From an operational perspective, Cyberplex beat consensus forecasts, extending the Google/Cyberplex trend to seven quarters.
Yesterday Cyberplex (CX.TO) reported Q3 sales of $28.2 million, a 158% increase over Q3 2008 sales of $11.2 million and a 10% sequential increase over Q2 2009 sales of $25.7 million. Analysts were expecting a sequential decline in sales due to historically weak Q3 related to seasonality in media spending. Seasonality trends were broken for this quarter, and revenue was reported approximately 28% ahead of consensus forecasts. The Company reported net income of $0.7 million, or $0.01 EPS for the quarter, which was a 12.5% year-over-year increase from Q3 2008 net income of $0.6 million. Because a vast majority of its revenue is recognized in U.S. dollars, and it reports in Canadian dollars, the company continues to struggle with currency volatility related to the relationship between the U.S. dollar and the Canadian dollar. The company reported $1.6 million in foreign exchange losses for the quarter despite attempting to apply FX hedging programs this quarter. Management still needs to get a handle on this issue. The company reported $2.7 million in EBITDA ahead of FX adjustments, which was a 390% improvement over Q3 2008 EBITDA before FX of $0.6 million. This was also ahead of consensus. The Company is demonstrating earnings leverage from operations, although due to currency risk, it is not necessarily being reflected in net income for this quarter.
This was a cash flow neutral quarter, and the company exited Q3 with $21.4 million of cash.
Showing posts with label Q3 2009 Earnings. Show all posts
Showing posts with label Q3 2009 Earnings. Show all posts
11/11/09
11/5/09
Bridgewater Systems Q3 2009 - Beats Consensus Forecasts and Increases FY Guidance.
This morning Bridgewater Systems reported Q3, 2009 earnings and subsequently discussed the results and outlook during an analyst call. Analysts are likely to view the results and the business outlook as positive for the stock.
Net income for the quarter was reported at $1.7 million or $0.07 EPS, ahead of consensus forecasts of $0.05 EPS. Revenue was reported at $15.8 million, a 53% increase over prior year Q3 revenue of $10.3 million and ahead of consensus forecasts of $14.6 million for the quarter. Gross Margins contracted sequentially to 64% from Q2 2009 Gross Margins of 75% and from Q3 2008 Gross Margins of 75%. The gross margins contraction is related to the deployment of the Widespan contract and activities related to various trials and deployment preparations associated with various recent contract wins - basically scaling costs. Management expects Gross Margins to continue in the mid-60s range until H2 2010, when it anticipates that Gross Margins will expand to a target of 70% where it is expected to stabilize.
Net income for the quarter was reported at $1.7 million or $0.07 EPS, ahead of consensus forecasts of $0.05 EPS. Revenue was reported at $15.8 million, a 53% increase over prior year Q3 revenue of $10.3 million and ahead of consensus forecasts of $14.6 million for the quarter. Gross Margins contracted sequentially to 64% from Q2 2009 Gross Margins of 75% and from Q3 2008 Gross Margins of 75%. The gross margins contraction is related to the deployment of the Widespan contract and activities related to various trials and deployment preparations associated with various recent contract wins - basically scaling costs. Management expects Gross Margins to continue in the mid-60s range until H2 2010, when it anticipates that Gross Margins will expand to a target of 70% where it is expected to stabilize.
10/16/09
GOOG Beats Expectations...Will CX .TO Follow Again?
During the Q4 earnings season I began highlighting an interesting pattern between Google earnings performance and Cyberplex performance. Essentially, each time that Google exceeded earnings expectations, Cyberplex also exceeded forecasts when it reported approximately two to three weeks later. In July, I became a little bolder and proposed a trading idea that Google performance has consistently foreshadowed Cyberplex performance, suggesting that traders could accumulate ahead of CX.TO earnings report.
10/14/09
INTC flies by forecasts - strong beat and analyst upgrades everywhere.
Intel is the first of technology sector bellwethers to report. It had already pre-reported that it would have a strong third quarter, although the actual numbers surpassed all analysts expectations - both top line and bottom line. The sequential quarterly growth was reported by Management to be the strongest in 30 years. Analysts are raising targets, and already some are whispering stretch targets of $40.00, with official 12-month targets appearing to settle in a range between $26 and $30.
8/6/09
Redknee (RKN.TO) Strong Q3 - Outlook Encouraging
Tweet Last Night: As expected $TSE:RKN reported a strong quarter - 21% growth, 23% GM growth, 17.2% EBITDA margin, $0.01 EPS
Redknee reported
Management has hinted at future tuckunder acquisitions both in important local international markets, and in triple play OSS. It has stated that it would like to normalize cash on hand at between $17 and $20 million. Currently, the Company has $22.4 million, so there is budget for tuckunder acquisitions available.
The company continues to predict continued profitable growth into 2010 and 2011 despite continued currency risk related to the value of the Canadian dollar. Currency volatility continues to be Redknee's largest risk, and it may result in slower deployments as international clients attempt to manage costs related to currency fluctuations.
Earning for the first 9 months of 2009 are reported at $0.06 EPS
Fundamentally, the stock is trading in the 10x EV/EBITDA range on a conservative FYE estimate. There is probably room for this stock to continue to ascend on a comparative basis. Notwithstanding the general over valuation of the current equity market, RKN and its peers such as BWC are profitable with international presence in high growth market sectors and strong balance sheets. A good spot to be for stock pickers.
Disclosure: own BWC, do not own RKN.
Redknee reported
- $14.5 million in sales for the quarter, up 21% from $11.9 million in previous quarter
- Gross Margins of 79%, up 23% from 64% in previous quarter.
- EBITDA of $2.5 million versus an EBITDA loss of $2.5 million in previous quarter
- Earnings of $0.8 million or $0.01 EPS versus a loss of $3.5 million or a $0.06 loss per share.
- Income from operations impacted by $1.1 million in FX loss for this quarter due to CAD$ strength.
- Current backlog is $28.3 million with 30% or approximately $8.5 million to be recognized in Q4, 2009.
- It expects Gross Margins to normalize to between 73% and 75%
- Recurring revenue as a percentage of total has increased from 33% to 38% due mostly to more maintenance renewals.
- Breakeven revenue benchmark has declines from $58 m annualized to $51 m annualized over the past 6 quarters.
- DSO has declined from 81 days to 75 days.
- SG&A expenses as a percentage of revenue should decline as management leverages headcount. Expect EBITDA margins to increase from 17.2% over the next few quarters.
- It plans to continue international expansion with Tier 1 market.
- Begin focusing on Tier 2 and Tier 3 players in North America and Europe.
- Expand into broadband triple play OSS.
Management has hinted at future tuckunder acquisitions both in important local international markets, and in triple play OSS. It has stated that it would like to normalize cash on hand at between $17 and $20 million. Currently, the Company has $22.4 million, so there is budget for tuckunder acquisitions available.
The company continues to predict continued profitable growth into 2010 and 2011 despite continued currency risk related to the value of the Canadian dollar. Currency volatility continues to be Redknee's largest risk, and it may result in slower deployments as international clients attempt to manage costs related to currency fluctuations.
Earning for the first 9 months of 2009 are reported at $0.06 EPS
Fundamentally, the stock is trading in the 10x EV/EBITDA range on a conservative FYE estimate. There is probably room for this stock to continue to ascend on a comparative basis. Notwithstanding the general over valuation of the current equity market, RKN and its peers such as BWC are profitable with international presence in high growth market sectors and strong balance sheets. A good spot to be for stock pickers.
Disclosure: own BWC, do not own RKN.
7/31/09
RDM Corp results offer a glimmer of what could be
In early 2008, I slapped a sell rating on RDM Corp (RC.TO) with a $0.60 target. The company was being rocked by a stressed out and capital constrained client base (banks), a stuffed channel, and really poor visibility. Revenues were declining drastically as the client base stopped buying its various digital check scanners. The only thing that it had going for it at the time was about $17 million in cash, no debt, and a relatively minor payment processing business.
Last November and then again this previous March, the stock bounced against the $0.60 range as expected. Since then, there has been a fairly remarkable recovery for the share price where it has recently traded in the $1.20 range. There may be a legitimate reason for the move in share price.
RC reported $5.9 million in revenue for Q3 2009, a 13.4% improvement over previous year sales - although nice, this is not the story. Gross Margins for Q3 2009 increased to 42% from 34% the previous year, a 23% improvement, which should be considered very positive. The root cause of this substantial increase in GM is directly related to the success RDM Corp is experiencing as a payment processor. For q3 2009, payment processing revenue represented 42% of total revenue for the quarter versus the previous year where it represented only 33% of total sales. Why is this good? Payment processing generates close to 70% GM, whereas the device business delivers between 30% and 35% GM. In addition, payment processing is essentially 100% recurring revenue, which has helped to improve management's visibility on a growing percentage of its total revenue. Improving margins have helped the company to eek out a modest net income for the quarter of $0.175 million or $0.01 EPS. Right now the company executes 3.8 million transactions per day on its payment network, a 35% increase over the previous year. Revenue for the segment increased to $2.5 million or 48% over Q3 2009. Organic growth is expected to continue to be strong, so there may be a trend towards more profitable quarters coming.
Management must find away to better use its capital in order to accelerate a move towards payment processing, and to get out of the declining device gig. More payment processing begets more visibility, more earnings leverage, and more cash flow for shareholders.
Disclosure: I do not own shares of RC.
Last November and then again this previous March, the stock bounced against the $0.60 range as expected. Since then, there has been a fairly remarkable recovery for the share price where it has recently traded in the $1.20 range. There may be a legitimate reason for the move in share price.
RC reported $5.9 million in revenue for Q3 2009, a 13.4% improvement over previous year sales - although nice, this is not the story. Gross Margins for Q3 2009 increased to 42% from 34% the previous year, a 23% improvement, which should be considered very positive. The root cause of this substantial increase in GM is directly related to the success RDM Corp is experiencing as a payment processor. For q3 2009, payment processing revenue represented 42% of total revenue for the quarter versus the previous year where it represented only 33% of total sales. Why is this good? Payment processing generates close to 70% GM, whereas the device business delivers between 30% and 35% GM. In addition, payment processing is essentially 100% recurring revenue, which has helped to improve management's visibility on a growing percentage of its total revenue. Improving margins have helped the company to eek out a modest net income for the quarter of $0.175 million or $0.01 EPS. Right now the company executes 3.8 million transactions per day on its payment network, a 35% increase over the previous year. Revenue for the segment increased to $2.5 million or 48% over Q3 2009. Organic growth is expected to continue to be strong, so there may be a trend towards more profitable quarters coming.
Management must find away to better use its capital in order to accelerate a move towards payment processing, and to get out of the declining device gig. More payment processing begets more visibility, more earnings leverage, and more cash flow for shareholders.
Disclosure: I do not own shares of RC.
11/26/08
Descartes Systems: In Dark Days The Sun Shines on DSG
Descartes Systems operates an unsexy SaaS messaging network for the worldwide supply chain that helps to lubricate the flow of goods across international borders by automating customs and regulatory filings associated with shipping. In addition, DSG provides logistics services for fleets, which has experienced increasing demand due to higher fuel and declining shipments.
Third Quarter was better than expected.
The Company was slightly below expectations in topline sales reporting $7.1 million versus my expectation of $7.3 million due to shipping headwinds. However EBITDA was higher than expected at $4.4 million versus my expectation of $4.1 million. I believe that this is due to greater demand for higher margin services during the quarter. Cashflow was reported at $5.9 million, substantially higher than our forecast of $4.9. This better than expected result was due partly to Days Sales Outstanding (DSO) declining from 53 days to 47 days versus our expectation that DSO would increase to 60 days due to the economic stress of its client base. Reported earnings were 64% higher than my forecast at $2.3 million versus $1.4 million. Part of this difference can be explain by lower than forecasted tax expenses. EPS was $0.04 and a penny higher than my expectations of $0.03 EPS. This Company is growing at a solid rate while many others are faltering.
Outlook Is Positive For Three Reasons.
1. Regulations will increase and make shipping more complex - With the announcement of the 10+2 regulation (aimed at improving product safety) in the US, DSG is well positioned to help its clients comply at minimal relative expense, while the US government continues to keep the supply chain lubricated. By 2011, European Union regulatory harmonization will boost demand again.
2. Worldwide Recession - Shippers will need to become more efficient to survive. Only 5% of all documentation is automated. More automation should be expected, and DSG is in a great position to benefit - especially in North America.
3. Volatility and Uncertainty - These two conditions benefit DSG the most because shippers will need to contend with increasingly complex orders and contracts that may be ammended by the second. This should benefit DSG in the near-term as the only way to deal with this is through automated messaging.
A Stock for the Times
Descartes Systems Group provides a boring but essential service to the Supply Chain. As conditions deteriorate, and volatility increases, while more regulations get enacted, Descartes Systems becomes more essential to Supply Chain.
The Company has no debt and $53.5 million in cash.
A Potential Consolidator
Descartes is in great position to use its balance sheet to accelerate its capture of more regulations worldwide for automation. Its acquisition of Dexx in Europe is an early foray. I expect more to come. I also believe that the Company can extend its messaging concept to other transactions in the value chain. Finally, DSG could leverage its balance sheet to evolve into an outsources fleet management system.
I do not own shares of Descartes Systems, nor do I receive any compensation from the Company, Management, or the Board.
Third Quarter was better than expected.
The Company was slightly below expectations in topline sales reporting $7.1 million versus my expectation of $7.3 million due to shipping headwinds. However EBITDA was higher than expected at $4.4 million versus my expectation of $4.1 million. I believe that this is due to greater demand for higher margin services during the quarter. Cashflow was reported at $5.9 million, substantially higher than our forecast of $4.9. This better than expected result was due partly to Days Sales Outstanding (DSO) declining from 53 days to 47 days versus our expectation that DSO would increase to 60 days due to the economic stress of its client base. Reported earnings were 64% higher than my forecast at $2.3 million versus $1.4 million. Part of this difference can be explain by lower than forecasted tax expenses. EPS was $0.04 and a penny higher than my expectations of $0.03 EPS. This Company is growing at a solid rate while many others are faltering.
Outlook Is Positive For Three Reasons.
1. Regulations will increase and make shipping more complex - With the announcement of the 10+2 regulation (aimed at improving product safety) in the US, DSG is well positioned to help its clients comply at minimal relative expense, while the US government continues to keep the supply chain lubricated. By 2011, European Union regulatory harmonization will boost demand again.
2. Worldwide Recession - Shippers will need to become more efficient to survive. Only 5% of all documentation is automated. More automation should be expected, and DSG is in a great position to benefit - especially in North America.
3. Volatility and Uncertainty - These two conditions benefit DSG the most because shippers will need to contend with increasingly complex orders and contracts that may be ammended by the second. This should benefit DSG in the near-term as the only way to deal with this is through automated messaging.
A Stock for the Times
Descartes Systems Group provides a boring but essential service to the Supply Chain. As conditions deteriorate, and volatility increases, while more regulations get enacted, Descartes Systems becomes more essential to Supply Chain.
The Company has no debt and $53.5 million in cash.
A Potential Consolidator
Descartes is in great position to use its balance sheet to accelerate its capture of more regulations worldwide for automation. Its acquisition of Dexx in Europe is an early foray. I expect more to come. I also believe that the Company can extend its messaging concept to other transactions in the value chain. Finally, DSG could leverage its balance sheet to evolve into an outsources fleet management system.
I do not own shares of Descartes Systems, nor do I receive any compensation from the Company, Management, or the Board.
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