IVTA Infovista S.A. ADS (MM)

InfoVista (Euronext: IFV, ISIN: FR0004031649, NASDAQ: IVTA), the leading service-centric performance management software company, today announced results for its fiscal year 2006 second quarter, ended December 31, 2005. Total revenues were EUR 10.0 million, a 15% increase over the same period in the prior year. Net income for the quarter amounted to EUR 85 thousand, after a stock-based compensation charge of EUR 276 thousand. Commenting on InfoVista's performance in the period, Gad Tobaly, Chief Executive Officer, noted: "Our solid results in the quarter reflect good execution in all regions. We are particularly gratified by the growth of license revenues from both Service Providers and Enterprise customers, and the industry validation that we have received for our VistaInsight for IP Telephony solution from customers, analysts and the media. The consolidation that continues in our market is further proof of the value these solutions deliver and strengthens our relationships with partners and customers seeking to work with a leading performance management software developer that they can trust. All told, Q2 was a strong quarter in which we were able to secure our market position and deliver further improved financial performance." Financial Highlights Revenues -- Total revenues in the quarter rose 15% to EUR 10.0 million. License revenues grew by 21% to EUR 5.6 million, or 57% of total revenues, while service revenues increased by 9% to EUR 4.3 million. -- For the first six months of fiscal 2006, total revenues increased by 17% to EUR 19.0 million. License revenues increased by 21% to EUR 10.5 million, representing 55% of total revenues, while service revenues increased by 12% to EUR 8.5 million. Expenses -- Gross margin in the quarter improved to 80.9% of total revenues, as compared to 80.4% in the comparable quarter of the previous year. -- Second quarter operating expenses totaled EUR 8.0 million as compared to EUR 6.7 million in the comparable period last year. The increase is primarily due to additional spending in sales and marketing combined with higher commission expenses of EUR 0.6 million, stock-based compensation for approximately EUR 0.3 million, further investment in research and development for EUR 0.2 million. Additionally, the stronger exchange rate of the US dollar against the Euro boosted operating expenses by approximately EUR 0.1 million. Earnings -- Net income for the second quarter was EUR 85 thousand. Excluding stock-based compensation, net income for the second quarter would have been EUR 0.4 million, compared to EUR 0.1 million. Balance Sheet -- Days Sales Outstanding (DSOs) improved to 80 days from 108 days at prior quarter end. -- The Company's balance sheet remains strong, with no debt and with cash and marketable securities of EUR 34.1 million, a quarterly increase of EUR 2.1 million that primarily came from operating activities. -- There were a total of 17,802,394 InfoVista shares outstanding as at December 31, 2005. Operational Highlights Sales growth across all geographical regions -- The sharpest revenue growth in the quarter was recorded in America, where sales were up 29% to EUR 4.0 million over the comparable quarter last year. European revenues were up 6% over the comparable quarter last year, to EUR 5.1 million. Finally, revenues in the Asia-Pacific region increased by 20% in the quarter, to EUR 0.9 million. Europe, America and Asia-Pacific contributed 51%, 39% and 10%, respectively, of the second quarter's total revenues. -- Existing customers increased their commitment to InfoVista solutions, with revenues from repeat customers representing 90% of total revenues for the quarter. Repeat customers included the American and Canadian telecommunication incumbents, Telefonica and Cable & Wireless in Europe, and SingTel in Asia. -- Revenues from the direct sales channel increased 30% over the same period last year to contribute 63% of total revenues for the second quarter. Indirect revenues totaled EUR 3.7 million in the quarter, accounting for 37% of total revenues. Strong demand from Service Providers and sharp growth in the Enterprise segment -- Revenues from Service Providers increased 9% year-on-year to EUR 6.8 million in the quarter, representing 69% of total revenues. During the quarter, InfoVista recorded revenues from the telecommunication incumbents in the US, Canada, Mexico, UK and Singapore. InfoVista secured revenues of at least EUR 250 thousand each from eight Service Providers during the quarter, including a combined deal of EUR 1 million with the T-Mobile Group and two other large deals from Telefonica and new customer Eircom of Ireland. Mobile operators are enhancing their core networks to deploy a new generation of wireless data services as they require superior Quality of Service and network performance management solutions to manage their MPLS backbone. In Q2, InfoVista was chosen over the competition by wireless operators such as SingTel Mobile, Polkomtel, PT Excelcom, Bouygues Telecom and two distinct T-Mobile operations, to address a combination of those needs, vindicating the Company's transformation from strict resource performance management to service-centric quality monitoring. -- Revenues from the Enterprise market jumped 34% to EUR 3.1 million in the quarter, contributing 31% of total revenues. Three important contracts were signed with financial institutions, including a EUR 0.5 million competitive deal with a top-five banking firm that selected InfoVista to provide comprehensive management solution for its IP Telephony system, considered one of the world's largest such deployments to date. InfoVista also booked orders from government entities in the US, Germany and the Czech Republic during the quarter. Further Industry recognition -- VistaInsight for IP Telephony is the recipient of Internet Telephony's 2005 Product of the Year Award and was acknowledged as a leading IP telephony management solution in the Yankee Group's recent report, "VoIP Management Solutions Guide: Managing Cisco IP Communications in the Enterprise." Strengthened Partnerships and Alliances -- In Q2, InfoVista hosted successful Executive Advisory Panels in Rome, Italy and Washington, DC. InfoVista customers and partners representing a diverse range of operators, outsourcers and industry experts throughout EMEA and the Americas shared their perspectives, lessons learned, recommendations and plans for next-generation network success. New Solution Released -- During the quarter, the Company announced the launch of VistaInsight(TM) for Servers 2.0, the latest version of InfoVista's performance management solution for maximizing server and system infrastructure investments in enterprise data centers. In addition to new functionalities to expand its addressable market, VistaInsight for Servers 2.0 includes capabilities geared toward the support of server virtualization. Outlook Despite the seasonality that comes with the first quarter of the calendar year, InfoVista anticipates positive year on year growth in Q3, with a revenue range of EUR 9.0 to EUR 9.5 million. The Company also expects its third quarter net results to be at or near breakeven. SFAF meeting The company will host a SFAF (Societe Francaise des Analystes Financiers) Meeting today in Paris in French at 10.00 am (Continental Europe). About InfoVista InfoVista is the Service-Centric Performance Management Software Company that assures the optimal delivery of business-critical IT services. Driven by a uniquely adaptive and real-time technology foundation, InfoVista solutions improve business effectiveness, reduce operating risk, lower cost of operations, increase agility and create competitive advantage. Eighty percent of the world's largest service providers as ranked by Fortune(R), as well as leading Global 2000 enterprises, rely on InfoVista to enhance the business value of their technology assets. Representative customers include ABN AMRO, Allstream, Banques Populaires, AXA, Banque de France, Bell Canada, British Telecom, Broadwing Communications, Cable & Wireless, Com Hem, Defense Information Systems Agency (DISA), Deloitte & Touche, Deutsche Telecom, France Telecom, Savvis Corporation, SingTel, Telefonica, and US Cellular. A Software Magazine 500 company, InfoVista stock is traded on the NASDAQ (IVTA) and on Eurolist by Euronext (FR0004031649). For more information about the company, please visit www.infovista.com. Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995: Except for historical information contained herein, the matters discussed in this news release are "forward looking statements." These statements involve risks and uncertainties which could cause actual results to differ materially from those in such forward-looking statements; including, without limitation, risks and uncertainties arising from the rapid evolution of our markets, competition, market acceptance of our products, our dependence upon spending by the telecommunications industry and our ability to develop and protect new technologies. For a description of other factors which might affect our actual results, please see the "Risk Factors" section and other disclosures in InfoVista's public filings with the US Securities & Exchange Commission and French Autorite des Marches Financiers. Readers of this news release are cautioned not to put undue reliance on any forward-looking statement. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. InfoVista is a registered trademark of InfoVista, S.A. -0- *T INFOVISTA CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except for share and per share data) ----------- ----------- ------------ ----------- For the six months For the three months ended December 31, ended December 31, ----------------------- ------------------------ 2005 (1) 2004 2005 (1) 2004 ----------- ----------- ------------ ----------- (unaudited) (unaudited) (unaudited) (unaudited) Revenues License revenues EUR 10,538 EUR 8,678 EUR 5,648 EUR 4,667 Service revenues 8,473 7,569 4,303 3,955 ----------- ----------- ------------ ----------- Total revenues 19,011 16,247 9,951 8,622 Cost of revenues Cost of licenses 349 368 210 198 Cost of services 3,433 2,857 1,693 1,495 ----------- ----------- ------------ ----------- Total cost of revenues 3,782 3,225 1,903 1,693 ----------- ----------- ------------ ----------- Gross profit 15,229 13,022 8,048 6,929 Operating expenses Sales and marketing expenses 8,711 7,365 4,465 3,548 Research and development expenses 3,690 3,269 1,894 1,650 General and administrative expenses 3,297 2,721 1,683 1,468 Impairment of fixed assets - 4 - 3 Amortization of acquired intangibles - 158 - 63 ----------- ----------- ------------ ----------- Total operating expenses 15,698 13,517 8,042 6,732 ----------- ----------- ------------ ----------- Operating (loss) income (469) (495) 6 197 Other income (expense): Realized gains on marketable securities 224 227 109 120 Net foreign currency transaction losses (9) (262) (18) (208) Other income, net 43 14 34 2 ----------- ----------- ------------ ----------- (Loss) Income before income taxes (211) (516) 131 111 Income tax (expense) benefit (156) 10 (46) (3) ----------- ----------- ------------ ----------- Net (loss) income EUR (367) EUR (506) EUR 85 EUR 108 =========== =========== ============ =========== Basic net (loss) income per share EUR (0.02) EUR (0.03) EUR 0.00 EUR 0.01 Diluted net (loss) income per share EUR (0.02) EUR (0.03) EUR 0.00 EUR 0.01 Basic weighted average shares outstanding 17,477,352 17,205,645 17,587,631 17,246,502 Diluted weighted average shares outstanding 17,477,352 17,205,645 18,966,581 20,883,505 (1) For the three and six months ended December 31, 2005, the operating expenses and cost of services include a stock-based compensation charge of EUR 276 thousand and EUR 552 thousand, reflecting the adoption of FAS123(R). Excluding this charge, the Company would have recorded net income of EUR 361 thousand and EUR 185 thousand, respectively, for the three and six months ended December 31, 2005. *T -0- *T INFOVISTA CONSOLIDATED BALANCE SHEETS (In thousands, except for share data) ---------------------- As of ---------------------- December June 30, 31, 2005 2005 ----------- ---------- (unaudited) ASSETS Cash and cash equivalents EUR 8,605 EUR 8,781 Marketable securities 25,509 24,965 Trade receivables, net of allowance of EUR 232 and EUR 253, respectively 8,795 11,310 Prepaid expenses and other current assets 1,697 2,071 ----------- ---------- Total current assets 44,606 47,127 ----------- ---------- Fixed assets, net 2,328 2,200 Intangible assets, net 1,717 1,158 Investment in equity securities 1,027 1,027 Deposits and other assets 838 717 ----------- ---------- Total long-term assets 5,910 5,102 ----------- ---------- Total assets EUR 50,516 EUR 52,229 =========== ========== LIABILITIES & STOCKHOLDERS' EQUITY Trade payables EUR 2,314 EUR 2,465 Accrued salaries and commissions 1,618 2,523 Accrued social security and other payroll taxes 1,203 1,026 Deferred revenue 5,438 7,202 Accrued VAT 796 1,541 Other current liabilities 362 363 ----------- ---------- Total current liabilities 11,731 15,120 ----------- ---------- Other long term liabilities 150 113 ----------- ---------- Total long-term liabilities 150 113 ----------- ---------- Stockholders' equity Common stock (18,967,363 and 18,524,721 shares authorized and issued, and 17,802,394 and 17,372,867 shares outstanding) 10,242 10,003 Capital in excess of par value of stock 86,851 84,893 Accumulated deficit (52,556) (52,189) Unrealized gains(losses) on available for sale securities 6 (33) Cumulative translation adjustment (1,050) (1,200) Less common stock in treasury, at cost (4,858) (4,478) ----------- ---------- Total stockholders' equity 38,635 36,996 ----------- ---------- Total liabilities and stockholders' equity EUR 50,516 EUR 52,229 =========== ========== *T