Envivio Beats Expectations in First Quarter as Public Company as Revenue Jumps 35 Percent

Posted by Joe Zaller
May 31 2012

Video encoding and transcoding specialist Envivio reported that its revenue for the first quarter of its FY 2013 was $13.4m, up 35% from the same period a year ago, and down 14% from the seasonally stronger previous quarter.  82% of revenue during the quarter came from existing customers.

The company posted a GAAP net loss for the quarter of $2.2m, or $0.17 per share, compared to a net loss of $1.2m or $0.09 per share last year, and GAAP net income of $800,000 last quarter. The company attributed the net loss in the quarter to seasonality as well as investments in product development and sales & marketing initiatives, which increased substantially during the quarter.

On a non-GAAP basis, the company posted a loss of $1.5m, or $0.12 per share, compared to a non-GAAP loss of $800,000 ($0.06 per share) last year, and non-GAAP net income of $1.2m last quarter.

The non-GAAP operating loss for the quarter was $1.5m versus a non-GAAP operating loss of $800,000 last year and a non-GAAP operating profit of $1.4m last quarter.

The results were better than the consensus estimates of analysts, who were looking for a loss of $0.18 per share on revenue of $13m. Nevertheless, the company’s stock sold off by more than 10% in early trading before climbing into positive territory by the end of the day.

Direct sales accounted for 27% of revenue in the quarter versus 39% a year ago.  The company said the increase in third-party revenue was due to large sales to two channel partners — Hauwei and Ericsson — who accounted for 18% and 11% of revenue respectively.  Sales to Hauwei were for projects in the Middle East and APAC, while sales to Ericsson were for projects in EMEA.

On a geographic basis:

  • Americas revenue was $2.4m, down 20% versus last year, and down 66% versus last quarter
  • EMEA revenue was $7.5m, up 74% versus last year and up 21% versus last quarter
  • APAC revenue was $3.5, up 35% versus last year, and up 46% versus last quarter


On a segment basis:

  • Product revenue in the quarter was $12.1m (90% of total revenue) versus $9.3m (94%) last year and $14m (90%) last quarter. 
  • Revenue from software products in the quarter was $1.06m (7.9% of total revenue), including new sales and upgrades to existing software customers.  Envivio CFO Eric Miller said that over time the company expects software-only sales to approach 20% of revenue.
  • Service and support revenue were $1.3m (10% of total revenue), up 109% versus last year, and down 19% versus last quarter.


Gross margins in the quarter were 61.7% up from 59.5% last year, and 54.8% in the previous quarter.  The company said that the year over year increase in gross margins was due to higher software-only sales, but was partially offset by lower gross margins in APAC. On a non-GAAP basis gross margins for the quarter were 61.7% versus 59.7% last year and 64.8% last quarter. Miller said the company’s long term target for gross margins is 66-68%, which he says is still a realistic goal for the company. 

Expenses in the quarter were up sharply across the board. Non-GAAP operating expenses for the quarter were $9.7m, up 45% last year, and up 13% versus last quarter. Non-GAAP R&D expenses were $2m, up 33% versus last year, and up 11% versus last quarter. Non-GAAP sales & marketing expenses were $5.6m, up 65% versus last year, up 14% versus last quarter. The company said the increase in sales and marketing costs were due to increased investments in sales and service capacity and marketing programs.  Non-GAAP G&A expenses in the quarter were $2.1m, up 17% compared to last year, and up 11% compared to last quarter.

The company ended the quarter with $75.3m in cash; and 152 employees, up from 117 employees last year and 146 employees last quarter.



Envivio says its expects its Q2 FY 2013 revenue to be in the range of $17m to $18m, with gross non-GAAP gross margins of 62% to 64%. The company gave broad profitibilty guidance, saying it non-GAAP net income / loss would be in the range of a loss of $460,000 to a profit of $720,000.


“In our first quarter as a public company, we delivered strong year-over-year revenue results, which reflect our leadership in the growing multi-screen video processing market,” said Julien Signes, president and CEO, Envivio. “In this quarter we added 17 new customers, expanded sales of our new Halo product and began deployments of satellite TV solutions. We are committed to continuing our growth strategy, and the proceeds from our IPO will provide the flexibility to expand our marketing and sales initiatives, and further develop innovative, industry-leading products.”



Related Content:

Press Release: Envivio Reports First Quarter Fiscal 2013 Financial Results

Envivio Files for $85 Million Goldman Sachs Led IPO

April 2012 Envivio S-1/A filing (IPO Documents)

Previous Quarter: Envivio Reports Revenue Was Up 69 Percent in FY 2012, Updates IPO Documents

Envivio Closes $16.5 Million Fundraising Round

Envivio D/A Filing: Disclosed newly raised funds


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