Production and playout video server specialist EVS reported that its revenue for the first quarter of 2013 was €32.8m, an increase of 9.2% versus the same period last year, and an increase of 28.4% versus the previous quarter. Excluding impact of exchange rates and large rental contracts, (a large, but lumpy part of EVS’s revenue), the company’s Q1 2012 revenue was up 9.4% versus last year.
Net profit in the quarter was €10m, up 15.8% versus the same period a year ago, and up 128% versus the previous quarter.
EBIT (earnings before interest and tax) in the quarter was €14.5m, up 6.7% compared to the same period last year, and up 179% versus last quarter. The corresponding operating margin for the quarter was 44% down slightly from 45.1% last year, and up from 20.3% last quarter.
Gross margins for the first quarter were 79.6%, up from 77.6% last year slightly versus last year, and up from 67.3% last quarter (Last quarter, EVS company set-up a new provision of €1m for 2-years standard technical warranty. Excluding this provision, gross margins last quarter would have been 71.2%). The company attributed is margin expansion to the leveraging effect of higher sales on fixed operations costs.
Operating expenses increased by 19.2% versus the same period a year ago, due to increased headcount, the acceleration on some strategic R&D projects, and some costs relating to the setup of the company’s new strategy.
R&D expenses in the quarter were €5.8m, or 18% of revenue, up 14% from the same period last year, and down 9% versus last quarter, when the company brought on R&D contractors to accelerate certain R&D projects.
Selling and administrative expenses in the first quarter of 2013 were €5.6m, or 17% of revenue, up 25% versus the same period a year ago, and up 41% versus the previous quarter.
The company ended the quarter with 465 employees, up from 463 at the end of last quarter, and up 9% from 428 employees at the end of Q1 2012. EVS added 48 full-time employees in 2012, including 25 in the fourth quarter in order to “accelerate some strategic R&D developments.” The still has 20+ open position, however it now says that it plans to reduce OpEx growth compared to previous years.
EVS CFO Jacques Galloy said the results were in line with the company’s expectations, and highlighted the fact that the company’s revenue is growing faster than the overall market. Galloy also said that he expects the second of 2013 to be stronger than the first half of the year as customers prepare for major sporting events in 2014.
The order book stood at €42.9m as of May 10, 2013, essentially flat compared to February 15, 2013. This includes €32.8m worth of orders to be delivered in 2013 and €10.1 worth of orders, to be delivered in 2014 (up from €5.6m last quarter).
The company highlighted the fact that its ENM order book more than doubled in during the first quarter of 2013 to €7m, on the back of significant orders.
As of this quarter, EVS has changed the way it reports segment revenue. The company, which previously reported revenue in the “OB” and “Studio” segments, now breaks out its revenue by market (Sports, ENM and Big Events), by Region (APAC, EMEA and Americas) and by nature (Systems and Services).
Approximately 90% of former OB and 50% of the former studio segments are now allocated to “Sports,” while about 10% of former OB as well as 50% of studio is now allocated to ENM.
- Revenue from sports-related applications during the first quarter of 2013 were €27.2m, or 82.8% of total group sales, an increase of 19.3% versus last year. The company said revenue from sports-related customers increased due to new OB and sports center projects across many countries.
- Revenue from Entertainment, News & Media (ENM) during the quarter was €5.6m, or 17.2% of total group sales, down 22.5% compared to last year. The company attributed the decline in ENM to a large project delivered in Q1 2012, which was not repeated.
- Systems revenue in the quarter was €31.2m, or 95% or total revenue, up 10.5% versus last year. Services revenue was €1.6m, or 5% of total revenue, down 11.2% versus last year.
- Revenue from EMEA in the first quarter of 2013 was €14.2m, down 19.4% last year, Sales in EMEA accounted for 43% of group revenue, down sharply from 59% last year. The company said EMEA revenue was in-line with expectations, and that “Eastern Europe, UK and Northern Europe are most dynamic while Mediterranean area remains weak.”
- Americas revenue for the first quarter of 2013 was €8.4m, up 50.1% versus last year. Americas accounted for 41.2% of group revenue, up significantly from 19% last year. The company attributed the growth in the Americas region to a strong order book rather than new deals. EVS said it “shall be a challenge to match the record 2Q12 sales numbers of €12.7m as the order intake in the America’s is weaker than expected.”
- Q1 2013 revenue from the APAC region was €10.2m, up 50.5% versus last year. The company says it is “gaining market share in this buoyant region which is delivering above expectations, in particular in Australia and Japan.” APAC accounted for 31% of total revenue in Q1 2013, up from 23% last year.
The company said it is “optimistic about the long term prospects of the group, underpinned by robust long term growth drivers,” and maintained its previously issued guidance.
Management said that sales in the second half of the year should be better than first half as it shall start benefiting from the traction of big sporting events in 2014 (also in emerging countries) as well as the first impacts of the new strategy
However, management cautioned that the company has low visibility in the current state of the economy, and that because the company “targets small niches where the combination of infrastructure reliability, applications agility and service quality are essential success criteria; tt should be clear that risk factors such as economic uncertainties, balance-sheets constraints of clients or major currencies fluctuations do not make short-term forecasting easy.”
EVS also said that its “operating expenses should grow by a low double digit rate, which should normally translate in lower margins.”
“The first quarter delivered by our company is encouraging,” said EVS CEO Joop Janssen. “In an uncertain macro-economic environment, we posted again a solid performance. While some regions and countries go through challenging times more than others, the global reach and EVS’ strong brand and product position gives us confidence to deliver our ambitious plan. We are in particular proud of our very good progress in APAC where in addition to a strong market development our share in it seems to grow even more rapidly in the quarter. Our new strategy, launched in February of this year is now fully in place and very well received by our markets at the yearly global Media tradeshow (NAB) in mid-April. EVS launched an impressive number of new products in all of our four target markets. The execution of the new organization plans is well on track. As indicated earlier we have brought our headcount growth further under control while concentrating on leveraging our investments in new product innovation.”
Press Release: EVS Reports First Quarter 2013 Results
Previous Year: EVS Reports Record Revenue and Order Book in Q1 2012
© Devoncroft Partners. All Rights Reserved.