VASCO Reports Results for Second Quarter and First Six Months of 2011
Revenue for the second quarter of 2011 was $43.0 million, an increase of 74% compared to the second quarter of 2010; Operating income for the second quarter of 2011 was $3.4 million, an increase of 116% compared to the second quarter of 2010. Guidance for full-year revenue growth in 2011 over 2010 increased. Financial results for the period ended June 30, 2011 and guidance for full-year 2011 to be discussed on conference call today at 10:00 a.m. E.D.T.
OAKBROOK TERRACE, IL, and ZURICH, Switzerland, July 26, 2011 – VASCO Data Security International, Inc. (Nasdaq: VDSI) (www.vasco.com), today reported financial results for the second quarter and six months ended June 30, 2011.
Revenue for the second quarter of 2011 increased 74% to $43.0 million from $24.7 million in the second quarter of 2010, and for the first six months of 2011, increased 63% to $79.3 million from $48.7 million for the first six months of 2010.
Net income for the second quarter of 2011 was $2.6 million, or $0.07 per diluted share, an increase of $1.2 million, or 88%, from $1.4 million, or $0.04 per diluted share, for the second quarter of 2010. Net income for the first six months of 2011 was $5.1 million, or $0.13 per diluted share, an increase of $3.1 million, or 160%, from $2.0 million, or $0.05 per diluted share, for the comparable period in 2010.
Other Financial Highlights:
- Gross profit was $26.3 million, or 61% of revenue, for the second quarter of 2011 and $49.0 million, or 62% of revenue, for the first six months of 2011. Gross profit was $17.4 million and $34.1 million for the second quarter and first six months of 2010, respectively, or 70% of revenue for both periods of 2010.
- Operating expenses for the second quarter and first six months of 2011 were $22.9 million and $42.5 million, respectively, an increase of 44% from $15.9 million reported for the second quarter of 2010 and an increase of 34% from $31.8 million reported for the first six months of 2010.
Operating expenses for the second quarter and first six months of 2011 included $0.8 million and $1.3 million, respectively, of expenses related to stock-based incentives. Operating expenses for the second quarter and first six months of 2010 included $0.6 million and $1.2 million, respectively, of expenses related to stock-based incentives.
- Operating income for the second quarter and first six months of 2011 was $3.4 million and $6.5 million, respectively, an increase of $1.8 million, or 116%, from $1.6 million reported for the second quarter of 2010 and an increase of $4.2 million, or 181%, from $2.3 million reported for the first six months of 2010. Operating income as a percentage of revenue for the both second quarter and first six months of 2011 was 8% compared to 6% and 5% for the comparable periods in 2010.
- Earnings before interest, taxes, depreciation and amortization (EBITDA) was $5.3 million and $9.8 million for the second quarter and first six months of 2011, respectively, an increase of 134% from $2.2 million reported for the second quarter of 2010 and an increase of 159% from $3.8 million reported for the first six months of 2010.
- Cash balances at June 30, 2011 totaled $84.6 million compared to $86.0 million and $85.5 million at March 31, 2011 and December 31, 2010, respectively. There were no bank borrowings at any of the periods ended June 30, 2011, March 31, 2011 or December 31, 2010.
Operational and Other Highlights:
- VASCO acquired Alfa & Ariss, a specialist in open identity and access management, on April 1, 2011.
- VASCO’s cloud-based DIGIPASS as a Service authentication was made available for Google™Apps.
- Belgian cloud service provider Thinfactory put DIGIPASS as a Service at the disposal of the end-users of its online web store.
- VASCO entered the global SSL certificate market with CertiID SSL and EV SSL certificates.
- VASCO launched its CertiID managed PKI offering trusted certificates to corporations’ employees and business partners.
- VASCO launched DIGIPASS 836, a smart card reader with an optical interface and replaceable batteries.
- The University of Colorado at Boulder used VASCO’s DIGIPASS GO 6 and IDENTIKEY Server to secure access to its new supercomputer and its network.
- Indiana University deployed VASCO’s DIGIPASS to provide secure access to its institutional data and online applications.
- Soliton Systems, a leading Japanese network solution vendor, embedded VACMAN® Controller in its Net’Attest EPS series product line, its all-in-one authentication server appliances.
Guidance for full-year 2011:
VASCO is revising its guidance for the full-year 2011 as follows:
- Expected revenue growth of more than 40% for the full-year 2011 over full-year 2010, as compared to expected full-year revenue growth of more than 20% announced at the end of the first quarter of 2011; and
- Operating margins, excluding expenses related to the amortization of acquisition-related intangible assets, for full-year 2011 are projected to be in the range of 8% to 12% of revenue, no change from guidance previously announced, but are expected to be at the lower end of the range.
“The second quarter of 2011 continued to show strong revenue growth from our traditional businesses,” stated T. Kendall Hunt, Chairman & CEO. “Revenues in the second quarter of
2011 were the highest in the company’s history, reflecting strong growth from the banking market partially offset by a decline in revenues from the enterprise and application security market. We expect to report strong revenue growth for full-year 2011 over 2010. We believe that our strong order intake, which includes a significant number of orders scheduled to ship and invoice in 2011 and beyond, is an important and concrete sign that our business is gaining momentum. We also continued to invest in our DIGIPASS as a Service product line. The addition of Google™Apps to our platform was a significant addition and we continue to work on integrating other important SAAS applications into our platform.”
“In addition to our strong order intake, we have a strong pipeline of potential new orders and we expect that we will experience continued strong revenue growth in the second half of the year, driven primarily by the performance of the banking sector,” stated Jan Valcke, VASCO’s President and COO. “We also believe that our non-banking business will improve as a result of programs designed to support our reseller channel and their efforts. With the projected strong growth in revenues from the banking market in 2011, which includes high volume transactions with lower average selling prices, we expect our gross margins as a percentage of revenue will continue to be below the comparable quarters of 2010. Looking forward, we believe that as the performance from our non-banking business improves and our services strategy gains traction, our gross margins will improve.”
Conference Call Details
In conjunction with this announcement, VASCO Data Security International, Inc. will host a conference call today, July 26, 2011, at 10:00 a.m. EST – 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 Second Quarter and First Six Months Ended June 30, 2011.
To participate in this Conference Call, please dial one of the following numbers:
USA/Canada: +1 800-268-2160
International: +1 303-223-4375
And mention VASCO to be connected to the Conference Call.
The Conference Call is also available in listen-only mode on 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 for at least 60 days.
VASCO Data Security International, Inc.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share data) (unaudited)2011201020112010Net revenue42,981$ 24,742$ 79,339$ 48,656$ Cost of goods sold16,677 7,306 30,355 14,532 Gross profit26,304 17,436 48,984 34,124 Operating costs:Sales and marketing 11,469 7,727 20,982 15,656 Research and development5,088 3,327 9,145 6,598 General and administrative 5,640 4,698 11,001 9,347 Amortization of purchased intangible assets707 108 1,387 223 Total operating costs22,904 15,860 42,515 31,824 Operating income3,400 1,576 6,469 2,300 Interest income124 63 236 134 Other income (expense), net319 142 610 202 Income before income taxes3,843 1,781 7,315 2,636 Provision for income taxes1,222 385 2,194 667 Net income2,621$ 1,396$ 5,121$ 1,969$ Net income per share:Basic0.07$ 0.04$ 0.14$ 0.05$ Diluted0.07$ 0.04$ 0.13$ 0.05$ Weighted average common shares outstanding:Basic37,532 37,404 37,526 37,400 Diluted38,752 38,201 38,611 38,242 See accompanying notes to consolidated financial statements.June 30,Three months endedSix months endedJune 30,
VASCO Data Security International, Inc.CONSOLIDATED BALANCE SHEETS(in thousands, except per share data)June 30,December 31,20112010ASSETS(unaudited)Current assets:Cash and equivalents84,630$ 85,533$ Accounts receivable, net of allowance for doubtful accounts22,54021,702Inventories14,17410,710Prepaid expenses2,4191,859Foreign sales tax receivable5842,282Deferred income taxes632369Other current assets1,774199Total current assets126,753 122,654 Property and equipment, net5,697 4,771 Goodwill17,20412,772Intangible assets, net of accumulated amortization 11,4111,603Other assets2,0671,141Total assets163,132$ 142,941$ LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:Accounts payable7,076$ 8,857$ Deferred revenue10,324 6,464 Accrued wages and payroll taxes7,529 4,971 Income taxes payable2,670 2,109 Other accrued expenses5,248 3,364 Total current liabilities32,847 25,765 Deferred compensation1,026 456 Deferred revenue25 47 Deferred tax liability1,204 180 Total liabilities35,102 26,448 Stockholders’ equity : Common stock 38 38 Additional paid-in capital69,191 68,428 Accumulated income52,645 47,524 Accumulated other comprehensive income 6,156 503 Total stockholders’ equity128,030 116,493 Total liabilities and stockholders’ equity163,132$ 142,941$
Reconciliation of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)to net income (in thousands):Three monthsSix monthsended June 30,ended June 30,2011201020112010(in thousands, unaudited)(in thousands, unaudited)EBITDA5,270$ 2,248$ 9,751$ 3,764$ Interest income, net124 63 236 134 Provision for income taxes(1,222) (385) (2,194) (667) Depreciation and amortization(1,551) (530) (2,672) (1,262) Net income 2,621$ 1,396$ 5,121$ 1,969$
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.
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 global software company for Internet Security serving a customer base of approximately 10,000 companies in more than 100 countries, including approximately 1,700 international financial institutions. VASCO’s prime markets are the financial sector, enterprise security, e-commerce and e-government.
VASCO’s Annual Report on Form 10-K for the year ended December 31, 2010, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other public filings with the U.S. Securities and Exchange Commission discuss important risk factors that could affect our business, results of operations and financial condition. The forward-looking statements in this news release speak only as of this date. VASCO does not undertake any obligation to revise or update publicly any forward-looking statement for any reason.
This document may contain trademarks of VASCO Data Security International, Inc. and its subsidiaries, including VASCO, the VASCO “V” design, DIGIPASS, VACMAN, aXsGUARD and IDENTIKEY.
For more information contact:
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