Vizrt Revenue Declines 6 Percent in Q2 2012 Due to Weakness in EMEA

Posted by Joe Zaller
Aug 10 2012

Vizrt reported that its revenue for the second quarter of 2012 was $30.15m, a decline of 6% versus the same period a year ago, and a decline of 5% versus the previous quarter.

The net loss for the second quarter of 2012 was $4.4m, compared to a net profit of $4.5m last year, and a net profit of $2.1m last quarter.  The loss in the quarter includes a non-cash impairment charge of $7.8m relating to the 1998 purchase of Escenic.

On an operating basis, the company posted a profit of $3.9m, down 24% from last year, and down 3% versus last quarter.  

EBITDA for the second quarter of 2012 was $5.4m, down 15% versus last year and a down 2% versus last quarter.   The EBITDA margin for the quarter was 18% versus 20% last year and 18% last year.

The results are slightly above the high end of the range the company provided in a profit warning in early July 2012.  At that time Vizrt management estimated that its revenues for the second quarter 2012 would be in the range of $28m to $30m, and that EBITDA for Q2 and the full year 2012 would be impacted.

Gross margins for the second quarter of 2012 were 66%, flat with last year and down from 67% last quarter. 

Operating expenses for the quarter were $15.9m, essentially flat with last year, despite the  fact that the company has added 22 employees since last year, primarily as a result of the purchase of LiberoVision in Q3 2011.  Operating expenses were down 7% versus the previous quarter

According to Vizrt CEO Martin Burkhalter, “In times of uncertainty, OPEX control becomes an important operational focus.  Our discipline has allowed us to protect margins and continue with the healthy cash generation, even though we have continued to invest in R&D.”

The order backlog at the end of the quarter was $48.5m, down 3% versus the same period a year ago, and down 3% versus last quarter.

The company ended the second quarter of 2012 with 582 employees and $69.6m in cash.

 

Product Line Results for the Quarter:

  • Broadcast Graphics (BG) revenue in the quarter was $23m (76% of total revenue), down 4% versus last year and down 8% versus last quarter.  The BG order backlog was $26.5m, down 3% versus last year, and up 6% versus last quarter.

 

  • Media Asset Management (MAM) revenue in the quarter was $5.4m (18% of total revenue), down 10% versus the same period a year ago, and up 4% versus last quarter. The MAM order backlog was $18, up 9% versus the same period a year ago, and down 14% versus last quarter.

 

  • Online & Mobile (OLM) revenue in the quarter was $1.7m (6% of total revenue), down 22% versus last year and up 9% versus last quarter.  The OLM order backlog was $4m, down 32% versus last year, and up 2% versus last quarter.

 

 

Geographic Performance for the Quarter:

  • Revenue from EMEA was $14.9m (49% of total revenue), down 17% versus both last year and last quarter. The company said that the EMEA region is suffering from economic uncertainties.

 

  • Americas revenue was $7.3m (24% of total revenue), up 7% versus last year, and up 4% versus last quarter

 

  • APAC revenue was $7.9 (26% of total revenue), up 7% versus last year, and up 17% versus last quarter.  The company said revenue growth in APAC was solid, despite being affected by a weak performance in India, which is suffering from adverse currency effects of the Rupee vs. the US-Dollar, as well as other economic issues.

 

 

Results for first half of 2012

Vizrt’s revenue for the first six months of 2012 was $61.9m, up 3% versus the first half of 2011.  The net loss for the first half of the year was $2.2m, versus net profit of %6.6m for the first half of 2011.  The net loss in the first half of the year was due to the non-cash impairment charge of $7.8m relating to the 1998 purchase of Escenic.

EBITDA for the first half of 2012 was $11m, up 6% verus the same period last year.  The EBITDA margin was 18%, % compared to 17% last year.

Gross margins for the first half of the year were 66%, up from 64% in H1 2011.

Operating expenses for the first six months were $33.1m, up 6% versus last year.

 

Business Outlook:

Last quarter, the company reiterated its earlier guidance of 13% revenue growth and improving margins based on a strengthening outlook. This changed in July 2012, when the company issued a profit warning. 

Burkhalter issued a cautions statement about the company’s prospects for the remainder of 2012.

”As we announced in our July 3 press release, our revenues were impacted by the rearing up of the economic uncertainties, predominantly in EMEA and the Americas. Events in the Eurozone, as well as the uncertain outlook of the US economy, which appears to be recovering more slowly than expected, have again started to dominate the investment outlook of the media industry.  Though none of the running projects have been cancelled or delayed, we experienced a noticeable cutback in both new tenders and orders.”

“Considering the impact of economic uncertainties on the business climate, it is too early to provide accurate quantitative guidance for the remainder of this year. As we shared in our press release of July 03, we anticipate that we will not be able to match the guidance for the full year that we published previously, as we do not expect that market conditions will improve materially during the second half of the year.  However, assuming the business climate does not deteriorate significantly from its current state, we expect that our strict control of OPEX will allow us to maintain our margins roughly at the current levels.  Going forward, we will continue on a path of financial prudence and discipline, while at the same time working on further improving our offering to the broadcast and general media industries, who continue to look for technology that will help them reach their financial goals and strategic objectives.  As we are in very robust financial health, we are in a position where we can continue to develop our leadership in the digital media industry, which is a great position to be in and one that gets recognized by the market.”

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Related Content:

Press Release: Vizrt Reports H1 and Q2 2012 Results – Margins protected despite lower than expected Q2 revenues

Vizrt Warns of Lower Revenue Expectations for 2012 Due to Weakness in EMEA and Americas

Vizrt  Q2 2012 Analyst Presentation  http://dcft.co/O81uC9

Previous Quarter: Vizrt Revenue Increases 13% in Q1 2012 Driven by Strong Performance in Graphics and MAM

Previous Year: Vizrt Q2 2011 Profit Triples as Revenue Jumps 32 Percent

More Broadcast Vendor M&A: Vizrt Completes Acquisition of LiberoVision

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