Vizrt Q1 2013 Revenue Declines 15 Percent Due to Weakness in Europe

Posted by Joe Zaller
May 09 2013

Vizrt reported that its revenue for the first quarter of 2013 was $27m, down 15% versus the same period a year ago, and down 11% versus the previous quarter.

The company said that market and economic conditions in Europe continue to be difficult, attributable mainly to falling domestic demand for goods and services and lower exports, and that this general weakness strongly affected the company’s sales in the EMEA region during the quarter.

Gross margins for the first quarter of 2013 were 65%, down from 67% last year and down from 70% last quarter.  In its earnings presentation, the company highlighted the fact that its gross have remained “relatively stable,” despite declining revenue.  Company management said this was due to a “shift in product mix towards higher margin broadcast graphics activities, and by a continued focus on cost control.”

Operating expenses for the quarter were $15.5m, down 9% versus last year due to cost control measures that the company has had in place for several quarters. The company said that OpEx was kept at a similar level to the 2012 average quarterly run rate, leading to continued profitability and cash generation from operating activities, though at lower levels. Specifically:

  • R&D expenses in the quarter were $5m (19% of revenue), down 2% versus the same period ago, and up 31% versus the previous quarter

 

  • Sales and marketing expenses in the quarter were $7.7m (29% of revenue), down 14% versus the same period a year ago, and down 1% versus the previous quarter

 

  • General and administrative expenses in the quarter were $2.8m (10% of revenue), down 8% versus the same period a year ago, and up 4% versus the previous quarter.

 

EBITDA was $3.1m for the quarter, down 44% from $5.6m last year, and down 65% versus the previous quarter.   The EBITDA margin for the quarter was 12% versus and EBITDA margin of 18% last year and 29% last quarter.

Net profit for the quarter was $1.18m, down 45% versus the same period a year ago, and up 28% versus the previous quarter.

 

Product Line Results for the Quarter:

  • Broadcast Graphics (BG) accounted for $21.9m during the quarter (81% of total revenue), a decline of 12% versus the same period ago, and a decline of 7% versus the previous quarter. The BG order backlog was $26.8m, up 7% versus last year, and up 6% versus the previous quarter. The company said that broadcast graphics performed in-line with its expectations.

 

  • Media Asset Management (MAM) revenue in the quarter was $4.2m (16% of total revenue), down 12% versus the same period a year ago, and down 7% versus last quarter. The company said that MAM was strongly affected by uncertainties in Europe. The MAM order backlog was $18,5m, down 12% versus the same period a year ago, and up 1% versus the previous quarter. Vizrt management said there has been a “further lengthening of investment decision-making cycles” for MAM deployments, especially for larger projects.  Vizrt said it has not lost MAM deals, instead projects have been postponed or are still under negotiation, and therefore still in the company’s MAM pipeline.

 

  • Online & Mobile (OLM) revenue in the quarter was $876,000 (3% of total revenue), down 44% versus last year and down 31% versus last quarter.  The OLM order backlog was $3.7m, down 6% versus last year, and up 5% versus the previous quarter. The company said that ONM performance “continues to be below expectations and, as announced on April 30, 2013, an additional impairment charge of MUSD 3.0 for 2012 was recorded, following which no goodwill or intangible assets remain on Vizrt’s balance sheet in relation to the Escenic acquisition.”

 

Geographic Performance for the Quarter:

Vizrt had a rough quarter in EMEA, traditionally its strongest market, but this weakness was offset partially by a strong performance from the Americas region.

  • Revenue from EMEA was $11.1m (41% of total revenue), down 38% versus the same period last year and down 20% versus last quarter

 

  • Americas revenue was $9.4m (35% of total revenue), up 32% versus last year, and up 18% versus last quarter.  The company said that “although certain macro-economic conditions in the U.S., such as reduced government spending, have had a somewhat dampening effect on GDP development, overall the region posted solid economic growth.”

 

  • APAC revenue was $6.5 (24% of total revenue), down 3% versus last year, and down 23% versus last quarter

 

The company ended the quarter with 582 employees, up from 575 last quarter, and $77.86m in cash, down 1% versus last quarter.

 

Outlook

The company said that despite economic uncertainties, it continues to see a number of positives in the market. Though management expects the economic uncertainties to continue affecting the business climate into 2013, it still believes that the second half of the year will start to show an improvement in the global economy in general, and bring a return to growth for Vizrt.  Focus for 2013 will remain on cost control, without compromising the company’s ability to innovate and support our strategic growth ambitions.

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Related Content:

Press Release: Vizrt Reports Q1 2013 Results

Vizrt: Q1 2013 Earnings Call Presentation

Broadcast Vendor M&A: Vizrt Buys Remaining Shares of LiberoVision

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

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

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