Devoncroft

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.

Order Book:

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.

Segment Revenue:

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.

Geographic Revenue:

• 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.

Outlook:

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.”

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“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.”

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Related Content:

Press Release: EVS Reports First Quarter 2013 Results

EVS Q1 2013 Earnings Presentation

Previous Quarter: EVS Posts Record Revenue in 2012, Unveils New Strategy and Vision for Future

Previous Year: EVS Reports Record Revenue and Order Book in Q1 2012

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© Devoncroft Partners. All Rights Reserved.

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Tags: broadcast vendor financial results, EVS, Jacques Galloy, Joop Janssen, quarterly results
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Production and playout video server specialist EVS announced that its revenue for 2012 was €137.9m, a record for the company.  The company also posted an impressive EBIT margin of 44.4% for the full year.

Major sporting events such as the European football championships and the London Olympics were major drivers of the company’s business in 2012. Following a roaring start to the year, which saw EVS exceed the entire previous year’s revenue by the end of the third quarter of 2012, the company’s revenue slowed in Q4 in accordance with the guidance it provided earlier in the year.

Revenue for the fourth quarter of 2012 was €25.6m, down 17.5% versus the same period a year ago, and down 35% versus the previous quarter.  Excluding currency fluctuations and big event rentals, which are a major revenue driver for EVS, the company said its revenue declined 17.3% versus the fourth quarter of 2011.

Net profit in the quarter was €4.4m, down 42% versus the same period a year ago, and down 65% versus the previous quarter.

EBIT (earnings before interest and tax) in the quarter was €5.2m, down 60.1% compared to the same period last year, and down 73% versus last quarter. The corresponding operating margin for the quarter was 20.3%, down from 41.9% last year, and 48.8% last quarter.  The company called the lower EBIT margin “temporary,” and attributed it to “seasonally lower sales with growing costs.”

Consolidated gross margins for the quarter were 67.3%, versus 78% last year, and 79.4% last quarter.  The company attributed the lower margins to “the deleveraging effect of lower sales on growing fixed operations costs but also due to the set-up of a new provision of €1m for 2-years standard technical warranty.”  The company said that if this prevision were excluded that gross margins for the quarter would have been 71.2%.

SG&A expenses in the quarter were €3.9m, down from €5.5m last year.  R&D expenses in the fourth quarter were €6.4m, up 21% versus the same period a year ago.

Full Year Results

Revenue for the full year was 137.9m, an increase of 29% versus 2011. Excluding currency fluctuations and big event rentals, which are a major revenue driver for EVS, the company said its revenue increased 18% in 2012 versus 2011.

Net profit for 2012 was €41.7m up 30.2% versus the previous year.

Consolidated gross margin were 77.3%, down slightly from 2011.

Operating expenses increased by 15.3% in 2012 versus 2011.  The company said its 2012 OpEx included “one-off repositioning costs of €1.4m, that was partly offset by the release of a past litigation provision of €1. EVS said its underlying 14.3% increase in OpEx during the year was due to an “increased number of employees as well as investments in a new group ERP and lower R&D tax credits.”

Company CFO Jacques Galloy said: “After some years of sales stagnating at €110m, we closed 2012 with a record level, with sales growing by 29.0% and topping €137.9 million. We benefited from big sporting events rentals this year for about €10m million but our overall business grew strongly, especially in studios (+30.9%) and in the Americas (+32.7% at constant currency). The operating result (EBIT) grew by 39.0% compared to last year. As anticipated, 4Q12 delivered a weaker performance following a very strong sporting summer. The order book as of February 15, even though lower than at the beginning of 2012, is record for starting an uneven year, highlighting our strong competitive position and the successful investments in the past. We remain optimistic about the long term growth drivers of EVS while our short to medium term visibility remains limited as usual. 2013 shall not benefit from such big sporting events but our continued investments in innovation and expansion pave the way for positioning the company for the future”

Segment Results for 2012:

• Studio revenue in 2012 was €63.3m, up 30.9% versus 2011 (up 17.3% on a constant currency basis and excluding big events).  The studio segment accounted for 46% of revenue in 2012, with outside  broadcast (OB) making up the remainder.

• OB revenue in 2012 was €74.6.m million up 27.4% versus 2011 (up 18% on a constant currency basis and excluding big events).  OB sales represented 54% of total sales in 2012.

Regional Results for 2012:

• 2012 revenue from the EMEA region was €74.6m (54.1% of total revenue), up 29% versus last year, and down 17% versus last quarter. EMEA revenue was driven by the 2012 summer Olympics, and increasing business in Eastern Europe and the Middle East.

• 2012 revenue from the Americas was €36.7m, up 32.7% versus last year on a constant currency basis. EVS said sales in in the Americas were driven by a 67% increase in its studio segment 67% compared to 2011, and new OB vans and upgrades to HD.

• APAC revenue for the year was €26.6m, an increase of 13% over 2011.    The company attributed its improved performance in Asia to increased demand in South Korea, Australia and China. EVS said that the continued high demand for European sports content in APAC is a long term driver for the region.

The company ended the year with 463 employees, up 11.6% (or 48 employees) since the end of 2011.  The company says it recruited 25 full-time employees during the fourth quarter of 2012 in order to “accelerate some strategic R&D developments.” EVS says that on average, it had 439 full-time employees in 2012, versus and 386 full-time employees in 2011, a 13.7% increase. One third of the company’s employees are based in one of its 20 global sale offices or development business units.

New Corporate Strategy

EVS also unveiled a new corporate strategy whereby it will focus on four key markets: Sports, Entertainment, News and Media.  EVS CEO Joop Janssen said the new strategy will “enable us to better deliver our investments in R&D and product innovation, help drive the expansion of our sales network, and continue to improve our user training and customer support and bring even better products to the market faster.”

The company says that this new strategy, along with a new corporate brand identity will be unveiled at the 2013 NAB show.

The company also announced a new management structure.

Outlook for the full year 2012

EVS said that while it is optimistic about its long term prospects, it reiterated its low visibility in the current state of the economy, and cautioned that the €10m of  event rental revenue achieved in 2012 is not repeatable in 2013, which is a “non-big event year.”

The company also said its operating expenses should grow by “a low double digit rate” in 2013, which could translate in lower margins.

EVS says that the second half of 2013 should be better than first half since spending for big sporting events to be held in 2014 will start to be committed at that time.

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Related Content:

Press Release: EVS Reports Record Revenue for 2012

Press Release: EVS announces a new market-focused strategy and vision

Previous Quarter: EVS Q3 2012 Revenue Jumps 32.3 Percent, YTD Revenue Surpasses all of Previous Year

Previous Year: EVS Revenue Declines 3.8% in 2011, But 2012 Order Book Hits Record Levels

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© Devoncroft Partners. All Rights Reserved.

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Tags: broadcast vendor financial results, EVS, Jacques Galloy, Joop Janssen, quarterly results
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Production and playout video server specialist EVS announced strong revenue and profit for the third quarter of 2012, along with an industry-leading operating margin of almost 50 percent.

Revenue for the third quarter of 2012 was €39.5m, 32.3% higher than the same period a year ago, and down 8% versus the previous quarter.  Excluding currency fluctuations and big event rentals, which are a major revenue driver for EVS, the company said its revenue increased 6.2% versus the third quarter of 2011.

Net profit in the quarter was €12.7m, up 27.4% versus the same period a year ago, and down 20% versus the previous quarter.

EBIT (earnings before interest and tax) in the quarter was €19.3m, up 38.6% compared to the same period last year, and down 17% versus last quarter. The corresponding operating margin for the quarter was 48.8%, up from 46.6% last year, and 54.2% last quarter.

Order intake in the third quarter was up 10.7% versus last year, but decelerated compared to the first six months of the year, due to the usual market slowdown following the big events of this summer.  Through October 2012 orders in the OB segment were up 20.3%, while studio orders increased by 25.8% over the same period.  Studio orders currently represent 65 of the company’s open order book.

Consolidated gross margins for the quarter were 79.4%, versus 81% last year, and 81.2% last quarter.

Operating expenses (R&D, S&A) increased by 18.8% in 3Q12, mainly due to the increased number of new employees, the amortization of a new ERP system, and new top management.

SG&A expenses were €6.17m, up 27% versus last year, and up 9% versus last quarter. R&D expenses were €5.65, up 11% versus last year, and up 10% versus last quarter,

Segment Results:

• Studio revenue in the third quarter of 2012 was €20.3m, up 76% versus last year (up 36.4% on a constant currency basis and excluding big events), and up 18% versus last quarter.  The studio segment accounted for 51% of revenue in the quarter, up from 40.2% last quarter, with outside broadcast (OB) making up the remainder.

• OB revenue in Q3 2012 was €19.m million up 4.6% versus last year (down 11.2% on a constant currency basis and excluding big events), and down 25% versus last quarter.  OB sales represented 48.4% of total sales in 3Q12.

Regional Results:

• Revenue from the EMEA region was €19.5m (49.3% of total revenue), up 16.29% versus last year, and down 17% versus last quarter. EMEA revenue was driven by the 2012 summer Olympics

• Revenue from the Americas was €11.4m, up 47.8% versus last year on a constant currency basis, and down 10% versus the previous quarter. EVS said this was the second record quarter in a row for Americas revenue, thanks to new innovations for OB customers, increased penetration into the studio segment, and an enlarged product portfolio.

• APAC revenue for the quarter was €8.6m, an increase of 37.7% versus last year, and an increase of 30% versus the previous quarter.    The company attributed its improved performance in Asia to strong business momentum in Japan after unusual weaker 2011, as well as increased demand in South Korea, Malaysia, Australia and mainland China.

Year-to-Date Results

Revenue for the first nine months of 2012 was €112.3m, up 47.9% versus the first nine months of 2011. Through the first three quarters of 2012, EVS has already surpassed its total revenue for all of 2011.

Net profit for 1H 2012 was €37.4m up 52.3% versus the previous year.

Consolidated gross margin were 79.6%, up from 78.6% last year.

Operating expenses for the first nine months increased by 17.1% due to increased headcount, a new ERP system, and lower R&D tax credits. The operating margin for the first nine months of 2012 was 48.8%, compared to 46.6% last year.

Outlook for the full year 2012

EVS said that with revenue of approximately €134m already secured for 2012, its sales should grow by more than 25% this year, and that its EBIT profit should be about 40% higher than last year.

The company says that although its current rate of business exceeds previously issued guidance, its management remains cautious in a difficult and competitive environment. Because of seasonality following major sporting events earlier in the year, the company expects its Q4 2012 results to be sequentially lower.

Although 2012 will be a record year for the company, EVS says it has limited visibility for 2013, and remains cautious for uneven year 2013, without major sporting events”.

New EVS CEO Joop Janssen, said he has “started to work on the future vision and strategy plan of the company, with a focus on realizing our growth potential towards the year 2016. The result of this inclusive process will be based on the strong current fundamentals that enabled EVS to become such a successful company. I plan to share this vision in early 2013”.

Company CFO Jacques Galloy, commented: “As expected, this third quarter is again very strong with sales growing by 32.3% to EUR 39.5 million. Summer games were really successful and brought EVS to a next level. Our business grew especially in studios (+76%) and in the Americas (+48% at constant exchange rate) over the quarter. Studio sales benefitted directly from dedicated rentals relating to the Summer games. Higher sales and good cost control led to a higher EBIT margin of 48.8% of sales in 3Q12 compared to 46.6% in 3Q11. Combining 9M12 sales and the order book, we had secured sales for around EUR 134 million at October 31. We confirm record FY12 sales shall exceed +25% growth, despite the expected usual Q4 slowdown following big summer sporting events. EBIT should grow by more than 40% this year.

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Related Content:

Press Release: EVS Reports Third Quarter 2012 Results

Previous Quarter: EVS Revenue Jumps 83 Percent in Record Q2 2012, CFO Calls Quarter “Awesome”

Previous Year: EVS Reports Q3 2011 Results, Issues Strong Guidance

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© Devoncroft Partners. All Rights Reserved.

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Tags: broadcast vendor financial results, EVS, Jacques Galloy, Joop Janssen, quarterly results
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