Broadcast graphics specialist ChyronHego announced that its revenue for the second quarter of 2014 was $14.7m, an increase of 37% versus the year earlier period, and an increase of 16% compared to the previous quarter.
The company said it experienced year-over-year growth in all geographies with the exception of Asia.
The $4m year-over-year revenue increase was substantially accounted for by the contribution of last year’s acquisition of Hego AB. The Q2 2013 period only included the results of operations for Hego and its subsidiaries after May 22, 2013, the closing date of the transaction.
Q2 2014 net income was $2.9m or $0.08 per share. This represents the first quarter of profitability for the company since Q2 2011. During the same period a year ago, the company posted a net loss of $2.1m, or $(0.09) per share.
It is important to note Q2 2014 benefited from a favorable $2.2 million mark-to-market adjustment of the company’s contingent liability stemming from last year’s Hego acquisition. Excluding this adjustment, the ChyronHego’s net income would have been $0.8 million for the quarter.
We are very excited to show our first profitable quarter since quarter two 2011,” said company CEO Johan Apel. “Our efforts in both keeping cost under control and driving revenue growth are bearing fruit. We are expecting the growth in revenues to continue for the coming quarters. We are in terms of revenues ahead of our plan both in the U.S. and the Europe, and we have a positive outlook regarding development of these markets.”
Gross margins in the quarter were 62%, down from 68.4% a year ago. The company attributed its margin compression to an increase in lower margin service revenue, which accounted for $7.06m, or 48% of total revenue during the quarter, up from 37% of total revenue in Q2 2013.
During the quarter, ChyronHego closed on the acquisition of ZXY Sports Tracking announced at NAB. The Company also indicated the WeatherOne acquisition, also announced at NAB, closed on July 1 of this year.
On the company’s conference call with equity analysts, Dougherty & Co analyst Steve Frankel asked Apel about ChyronHego’s addressable market size. The figures cited by Apel were from a report published in 2011, which has since been substantially updated. Therefore, it stands to reason the company’s addressable market may change once the updated market sizing values from the recently released IABM DC Global Market Valuation Report are reviewed by ChyronHego’s management team. This will be an interesting subject to track in future investor messaging from the company.
The conversation with analysts also provided additional context on ChryonHego’s recent $50 million share shelf offering. Responding from a related questions from Marty Elbaum of Horizon Networks, Apel said, “We have filed a shelf to be ready to be able to pull the trigger if the market conditions are right and if there are business reasons for us to raise money. So that said, trying to make sure that there are no people out there really scared of the huge dilution just around the corner. That is not our intention. We are just trying to make sure that we have all the legalities in place to be able to – if there is a need, raise money for acquisition purposes and so forth.”
Press Release: ChyronHego Reports Profit for the Second Quarter 2014
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