Despite Record Q4, EVS Revenue Down 9.8 Percent in 2015

Posted by Josh Stinehour
Feb 23 2016

Production and playout video server specialist EVS reported Q4 2015 and full year 2015 results. EVS_Logo (2013)

Revenues for the full year 2015 were €118.5 million, a decrease of 9.8% over 2014 results.

Net profit for full year 2015 was €23.7 million (€1.76 per share), a decrease of 33.3% versus 2014.

Gross margins for the full year were 71.1%, a reduction versus the 74.5% recorded in 2014.  Management attributed the reduced gross margins to lower sales, higher write-offs on inventories, the effect of the headquarters, and the impact of currency fluctuations.

EBIT margin for the full year was 27.6%, which compares to 35.1% during the full year 2014.

R&D expenses for the full year 2015 were €24.5 million, or 20.7% of total revenue, a decrease of 2.7% versus the R&D expense in 2014.

Selling and administrative expenses for the full year 2015 were €26.6 million, or 22.4% of total revenue, representing a 5.9% increase over the full year 2014.

The company ended 2015 with 485 employees, up slightly from 482 at the end of the third quarter of 2015, and down from the 512 employees at the end of 2014.  The year-over-year decline in employees was caused by the closing of the Company’s office in China and more selective recruiting.  Average headcount in 2015 represented a 2.8% decrease when compared to 2014.

The order book stood at €50.4 million as of February 15, 2016.  This represents a 69.1% increase over the order book on February 15, 2015 and an increase of 60.5% versus October 31, 2015.

 

Q4 2015 Results:

EVS had Q4 2015 revenue of €42.9 million, an increase of 40.5% versus the same period last year, and an increase of 52.1% versus the previous quarter.  Excluding the effect of exchange rate movements and event rentals, the Company’s Q4 2015 revenue increased 36.3% versus the year earlier period.

This is a record level of quarterly revenue for the company.  Management cited several factors contributing to the strong performance including positive effects from currency, initial server upgrades, and the release of customer budgets held back during the first half of the year.

Net profit for Q4 2015 amounted to €13.4 million (€1.00 per share), compared to €8.3 million (€0.61 per share) in the year earlier period and €4.8 million (€0.36 per share) in the preceding quarter.

Gross margins for the fourth quarter were 74%, a slight increase against the 73% gross margins recorded in Q4 2014, and an increase from the 70.0% gross margins recorded in Q3 2015.

EBIT for the fourth quarter 2015 was €18.0 million, up 103.1% compared to the fourth quarter of 2014 and up 150.0% versus Q3 2015.

Operating margin for the quarter was 42.1%, substantially higher than 29.1% from the same period last year and the 25.6% operating margin achieved during the third quarter of 2015. The primary reason for the increase in profitability in the quarter was the strong level of sales.

Operating expense for the quarter grew by 3.7% versus the same period a year ago.

R&D expenses in the quarter were €6.6 million, or 15.3% of revenue, flat versus the same period last year, and down 4.5% versus last quarter.

Selling and administrative expenses in the fourth quarter were €7.1 million, or 16.5% of revenue, up 7.5% versus the same period a year ago, and up 3.9% versus the previous quarter.

 

Revenue by Segment:

  • Revenues from Outside broadcast vans during the fourth quarter of 2015 were €21.0 million, or 49.0% of total revenue, an increase of 17.5% versus the fourth quarter of 2014. For the full year 2015, this segment contributed 53.8% of the total revenue, a decrease of 7.2% versus 2014.

 

  • Revenues from Studio & others during the quarter were €21.8 million, or 51.0% of total group sales, up 73.4% compared to the year earlier period.  For the full year, this segment contributed 44.6% of total revenue, an increase of 9.2% versus 2014.

 

  • There were no revenues associated with Big sporting event rentals during the quarter. For the full year, this segment contributed 1.6% of total revenue, a decrease of 86.5% versus 2014.

 

Systems and Service Revenue:

  • Systems revenue in the quarter was €40.2 million, or 93.7% of total revenue, up 42.2% versus Q4 2014. During the full year 2015, Systems revenue was €109.7m representing 92.5% of total revenue and was down 10.4% versus 2014.

 

  • Services revenue was €2.7 million for Q4 2015, or 6.3% of total revenue, up 18.3% versus the year ago period. Contribution to full year 2015 results was €8.8 million for this segment, representing 7.5% of total revenue, which was a decrease of 1.5% when compared to 2014.

 

Revenue by Geography:

  • Revenue from EMEA (excluding events) in the fourth quarter of 2015 was €22.9 million, up 35.6% against last year’s quarter. Sales in EMEA accounted for 53.5% of group revenue during the fourth quarter.  This compares to 55.4% of total revenue during the fourth quarter of 2014.  For the entire year of 2015, EMEA revenue (excluding events) was €49.8 million or 42.0% of total revenue and a decrease of 20.7% when compared to 2014.

 

  • Americas’ revenue for the fourth quarter of 2015 was €10.6 million, an increase of 39.7% versus last year. Americas accounted for 24.9% of total revenue during the quarter, down slightly from 25.0% of total revenue during the fourth quarter of 2014. For the entire year of 2015, Americas’ revenue was €41.7 million or 34.7% of total revenue and was up 25.0% when compared to Americas’ revenue during 2014.

 

  • Q4 2015 revenue from the APAC region was €9.2m, up 55.3% versus last year’s quarter. APAC accounted for 21.4% of total revenue in the fourth quarter, up from a contribution of 19.4% during Q4 2014. For the full year 2015, APAC’s revenue was €25.6 million or 21.6% of total revenue and was down 19.9% when compared to APAC’s revenue in 2014.

 

Outlook:

The Company’s full year 2015 results were above management’s guidance of revenue in the range of €110 to €115 million.  Commenting on the market environment, Managing Director & CEO Muriel De Lathouwer stated, “After a period of high cautiousness, we observed at the end of the year some of our customers releasing budgets that were put on hold during the first part of the year. In 2016, we expect the industry to remain in mutation and technology transitions to continue weighting on investment decisions.”

Management stated the Company has limited visibility around top-line revenue for the 2016 calendar.  EVS is expecting around €10 million of rental revenue associated large events, primarily the EURO football championship and Rio Olympics.

 

 

Related Content:

Press Release: EVS Reports 2015 Results

EVS Q4 and FY 2015 Earnings Presentation

 

 

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