VASCO Data Security International, Inc. (Nasdaq: VDSI), today reported its financial results for the first quarter ended March 31, 2006.
Revenues for the first quarter of 2006 increased 20% to $13.7 million from $11.4 million in the first quarter of 2005. Net income for the first quarter 2006 increased 39% to $2.0 million, or $0.05 per diluted share, from $1.4 million, or $0.04 per diluted share, in the first quarter of 2005.
Gross profit was $9.5 million or 69% of revenue for the first quarter of 2006 and compares to gross profit of $7.2 million or 63% of revenue in the first quarter of 2005.
Operating expenses for the first quarter of 2006 were $6.6 million, an increase of $1.3 million or 24% from $5.3 million reported for the first quarter 2005. Operating expenses in 2006 included $0.3 million related to stock based incentives.
Operating income for the first quarter was $2.9 million, an increase of $1.0 million or 51% from $1.9 million reported for the first quarter of 2005. Operating income as a percentage of revenue for the first quarter of 2006 was 21% compared to 17% for the first quarter of 2005.
Earnings before interest, taxes, depreciation and amortization was $3.1 million for the first quarter of 2006, an increase of 29% from $2.4 million reported for the first quarter of 2005.
Net cash balances, total cash and cash equivalents less bank borrowings, at March 31, 2006 totaled $14.5 million compared to $14.0 million at December 31, 2005.
Operational and Other Highlights:
- Approximately 1.8 million Digipass units shipped in the first quarter of 2006, an increase of more than 16% from the first quarter of 2005.
- A total of 341 new accounts sold in the quarter, including 34 banks and 307 Corporate Network Access (CNA) customers. Both the number of new CNA customers and the number of new banks are a company record for a quarter.
- VASCO Launches Speech Enabled Digipass 300 Comfort Voice
- VASCO and Eutron Launch USB Enabled Digipass 860
- VASCO Launches Digipass for Web
- VASCO Launches Full Option, All Terrain Product Strategy
- VASCO Partners with IMPRIVATA To Deliver Digipass-Based Network Authentication Appliance
- SNS Bank Rolls Out Digipass 300 Comfort Voice to Blind and Visually Impaired Customers
- German LBBW (Landesbank Baden-Wuerttemberg) offers Secure Retail e-banking to its Customers with VASCO's Digipass 250
- VASCO Awards GE Money Bank Germany for Its Visionary Approach to the German E-Banking Market
- Dexia Bank (Belgium) to Secure Retail E-banking Customers with VASCO's Digipass 810 Strong Authentication
- Banca Monte Paschi Belgio (Belgium) to Use VASCO's Digipass 260 for Retail and Corporate Banking
Guidance for full-year 2006
VASCO reaffirmed the full-year 2006 guidance provided on February 21, 2006, which included:
- Revenue growth of 35% to 45% for the full-year 2006 over full-year 2005
- Gross margins as a percentage of revenue of 58% to 63% for the full-year 2006, and
- Operating margins as a percentage of revenue of 13% to 18% as reported in accordance with Generally Accepted Accounting Principles and 15% to 20% excluding stock related compensation and amortization expenses
"We introduced our All Terrain Strategy in the first quarter of 2006 to further penetrate and protect our existing and growing customer base," said Ken Hunt, VASCO's CEO, and Chairman. "We will build on our strategy of being the high-volume, high-quality, low-cost producer by expanding our flexible platform to support a growing array of authentication products. Some of those products, like our Digipass for Web, which we announced this quarter, will allow customers to implement a strong authentication solution as a complement to or as an alternative to deploying hardware authentication devices. Our platform, which allows any of our forms of authentication to be used simultaneously, will allow customers to deploy an appropriate, cost-effective method of authentication for each user of their application by selecting the appropriate Digipass product, including Digipass for Web. We believe that Digipass for Web will provide a seamless, non-invasive way to authenticate users that goes well beyond today's fraud detection products. With the addition of Digipass for Web, VASCO will be able to serve and authenticate every audience that needs strong authentication, from people buying a book online once a year to CFO's of companies, transacting millions of dollars on a daily base. We will also be looking to acquire companies that can expand our authentication product offerings and product development capabilities."
"The results of the first quarter in 2006 reflect the continued strong growth of the business in both our banking and corporate network access markets compared to the first quarter of 2005," said Jan Valcke, VASCO's President and COO. "The increase in gross margin as a percentage of revenue in the quarter primarily reflects the fact that our corporate network access business, which has a higher gross margin rate than our banking business, grew faster than our banking business and the fact that we were able to reduce our average cost of product sold. We added 34 new banking customers as compared to 18 in the first quarter of 2005. We also saw a very strong order flow in the first quarter of 2006. As we start the second quarter, we have a backlog of firm orders to be shipped in the second quarter of $16.0 million, which is 48% higher than the $10.8 million backlog we had entering the second quarter of 2005 and 30% higher than the $12.3 million in actual sales reported for Q2 2005."
Cliff Bown, Executive Vice President and CFO added, "Our balance sheet continues to be strong. Net cash balances, cash and cash equivalents less bank borrowings, were $14.5 million, an increase of $0.5 million or 4% from December 31, 2005. Our working capital was $18.9 million at the end of the first quarter, an increase of $2.6 million, or 16%, from $16.3 million at December 31, 2005. Days Sales Outstanding (DSO) in net accounts receivable increased to 76 days at March 31, 2006 from 63 days at December 31, 2005."Download the document now 37.2 kb (Adobe Acrobat Document)