Vizrt reports 9M and Q3 2013 results
- Revenue growth in the third quarter for both product lines and in all regions
- MAM revenue at new record quarterly level
Bergen, Norway, November 14, 2013, Vizrt Ltd. (Oslo Main List: VIZ).
Vizrt today reports its financial results for the third quarter 2013 and the first nine months of 2013.
Following the divestment of Escenic AS, Vizrt going forward will report its financials based on continuing operations.
THIRD QUARTER 2013 HIGHLIGHTS
- Revenues of MUSD 32.4, up 14% compared to MUSD 28.5 in Q3 2012.
- EBIT of MUSD 5.8, corresponding to an 18% margin, up 12% compared to MUSD 5.2 (18%) in Q3 2012.
- EBITDA of MUSD 6.7, corresponding to a 21% margin, up 6% compared to MUSD 6.3 (22%) in Q3 2012.
- Cash generation from operating activities of MUSD 5.5, compared to MUSD 5.4 in Q3 2012.
FIRST 9M 2013 HIGHLIGHTS
- Revenues of MUSD 89.1, up 2% compared to MUSD 87.1 in 9M 2012.
- EBIT of MUSD 13.8, corresponding to a 15% margin, down 5% compared to MUSD 14.5 (17%) in 9M 2012.
- EBITDA of MUSD 16.9, corresponding to a 19% margin, down 6% compared to MUSD 17.9 (21%) in 9M 2012.
- Cash generation from operating activities of MUSD 12.5, compared to MUSD 13.3 in 9M 2012.
Adjusted for a MUSD 1.4 revaluation of a contingent liability related to the LiberoVision acquisition, cash generation from operating activities for 9M 2013 was MUSD 13.8.
BUSINESS HIGHLIGHTS
- The revenue growth in Q3 2013, both sequentially and compared to the same period last year, was driven by both the company’s product lines. While AMECS and APAC continue to perform strongly, the highest growth was recorded in EMEA.
- MAM revenues reached a new record quarterly level of MUSD 6.5.
- A special dividend of MUSD 25.0 (including tax at company level of MUSD 1.8) was paid out on August 23, 2013. Following the distribution, Vizrt retains a strong balance sheet and continues its solid cash generation from operating activities.
LOI SIGNED FOR THE ACQUISITION OF MOSART
- As communicated November 13, 2013, Vizrt has entered into an indicative non-binding term sheet with TV2 Gruppen AS for the purchase of all of the issued share capital of Mosart Medialab AS ("Mosart"). Mosart’s solution helps broadcasters streamline their workflow, automating a number of TV production tasks through software and will enhance Vizrt’s offering to broadcasters on a global scale. The consideration of the purchase includes cash of NOK 105 million (approximately USD 17.6 million) and continued Mosart’s software license for TV2 in accordance with the current license fee of NOK 2.6 million per year for seven years. In addition, the sellers have an earn-out mechanism should the revenues for the years 2013, 2014 and 2015 exceed certain thresholds.
DIVESTMENT OF ESCENIC
- As communicated November 13, 2013, Vizrt has reached a definitive purchase agreement with CCI Europe concerning the sale of 100% of the outstanding shares of Escenic AS. Starting Q3 2013, Vizrt financial results are based on its continuing operations only, BG and MAM. Results related to Escenic are presented in a separate line item as discontinued operations. The comparable periods are presented based on the same principles.
Management summary and outlook
Martin Burkhalter, Vizrt’s CEO, stated: “Q3 saw a continued improvement of our financial performance. We delivered solid growth and maintained our margins, both in MAM and Broadcast Graphics, despite challenging trading conditions in many European markets, and despite some significant currency fluctuations in APAC and Latin America that were not in our customers favour.”
“The 17% growth in EMEA compared to Q3 2012 is an encouraging sign. I am also pleased with the continued strong performance in the Americas, which posted 16% growth compared to Q3 2012, and 27% for the first 9 month compared to the same period last year.”
“Another testament to our strength in the market was that this past quarter revenue was driven by a number of significant deals with new customers, as well as substantial repeat sales to existing customers who added more Vizrt products to their product portfolio in order to improve their workflow and multiplatform distribution capabilities.”
“As part of our growth strategy we are always looking for opportunities to strengthen our product offering and therefore I am excited about the large numbers of possibilities that Mosart’s proposed acquisition can bring to Vizrt and ultimately to our customers. Mosart’s technology will enable us to develop new integrated products and workflows with the potential of being highly disruptive for the broadcast technology market. It will further enhance our smart workflow solutions for the benefit of our customers."
”We remain focused on the execution of our multi platform distribution strategy, despite the fact that we have sold Escenic, our Online CMS system, as reported yesterday. We will offer and support for our integrated workflow from ingest and production of content, through to distribution to all media consumption platforms.”
Mr. Burkhalter concluded, “We expect that the coming months will still show some weakness in certain European markets. However, we also believe that we will see a modest recovery in a number of other EMEA markets. We anticipate that continued strong performance in APAC and the Americas will more than offset the weaker developments in Europe. We remain focus on the strengthening of our technological and strategic leadership, and will make investments that allow us to capitalize on new market opportunities. At the same time, we will maintain our financial prudence and discipline.”
FINANCIAL REVIEW Q3 and 9M 2013
RESULTS OVERVIEW –
| In KUSD | Q3 2013 | Q3 2012 | Change in % | Q2 2013 | Change in % | 9M 2013 | 9M 2012 | Change in % |
| Revenue | 32,381 | 28,493 | 14% | 30,570 | 6% | 89,087 | 87,071 | 2% |
| Gross Profit | 21,974 | 19,468 | 13% | 20,546 | 7% | 59,659 | 59,297 | 1% |
| Gross Margin | 68% | 68% | 67% | 67% | 68% | |||
| Operational Gross Profit* | 22,170 | 19,769 | 12% | 20,847 | 6% | 60,469 | 60,208 | 0% |
| Operational Gross Margin | 68% | 69% | 68% | 68% | 69% | |||
| EBIT | 5,801 | 5,196 | 12% | 5,305 | 9% | 13,784 | 14,460 | -5% |
| EBIT-Margin | 18% | 18% | 17% | 15% | 17% | |||
| EBITDA | 6,725 | 6,322 | 6% | 6,360 | 6% | 16,854 | 17,895 | -6% |
| EBITDA-Margin | 21% | 22% | 21% | 19% | 21% | |||
| Net profit from continuing operations | 2,345 | 3,818 | -39% | 3,910 | -40% | 7,618 | 11,010 | -31% |
| Adjusted net profit from continuing operations** | 4,150 | 3,818 | 9% | 3,910 | 6% | 9,423 | 11,010 | -14% |
| EPS from continuing operations | 0.03 | 0.05 | 0.06 | 0.11 | 0.17 | |||
| Adjusted EPS from continuing operations** | 0.06 | 0.05 | 0.06 | 0.14 | 0.17 | |||
| Backlog | 45,646 | 44,143 | 3% | 46,076 | -1% | |||
| Cash Flow from operating activities | 5,452 | 5,425 | 0% | 6,334 | -14% | 12,462 | 13,348 | -7% |
| Cash Position | 56,953 | 75,354 | -24% | 74,252 | -23% | |||
| Employees*** | 594 | 575 | 3% | 590 | 1% |
* Excluding amortization of intangible assets from acquisitions.
** Excluding MUSD 1.8 one-off tax expense that was recorded in Q3 2013 as part of the MUSD 25.0 special dividend.
*** The number of employees as of September 30, 2013 includes 58 employees of Escenic that are part of discontinuing operations.
Product lines breakdown of revenues
| In KUSD | Q3 2013 | Q3 2012 | Change in % | Q2 2013 | Change in % | 9M 2013 | 9M 2012 | Change in % |
| BG | 25,894 | 22,673 | 14% | 24,903 | 4% | 72,736 | 70,620 | 3% |
| MAM | 6,487 | 5,820 | 11% | 5,667 | 14% | 16,351 | 16,451 | -1% |
| Revenues | 32,381 | 28,493 | 14% | 30,570 | 6% | 89,087 | 87,071 | 2% |
BG and MAM revenues in Q3 2013, accounted for 80% and 20% of the total revenues, respectively, same as Q3 2012.
Geographic breakdown of revenues
| In KUSD | Q3 2013 | Q3 2012 | Change in % | Q2 2013 | Change in % | 9M 2013 | 9M 2012 | Change in % |
| EMEA | 14,813 | 12,611 | 17% | 12,481 | 19% | 37,604 | 42,723 | -12% |
| AMECS | 9,201 | 7,908 | 16% | 9,176 | 0% | 27,700 | 21,895 | 27% |
| APAC | 8,367 | 7,974 | 5% | 8,913 | -6% | 23,783 | 22,453 | 6% |
| Revenues | 32,381 | 28,493 | 14% | 30,570 | 6% | 89,087 | 87,071 | 2% |
Revenues in EMEA, AMECS and APAC, accounted for 46%, 28% and 26% of the Q3 2013 total revenues, respectively, compared to 44%, 28% and 28%, respectively in Q3 2012.
Operating expenses
| In KUSD | Q3 2013 | Q3 2012 | Change in % | Q2 2013 | Change in % | 9M 2013 | 9M 2012 | Change in % | |
| R&D | 4,650 | 3,961 | 17% | 4,322 | 8% | 13,493 | 12,738 | 6% | |
| S&M | 8,931 | 7,670 | 16% | 8,249 | 8% | 24,480 | 23,907 | 2% | |
| G&A | 2,592 | 2,641 | -2% | 2,670 | -3% | 7,902 | 8,192 | -4% | |
| OPEX | 16,173 | 14,272 | 13% | 15,241 | 6% | 45,875 | 44,837 | 2% |
The increase of OPEX in Q3 2013 compared to Q3 2012 is mainly a result of the increase in revenues due to revenue related costs as well as headcount related costs.
Revenue growth allowed for additional recruitments to support the execution of the company’s growth strategy. The company will maintain its financial prudence while pursuing growth opportunities.
Compared to the same period last year, 9M 2013 OPEX included a lower variable compensation component based on annual targets. This variable component offsets the increase in OPEX for 9M 2013 as compared to 9M 2012.
Currency effects
Exchange rate fluctuations in the USD versus the other main currencies Vizrt deals with (Euro, NOK, SEK) did not materially affect revenues as compared to the revenues reported for Q3 2012.
Order backlog
The order backlog as of November 11, 2013, was MUSD 45.6, up 3% compared to MUSD 44.1 in the same period LY, and down 1% compared to the Q2 2013 results release date. BG backlog was at MUSD 27.4 and MAM backlog at MUSD 18.2. BG backlog was up 10% compared to the same period LY, whereas for MAM the backlog was down 5% compared to the same period LY.
Balance sheet, cash flow and liquidity
Cash flow generated from operating activities in Q3 2013 was MUSD 5.5, compared to MUSD 5.4 in Q3 2012.
Vizrt has a strong financial position with no interest-bearing debt and a cash position of MUSD 57.0 as of September 30, 2013 (including MUSD 0.1 short term restricted cash). The company’s cash position as of September 30, 2013 decreased by MUSD 17.3 compared to June 30, 2013 due to the MUSD 25.0 special dividend distributed on August 23, 2013. Adjusted for this special dividend, the Company’s cash position increased by MUSD 7.7 compared to June 30, 2013.
Shareholders’ equity as of September 30, 2013 was MUSD 94.2, equivalent to an equity ratio of 70%.
Taxes
Adjusted for the one-off MUSD 1.8 corporate tax payment related to the special dividend distribution in August 2013, tax on income for Q3 2013 amounted to MUSD 1.6, representing an effective tax rate of 28%, compared to MUSD 1.2 (24%) in Q3 2012 and in line with the expected annual rate. Including this special dividend related tax expense, tax on income for Q3 2013 amounted to MUSD 3.4.
ANALYST CONFERENCE
An Analyst Conference will be held on November 14, 2013 at 09:30 a.m. (CET) at the SpareBank 1 Markets AS, Olav V’s gate 5 – 0161 Oslo, Norway.
Management will furthermore discuss the Q3 2013 results in a conference call at 1.15 p.m. (CET) Call details are as follows:
+47 24 159585 (Norway)
+44 203 1474861 (UK)
+49 69 247501899 (Germany)
A recording of the call will be available at the Company’s website: http://www.vizrt.com/company/presentations/
COMPANY CALENDAR
The results for the fourth quarter of 2013 will be published on February 25, 2014.
Investor and media contact:
Martin Burkhalter / CEO / 41 22 365 75 01 / MBurkhalter@vizrt.com
Tomer Wald / CFO / 47 5351 8040 / TWald@vizrt.com
Frank Schwarz / Schwarz Financial Communication / 49 611 1745 398 11 schwarz@schwarzfinancial.com
About Vizrt:
Vizrt provides real-time 3D graphics and asset management tools for the broadcast industry - from award-winning animations & maps to online publishing tools. Vizrt's products are used by the world's leading broadcasters and publishing houses, including: CNN, CBS, Fox, the BBC, BSkyB, Al Jazeera, ITN, ZDF, Star TV, Network 18, TV Today, CCTV, NHK, The Globe and Mail, Times Online, The Telegraph, and Welt Online. Furthermore, many world-class production houses and corporate institutions such as the Stock Exchanges in New York and London use Vizrt systems.
Vizrt is a public company traded on the Oslo Main List: VIZ, ISIN: IL0010838154. For further information please refer to www.vizrt.com
Copyright © Vizrt. All rights reserved. This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Vizrt and its affiliates. These statements are based on the current expectations or beliefs of Vizrt's management and are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties relate to changes in technology and market requirements, the company’s concentration on one industry, decline in demand for the company’s products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Vizrt undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.