Sandvine Corporation
TSX : SVC
AIM : SAND

Sandvine Corporation

April 11, 2007 07:00 ET

Sandvine Reports Revenue of $15.4 Million and Earnings Per Share of $0.045 in Q1 2007

Company reaffirms annual revenue guidance

WATERLOO, ONTARIO--(CCNMatthews - April 11, 2007) - Sandvine (TSX:SVC)(AIM:SAND), a leading provider of intelligent broadband network solutions for DSL, FTTH, cable, and wireless carriers, grew first quarter 2007 revenue to $15.4 million, 121% higher than $6.9 million in Q1 2006, and grew fully diluted earnings per share to $0.045 from $(0.002) in Q1 2006. The record results were driven by strong sales in the quarter and increased gross margins due to higher follow-on software sales in Q1 2007 from the Company's existing customers. All figures are in Canadian dollars unless otherwise noted.

"While we are pleased to report strong earnings to our shareholders, Sandvine is still primarily focused on making increased investments with the goals of gaining market share and building on our technology lead. With 12 new customers in the quarter and our groundbreaking PTS 14000 setting new performance benchmarks, Q1 2007 was very successful with respect to these goals," said Dave Caputo, Sandvine's President and CEO.



FINANCIAL HIGHLIGHTS
Millions of dollars, except per share data and where otherwise indicated
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Q1 2007 Q1 2006 Change Q4 2006 Change
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Total Revenue 15.4 6.9 121% 9.2 66%
Gross Margin 81% 74% 7 pts. 71% 10.5 pts.
Total Expenses 7.2 5.4 32% 6.9 3%
Net Income (Loss) 5.9 (0.2) - 0.1 -
FD EPS 0.045 (0.002) - 0.001 -
Total Cash(i) 72.4 14.2 410% 57.1 27%
Working Capital 72.1 18.7 285% 67.1 7%
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(i) Cash, cash equivalents and marketable securities


STRATEGIC UPDATE

In Q1 2007, Sandvine continued to make significant progress on several core strategies:

- Continued investment in sales and marketing: Won 12 new customers (seven DSL, four cable and one wireless). Sandvine now has over 80 customers, representing more than 40 million broadband subscribers, in over 30 countries, including seven of the top 20 broadband service providers in the US.

- Increased focus on larger customers: Won another Tier 1 cable MSO in the United States.

- Increased focus on emerging access technologies: Won a new wireless access technology customer.

- Continued investment in research and development: Major customers, including Hanaro in Korea, are clustering Sandvine's PTS 14000s at their highest traffic network locations to inspect and apply policy at up to 80 Gbps-a new performance benchmark.

OUTLOOK

Sandvine continues to expect total revenue for fiscal 2007 in the range of $50 million to $60 million, based on the following assumptions:

- In aggregate, existing customers will contribute as much revenue in fiscal 2007 as they did in fiscal 2006.

- One or two Tier 1 DSL companies will begin deploying Sandvine's solutions in fiscal 2007.

- Up to 20% of revenue will be delivered through Sandvine's sales channel partners.

CONFERENCE CALL

The Company will discuss its Q1 2007 results and the 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 site (http://www.sandvine.com/about_us/investors.asp) where listeners may also download an accompanying slide presentation.



Local dial-in number 416-644-3415
Toll-free North America 800-732-9307
Toll-free United Kingdom 00-800-0000-2288


A replay of the call will be available at 416-640-1917 or toll-free at 877-289-8525 (passcode 21224778#) from approximately 10:30 a.m. Eastern time today through April 18.

ABOUT SANDVINE

Sandvine's award-winning network equipment helps DSL, FTTH, cable, and wireless broadband service providers characterize what is really happening on their networks, enabling polices that improve customer satisfaction, reduce operational costs and increase profitability. Sandvine's DPI-based policy solutions are both application and subscriber-aware, empowering service providers to better manage network traffic congestion, mitigate the proliferation of malicious traffic, and deliver QoS-prioritized multimedia services. With more than 80 customers in over 30 countries, Sandvine is enhancing the Internet experience for millions of broadband users worldwide. www.sandvine.com.

CAUTION REGARDING FORWARD LOOKING INFORMATION

Certain statements in this report which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements") and are made pursuant to the "safe harbour" provisions of such laws. Statements related to Sandvine's projected revenues, earnings, growth rates, revenue mix and product plans, in particular the statements above under the heading "Outlook", are forward-looking statements as are any statements relating to future events, conditions or circumstances. The use of terms such as "anticipated", "expected", "projected", "targeting", "estimate" 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 or achievements of Sandvine to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements. These risks and uncertainties include, without limitation, each of the following:

- The Company's revenues may fluctuate from quarter to quarter and year to year depending upon sales cycles and customer demand;

- 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 on a small number of key customers for a large percentage of our revenues;

- 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; and

- The Company is dependent on its suppliers to ensure continuous supply on terms that allow the Company to fulfill demand, maintain quality and achieve its projected gross margins.

Sandvine does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.

Additional risks and uncertainties that relate to an investment in the securities of the Company and which can also impact upon forward-looking information which may be contained in this release can be found in the Company's Annual Information Form and other regulatory filings which are available on SEDAR at www.sedar.com.



Sandvine Corporation
Consolidated Interim Statement of Operations and Deficit
For the three month period ended February 28, 2007
(in Canadian dollars, amounts in thousands, except share and per share
data)

February 28 February 28
2007 2006
$ $
(unaudited) (unaudited)

Revenue
Product 13,558 6,193
Service 1,817 756
--------------------------

15,375 6,949

Cost of sales
Product 2,574 1,621
Service 347 183
--------------------------

2,921 1,804
--------------------------

Gross margin 12,454 5,145
--------------------------

Expenses
Sales and marketing 3,051 1,829
Research and development 2,643 2,439
General and administrative 752 842
Stock based compensation 184 46
Amortization 520 245
--------------------------

7,150 5,401
--------------------------

Income (loss) from operations 5,304 (256)

Interest and other income 639 82
--------------------------

Income (loss) before provision for income taxes 5,943 (174)

Provision for income taxes 71 1
--------------------------

Net income (loss) for the period 5,872 (175)

Deficit - Beginning of period (18,483) (18,101)
Transition adjustment on adoption of financial
instruments standards (78) -
--------------------------

Deficit - End of period (12,689) (18,276)
--------------------------
--------------------------

Earnings (loss) per share
Basic 0.048 (0.002)
--------------------------
--------------------------
Diluted 0.045 (0.002)
--------------------------
--------------------------

Basic weighted average number of shares
outstanding 122,751,511 87,746,777
Diluted weighted average number of shares
outstanding 129,367,292 87,746,777



Sandvine Corporation
Consolidated Interim Balance Sheets
As at February 28, 2007
(in Canadian dollars, amounts in thousands, except share and per share
data)

February 28 November 30
2007 2006
$ $
(unaudited) (audited)
Assets

Current assets
Cash and cash equivalents 9,585 19,564
Marketable securities 62,855 37,515
Accounts receivable 6,665 4,421
Other receivables 1,032 1,941
Inventory 12,785 9,625
Prepaid expenses 473 365
--------------------------

93,395 73,431

Capital assets 7,371 6,115
--------------------------

100,766 79,546
--------------------------
--------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 4,841 5,591
Current portion of deferred revenue 16,493 700
--------------------------

21,334 6,291

Deferred revenue 94 88
--------------------------

21,428 6,379
--------------------------

Shareholders' equity

Share capital 91,441 91,247
Contributed surplus 580 403
Accumulated other comprehensive income 6 -
Deficit (12,689) (18,483)
--------------------------

79,338 73,167
--------------------------

100,766 79,546
--------------------------
--------------------------



Sandvine Corporation
Consolidated Interim Statements of Cash Flows
For the three month period ended February 28, 2007
(in Canadian dollars, amounts in thousands, except share and per share
data)

February 28 February 28
2007 2006
$ $
(unaudited) (unaudited)

Cash provided by (used in)

Operating activities
Net income (loss) for the period 5,872 (175)
Items not affecting cash
Amortization 520 245
Foreign exchange (gain) loss (326) 88
Stock-based compensation 184 46
--------------------------

6,250 204

Changes in non-current balances 6 (154)
Changes in non-cash working capital balances 10,695 2,352
--------------------------

16,951 2,402
--------------------------

Investing activities
Purchase of capital assets (1,777) (700)
Net (purchase) of marketable securities (25,340) (8,466)
--------------------------

(27,117) (9,166)
--------------------------

Financing activity
Proceeds from the issuance of share capital 187 126
--------------------------

Net (decrease) in cash during period (9,979) (6,638)

Cash and cash equivalents - Beginning of period 19,564 9,755
--------------------------

Cash and cash equivalents - End of period 9,585 3,117
--------------------------
--------------------------

Contact Information

  • INVESTOR RELATIONS CONTACT
    Sandvine
    Rick Wadsworth
    (519) 880-2400 ext. 3503
    Email: rwadsworth@sandvine.com
    or
    MEDIA CONTACT
    Sandvine
    Tanieu Tan
    (519) 880-2232
    Email: ttan@sandvine.com
    Website: www.sandvine.com
    or
    UK CONTACT
    Buchanan Communications
    James Strong/Jeremy Garcia
    +44 20 7466 5000
    or
    AIM NOMAD
    Canaccord Adams Limited
    Chris Bowman/Andrew Chubb
    + 44 020 7050 6500