Despite Continued Weakness in Europe, Vizrt Reports Growth and Improved Margins in Q2 2013

Posted by Joe Zaller
Aug 13 2013

Vizrt reported that its revenue for the first quarter of 2013 was $31.7m, up 5% versus the same period a year ago, and up 17% versus the previous quarter.

Although the company says it continues to see softness in the European market, it had strong performances in both the Americas and APAC during the quarter.

“Considering the continued softness we experienced in our largest market, we are very pleased to have returned to growth,” said Vizrt CEO Martin Burkhalter. “Growth was driven by a strong performance for both the Americas and APAC. Growth was offset partially by continued weakness in Europe, which saw revenues decline by 9% compared to Q2 2012.

Gross margins for the second quarter of 2013 were 67%, up from 66% last year, and up from 65% last quarter.  In its earnings presentation, the company said it took a charge of $300,000 in the quarter for the amortization of intangible assets related to acquisitions.  Excluding these charges, gross margin for the quarter would have been 68%.

Vizrt management said it was able to improve its margins, despite challenging market conditions, because of the company’s “premium offering which helps customers realize their strategic objectives and add value by improving workflow efficiencies.”

Operating expenses for the quarter were $16.17m, up 1% versus last year, and up 4% versus the previous quarter. The company said it is continuing to focus on cost control, even as it increases its top

  • R&D expenses in the quarter were $4.8m (15% of revenue), up 3% versus the same period ago, and down 4% versus the previous quarter

 

  • Sales and marketing expenses in the quarter were $8.57m (27% of revenue), flat with the previous quarter and up 11% versus the previous quarter

 

  • General and administrative expenses in the quarter were $2.8m (9% of revenue), up 3% versus the same period a year ago, and up 1% versus the previous quarter.

 

EBITDA was $6.1m for the quarter, up 12 from $5.44m last year, and up 95% from $3.1m in the previous quarter.   The EBITDA margin for the quarter was 19% versus an EBITDA margin of 18% last year and 12% last quarter.

Net profit for the quarter was $3.6m, compared to a net loss of $3.75m last year, and up 204% versus last quarter’s net profit of $1.18m.

 

Product Line Results for the Quarter:

  • Broadcast Graphics (BG) accounted for $24.9m during the quarter (78% of total revenue versus 81% last quarter), an increase of 8% versus the same period ago, and an increase of 14% versus the previous quarter. The BG order backlog was $28.8m, up 9% versus last year, and up 7% versus the previous quarter.

 

  • Media Asset Management (MAM) revenue in the quarter was $5.66m (18% of total revenue versus 16% last quarter), up 5% versus the same period a year ago, and up 35% versus last quarter.   The MAM order backlog was $17.8m, down 1% versus last year, and down 1% versus last quarter

 

  • Online & Mobile (OLM) revenue in the quarter was $1.16m (3% of total revenue), down 32% versus last year, and up 33% versus last quarter.  The OLM order backlog was $3.7m, down 6% versus last year, and up 5% versus the previous quarter.

 

 

Geographic Performance for the Quarter:

Vizrt said it continued to experience weakness in the European market during the quarter, but that the Americas and APAC did well.

  • Revenue from EMEA was $13.6m (43% of total revenue versus 41% last quarter), down 9% versus the same period last year and up 22% versus last quarter

 

  • Americas revenue was $9.2m (29% of total revenue versus 35% last quarter), up 26% versus last year, and down 1% versus last quarter.

 

  • APAC revenue was $8.95 (28% of total revenue versus 24% last quarter), up 13% versus last year, and up 17% versus last quarter

 

The company ended the quarter with 590 employees, up from 582 last quarter, and $74.2m in cash, down 6% versus last quarter.

 

“We believe that the strategic nature of our product offering, in helping customers achieve financial and strategic objectives, puts our products in the “must have” premium category, which has allowed us to defend and grow margins,” said Burkhalter. “Both the 8% solid growth in BG and the 5% growth in MAM compared to Q2 2012 were driven by our global presence, and our ability to react to local economic trends, as witnessed in the Americas and APAC. The media landscape is very dynamic, and broadcasters need to invest in order to protect their competitive position.”

 

Results for first half of 2013

Vizrt’s revenue for the first six months of 2013 was $58.7m, down 5% versus the first half of 2012.

The net profit for the first half of the year was $4.8m, versus a loss of $2.2m for the first six months of 2012.

EBITDA for the first half of 2013 was $9.2m, down 16% versus the same period last year.  The EBITDA margin for the first half of 2013 was 16%, compared to 18% for the first half of 2012.

Gross margins for the first half of the year were 67%, down from 68% in H1 2012.

Operating expenses for the first six months of 2013 were $31.7m, down 4% versus the first six months of the previous year.

 

Business Outlook:

In its investor presnetaion, the company said “we believe that the European market will continue to be soft into H2 2013, but we anticipate this weakness to be more than offset by the relatively robust markets in APAC and the Americas, resulting in continued overall growth. We will continue to strengthen our technological and strategic leadership, while at the same time maintain our financial prudence and discipline.”

“For the coming months we foresee continuing weakness in the European market where broadcasters are investing on a strict “need to have” basis, said Burkhalter.” We anticipate this weakness to be more than offset by the relatively robust markets in APAC and the Americas. We believe that our global presence, and regionalized distribution and support capabilities will allow us to capitalize on these region specific opportunities, resulting in continued overall growth. We will continue to strengthen our technological and strategic leadership, while at the same time maintain our financial prudence and discipline.”

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Related Content:

Press Release: Vizrt Reports H1 and Q2 2013 Results

Vizrt Q2 2013 Investor Presentation

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

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

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