Vasco Data Security International (Nasdaq: VDSI), today reported financial results for the third quarter and nine months ended September 30, 2010.
Revenue for the third quarter of 2010 increased 19% to $26.3 million from $22.1 million in the third quarter of 2009, and for the first nine months of 2010, increased 7% to $75.0 million from $69.8 million for the first nine months of 2009.
Net income for the third quarter of 2010 was $2.2 million, or $0.06 per diluted share, an increase of $0.7 million, or 43%, from $1.5 million, or $0.04 per diluted share, for the third quarter of 2009. Net income for the first nine months of 2010 was $4.2 million, or $0.11 per diluted share, a decrease of $2.9 million, or 41%, from $7.0 million, or $0.18 per diluted share, for the comparable period in 2009.
Operational and Other Highlights:
* VASCO won 387 new customers in Q3 2010 (50 new banks and 337 new enterprise security customers). For the first nine months of 2010, VASCO won 1,305 new customers (158 banks and 1,147 enterprise security customers). Although management considers the number of new customers as an indicator of the momentum of our business and effectiveness of our distribution channel, the number of new customers is not indicative of future revenue.
* VASCO announces the availability of its multi-one time password (OTP) technology. With its multi-OTP devices, existing customers of traditional authentication solutions will be able to secure additional applications without introducing online transaction signing.
* VASCO launches DIGIPASS 831, a new edition of its most popular smart card reader now with replaceable batteries, a larger display (25% bigger) and an improved user-interface.
* VASCO enhances its IDENTIKEY Server to securely access corporate networks using strong authentication through wireless Internet connections.
* PostFinance, a Swiss financial institution, plans to deploy VASCO's new DIGIPASS 831 to its existing and new e-banking customers.
* RM, an international education company, secures its remote access and extranet access for employ for employees and partners with VASCO IDENTIKEY, DIGIPASS for Mobile and DIGIPASS GO 6.
* Leleux Associated Brokers, an independent Belgian stock broking firm, uses DIGIPASS technology to secure access to its online stock broking application "Leleux On Line."
* VASCO partners with Singapore-based distributor Pacific Tech. Pacific Tech is a leading regional Value Added Distributor (VAD) specializing in network unified threat management products and rich media communication systems and solutions.
Guidance for full-year 2010:
VASCO is reaffirming its guidance for the full-year 2010 as follows:
* Revenue growth of 5% to 10% for the full-year 2010 over full-year 2009, and
* Operating margin as a percentage of revenue for full-year 2010 is expected to be in the range of 5% to 10%.
"The results for the third quarter of 2010 reflected the continued strengthening of our business from the depressed economic conditions in 2009," stated T. Kendall Hunt, Chairman & CEO. "Revenues from both the banking and enterprise and application security markets increased substantially over the same periods in 2009. Revenues were also up over the second quarter of 2010 as strength in the banking business offset the declines in third quarter revenues we normally experience due to the seasonality of our business. We have also remained profitable while increasing our aggressive investments in infrastructure that are needed to support future anticipated growth."
"In the third quarter we saw a significant increase in orders from our banking business. The increase in RFP activity from customers in the banking market that we noted in prior quarters has started to result in firm purchase orders that are expected to ship in the fourth quarter of 2010 and throughout 2011," said Jan Valcke, VASCO's President and COO. "We also continue to be encouraged by the progress being made in the enterprise and application security markets. We have increased and plan to continue to increase our investment in sales and marketing and product development to help ensure that we can maintain our leadership position in the global authentication market."
Cliff Bown, Executive Vice President and CFO added, "During the third quarter of 2010, our cash and working capital balances increased 14% and 10%, respectively, from our balances at June 30, 2010. At September 30, 2010 our net cash balance was $86.4 million and we had $92.3 million of working capital. Days sales outstanding in net accounts receivable at September 30, 2010 decreased to 60 days from 71 days at June 30, 2010.