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VASCO Reports Results for Third Quarter and First Nine Months of 2015

Revenue from continuing operations for the third quarter of 2015 was $60.0 million, an increase of 14% compared to the third quarter of 2014; Operating income from continuing operations for the third quarter of 2015 was $13.5 million, a decrease of 3% compared to the third quarter of 2014. Full-year 2015 guidance increased for operating margin. Financial results for the period ended September 30, 2015 to be discussed on conference call today at 4:30 p.m. ET.

OAKBROOK TERRACE, Ill. and ZURICH, Oct. 27, 2015 /PRNewswire/ -- VASCO Data Security International, Inc. (NASDAQ:VDSI), today reported financial results for the third quarter and nine months ended September 30, 2015.

Revenue from continuing operations for the third quarter of 2015 increased 14% to $60.0 million from $52.6 million in the third quarter of 2014, and for the first nine months of 2015, increased 37% to $190.6 million from $139.1 million for the first nine months of 2014.

Net income from continuing operations for the third quarter of 2015 was $11.2 million, or $0.28 per diluted share, both unchanged from the third quarter of 2014. Net income from continuing operations for the first nine months of 2015 was $38.7 million, or $0.97 per diluted share, an increase of $17.1 million, or 79%, from $21.6 million, or $0.55 per diluted share, for the comparable period in 2014.

Net income, which includes the impact of our discontinued operations, for the third quarter of 2015 was $11.2 million, or $0.28 per diluted share, unchanged from the third quarter of 2014. Net income for the first nine months of 2015 was $38.7 million, or $0.97 per diluted share, an increase of $17.1 million, or 79%, from $21.6 million, or $0.55 per diluted share, for the comparable period in 2014.

Other Financial Highlights:

  • Gross profit from continuing operations was $36.3 million and $112.4 million for the third quarter and first nine months of 2015, respectively, and was 60% of revenue for the third quarter and 59% of revenue for the first nine months of 2015. Gross profit from continuing operations was $35.6 million and $92.4 million for the third quarter and the first nine months of 2014, respectively, and was 68% of revenue for the third quarter and 66% of revenue for the first nine months of 2014.
  • Operating expenses from continuing operations for the third quarter and first nine months of 2015 were $22.8 million and $67.2 million, respectively, an increase of 5% from $21.8 million reported for the third quarter of 2014 and essentially unchanged from $67.0 million reported for the first nine months of 2014.
  • Operating income from continuing operations for the third quarter and first nine months of 2015 was $13.5 million and $45.3 million, respectively, a decrease of $0.4 million, or 3%, from $13.8 million reported for the third quarter of 2014 and an increase of $19.9 million, or 78%, from $25.4 million reported for the first nine months of 2014. Operating income from continuing operations, as a percentage of revenue, for the third quarter and first nine months of 2015 was 22% and 24%, respectively, compared to 26% and 18% for the comparable periods in 2014.
  • Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations was $14.9 million and $49.6 million for the third quarter and first nine months of 2015, respectively, an increase of 3% from $14.4 million reported for the third quarter of 2014 and an increase of 66% from $29.8 million reported for the first nine months of 2014.
  • Cash, cash equivalents and short-term investments at September 30, 2015 totaled $184.0 million compared to $157.0 million and $137.4 million at June 30, 2015 and December 31, 2014, respectively. There were no bank borrowings at any of the periods ended September 30, 2015, June 30, 2015 or December 31, 2014.

Operational and Other Highlights:

  • VASCO expanded its Cronto technology authentication and visual transaction signing product offering by adding PIN pad and card reader devices. DIGIPASS 780 and DIGIPASS 880 utilize an encrypted high-definition color QR code to deliver advanced protection against hacking attacks with the highest level of user convenience.
  • KBC Bank Ireland has integrated the VASCO DIGIPASS for Apps security solution into its mobile banking application to enable Apple TouchID support and transaction signing for mobile banking.
  • Jibun Bank has implemented VASCO's DIGIPASS for Apps and VACMAN Controller to enhance security for online and mobile banking customers.
  • Sumitomo Mitsui Banking Corporation expanded the use of VASCO Authentication solutions by implementing VASCO DIGIPASS for Apps with Mobile OTP to protect online retail banking customers.

Guidance for full-year 2015:

VASCO is reaffirming its guidance for revenue and increasing its guidance for operating margins for the full-year 2015 as follows:

  • Revenue is expected to be in the range of $230 million to $240 million, and
  • Operating income as a percentage of revenue, excluding the amortization of purchased intangible assets, is projected to be in the range of 21% to 23%, an increase from the range communicated previously of 19% to 22%.

The guidance being provided excludes the impact, if any, related to the previously announced acquisition of Silanis Technology, Inc.

"We are pleased with the strong results for the third quarter and first nine months of 2015 and enthusiastic about our prospects for future growth," stated T. Kendall Hunt, Chairman & CEO. "In addition to the strong performance reflected in the numbers being reported, we believe we have made good progress with important proof of concepts that we have been working on with large customers that will help drive future revenue in our core authentication business. We have also continued to generate strong cash flows from our business and expect to put a significant amount of our cash to work soon when we close the acquisition of Silanis Technology, Inc. We believe the acquisition of Silanis is a concrete example of the execution of our strategy to grow our business organically and through smart acquisitions. With this acquisition, we expect to provide new solutions to our customer base that we believe will be in high demand, accelerate our transition to a recurring revenue model, strengthen our revenue base in North America, and expand our customer base outside of our core banking business."

Conference Call Details

In conjunction with this announcement, VASCO Data Security International, Inc. will host a conference call today, October 27, 2015, at 4:30 p.m. EDT - 21:30h CET. During the conference call, Mr. Ken Hunt, CEO, Mr. Jan Valcke, President and COO, and Mr. Cliff Bown, CFO, will discuss VASCO's results for the third quarter and nine months ended September 30, 2015.

To participate in this conference call, please dial one of the following numbers:

USA/Canada: 1 800 764 8268

International: +1 212 231 2921

And mention VASCO to be connected to the Conference Call.

The Conference Call is also available in listen-only mode on www.vasco.com. Please log on 15 minutes before the start of the Conference Call in order to download and install any necessary software. The recorded version of the Conference Call will be available on the VASCO website 24 hours a day for at least 60 days.

VASCO Data Security International, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)



























Three months ended



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