Sandvine Corporation
TSX : SVC
AIM : SAND

Sandvine Corporation

April 09, 2009 07:00 ET

Sandvine Reports Q1 2009 Results

WATERLOO, ONTARIO--(Marketwire - April 9, 2009) - Sandvine Corporation, (TSX:SVC)(AIM:SAND) a leading provider of intelligent broadband network solutions for DSL, cable, FTTx, fixed wireless and mobile operators, today reported first quarter fiscal 2009 revenue of $18.6 million, which is 124% higher than the same quarter last year and even with Q4 2008 revenue.

First quarter 2009 net loss was $4.8 million, or $0.035 per diluted share. On a non-GAAP1 basis, which excludes certain non-cash items including the impact of a $2.4 million goodwill impairment charge, the Company's net loss was $1.2 million, or $0.009 per diluted share. A reconciliation of GAAP to non-GAAP1 results is included as Table 1. The Company's cash and marketable securities at February 28, 2009 totaled $92.6 million, unchanged from the level at November 30, 2008.

Sandvine won nine new service provider customers in the first quarter, including three of the top 100 largest wireless service providers in the world, and realized record revenues from the wireless market. Revenue from the cable market was at its highest level in more than a year.

"This was a good quarter for Sandvine which included record first quarter revenues. Our momentum in the wireless and DSL markets continued, and, after a tough 2008, the cable market has once again shown some strength. We maintained healthy revenue and cash levels and continued to diversify our business," said Dave Caputo, Sandvine's president and chief executive officer.



FINANCIAL HIGHLIGHTS (All amounts are in Canadian dollars)
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Millions of dollars, except
per share data and where
otherwise indicated Q1 2009 Q1 2008 Change Q4 2008 Change
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Revenue 18.6 8.3 124% 18.6 -
Gross Margin percent 76% 75% 1 pp 82% -6 pp
R&D, SG&A 14.3 12.4 15% 14.8 -4%
Net Loss (4.8) (7.0) (1.8)
Non-GAAP(1) Loss (1.2) (5.9) (0.1)
Diluted Loss Per Share (0.035) (0.051) (0.013)
Non-GAAP(1) Diluted Loss Per
Share (0.009) (0.043) (0.000)
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STRATEGIC UPDATE and OUTLOOK

Sandvine is focused on growing its service provider customer base and the number of broadband subscribers they represent. The Company has over 150 service provider customers in over 60 countries serving more than 80 million fixed line broadband subscribers and a rapidly growing number of mobile data subscribers.

In the first quarter Sandvine won nine new customers.

- By access technology: four mobile data operators, two DSL service providers, two cable companies and one FTTx service provider.

- By geography: five from EMEA, two from North America, and one each from Asia Pacific and Caribbean and Latin America. Sandvine made initial sales to customers in 3 new countries.

- Large customers: initial orders from two fixed line broadband service providers, each with over one million broadband subscribers and three new wireless customers that are in the Top 100 worldwide, by voice subscriber count.

- Sales channel: six customers were won through reseller partners, including three that were won through our relationships with global network equipment vendors.

CONFERENCE CALL

A copy of the results will be available from the Investor Relations section of Sandvine's website. The Company will discuss the results and business outlook on a conference call at 8:30 a.m. Eastern time (1:30 BST) today. A webcast will also be available from the Investor Relations section of Sandvine's website.



Date April 9, 2009
Time 8:30 a.m. Eastern (1:30 BST)
Local dial-in number 416 644 3414
Toll-free North America 800 733 7560
Toll-free United Kingdom 00 800 2288 3501


A replay of the call will be available at 416-640-1917 or toll-free at 877-289-8525 (passcode 21301114#) from approximately 10:30 a.m. Eastern time on the day of the call through April 16.

ABOUT SANDVINE

Sandvine is focused on protecting and improving the quality of experience on the Internet. Our award-winning network equipment and solutions help cable, DSL, FTTx, fixed wireless and mobile operators better serve their subscribers and understand network trends; offer new services; mitigate malicious traffic; manage network congestion; and deliver QoS-prioritized multimedia services. With customers in over 60 countries serving over a hundred million broadband and wireless subscribers, Sandvine is enhancing the Internet experience worldwide. www.sandvine.com

CAUTION REGARDING FORWARD LOOKING INFORMATION

Certain statements in this press release which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements related to Sandvine's projected revenues, earnings, growth rates, revenue mix and product plans are forward looking statements as are any statements relating to future events, conditions or circumstances. The use of terms such as "may", "anticipated", "expected", "projected", "targeting", "estimate", "intend" and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance, achievements or developments of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and the Company does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.

Many factors could cause the actual results of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements, including, without limitation, each of the following factors, and those factors which are further discussed in the Company's Annual Information Form ("AIF"), a copy of which is available on SEDAR at www.sedar.com.

- The Company's revenues may fluctuate from quarter to quarter and year to year depending upon sales cycles, customer demand and the timing of customer purchase decisions;

- The Company's gross margins may fluctuate from period to period depending upon a variety of factors including product mix in the quarter, competitive pricing pressures and the level of sales generated through indirect channels;

- The Company is dependent upon and expects to continue to derive a large percentage of its revenue from both a small number of key customers and key reseller partners, none of whom are bound to any fixed purchase commitment or exclusivity obligations;

- The Company faces intense competition in markets where there are typically several different competing technologies and rapid technological changes;

- The Company's growth is dependent on the development of the market for intelligent broadband network management solutions and the decisions of the Company's target customers to deploy and further invest in those technologies, which decisions may be impacted upon by changing requirements in the area of broadband network management policies and/or changes in the regulatory framework to which the Company's customers may be subject;

- Overall economic conditions and the availability of credit may negatively impact the Company's customers and suppliers.

- The majority of the Company's operating expenses are denominated in Canadian dollars, U.S. dollars and New Israeli Shekels while its revenues and cost of sales are generally denominated in U.S. dollars. The Company's earnings are impacted by fluctuations in the exchange rates between these and other currencies in which the Company trades;

- The introduction and sale of new products by the Company may impact the timing of revenue recognition which could raise greater revenue fluctuations from quarter to quarter than has been experienced historically.

Table 1

(1) Non-GAAP Financial Measures

The following table provides a reconciliation of non-GAAP net income (loss) and related per share amounts to GAAP net income (loss) and the related per share amounts for the period indicated. These non-GAAP financial measures which are used internally by management to evaluate the Company's ongoing performance exclude the impact of stock based compensation, amortization of intangible assets acquired through business acquisitions and goodwill impairment expenses (collectively referred to as "Excluded Expenses"). The Company provides these non-GAAP financial measures as it is the Company's view that the Excluded Expenses are either (i) not part of its normal day-to-day operations and/or (ii) represent a "non-cash" accounting charge that does not deplete its cash resources. Accordingly, the Company believes that such financial measures may also be useful to investors in enhancing their understanding of the Company's operating performance. Non-GAAP net income (loss) is not recognized under Canadian GAAP and does not have a standardized meaning prescribed by Canadian GAAP. Therefore it is unlikely to be comparable to similarly titled measures reported by other issuers. Non-GAAP financial measures should be considered in the context of the Company's GAAP results.



----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three month period ended
----------------------------------------------------------------------------
February 28, February 29,
2009 2008
$ $
Amounts in thousands

Net loss (4,795) (6,977)
Stock based compensation expense 816 703
Amortization of intangible assets 400 400
Goodwill impairment 2,425 -
----------------------------
Net loss excluding the impact of the
items specified above (1,154) (5,874)
----------------------------
----------------------------


----------------------------------------------------------------------------
----------------------------------------------------------------------------

Three month period ended
February 28, February 29,
2009 2008
----------------------------------------------------------------------------

Basic and diluted loss per share (0.035) (0.051)
Impact on basic and diluted earnings per 0.026 0.008
share of Excluded Expenses
----------------------------
Basic and diluted loss per share excluding
the impact of Excluded Expenses (0.009) (0.043)
----------------------------
----------------------------



Sandvine Corporation
Consolidated Balance Sheets
As at February 28, 2009
(in Canadian dollars, amounts in thousands) (unaudited)

February 28 November 30
2009 2008
$ $

Assets

Current assets
Cash and cash equivalents 9,498 3,872
Marketable securities 83,104 88,676
Accounts receivable 14,540 19,202
Inventory 15,135 14,960
Other 1,815 1,513
-------------------------------
124,092 128,223
-------------------------------

Non current assets
Plant and equipment 14,249 12,595
Intangible assets 6,311 6,809
Goodwill - 2,425
-------------------------------
20,560 21,829
-------------------------------

144,652 150,052
-------------------------------
-------------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 7,396 8,941
Current portion of deferred revenue 8,987 8,951
-------------------------------
16,383 17,892
-------------------------------

Non current liabilities
Deferred revenue 250 186
Future tax liability 264 196
-------------------------------
514 382
-------------------------------

16,897 18,274
-------------------------------

Shareholders' equity
Share capital 146,479 145,103
Contributed surplus 5,048 5,608
Accumulated other comprehensive income 2 46
Deficit (23,774) (18,979)
-------------------------------
127,755 131,778
-------------------------------

144,652 150,052
-------------------------------
-------------------------------



Sandvine Corporation
Consolidated Statements of Operations
For the three month period ended February 28, 2009
(in Canadian dollars, amounts in thousands, except share and per share data)
(unaudited)

February 28 February 29
2009 2008
$ $
Revenue
Product 14,864 4,759
Service 3,713 3,529
-------------------------------
18,577 8,288
-------------------------------

Cost of sales
Product 3,782 1,491
Service 757 573
-------------------------------
4,539 2,064
-------------------------------

Gross margin 14,038 6,224
-------------------------------

Expenses
Sales and marketing 5,251 3,982
Research and development 7,098 6,139
General and administrative 1,912 2,324
Stock based compensation 816 703
Amortization of intangible assets 498 524
Depreciation 1,050 687
Goodwill impairment 2,425 -
-------------------------------
19,050 14,359
-------------------------------
Loss from operations (5,012) (8,135)

Interest and other income 332 1,178
-------------------------------
Loss before provision for income taxes (4,680) (6,957)
-------------------------------

Provision for income taxes
Current 47 20
Future 68 -
-------------------------------
115 20
-------------------------------

Net loss for the period (4,795) (6,977)
-------------------------------
-------------------------------
Loss per share
Basic and diluted (0.035) (0.051)
Basic and diluted weighted
average number of shares outstanding 135,553,729 136,849,460
-------------------------------
-------------------------------



Sandvine Corporation

Consolidated Statements of Cash Flows
For the three month period ended February 28, 2009
(in Canadian dollars, amounts in thousands, except share and per share data)
(unaudited)

February 28 February 29
2009 2008
$ $
Cash provided by (used in)

Operating activities
Net loss for the period (4,795) (6,977)
Items not affecting cash
Amortization of intangible assets 498 524
Depreciation 1,091 697
Foreign exchange (gain) loss (45) 73
Stock-based compensation 816 703
Goodwill impairment 2,425 -
Future income tax provision 68 -
Other - (328)
--------------------------

58 (5,308)

Changes in non-current balances 64 (26)
Changes in non-cash working capital balances 2,720 244
--------------------------
2,842 (5,090)
--------------------------

Investing activities
Purchase of plant and equipment (2,745) (1,451)
Purchase of marketable securities (212,057) (200,858)
Sale of marketable securities 217,586 208,902
--------------------------
2,784 6,593
--------------------------

Financing activities
Proceeds from the issuance of share capital - 161
--------------------------

- 161
--------------------------

Net increase in cash during period 5,626 1,664

Cash and cash equivalents - Beginning of period 3,872 7,878
--------------------------

Cash and cash equivalents - End of period 9,498 9,542
--------------------------
--------------------------

Cash and cash equivalents are represented by
Balances with banks 2,360 6,766
Cash equivalents 7,138 2,776

Contact Information

  • INVESTOR RELATIONS
    Sandvine
    Rick Wadsworth
    519 880 2400 ext. 3503
    rwadsworth@sandvine.com
    or
    MEDIA CONTACT
    Sandvine
    Jennifer Ross
    519 880 2232
    jross@sandvine.com
    or
    AIM NOMAD
    Canaccord Adams Limited
    Neil Johnson/Andrew Chubb
    +44 0207 050 6500