Vizrt Posts Lower Revenue, but Higher Margins and Profit in Q4 and Full Year 2012

Posted by Joe Zaller
Feb 21 2013

Broadcast graphics and media asset management (MAM) provider Vizrt reported that its revenue for the fourth quarter of 2012 was $30.3m, down 9% versus the same period a year ago, and up 2% versus the previous quarter. 

The company attributed the revenue decline to weakness in the European market.

On an operating basis, the company posted a profit of $5.6m, down 22% from last year, and up 30% versus last quarter.

Despite the lower top line number, the company’s EBITDA for the fourth quarter of 2012 was $8.9m, flat with last year and up 51% versus last quarter.   The translates to an EBITDA margin for the quarter of 29% versus 27% last year and 20% last year.

Gross margins for the fourth quarter of 2012 were 70%, up from 69% last year, and 66% last quarter.

Operating expenses for the quarter were $14.28m, down 11% versus last year, and down 6% versus last quarter.

R&D expenses in the quarter were $3.84m, down 19% versus last year, and down 14% versus the previous quarter.

Sales and marketing expenses in the quarter were $7.76m, down 3% versus last year, and down 4% versus the previous quarter.

G&A expenses in the quarter were $2.68m, down 17% versus last year, and down 1% versus the previous quarter.

The order backlog at the end of the quarter was $47.1m, up 2% versus the same period a year ago, and down 1% versus last quarter.

The company ended the fourth quarter of 2012 with 575 employees, compared to 585 last quarter, and 575 last year The company said that the year-over-year decrease in headcount is due to the its strict recruitment policy in 2012, which limited both replacements and new recruitments.

At the end of the quarter, Vizrt had no debt and $78.9m in cash, up from $73.1m last year, and $75.4m last quarter.

 

Product Line Results for the Quarter:

  • Broadcast Graphics (BG) revenue in the quarter was $23.6m (78% of total revenue), down 12% versus last year and up 4% versus last quarter.  The BG order backlog was $25.3m, up 1% versus last year, and up 2% versus last quarter.

 

  • Media Asset Management (MAM) revenue in the quarter was $5.4m (18% of total revenue), up 12% versus the same period a year ago, and down 7% versus last quarter. The MAM order backlog was $18.3, up 9% versus the same period a year ago, and down 3% versus last quarter.

 

  • Online & Mobile (OLM) revenue in the quarter was $1.3m (4% of total revenue), down 29% versus last year and up 16% versus last quarter.  The OLM order backlog was $3.5m, down 24% versus last year, and down 10% versus last quarter.

 

Geographic Performance for the Quarter:

  • Revenue from EMEA was $13.9m (46% of total revenue), down 25% versus last year and up 2% versus last quarter.

 

  • Americas revenue was $8m (26% of total revenue), up 3% versus last year, and flat versus last quarter

 

  • APAC revenue was $8.4 (28% of total revenue), up 19% versus last year, and up 5% versus last quarter

 

Full Year Results:

Revenue for the full year 2012 was $121.8m, a decline of 3% versus 2012, which was a record revenue year for the company.

Gross margins for the year were 67%, up from 66% in 201, and 62% in 2010.

EBITDA for 2012 was $25.8m, up from $24.9m in 2011. This translates to an EBITDA margin of 21%, up form 20% in 2011.

Full year 2012 R&D expenses were $18.08m, down 6% versus last year. R&D as a percentage of revenue was 15%, the same as in both 2012 and 2011. Sales and marketing expenses in 2012 were $33.36m, down 1% versus 2012. Sales and marketing expenses in 2012 were 27% of revenue. G&A expenses for the year were $11.18m, down 2% versus last year.  This equates to 9% of revenue.

EBITDA for the full year 2012 was $25.8m 24.9m (21%), an increase from $24.9m (20%) in 2011, and up from $16.1m in 2010 (15%).

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Product Line Results for the Full Year:

  • Broadcast Graphics revenues for 2012 were $94.3m or 77% of total revenues.  2012 revenue from broadcast graphics was down 3% versus 2011, but remained constant as a percentage of revenue.
  • MAM revenues for 2011 were $21.9m, up 7% versus 2011.  MAM sales accounted for 18% of total revenue in 2012, up from 15% of revenue in 2011.
  • Online & mobile revenue for 2011 was $5.7m, down 32% versus 2011. This equates to 5% of total revenues, down from 8% of revenue in 2011.

 

Geographic Performance for the Full Year:

The company said that revenue in both the Americas and APAC regions increased 9% versus 2011.  However, 2012 revenue from EMEA declined 13% versus the previous year.

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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: “Despite tough market conditions in Europe in 2012, we were able to conclude the year with nearly flat revenues compared to last year, as well as improving our margins. The decline in revenues was due to the continued market weakness in Europe, where macro-economic related uncertainties resulted in substantially longer investment decision cycles, especially with regards to larger projects. Although these effects weigh on the global business environment, we managed to increase our sales in APAC and The Americas.”

“Our margin improvement is the direct result of a strong focus on cost control, as well as an improvement of our gross margins. Despite our focus on cost control, we have not compromised our capabilities to implement our strategic objectives and further development of the company, maintaining our innovative edge, and offering prime products and services enabling our clients in achieving high quality and workflow efficient content distribution and channel differentiation.”

“As to our product lines, BG has been relatively stable. Notwithstanding the difficult market conditions we recorded further growth in MAM. We feel that broadcasters and other content owners are recognizing the importance of a file based workflow and the value of extending and expanding the economic life and usability of media assets. We expect broadcasters to continue to invest in this area and we therefore see an even stronger upside for this product line once there is a more sustainable global economic recovery. Performance of our Online business was below expectations. This product line is strongly affected by the uncertainties in the macroeconomic environment.”

“We see ourselves returning to our earlier communicated 13% target revenue growth, mid- to long-term. For 2013 we anticipate growth, though in the mid to high single digit range. Growth will come predominantly from The Americas and APAC, with Europe expected to show a modest recovery in the second half of the year. For 2013 we will maintain our focus on cost control, though as said, without compromising the strength of our organization, and we will continue to invest in expanding our product and market leadership position.”

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Related Content:

Press Release: Vizrt Reports Q4 and 2012 Results

Vizrt Q4 and Full Year 2012 Analyst Presentation

Previous Quarter: Vizrt Grows Operating Margin Despite Lower Revenue in Q3 2012

Previous Year: Vizrt Reports Record Revenue in 2011, Targets 13 Percent Growth in 2012

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