RSA Security Inc. (NASDAQ:RSAS) today reported financial results for the third quarter ended September 30, 2005.
Revenue for the third quarter of 2005 was $76.2 million, as compared to $76.7 million for the third quarter of 2004. Net income for the third quarter of 2005 increased 72% to $15.1 million, or $0.21 per diluted share, from $8.7 million, or $0.13 per diluted share, for the comparable period a year ago. During the third quarter the Company received $8.5 million in tax refunds and associated interest payments from the United States Internal Revenue Service (IRS). These tax refunds and related reserve adjustments increased the Company's earnings per diluted share by $0.08.
"We delivered third quarter financial results that were within our range of guidance, and we shipped a record number of authentication credentials," said Art Coviello, president and CEO of RSA Security. "With our new product releases in the third quarter, we continue to deliver the highest quality identity and data protection solutions to the market."
Third-Quarter Financial Highlights
Revenue: Revenue for the third quarter of 2005 was $76.2 million, as compared to $76.7 million for the third quarter of 2004. RSA Security's book-to-bill ratio for the quarter was approximately 1.0 to 1, and the Company closed the quarter with $61.5 million in combined backlog and deferred revenue.
Net Income: Net income for the third quarter of 2005 increased 72% to $15.1 million, or $0.21 per diluted share, from $8.7 million, or $0.13 per diluted share, from the third quarter of 2004.
Cash Position: Cash, cash equivalents, and marketable securities increased to $302.7 million at September 30, 2005 from $289.7 million at December 31, 2004. During the quarter, in accordance with the Company's approved share repurchase program, RSA Security repurchased 448,379 shares of its common stock for $5.7 million.
Tax: The IRS issued tax refunds and associated interest payments to the Company totaling $8.5 million. The tax refunds received during the third quarter are associated with the Company's previously disclosed IRS audit for the years 1996 through 2002.
Customers: RSA Security shipped product to approximately 5,300 customers in the third quarter, including 642 new customers. With these new customers, RSA Security's overall customer base is now approximately 19,000 worldwide.
Products: RSA Security announced RSA Authentication Manager 6.1, the enterprise software powering RSA SecurID two-factor authentication technology, which now delivers 802.1X-based security for organizations with both wired and wireless environments. The software also supports a number of Extensible Authentication Protocol (EAP) methods, including EAP-POTP, an open specification for wired/wireless strong authentication, which was developed by RSA Laboratories.
The Company also unveiled RSA SecurID for Microsoft Windows 2.0 solution, which delivers improve policy management capabilities, enhanced usability, increased scalability and complete integration with RSA SecurID SID800 USB-enabled authenticators.
The Company began shipping RSA BSAFE Data Security Manager, a middleware solution that simplifies and strengthens application security by putting security decisions and design in the hands of security experts while easing the implementation of security for developers.
The Company announced RSA Certificate Manager 6.6 and RSA Registration Manager 6.6 (formerly RSA Keon software), which deliver greater functionality and ease-of-use to customers deploying comprehensive digital certificate solutions. The new versions also provide simplified methods for customers pairing digital certificates with solutions such as smart cards, USB-based two-factor authentication tokens, and enterprise single sign-on.
Board Appointment: The Company appointed Orson Swindle, former commissioner of the United States' Federal Trade Commission (FTC), as a new member of its Board of Directors. Mr. Swindle was formally the Assistant Secretary of Commerce, appointed under President Reagan. Most recently he spent over seven years as a commissioner at the FTC - the Federal Government's principal law enforcement agency for antitrust and consumer protection laws.
RSA Security's financial guidance for the fourth quarter of 2005 is only current as of today, Thursday, October 27, 2005, and the Company undertakes no obligation to update its estimates:
The Company is reiterating its previously stated earnings guidance for the fourth quarter of 2005, and updating its revenue guidance. The current revenue guidance reflects the Company's plan to build both backlog and deferred revenue in the fourth quarter.
Fourth Quarter Guidance
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- Diluted earnings per share in the range of $0.15 to $0.19
- Revenue in the range of $78 million to $82 million, as compared to prior revenue guidance of $81 million to $85 million