- Published: 23 October 2008
- Written by Editor
VASCO Reports Results for Third Quarter and First Nine Months of 2008
VASCO Data Security International, Inc. (Nasdaq: VDSI) (http://www.vasco.com) today reported financial results for the third quarter and nine months ended September 30, 2008.
Revenue for the third quarter of 2008 increased 32% to $39.7 million from $30.0 million for the third quarter of 2007, and for the first nine months of 2008, increased 17% to $104.0 million from $88.8 million for the first nine months of 2007.
Net income for the third quarter of 2008 was $9.1 million, or $0.24 per diluted share, an increase of $3.2 million, or 55%, from $5.9 million, or $0.15 per diluted share, for the comparable period in 2007. Net income for the first nine months of 2008 was $21.5 million, or $0.56 per diluted share, an increase of $3.8 million, or 21%, from $17.7 million, or $0.46 per diluted share, for the comparable period in 2007.
Other Financial Highlights:
-- Gross profit was $27.8 million, or 70% of revenue, for the third
quarter of 2008 and $73.3 million, or 70% of revenue, for the first
nine months of 2008. Gross profit was $20.0 million, or 67% of revenue
for the third quarter of 2007 and $58.2 million, or 66% of revenue, for
the first nine months of 2007.
-- Operating expenses for the third quarter and first nine months of 2008
were $16.4 million and $47.0 million, respectively, an increase of
$4.7 million, or 40%, from $11.7 million reported for the third quarter
of 2007 and an increase of $13.3 million, or 40%, from $33.6 million
reported for the first nine months of 2007. Operating expenses for the
third quarter and first nine months of 2008 included $0.8 million and
$2.3 million, respectively, related to stock-based incentives.
-- Operating income for the third quarter and first nine months of 2008
was $11.4 million and $26.3 million, respectively, an increase of
$3.2 million, or 39%, from $8.3 million reported for the third quarter
of 2007 and an increase of $1.7 million, or 7%, from $24.6 million
reported for the first nine months of 2007. Operating income, as a
percentage of revenue, for the third quarter and first nine months of
2008 was 29% and 25%, respectively, compared to 28% for both of the
comparable periods in 2007.
-- Earnings before interest, taxes, depreciation and amortization was
$11.5 million and $28.4 million for the third quarter and first nine
months of 2008, respectively, an increase of 31% from $8.7 million
reported for the third quarter of 2007 and an increase of 7% from
$26.5 million reported for the first nine months of 2007.
-- Total cash balances at September 30, 2008 totaled $50.7 million
compared to $42.1 million and $38.8 million at June 30, 2008 and
December 31, 2007, respectively.
Operational and Other Highlights:
-- VASCO won 365 new customers in Q3 2008 (62 new banks and 303 new
enterprise security customers). For the first nine months of 2008,
VASCO won 1,472 new customers (212 banks and 1,260 enterprise security
customers).
-- VASCO launches new EMEA + LAM Enterprise Security Partner Program to
maximize Enterprise
-- VASCO launches Digipass Go 7 Strong User Authentication
-- VASCO makes Digipass 810 available to Asian markets
-- VASCO launches aXsGUARD survey for July 2008
-- Encore Payment Systems (U.S.) secures remote access with DIGIPASS GO 3
and VACMAN Middleware
-- WhiteGold to distribute VASCO in Australia
-- VASCO launches Japanese version of website
Guidance for full-year 2008:
VASCO reaffirmed its full-year 2008 guidance provided at the end of the second quarter, as follows:
-- Revenue growth is projected to be 15% to 25% for the full-year 2008
over full-year 2007,
-- Gross margin as a percentage of revenue for full-year 2008 is projected
to be in the range of 60% to 68%, and
-- Operating margin as a percentage of revenue for full-year 2008 is
projected to be in the range of 20% to 25%.
"We were pleased to see that the strong order flow that we experienced at the end of the second quarter continued in the third quarter," stated T. Kendall Hunt, Chairman & CEO. "Given the strong order flow, we continue to be cautiously optimistic in spite of the turmoil in the financial markets and we are, therefore, reaffirming the guidance for the full-year 2008 that we gave at the end of the second quarter. Even though the banking industry is going through a period of major change, our products continue to be very well positioned to help banks reduce their costs, extend their brand into the hands of their customers and reduce fraud by providing their customers with secure access to their accounts."
"The results for the third quarter were consistent with our belief that our growth over 2007 would be stronger in the second half of 2008 than in the first half of the year," said Jan Valcke, VASCO's President and COO. "While we expect that there may be some changes in the timing of orders from banks that have experienced major changes in their ownership, we believe that the overall demand for our products will continue to grow as the number of customers using the internet to access their accounts grows. Given the strength of our products, we also expect that the changes in ownership will create new opportunities for us to present our products' benefits to many individuals that have not worked with us previously."
Cliff Bown, Executive Vice President and CFO added, "The continued strong operating performance has resulted in a continued strengthening of our balance sheet. Our net cash balance increased $8.6 million, or 21%, and our working capital increased $6.9 million, or 10%, from June 30, 2008 to September 30, 2008. Days Sales Outstanding (DSO) in net accounts receivable decreased to approximately 69 days at September 30, 2008 from 83 days and 76 days at June 30, 2008 and December 31, 2007, respectively."
Conference Call Details
In conjunction with this announcement, VASCO Data Security International, Inc. will host a conference call today, October 23rd, at 10:00 a.m. EDT - 16:00h CET. During the Conference Call, Mr. Ken Hunt, CEO, Mr. Jan Valcke, President and COO, and Mr. Cliff Bown, CFO, will discuss VASCO's results for the third quarter 2008.
To participate in this Conference Call, please dial one of the following numbers:
Dial-in US: 800-732-5617
Dial-In International: +1 212-231-2904
Reservation Access Number: 21396337
The Conference Call is also available in listen-only mode on http://www.vasco.com. Please log on 15 minutes before the start of the Conference Call in order to download and install any necessary software. The recorded version of the Conference Call will be available on the VASCO website 24 hours a day.
VASCO Data Security International, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
Net revenue $39,705 $29,977 $104,042 $88,824
Cost of goods sold 11,866 10,009 30,761 30,639
Gross profit 27,839 19,968 73,281 58,185
Operating costs:
Sales and marketing 8,878 6,246 25,615 18,995
Research and
development 3,056 2,553 8,712 6,552
General and
administrative 4,344 2,666 12,109 7,302
Amortization of
purchased intangible
assets 122 250 518 761
Total operating
costs 16,400 11,715 46,954 33,610
Operating income 11,439 8,253 26,327 24,575
Interest income, net 227 192 761 330
Other income (expense),
net (789) (289) (571) (334)
Income before income
taxes 10,877 8,156 26,517 24,571
Provision for income
taxes 1,754 2,284 5,038 6,880
Net income $9,123 $5,872 $21,479 $17,691
Net income per share:
Basic $0.25 $0.16 $0.58 $0.48
Diluted $0.24 $0.15 $0.56 $0.46
Weighted average
common shares
outstanding:
Basic 37,173 37,013 37,138 36,820
Diluted 38,204 38,387 38,236 38,207
VASCO Data Security International, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2008 2007
ASSETS (unaudited)
Current assets:
Cash and equivalents $50,695 $38,833
Accounts receivable, net of allowance
for doubtful accounts 29,993 25,721
Inventories 10,899 7,076
Prepaid expenses 1,653 1,712
Foreign sales tax receivable 8,790 4,919
Deferred income taxes 207 476
Other current assets 221 180
Total current assets 102,458 78,917
Property and equipment, net 3,068 2,140
Goodwill, net of accumulated amortization 14,053 14,319
Intangible assets, net of accumulated
amortization 1,871 2,295
Other assets, net of accumulated
amortization 3,234 3,005
Total assets $124,684 $100,676
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 6,420 7,757
Deferred revenue 5,649 5,608
Accrued wages and payroll taxes 6,273 5,330
Income taxes payable 4,942 4,008
Other accrued expenses 4,068 3,776
Current deferred compensation 1,331 -
Total current liabilities 28,683 26,479
Deferred warranty 247 309
Accrued compensation 1,030 1,281
Deferred revenue 929 457
Deferred tax liability 498 611
Total liabilities 31,387 29,137
Stockholders' equity:
Common stock 37 37
Additional paid-in capital 66,278 64,734
Accumulated income 22,044 565
Accumulated other comprehensive income 4,938 6,203
Total stockholders' equity 93,297 71,539
Total liabilities and stockholders' equity $124,684 $100,676
Reconciliation of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") to net income:
Three months Nine months
ended September 30, ended September 30,
2008 2007 2008 2007
(in thousands, unaudited) (in thousands, unaudited)
EBITDA $11,474 $8,743 $28,392 $26,504
Interest income, net 227 192 761 330
Provision for
income taxes (1,754) (2,284) (5,038) (6,880)
Depreciation and
amortization (824) (779) (2,636) (2,263)
Net income $9,123 $5,872 $21,479 $17,691
EBITDA is a non-GAAP financial measure within the meaning of applicable U.S. Securities and Exchange Commission rules and regulations. We use EBITDA as a measure of performance, a simplified tool for use in communicating our performance to investors and analysts and for comparisons to other companies within our industry. As a performance measure, we believe that EBITDA presents a view of our operating results that is most closely related to serving our customers. By excluding interest, taxes, depreciation and amortization we are able to evaluate performance without considering decisions that, in most cases, are not directly related to meeting our customers' requirements and were either made in prior periods (e.g., depreciation and amortization), or deal with the structure or financing of the business (e.g., interest) or reflect the application of regulations that are outside of the control of our management team (e.g., taxes). Similarly, we find that the comparison of our results to those of our competitors is facilitated when we do not need to consider the impact of those items on our competitors' results.
EBITDA should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States. While we believe that EBITDA, as defined above, is useful within the context described above, it is in fact incomplete and not a measure that should be used to evaluate our full performance or our prospects. Such an evaluation needs to consider all of the complexities associated with our business including, but not limited to, how past actions are affecting current results and how they may affect future results, how we have chosen to finance the business and how regulations and the other aforementioned items affect the final amounts that are or will be available to shareholders as a return on their investment. Net income determined in accordance with U.S. GAAP is the most complete measure available today to evaluate all elements of our performance. Similarly, our Consolidated Statement of Cash Flows, which will be filed as part of our annual report on Form 10-K, provides the full accounting for how we have decided to use resources provided to us from our customers, lenders and shareholders.
About VASCO: VASCO is a leading supplier of strong authentication and e-signature solutions and services specializing in Internet Security applications and transactions. VASCO has positioned itself as a global software company for Internet Security serving a customer base of approximately 8,000 companies in more than 100 countries, including more than 1,200 international financial institutions. VASCO's prime markets are the financial sector, enterprise security, e-commerce and e-government.
Forward Looking Statements
Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as "believes," "anticipates," "plans," "expects," and similar words, is forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.
Reference is made to our public filings with the U.S. Securities and Exchange Commission for further information regarding VASCO and our operations.
For more information contact:
Jochem Binst, +32 2 609 97 40, This email address is being protected from spambots. You need JavaScript enabled to view it.
SOURCE VASCO Data Security International, Inc.
