Vizrt Reports H1 and Q2 2011 Results

Record Revenues, Strong Margin Growth and a Record Order Backlog
 
Bergen, Norway, August 11, 2011. Vizrt Ltd. (Oslo Main List: VIZ)
 
For the first six months of 2011, the Company posted a 25% revenue growth
compared to H1 2010 and achieved all-time record revenues.  All business areas
contributed to the revenue growth, with the strongest performance in BG and ONL.
 Geographically, APAC led growth with 48%, compared to H1 2010.  Profitability
has significantly improved, including both Gross Margin and EBIT Margin.
 
HIGHLIGHTS
  * H1 and Q2 2011 Revenues of MUSD 60.1 and MUSD 32.1,up 25% and up 32%
    compared to same periods LY.
  * EBIT of MUSD 7.5 in H1 2011and MUSD 5.1 in Q2 2011, corresponding to a 12%
    and 16% margin respectively, compared to MUSD 2.6 (5%) and MUSD 2.4 (10%)
    for the same periods LY.
  * EBITDA of MUSD 10.4 in H12011 and MUSD 6.4 in Q2 2011, corresponding to a
    17% and 20% margin respectively, compared to MUSD 5.7 (12%) and 3.9 (16%)
    for the same periods LY.
  * The Company posted a net profit of MUSD 6.6 (11%) in H1 2010 and MUSD 4.5
    (14%) in Q2 2011 compared to MUSD 0.6 (1%) and MUSD 1.1 (4%) in the same
    periods LY.
  * Record backlog to date of MUSD 49.8, up 32% compared to the same period LY.
  * Subsequent to the quarter's end, the Company successfully closed the
    acquisition of the first tranche of 60% of all the issued and outstanding
    shares of LiberoVision AG (LV), a leader in the field of virtual sports
    enhancements, complementing Vizrt's workflow solution in BG. LV will be
    consolidated from Q3 2011.
 
Martin Burkhalter, Vizrt CEO, commented on the results, "We are obviously
pleased we have again managed to achieve record revenue levels, but perhaps even
more pleasing is our bottom line performance, which saw a significant
improvement, not only year on year, but also quarter on quarter.  It is clear
that our strategic decisions and subsequent investments of the past couple of
years are paying off.  Our combined and integrated product offering, supported
by a strong commercial regionalization strategy, have allowed us not only to
increase sales to existing customers but also reach a significant number of new
ones.  Our products and solutions are very well received by the market and the
level of trust that customers have in our ability to meet their current and
future needs often leads to strategic investments and substantial follow up
orders."
 
Results Overview
 
  In KUSD           | Q2 2011 | Q2 2010 | Change in% | Q1 2011 | Change in %
--------------------+---------+---------+------------+---------+-------------
  Revenue           | 32,098  | 24,245  | 32%        | 28,001  | 15%
--------------------+---------+---------+------------+---------+-------------
  Gross Profit      | 21,166  | 15,650  | 35%        | 17,349  | 22%
--------------------+---------+---------+------------+---------+-------------
  Gross Margin      | 66%     | 65%     |            | 62%     |
--------------------+---------+---------+------------+---------+-------------
  EBIT              | 5,135   | 2,388   | 115%       | 2,369   | 117%
--------------------+---------+---------+------------+---------+-------------
  EBIT-Margin       | 16%     | 10%     |            | 8%      |
--------------------+---------+---------+------------+---------+-------------
  EBITDA            | 6,421   | 3,892   | 65%        | 3,977   | 61%
--------------------+---------+---------+------------+---------+-------------
  EBITDA-Margin     | 20%     | 16%     |            | 14%     |
--------------------+---------+---------+------------+---------+-------------
  Net Profit (loss) | 4,508   | 1,067   | 322%       | 2,141   | 111%
--------------------+---------+---------+------------+---------+-------------
  Net Profit-Margin | 14%     | 4%      |            | 8%      |
--------------------+---------+---------+------------+---------+-------------
  EPS               | 0.07    | 0.02    | 250%       | 0.03    | 133%
--------------------+---------+---------+------------+---------+-------------
  Backlog           | 49,792  | 37,797  | 32%        | 40,000  | 24%
--------------------+---------+---------+------------+---------+-------------
  Cash Position     | 63,874  | 51,350  | 24%        | 59,938  | 7%
 
Vizrt Product Lines and Geographical Overview
 
Broadcast Graphics (BG)
BG revenues in H1 2011 accounted for 73% of total revenues with MUSD 43.7, a
26% growth Y-o-Y and record 39% growth Q-o-Q. Compared to Q1 2011, BG revenues
were up 18%.
 
Media Asset Management (MAM)
MAM revenues in H1 2011 accounted for 17% of total revenues with MUSD 10.4, an
11% growth Y-o-Y and 9% growth Q-o-Q. Compared to Q1 2011, MAM revenues were
up10%.
 
Online & Mobile (ONL & MOB)
Of all Vizrt product lines, ONL & MOB posted the strongest growth rate, with
57% Y-o-Y, of which organic growth contributed 27%, with the remainder due to
MOB, which was consolidated from Q3 2010 onwards. H1 2011 revenues came in at
MUSD 5.9, compared to MUSD 3.8 in H1 2010.  The strong growth for the product
line included MUSD 1.1 from MOB in H1 2011.  ONL & MOB accounted for 10% of
total revenues in H1 2011.
 
Geographical Overview
 
All regions contributed to the improved performance as compared to H1 2010, with
the strongest growth recorded in APAC, where revenues went up by 48% to MUSD
14.0, as compared to MUSD 9.4 for H1 2010. Revenues in the EMEA region were up
by 22%, from MUSD 26.8 to MUSD 32.8, and revenues in the AMERICAS were up 14%,
from MUSD 11.7 to MUSD 13.3.
 
FINANCIALS
Gross Profit and Gross Margin
The gross margin for H1 2011 was 64% as compared to 62% for the same period LY.
The increase is mainly due to a lower HW portion in the product mix. The gross
profit in H1 2011 was affected by a MUSD 1.3 amortization of intangible assets
from acquisitions, compared to MUSD 1.5in H1 2010. Adjusted for these
amortization effects, the gross margin was 66%, compared to 65% LY.
 
The gross margin for Q2 2011 was 66%, as compared to 65% for the same period
LY.  The gross profit was affected by MUSD 0.5 in Q2 2011, compared to MUSD 0.7
in Q2 2010 due to amortization of intangible assets resulting from acquisitions.
Adjusted for these amortization effects, the gross margin was at 68% for both
periods.
 
Operating Expenses
Total operating expenses in H1 2011were MUSD 31.1, up 15% compared to the same
period LY. The increase was mainly due to an increase in headcount following the
Adactus acquisition, which took place in July 2010 Furthermore the ongoing
implementation of the regionalization program, as well as a general salary
increase implemented throughout the company in 2011 and currency effects due to
volatile exchange rates have all contributed to the cost increase.
 
Operating expenses summary
 
  In KUSD |   H111 |   H110 |   Q211 |   Q210 |   Q111
----------+--------+--------+--------+--------+--------
    R&D   |  9,368 |  7,545 |  4,759 |  3,685 |  4,609
----------+--------+--------+--------+--------+--------
    S&M   | 16,514 | 14,557 |  8,655 |  7,258 |  7,859
----------+--------+--------+--------+--------+--------
    G&A   |  5,219 |  4,835 |  2,617 |  2,319 |  2,602
----------+--------+--------+--------+--------+--------
   OPEX   | 31,101 | 26,937 | 16,031 | 13,262 | 15,070
 
Order backlog
A  record order backlog was achieved as of August 10, 2011 in the amount of MUSD
49.8, up  32%, compared to  LY MUSD  37.8, and up  24% compared to  the Q1 2011
results  release date. For  the first time  LV backlog amounting  to MUSD 3.1 is
included  under BG. BG backlog  was at MUSD 27.0, MAM  backlog at MUSD 16.4, ONL
backlog  at MUSD 5.0 and Mobile streaming,  related to Adactus, at MUSD 1.3. For
all  products backlog was  significantly higher than  the comparable backlog for
the  same period LY. For BG, the backlog  was up 37% compared to the same period
LY,  whereas for MAM  and ONL&MOB the  backlog was up 29% and 17%, respectively,
comparing to the same period LY.
 
Balance Sheet, Cash Flow and Liquidity
Cash flow generation from operating activities in H1 2011 was MUSD 5.4, compared
to MUSD 3.6 in H1 2010. Net cash provided by operating activities in Q2 2011 was
MUSD 3.0, compared to MUSD 1.1 in Q2 2010.
 
Vizrt  has a strong financial  position with no interest-bearing  debt and a net
cash  position of MUSD  63.9 as of June  30, 2011 (including MUSD 0.9 restricted
cash),  compared  to  MUSD  57.5 as  of  December  31, 2010 (including  MUSD 0.5
restricted  cash). Furthermore shareholders' equity as of June 30, 2011 was MUSD
121.6, which is equivalent to an equity ratio of 78%.
 
Organization
At  the end of June 30, 2011, the  Company had 560 employees, compared to 519 as
the  end of June 30, 2010. This increase is  mainly due to increased staffing in
low  cost countries  as well  as an  additional 16 employees  resulting from the
acquisition of Adactus in Q3 2010.
 
OUTLOOK
Martin  Burkhalter, Vizrt CEO, stated,  "Our sales are driven  by our strong and
continuously  evolving offer to  the ever changing, very dynamic media landscape
-  with multiplatform delivery, upgrade to HD, 3DTV and file based workflows. We
are  starting  to  see  the  first  signals  of stronger markets in both MAM and
ONL&MOB,  and we are taking the necessary measures to improve our performance in
these  segments.  We have found that our  ability to offer both fully integrated
solutions  as  well  as  more  application  specific  product  suites is finding
resonance with the market."
 
"So  far, the fiscal and  macroeconomic challenges in the  public sector of some
European countries and the US have not had any visible negative impact on market
conditions.   We do however see a growing  concern related to rising public debt
and signs of slower economic growth in certain regions that could, in the mid or
long-term, have an impact.  That said, our performance has been very strong, and
the  signs for  the second  half of  2011 are positive.   We therefore expect to
achieve stable growth for the second half of this year."
 
Capital Markets Day
This  year's Capital  Market day  will be  held on  September 9 to coincide with
Vizrt's  presence at IBC 2011 in  Amsterdam.  Management will make presentations
on the current state of and future expectations for the company, following which
the Vizrt stand at IBC will be visited for demonstrations.  The event is managed
by  Schwarz Financial  Communication and  if you  wish to attend, please contact
Marc Lakmaaker vialakmaaker@schwarzfinancial.com.
 
Analyst Conference
An Analyst Conference will be held at 09:30 a.m. (CEST) at DnBNor Head Offices,
Stranden 21 in Oslo Investors and Analysts who are not able to attend the
conference are invited to call Management directly.
 
The Q3 2011 results will be released on November 10, 2011.
 
Contacts
 
Martin Burkhalter
CEO
+41 79 795 24 48
mbu@vizrt.com
 
Ofra Brown
CFO
+47 5351 8040
ofra@vizrt.com
 
SCHWARZ Financial Communication
Frank Schwarz
+49 611 1745 398 11
schwarz@schwarzfinancial.com
 
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
 
Full Report as PDF: 
http://hugin.info/138784/R/1537685/469433.pdf
 
Q2 Management Presentation: 
http://hugin.info/138784/R/1537685/469435.pdf
 
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Source: Vizrt Ltd. via Thomson Reuters ONE
 
[HUG#1537685]