Vizrt announced results for the second quarter of 2016. For the quarter Vizrt had revenue of $34.2 million, an increase of 6.5% versus the second quarter of 2015, and an increase of 21.2% versus the preceding quarter, Q1 2016.
Gross margins for Q2 2016 were 72.6%, which compares to 71.8% gross margins recorded during Q2 2015 and 70.4% gross margins from the preceding quarter.
Operating income for the quarter was $9.0 million, an increase of 56.6% compared to the second quarter of 2015, and an increase of 126.5% over the preceding quarter. Operating margin for Q2 2016 was 26.4% versus 17.9% in Q2 2015 and 14.1% in Q1 2016.
Operating margins benefited from the decision to capitalize $1.7 million of research and development expenses in the quarter – and thereby exclude from operating expenses. Vizrt had one-time expenses of $1.8 million in the quarter related to compensation to the Company’s former CEO, recruitment of the current CEO, and certain legal costs.
Net income for Q2 2016 was $11.0 million. In the year-earlier period, Q2 2015, Vizrt recorded a net loss of $0.1 million, and in the preceding quarter net loss was $6.8 million.
Cash and cash equivalents ended the quarter at a balance of $37.2 million, up slightly from $36.6 million at the end of Q1 2016.
Revenue by Geography:
- Revenues from EMEA for the quarter were $16.3 million, an increase of 3.8% in comparison to Q2 2015 and an increase of 27.3% against the preceding quarter. For Q2 2016 EMEA accounted for 48.0% of overall revenue, versus 49.0% in Q2 2015 and 45.0% in Q1 2016.
- Revenues from the Americas region were $9.4 million during the second quarter of 2016, a year-over-year decrease of 3.7% and a sequential increase of 3.1%. Americas represented 27.0% of total revenue in the quarter, compared to 30.0% in Q2 2015 and 32.0% in Q1 2016.
- Revenues from the Asia-Pacific geography during the second quarter of 2016 were $8.5 million, a 27.5% increase over Q2 2015, and an increase of 34.4% against Q1 2016. Asia-Pacific accounted for 25.0% of total sales in Q2 2016. During the year-earlier period Asia-Pacific contributed 21.0% of sales and in Q1 2016 Asia-Pacific contributed 23.0% of total revenue.
Operating Expenses by Category:
- Research and development (“R&D”) expenses in the quarter were $3.9 million, a 24.9% decrease versus the same period a year ago, and a decrease of 28.5% versus the previous quarter. In terms of total sales, R&D expenses represented 11.4% of revenue in the Q2 2016, compared to 17.0% in Q2 2015 and 19.3% in 19.3%. The decline in R&D expense is attributed to the accounting decision in the quarter to capitalize $1.7 million of R&D expenditure. When including this capitalized portion of R&D, total R&D expenses were 16.4% of total sales.
- Sales and marketing (“S&M”) expenses in the quarter were $7.39 million, a decrease of 6.8% against the year earlier period and an increase of 2.7% versus Q1 2016. S&M expenses were 21.6% of total sales in the quarter. This compares to 24.7% in Q2 2015 and 25.5% in Q1 2016.
- General and administrative (“G&A”) expenses in the quarter were $2.676 million, a decrease of 6.1% versus the same period a year ago, and a decrease of 7.5% versus the preceding quarter. As a percentage of sales, G&A expenses represented 7.8% of revenue in the quarter, versus 9.3% in Q2 2015 and 10.3% in Q1 2016.
Appointment of New CEO:
Announced on June 15, 2016, Vizrt appointed a new Chief Executive Officer, Michael Hallén. Mr. Hallén replaces former CEO Martin Burkhalter, who retired after leading Vizrt for six years.
“I’m looking forward to working together with Vizrt’s world-class team to serve long term customers while capturing the new market opportunities that are being created in this fast changing industry,” said Mr. Hallén in the press release announcing his appointment.
Mr. Hallén assumed the responsibilities of CEO effective August 1, 2016. Dr. Francois Laborie had served as action CEO through August 1, 2016 and will return to his role as COO of Vizrt.
Vizrt ended Q2 2016 with a total backlog of $56 million, a 4% year-over-year decline, and a sequential decrease of 1.1%.
Vizrt’s management provided the following commentary on the market environment, “In general, the market remains cautious with large infrastructure investments prioritized to meet future IP and 4K demands. However, we remain confident that the second half of 2016 will deliver growth for Vizrt as our backlog remains healthy and our customers understand the need to implement efficiency gains while reaching all their viewers regardless of the platform or of the method of consumption.”
Press Release: Vizrt Q2 2016 Financial Results
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