VASCO Data Security International, Inc. (Nasdaq: VDSI) (www.vasco.com), today reported financial results for the first quarter ended March 31, 2010.
Revenue for the first quarter of 2010 increased 3% to $23.9 million from $23.2 million in the first quarter of 2009. Net income for the first quarter of 2010 was $0.6 million, or $0.01 per fully diluted share, a decrease of $2.9 million, or 83%, from $3.5 million, or $0.09 per fully diluted share, for the first quarter of 2009.
Financial Highlights:
- Gross profit was $16.7 million, or 70%, of revenue for the first quarter of 2010. Gross profit was $16.7 million, or 72%, of revenue for the first quarter of 2009.
- Operating expenses for the first quarter 2010 were $16.0 million, an increase of 33% from $12.0 million reported for the first quarter 2009. Operating expenses for the first quarter of 2009 included a benefit from the reversal of $2.0 million of expenses accrued at 12/31/08 related to long-term, performance-based, incentive awards.
- Operating income for the first quarter 2010 was $0.7 million, a decrease of $4.0 million, or 85%, from $4.7 million reported for the first quarter of 2009. Operating income as a percentage of revenue in the first quarter 2010 was 3% compared to 20% in the first quarter of 2009.
- Earnings before interest, taxes, depreciation and amortization were $1.5 million for the first quarter 2010, a decrease of 71% from $5.3 million reported for the first quarter of 2009.
- Net cash balances, total cash and cash equivalents less bank borrowings, at March 31, 2010 totaled $76.1 million compared to $67.6 million at December 31, 2009.
Operational and Other Highlights:
- VASCO won 438 new customers in Q1 2010 (52 new banks and 386 new enterprise security customers).
- VASCO transforms the eSecurity landscape by launching DIGIPASS as a Service (DaaS)™ Authentication Service Offering.
- Landbouwkrediet/ Credit Agricole (Belgium) deploys DIGIPASS and VACMAN Controller to secure online access to its banking application.
- Cascades secures its remote network with VASCO's two-factor authentication.
- PartyGaming decides to protect its online customers with two-factor authentication from VASCO.
- Virginia Heritage Bank secures cash management solution and employee access with VASCO DIGIPASS.
- VASCO partners with Tech Data to offer market leading strong authentication to North American channel.
- VASCO makes DIGIPASS for Mobile available to Windows Mobile users.
- VASCO expands its SEAL-offering with IDENTIKEY Server 3.1 e-learning and announces new authorized training centers (VATC).
- VASCO expands its DIGIPASS Pack offering with an IDENTIKEY based version.
Guidance for full-year 2010:
VASCO is reaffirming its guidance for the full-year 2010 as follows:
- Revenue growth of 15% to 20% for the full-year 2010 over full-year 2009,
- Operating margins as a percentage of revenue for full-year 2010 are projected to be in the range of 5% to 10%.
"The first quarter of 2010 was challenging due to prospects in the banking market delaying budget spend for new projects and current customers slowing down existing projects," stated T. Kendall Hunt, Chairman & CEO. "Also contributing to the results was the very strong fourth quarter of 2009 which we believe impacted the number of transactions that normally would have occurred in the first quarter of 2010. Notwithstanding the results of the first quarter, we are encouraged by the number of new transactions that are in various stages of discussions or negotiation. We continue to believe that we will return to a trend of solid growth in 2010 over the comparable periods in 2009. We are also continuing to invest in the infrastructure and people needed to support growth in all of our markets as well as the launch of our authentication services business."
"As evidenced by the large number of requests for proposal in which we are involved, we believe that the banking market is continuing its recovery," said Jan Valcke, VASCO's President and COO. "While we expect that there will be pressure on price and terms of the new banking deals, we believe that we are very well positioned to win a large number of the proposals. We are also encouraged by the continuing growth in the Enterprise and Application Security market and the continued development of our authentication services product offering. With the expected growth in each of these areas, we believe that it is very important that we continue to invest in our infrastructure and workforce throughout 2010 to ensure that we are well positioned for strong growth in 2011."
Cliff Bown, Executive Vice President and CFO added, "During the first quarter 2010 our balance sheet continued to show strength. For the first quarter our net cash balance increased $8.5 million, or 13%, and our working capital decreased $1.3 million, or 1%, from December 31, 2009. Days sales outstanding in net accounts receivable at March 31, 2010 decreased to 83 days from 88 days at December 31, 2009.