Vizrt Grows Operating Margin Despite Lower Revenue in Q3 2012

Posted by Joe Zaller
Nov 18 2012

Broadcast graphics and media asset management (MAM) provider Vizrt reported that its revenue for the third quarter of 2012 was $29.6m, down 7% versus the same period a year ago, and a decline of 2% versus the previous quarter.

Net income for the third quarter of 2012 was $3m, compared to net income of $3.3m last year, and a net loss of $4.4m last quarter, when the company took a $7.8m non-cash impairment charge relating to the 1998 purchase of Escenic.

On an operating basis, the company posted a profit of $4.3m, up 14% from last year, and up 12% versus last quarter.

EBITDA for the third quarter of 2012 was $5.9m, up 5% versus last year and up 8% versus last quarter.   The EBITDA margin for the quarter was 20% versus 18% last year and 18% last year.

Gross margins for the third quarter of 2012 were 66%, flat with last year last quarter.

Operating expenses for the quarter were $15.265m, down 12% versus last year, and down 5% versus last quarter.

The order backlog at the end of the quarter was $47.8m, down 2% versus the same period a year ago, and down 2% versus last quarter.

The company ended the third quarter of 2012 with 575 employees, compared to 582 last quarter, and 591 last year, The company said the headcount reduction is primarily the result of strict recruitment policy.

At the end of the quarter, Vizrt had no debt and $75.4m in cash, up from $73.1m last year, and $69.6m last quarter.

 

Product Line Results for the Quarter:

  • Broadcast Graphics (BG) revenue in the quarter was $22.7m (77% of total revenue), down 12% versus last year and down 2% versus last quarter.  The BG order backlog was $24.9m, up 1% versus last year, and down 6% versus last quarter.

 

  • Media Asset Management (MAM) revenue in the quarter was $5.8m (20% of total revenue), up 35% versus the same period a year ago, and up 8% versus last quarter. The MAM order backlog was $18.9, down 4% versus the same period a year ago, and up 5% versus last quarter.

 

  • Online & Mobile (OLM) revenue in the quarter was $1.1m (4% of total revenue), down 34% versus last year and down 36% versus last quarter.  The OLM order backlog was $4m, down 6% versus last year, and up flat with versus last quarter.

 

Geographic Performance for the Quarter:

The company said that “the economic slowdown in most Euro zone countries continued to impact our results. The Americas and APAC regions, however, recorded growth.”  Specifically:

  • Revenue from EMEA was $13.6m (46% of total revenue), down 23% versus last year and down 9% versus last quarter.

 

  • Americas revenue was $8m (27% of total revenue), up 19% versus last year, and up 9% versus last quarter

 

  • APAC revenue was $8 (27% of total revenue), up 8% versus last year, and up 1% versus last quarter

 

Year-to-date Results

Vizrt’s revenue for the first nine months of 2012 was $91.5m, essentially flat versus the first nine months of 2011.

Net income for the first nine months of 2012 was $800,000, down significantly from net income of $10m for the first nine months of 2011. Year-to-date net income was impacted by a Q2 2012  non-cash impairment charge of $7.8m relating to the 1998 purchase of Escenic.

EBITDA for the first nine months of 2012 was $16.9m, up 6% versus the same period last year.  The year-to-date EBITDA margin was 18%, compared to 17% last year.

Gross margins for the nine months of the year were 66%, up from 65% last year.

Operating expenses for the first nine months of 2012 were $48.33, flat with last year.

 

Business Outlook:

At the beginning of 2012, the company reiterated 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.

Martin Burkhalter, Vizrt CEO, commented on the results: “As discussed at the time of our Q2 release, we continue to experience challenging market conditions.  The uncertainties in the general economic environment, most notably in Europe, have led to a lengthening of investment decision making cycles.  Against this background, we recorded revenues nearly equal to last year’s first nine months, and down 7% compared to Q3 of last year.  Furthermore, we have managed to improve our margins, with EBITDA and EBIT coming in at 20% and 15%, of revenues respectively, for the quarter.”

“Product wise, performance this past quarter was backed by a strong showing in MAM, especially in APAC, whereas BG slightly increased Y-o-Y.  Revenues for ONL suffered, down significantly, which is to be expected as media houses are less likely to make what they would regard as non-core investments in times of uncertainty. For the regions, the main weakness, as expected, was in Europe, while the U.S. posted growth both Year on Year and Quarter on Quarter.”

“Despite the experienced softness in the market, we managed to increase our cash position to over $75m, a nearly $6m increase for the quarter.  We believe these figures show the depth and strength of our offering.”

“Another evidence to the strength of our offering is that Vizrt was once again the vendor of choice for broadcasters looking to capture audiences in relation to the U.S. presidential elections. In the United States alone, six national networks and more than 150 local channels covered the election with Vizrt tools – more than ever before.”

“Going forward, we expect that the general economic environment will continue to influence market conditions and prolong decision making cycles, especially in Europe.  However, our healthy backlog together with our strong product offering, give us the confidence that we should be capable of delivering a solid result for the full year, despite the challenging market conditions”.

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Related Content:

Press Release: Vizrt Reports 9 Months and Q3 2012 Results

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

Previous Year: Vizrt Reports Q3 2011 Results

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