Vizrt Reports Q1 2010 Results
Revenue up 38% compared to Q1 2009
Bergen, Norway, May 19, 2010. Vizrt Ltd. (Oslo Main List: VIZ)
Revenue growth of 38% in Q1 2010, which followed on the strong revenue pick-up in Q4 2009, supports our expectations that we are on track to return to historic levels within the next 12 months.
HIGHLIGHTS
- Q1 2010 Revenues MUSD 23.7 up 38% compared to Q109.
- EBIT of MUSD 0.2 corresponding to a 1% margin compared to MUSD -2.4 (-14%) in Q109.
- EBITDA of MUSD 1.8 corresponding to a 7% margin compared to MUSD -0.7 (-3.8%) in Q109.
- The Company posted a net loss of MUSD 0.4, which is mainly due to currency impacts related to the multi-currency environment in which Vizrt operates and the current volatility in exchange rates.
- Backlog to date amounts to MUSD 36.1, up 78% compared to the same period LY.
- On February 2010 the company announced the purchase of the remaining 70% of Adactus AS, complementing Vizrt's workflow solution. The transaction is expected to be finalized during Q2 2010.
Martin Burkhalter, Vizrt CEO, commented on the results, "The reasons for the strong year on year increase in revenues are the same as our strong Q4 2009 was based on. The broadcast markets are slowly recovering and existing and new customers are coming back to us now that CAPEX budgets and discretionary spending are being restored. We also continue to benefit from the shift towards HDTV. Our results in MAM are promising, as budgets in this sector seem to recover. Customers seem to recognize the fact that investments in this area are a prerequisite for an efficient workflow and to develop new revenue streams. Development in our Online business is somewhat behind schedule, but this is to be expected as our traditional customers in this segment continue to struggle with the effects of the economic downturn."
Results Overview
| Q1 2010 | Q1 2009 | Change | Q4 2009 | Change | |
| Revenue | 23,708 | 17,195 | 38% | 26,128 | -9% |
| Gross Profit | 13,843 | 10,157 | 36% | 15,365 | -10% |
| Gross Margin | 58% | 59% | 59% | ||
| EBITDA | 1,776 | (661) | 369% | 4,334 | -59% |
| EBITDA-Margin | 7% | (3.8%) | 17% | ||
| Net Profit (loss) | (448) | (2,090) | 79% | 3,424 | -113% |
| Net Profit-Margin | (1.9%) | (12%) | 13% | ||
| EPS | (0.007) | (0.03) | 77% | 0.05 | -114% |
| Backlog | 36,148 | 20,272 | 78% | 37,346 | -3% |
| Cash Position | 51,693 | 47,261 | 9% | 50,010 | 3% |
Vizrt Product line Overview
Broadcast Graphics (BG)
While Q109 was very weak, with BG revenues of MUSD 11.4, the last six months have seen a strong recovery in demand for our core BG product line, with revenues up 54% YoY to MUSD 17.7 in Q1 2010. Compared to Q409 BG revenues were down 9%, which is normal for the first quarter of the financial year when compared to a traditionally strong last quarter. BG remains the largest revenue contributor of the group, accounting for 74% of total revenue in Q1 2010.
Media Asset Management (MAM)
Of all Vizrt activities, MAM has shown the strongest recovery. For Q1 2010 MAM revenues came in at MUSD 4.4, up 40% compared to Q1 2009 and up 8% compared to Q4 2009. The main reasons for the increase in MAM revenues are: Firstly, there are more RFPs in the market and we have a good track record converting these into business for Vizrt. Secondly, we have improved our capacity to deliver projects. Thirdly, our competence in integrated workflow solutions is starting to pay dividends. MAM is the second largest revenue contributor with a contribution to revenues of 19% in Q1 2010.
Online (ONL)
ONL is still struggling with strong revenue volatility, which is mainly due to the relatively low volumes compared to our other business activities. Q1 2010 revenue was MUSD 1.6, compared to MUSD 2.6 for Q1 2009, down 37%. The main reason for the fall in revenues is the continuing weakness in the printed advertising market, which has a knock-on effect on investment decisions taken by our customers in this unit. Although we are seeing some signs of recovery in our customers' markets, pick-up is slow. While our traditional ONL customers are struggling, we are witnessing an increase in interest from the broadcast industry in our ONL solutions, though this interest has yet to turn into new deals.
Regions
Q1 2010 saw a return to growth for all regions as compared to Q1 2009. The strongest growth was recorded in The Americas, with revenues up by 49% to MUSD 5.1, as compared to MUSD 3.4 for Q1 2009. Growth in the EMEA region was 38%, with revenues up from MUSD 9.6 to MUSD 13.2. Revenues in the APAC region were up 29%, from MUSD 4.1 to MUSD 5.3. Following the organization of the company into three regions, geographical revenue breakdown will be reported accordingly going forward.
FINANCIALS
Gross profit and gross margin
The gross margin for Q1 2010 was 58% as compared to 59% for the same period last year. The gross profit was affected by a MUSD 0.8 amortization of intangible assets from acquisitions in Q1 2010 as well as in Q1 2009. Adjusted for these amortization effects, the gross margin was 62%, compared to 64% last year.
Operating expenses
Total operating expenses in Q1 2010 totaled MUSD 13.7, up 9% compared to the same period LY. The increase is mainly due to the regionalization efforts the Company has been implementing since late 2009. Both R&D and the Sales Organization are focused on developing, marketing and selling our integrated workflow solution offering across the three product lines. Developing and building such competence in the three global regions carries associated costs, which we expect will start paying off in the second half of the year. However, as compared to Q4 2009 the increase in OPEX is 4% only. This QoQ increase is mainly explained by salary increases implemented throughout the company, following 2009 in which salaries were frozen.
Operating expenses summary
Order backlog
The order backlog as of May 18, 2010 was MUSD 36.1, up 78%, compared to last year MUSD 20.3, and down 3% compared to the Q4 2009 results release date. BG backlog was at MUSD 16.9, MAM backlog at MUSD 14.7 and ONL backlog at MUSD 4.5, all significantly higher than the comparable backlog for the same period last year (107%, 47% and 118% respectively).
Balance Sheet, Cash Flow and Liquidity
Cash flow generation from operating activities in Q1 2010 was MUSD 2.4 compared to MUSD 2.8 in Q1 2009 and MUSD 2.5 in Q4 2009.
Vizrt has a strong financial position with no interest-bearing debt and a net cash position of MUSD 51.7 as of March 31, 2010 (including MUSD 1.2 restricted cash), compared to MUSD 50.0 as of December 31, 2009. Furthermore shareholders' equity as of March 31, 2010 was MUSD 100.3, which is equivalent to an equity ratio of 77%.
Organization
At the end of Q1 2010, the Company had 498 employees, compared to 484 at the end of Q1 2009. This increase is mainly due to increased staffing in low cost countries and first steps in implementing the regionalization restructuring of the company.
OUTLOOK
Martin Burkhalter, CEO of Vizrt, stated, "This past quarter has been, in many ways, a confirmation of what we felt and said before: The broadcast markets are slowly recovering and existing and new customers are coming back to us, now that CAPEX budgets are being restored".
In the ONL product line, we are still seeing the effects of the market downturn, and we anticipate recovery in this business unit to be slower than for BG and MAM. However, at this year's NAB in April we witnessed a tremendous interest for our integrated ONL product offering, which is quite unique. We are therefore confident that we will see a growth of our ONL business in general, and particularly in the broadcast environment, due to the advantages our solutions offer in terms of workflow. Furthermore, at NAB we presented our capability to distribute content and graphics to handheld devices like the Kindle and the iPad. The scheduled acquisition of Adactus will be instrumental in helping our customers meet the ever increasing need to distribute their content to the quickly growing market of handheld devices."
"The movie Avatar has triggered an enormous interest for 3D stereoscopic live TV production, which many believe will be the next big game changer in the broadcast industry. Worldwide interest in 3D production is growing, and broadcasters are eager to put the technology to use in live sports events. The fact that we are already able to offer real 3D graphics capabilities, has led to Sky Sport choosing Vizrt for its first 3D production of a Premier League game in the UK and the Bundesliga in Germany. This is an exciting development for us, since with Viz Engine, Viz Trio and Viz Virtual Studio, we have a range of 3D products that are now proven in the field in high-profile live productions."
"Despite the fact that the market in 2009 suffered strongly from the global financial crisis, we have deliberately continued to invest resources in product development and sales resources in Asia and the Americas. We believe that we will benefit much stronger from market upswings than companies which have had to cut costs aggressively along the way. Furthermore, our skilled and motivated team allows us to retain the leadership we have in our markets and enables us to enter into new markets when these take off."
"Although these are sad circumstances in which I address the financial community for the first time as CEO of Vizrt, it is also with pride of what we have achieved as a company under Bjarne Berg's leadership. We are in a very strong position to benefit from the exiting new developments in the media industry and we have an experienced, motivated and committed team to benefit from this development going forward. We are in a financially very sound position and are witnessing the recovery of the financial crisis in our core markets, an observation backed by our healthy backlog."
"In terms of revenues, we believe that we are heading back towards the levels we achieved prior to the global downturn and anticipate to reach these levels in the coming nine to twelve months. With this recovery, we expect our profitability to improve as well."
Shareholders Events
An international Conference Call will be held at 10:00 a.m. (CET)
Please use one of the following dial-in-numbers:
+49 69 247 501 899 (Germany)
+44 203 147 48 61 (UK)
+47 24 159 585 (Norway)
Vizrt will hold a Capital Market Day at the company's headquarters in Bergen on June 9, 2010.
The Q2 2010 results will be released on August 12, 2010.
Contacts
CEO
+47 795 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