Vizrt Reports H1 and Q2 2011 Results
Record Revenues, Strong Margin Growth and a Record Order Backlog
Bergen, Norway, August 11, 2011. Vizrt Ltd. (Oslo Main List: VIZ)
For the first six months of 2011, the Company posted a 25% revenue growth compared to H1 2010 and achieved all-time record revenues. All business areas contributed to the revenue growth, with the strongest performance in BG and ONL. Geographically, APAC led growth with 48%, compared to H1 2010. Profitability has significantly improved, including both Gross Margin and EBIT Margin.
HIGHLIGHTS
- H1 and Q2 2011 Revenues of MUSD 60.1 and MUSD 32.1,up 25% and up 32% compared to same periods LY.
- EBIT of MUSD 7.5 in H1 2011and MUSD 5.1 in Q2 2011, corresponding to a 12% and 16% margin respectively, compared to MUSD 2.6 (5%) and MUSD 2.4 (10%) for the same periods LY.
- EBITDA of MUSD 10.4 in H12011 and MUSD 6.4 in Q2 2011, corresponding to a 17% and 20% margin respectively, compared to MUSD 5.7 (12%) and 3.9 (16%) for the same periods LY.
- The Company posted a net profit of MUSD 6.6 (11%) in H1 2010 and MUSD 4.5 (14%) in Q2 2011 compared to MUSD 0.6 (1%) and MUSD 1.1 (4%) in the same periods LY.
- Record backlog to date of MUSD 49.8, up 32% compared to the same period LY.
- Subsequent to the quarter's end, the Company successfully closed the acquisition of the first tranche of 60% of all the issued and outstanding shares of LiberoVision AG (LV), a leader in the field of virtual sports enhancements, complementing Vizrt's workflow solution in BG. LV will be consolidated from Q3 2011.
Martin Burkhalter, Vizrt CEO, commented on the results, "We are obviously pleased we have again managed to achieve record revenue levels, but perhaps even more pleasing is our bottom line performance, which saw a significant improvement, not only year on year, but also quarter on quarter. It is clear that our strategic decisions and subsequent investments of the past couple of years are paying off. Our combined and integrated product offering, supported by a strong commercial regionalization strategy, have allowed us not only to increase sales to existing customers but also reach a significant number of new ones. Our products and solutions are very well received by the market and the level of trust that customers have in our ability to meet their current and future needs often leads to strategic investments and substantial follow up orders."
Results Overview
| In KUSD | Q2 2011 | Q2 2010 | Change in% | Q1 2011 | Change in % |
|---|---|---|---|---|---|
| Revenue | 32,098 | 24,245 | 32% | 28,001 | 15% |
| Gross Profit | 21,166 | 15,650 | 35% | 17,349 | 22% |
| Gross Margin | 66% | 65% | 62% | ||
| EBIT | 5,135 | 2,388 | 115% | 2,369 | 117% |
| EBIT-Margin | 16% | 10% | 8% | ||
| EBITDA | 6,421 | 3,892 | 65% | 3,977 | 61% |
| EBITDA-Margin | 20% | 16% | 14% | ||
| Net Profit (loss) | 4,508 | 1,067 | 322% | 2,141 | 111% |
| Net Profit-Margin | 14% | 4% | 8% | ||
| EPS | 0.07 | 0.02 | 250% | 0.03 | 133% |
| Backlog | 49,792 | 37,797 | 32% | 40,000 | 24% |
| Cash Position | 63,874 | 51,350 | 24% | 59,938 | 7% |
Vizrt Product Lines and Geographical Overview
Broadcast Graphics (BG)
BG revenues in H1 2011 accounted for 73% of total revenues with MUSD 43.7, a 26% growth Y-o-Y and record 39% growth Q-o-Q. Compared to Q1 2011, BG revenues were up 18%.
Media Asset Management (MAM)
MAM revenues in H1 2011 accounted for 17% of total revenues with MUSD 10.4, an 11% growth Y-o-Y and 9% growth Q-o-Q. Compared to Q1 2011, MAM revenues were up10%.
Online & Mobile (ONL & MOB)
Of all Vizrt product lines, ONL & MOB posted the strongest growth rate, with 57% Y-o-Y, of which organic growth contributed 27%, with the remainder due to MOB, which was consolidated from Q3 2010 onwards. H1 2011 revenues came in at MUSD 5.9, compared to MUSD 3.8 in H1 2010. The strong growth for the product line included MUSD 1.1 from MOB in H1 2011. ONL & MOB accounted for 10% of total revenues in H1 2011.
Geographical Overview
All regions contributed to the improved performance as compared to H1 2010, with the strongest growth recorded in APAC, where revenues went up by 48% to MUSD 14.0, as compared to MUSD 9.4 for H1 2010. Revenues in the EMEA region were up by 22%, from MUSD 26.8 to MUSD 32.8, and revenues in the AMERICAS were up 14%, from MUSD 11.7 to MUSD 13.3.
FINANCIALS
Gross Profit and Gross Margin
The gross margin for H1 2011 was 64% as compared to 62% for the same period LY. The increase is mainly due to a lower HW portion in the product mix. The gross profit in H1 2011 was affected by a MUSD 1.3 amortization of intangible assets from acquisitions, compared to MUSD 1.5in H1 2010. Adjusted for these amortization effects, the gross margin was 66%, compared to 65% LY.
The gross margin for Q2 2011 was 66%, as compared to 65% for the same period LY. The gross profit was affected by MUSD 0.5 in Q2 2011, compared to MUSD 0.7 in Q2 2010 due to amortization of intangible assets resulting from acquisitions. Adjusted for these amortization effects, the gross margin was at 68% for both periods.
Operating Expenses
Total operating expenses in H1 2011were MUSD 31.1, up 15% compared to the same period LY. The increase was mainly due to an increase in headcount following the Adactus acquisition, which took place in July 2010 Furthermore the ongoing implementation of the regionalization program, as well as a general salary increase implemented throughout the company in 2011 and currency effects due to volatile exchange rates have all contributed to the cost increase.
Operating expenses summary
| In KUSD | H111 | H110 | Q211 | Q210 | Q111 |
|---|---|---|---|---|---|
| R&D | 9,368 | 7,545 | 4,759 | 3,685 | 4,609 |
| S&M | 16,514 | 14,557 | 8,655 | 7,258 | 7,859 |
| G&A | 5,219 | 4,835 | 2,617 | 2,319 | 2,602 |
| OPEX | 31,101 | 26,937 | 16,031 | 13,262 | 15,070 |
Order backlog
A record order backlog was achieved as of August 10, 2011 in the amount of MUSD 49.8, up 32%, compared to LY MUSD 37.8, and up 24% compared to the Q1 2011 results release date. For the first time LV backlog amounting to MUSD 3.1 is included under BG. BG backlog was at MUSD 27.0, MAM backlog at MUSD 16.4, ONL backlog at MUSD 5.0 and Mobile streaming, related to Adactus, at MUSD 1.3. For all products backlog was significantly higher than the comparable backlog for the same period LY. For BG, the backlog was up 37% compared to the same period LY, whereas for MAM and ONL&MOB the backlog was up 29% and 17%, respectively, comparing to the same period LY.
Balance Sheet, Cash Flow and Liquidity
Cash flow generation from operating activities in H1 2011 was MUSD 5.4, compared to MUSD 3.6 in H1 2010. Net cash provided by operating activities in Q2 2011 was MUSD 3.0, compared to MUSD 1.1 in Q2 2010.
Vizrt has a strong financial position with no interest-bearing debt and a net cash position of MUSD 63.9 as of June 30, 2011 (including MUSD 0.9 restricted cash), compared to MUSD 57.5 as of December 31, 2010 (including MUSD 0.5 restricted cash). Furthermore shareholders' equity as of June 30, 2011 was MUSD 121.6, which is equivalent to an equity ratio of 78%.
Organization
At the end of June 30, 2011, the Company had 560 employees, compared to 519 as the end of June 30, 2010. This increase is mainly due to increased staffing in low cost countries as well as an additional 16 employees resulting from the acquisition of Adactus in Q3 2010.
OUTLOOK
Martin Burkhalter, Vizrt CEO, stated, "Our sales are driven by our strong and continuously evolving offer to the ever changing, very dynamic media landscape - with multiplatform delivery, upgrade to HD, 3DTV and file based workflows. We are starting to see the first signals of stronger markets in both MAM and ONL&MOB, and we are taking the necessary measures to improve our performance in these segments. We have found that our ability to offer both fully integrated solutions as well as more application specific product suites is finding resonance with the market."
"So far, the fiscal and macroeconomic challenges in the public sector of some European countries and the US have not had any visible negative impact on market conditions. We do however see a growing concern related to rising public debt and signs of slower economic growth in certain regions that could, in the mid or long-term, have an impact. That said, our performance has been very strong, and the signs for the second half of 2011 are positive. We therefore expect to achieve stable growth for the second half of this year."
Capital Markets Day
This year's Capital Market day will be held on September 9 to coincide with Vizrt's presence at IBC 2011 in Amsterdam. Management will make presentations on the current state of and future expectations for the company, following which the Vizrt stand at IBC will be visited for demonstrations. The event is managed by Schwarz Financial Communication and if you wish to attend, please contact Marc Lakmaaker via lakmaaker@schwarzfinancial.com.
Analyst Conference
An Analyst Conference will be held at 09:30 a.m. (CEST) at DnBNor Head Offices, Stranden 21 in Oslo Investors and Analysts who are not able to attend the conference are invited to call Management directly.
The Q3 2011 results will be released on November 10, 2011.
Contacts
Martin Burkhalter
CEO
+41 79 795 24 48
mbu@vizrt.com
Ofra Brown
CFO
+47 5351 8040
ofra@vizrt.com
SCHWARZ Financial Communication
Frank Schwarz
+49 611 1745 398 11
schwarz@schwarzfinancial.com