Vasco posts Q4 net income rise

Source: Vasco Data Security International

Vasco Data Security International, Inc. (Nasdaq: VDSI), today reported financial results for the fourth quarter and full year ended December 31, 2011.

Revenue from continuing operations for the fourth quarter of 2011 increased 47% to $48.5 million from $33.0 million in 2010 and, for the full year 2011, increased 56% to $168.1 million from $108.0 million in 2010.

Net income from continuing operations for the fourth quarter of 2011 was $11.3 million, or $0.29 per fully diluted share, an increase of $4.7 million, or 70%, from $6.7 million, or $0.17 per fully diluted share, for the fourth quarter of 2010. Net income from continuing operations for the full year 2011 was $24.3 million, or $0.63 per fully diluted share, an increase of $13.4 million, or 124%, from $10.8 million, or $0.28 per fully diluted share for the full year 2010.

Net income, which includes the impact of our discontinued operations, for the fourth quarter of 2011 was $10.8 million, or $0.28 per diluted share. Net income for the full year 2011 was $18.1 million, or $0.47 per diluted share.

Financial Highlights:
• Gross profit from continuing operations was $32.0 million or 66% of revenue for the fourth quarter of 2011 and $108.1 million or 64% of revenue for the full year 2011. Gross profit was $23.3 million or 71% of revenue for the fourth quarter of 2010 and $76.0 million or 70% of revenue for the full year 2010.
• Operating expenses from continuing operations for the fourth quarter and full year 2011 were $22.9 million and $83.3 million, respectively, an increase of 46% from $15.7 million reported for the fourth quarter 2010 and an increase of 31% from $63.6 million reported for the full year 2010.
Operating expenses from continuing operations for the fourth quarter and full year 2011 included $3.9 million and $6.1 million, respectively, of expenses related to stock-based incentives. Operating expenses from continuing operations for the fourth quarter and full year 2010 included a benefit of $0.9 million and expense of $1.0 million, respectively, related to stock-based incentives.
Operating exxpenses from continuing operations for the fourth quarter and full year 2011 also included $0.5 million and $2.0 million, respectively, of expenses related to the amortization of purchased intangible assets. Operating expenses for the fourth quarter and full year 2010 included $0.1 million and $0.4 million, respectively, of expenses related to the amortization of purchased intangible assets.
• Operating income from continuing operations for the fourth quarter and full year 2011 was $9.1 million and $24.8 million, respectively, an increase of $1.5 million, or 20%, from $7.6 million reported for the fourth quarter of 2010 and an increase of $12.4 million, or 100%, from the $12.4 million reported for the full year 2010. Operating income as a percentage of revenue for the fourth quarter and full year 2011 was 19% and 15%, respectively, compared to 23% and 11% for the comparable periods in 2010.
• Earnings before interest, taxes, depreciation and amortization from continuing operations was $10.3 million and $29.1 million for the fourth quarter and for the full year 2011, respectively, an increase of 25% from $8.2 million reported for the fourth quarter of 2010 and an increase of 87% from $15.5 million reported for the full year 2010.
• Net cash balances, total cash and cash equivalents less bank borrowings, at December 31, 2011 totaled $84.5 million compared to $77.5 million and $85.5 million at September 30, 2011 and December 31, 2010, respectively.

Operational and Other Highlights:
• Konami Digital Entertainment chooses DIGIPASS technology to secure its online services
• Caixa Geral de Depositos France implements VASCO's DIGIPASS technology to secure its online customer base
• VASCO launches its second generation for Intel® Identity Protection Technology: DIGIPASS for Windows Powered by Intel® IPT
• IDENTIKEY federated authentication extends access control across multiple applications and unconnected networks
• VASCO Data Security and OneLogin Protect Customers Accessing the Cloud
• VASCO and OpSource partner to provide secure cloud services
• VASCO SEAL announces new e-learning course for latest IDENTIKEY Server 3.3

Guidance for full-year 2012:
VASCO is providing guidance for the full-year 2012 as follows:
• Revenue for 2012 is expected to be $175 million or more, and
• Operating income as a percentage of revenue, excluding the amortization of purchased intangible assets, for full-year 2012 is projected to be in the range of 13% to 16%.

"The results for the fourth quarter and full year 2011 exceeded our expectations and were the best in the company's history," stated T. Kendall Hunt, Chairman & CEO. "The results of the quarter and full year reflected the benefit of several large transactions in both the banking and enterprise and application security markets, including transactions coming from new customers, some of which are coming from developing markets. While we do not expect that these individual customers will generate comparable revenue in 2012, we do believe that they will represent new revenue opportunities in years beyond 2012 given our sustainable, repeatable revenue model. With that model, our results have varied substantially period to period based on the specific orders being processed in each period and we would expect that situation to continue for 2012. Over the longer term, however, our sustainable, repeatable revenue model has resulted in substantial growth for our company over the last 8 years"

"We are very pleased with the progress we made in both the banking market and the enterprise and application security market in 2011," said Jan Valcke, VASCO's President and COO. "Revenue from the banking market grew by more than 45% for the quarter and more than 70% for the full year over the same periods in 2010, with more than 10% growth in all of our geographic markets for both the fourth quarter and full-year 2011. In addition, we experienced a return to strong growth in the enterprise and application security market in the fourth quarter of 2011 as revenue increased by more than 40% in the quarter compared to 2010. Although we do not expect to repeat the strong results of the last quarter in the first quarter of 2012, we believe that the demand for our products continues to be strong. "

Cliff Bown, Executive Vice President and CFO added, "With the strong performance of our business, including the strength of the business in the Americas, we determined that it is more likely than not that we will be able to use all of our net operating loss carryforwards in the U.S. As a result, we eliminated the reserve we had established in previous periods related to the benefit of the net operating loss carryfoward and reduced tax expense by $3.9 million in the fourth quarter of 2011. While the reversal of the reserve clearly benefits our 2011 results it will also increase our tax rate in 2012. 

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