Regulatory News:
InfoVista (Euronext: IFV, ISIN: FR0004031649), the leading
service-centric performance management software company, today announced
financial results for the first quarter of its fiscal year 07/08, ended
September 30, 2007.
Following the correction of InfoVista’s
Q1 numbers for fiscal year 06/07 (see below), comparisons are provided
based on both reported and corrected numbers for that period.
Total revenues for the quarter were €10.2
million, up 11% from the reported revenues of €9.2
million or 24% from the corrected revenues in the comparable quarter
last year. Revenues benefited from a 15% increase in the sales of
services mainly driven by a 37% increase in professional services. For
the first time ever in the first quarter of its fiscal year, InfoVista
reported positive operating profit, totaling €0.2
million. However, net loss for the quarter was €0.2
million, due primarily to negative financial income.
Commenting on the quarter, Chief Executive Officer Alain Tingaud said: "Our
performance this quarter starts to show the impact of the reorganization
we undertook two quarters ago. Though we are far from where we wish to
be, we are confident that this improving trend will continue as we
launch new solutions and have reshaped our US operations. The
acquisition of Accellent, which we announced separately today, fits
right into our strategy and should enable us to consolidate our growth
prospects. Unfortunately, the progress we are making on the operational
and strategic fronts was marred in the quarter by the need for a
correction of our prior fiscal year numbers. We are extremely saddened
by this incident, due to the deliberate actions of one of our employees,
and are taking far-reaching measures to ensure that it cannot be
repeated.” Q1 Financial Highlight Revenues
Total revenues for the first quarter increased to €10.2
million, as compared to reported revenues of €9.2
million or corrected revenues of €8.2
million in the comparable quarter last year. On a constant exchange
rate basis, total revenues would have been €10.6
million for the first quarter.
Service revenues contributed to 57% of total revenues, increasing 15%
to €5.8 million.
License revenues for the first quarter rose to €4.4
million, representing 43% of total revenues.
Expenses
The gross margin in the first quarter stood at 78% of revenues, as
compared to reported gross margin of 80% or corrected gross margin of
78% for the same quarter the previous year. The gross margin reflects
the higher proportion of service revenues in the first quarter of the
current year and re-allocation of presales technical resources to
billable activities, which resulted in a shift in costs from sales and
marketing to cost of services.
Operating expenses for the first quarter totaled €7.8
million, roughly unchanged from the comparable quarter last year.
-- Sales & marketing expenses, representing 49% of total operating
expenses, declined 9% year-on-year. This drop is largely due to a
shift in personnel in the quarter, as certain pre-sales personnel
were reallocated to billable activities, triggering a different cost
allocation.
-- General & administrative expenses, which account for 21% of total
operating expenses, declined 3% year-on-year.
-- Research & development expenditure increased 29% year-on-year in
line with the previously announced investment in a development
center in India and the strengthening of the Company's product
management group.
Financial loss for the quarter stood at €0.4
million. InfoVista incurred negative financial income due to the
devaluation of its financial asset position as a result of investments
made in a money market fund affected by the US subprime market.
Total headcount at September 30, 2007 was 230, as compared to 216 at
the end of September 2006.
Earnings
For the first time ever, InfoVista achieved a positive operating
profit, of €0.2 million, in the first
quarter of its fiscal year. However, as a result of the financial
costs noted above, InfoVista posted a net loss of €0.2
million for the quarter. On a constant exchange rate basis, the net
loss would have been approximately €46,000.
Balance Sheet
Days Sales Outstanding (DSO) stood at 65 days at the end of the first
quarter, an improvement compared to 96 days one year earlier or 92
days after correction.
As at September 30, 2007, the Company’s
balance sheet remains strong, with no debt and with cash, short-term
deposits and financial assets at €36.5 million,
including €7.0 million of financial assets
still exposed to a risk of valuation.
As at September 30, 2007, there were a total of 19,754,476 and
18,614,266 InfoVista shares issued and outstanding, respectively.
Q1 Operational Highlights Strong Contribution from Service Activities:
The first quarter showed a significant contribution from professional
service activities in all regions. In the first quarter of this fiscal
year, the Company’s professional service
revenues represented €1.6 million, an
increase of 37% against the same quarter of last year. Maintenance
activities were strong in all regions. For the quarter, contract
renewals remained high, generating total revenue of €4.3
million, which represents a year-on-year growth of 8%.
Revenue Drivers in the First Quarter:
Total first quarter revenues in the American region amounted to €5.0
million, up 78% from a year ago, and accounted for 49% of total
revenues. New customers included Terrestar, a satellite wireless
service provider, which was secured with the help of Accenture. In
addition, the Company received repeat orders from Bell Canada, Bell
Alliant and Wells Fargo. First quarter revenues in the Americas
included a €2.2 million contribution from
Microsoft Corporation, pursuant to the multi-year deal announced in
January 2007.
In EMEA, total revenues declined to €4.0
million, a 26% year-on-year decline compared to previously reported
revenue and 11% year-on-year compared to corrected revenues. EMEA
represented 39% of total revenues in the first quarter. In EMEA, the
Company won several repeat orders from major service providers such as
Maroc Telecom; Telecom Italia, a newly won customer where InfoVista
displaced one of its competitors; and SFR the French mobile operator.
Asia Pacific total revenues rose by 31% year-on-year to €1.2
million, accounting for 12% of the first quarter’s
total revenues. InfoVista received orders from two existing customers:
Reliance in India and Optus in Australia.
Revenues from the direct sales channel increased to €6.5
million in the quarter, accounting for 63% of total revenues. Indirect
revenues stood at €3.7 million,
representing 37% of total revenues for the quarter.
InfoVista’s service provider revenues
amounted to €6.2 million, or 61% of total
revenues.
Technological Developments
During the quarter, InfoVista announced the release of VistaFoundation®
Kit 4.0, a next-generation version of the Company’s
underlying technology platform that powers the latest versions of the
VistaInsight® suite of solutions.
VistaFoundation is a set of software components that transparently
provide many of the core underlying capabilities in InfoVista’s
suite of performance management solutions for next generation services
and infrastructure.
Also in the quarter, InfoVista announced the release of VistaInsight®
for Networks 3.0, an updated version of the Company’s
flagship performance-monitoring software for fixed, mobile and cable
service providers.
Other Developments
For the third year in a row, InfoVista advanced in Software Magazine’s
Software 500 list of the world’s largest
software products and services companies, moving up a cumulative 50
points in the last 3 years to 254.
Recent Events Correction of Fiscal Year 06/07 Numbers
As a consequence of the below, the financial statements of InfoVista for
fiscal year 06/07 have been corrected and include significant subsequent
events that took place since the end of its fiscal year (please see
attached tables).
Discovery of Side Letter
On or around October 17, 2007, InfoVista’s
President and Chief Financial Officer discovered that its fiscal year
06/07 results include revenues of €1.1
million that should not have been recognized. This revenue was
recognized on the basis of a firm order and a certification letter
that were properly signed by a reputable international partner. In
this particular instance, however, these documents had been obtained
improperly by the Senior Vice President of InfoVista in charge of EMEA
sales operations, who concealed that he had additionally and
simultaneously signed a side-letter with the partner giving it a right
to exchange or return the software solution sold.
Philippe Ozanian, President and CFO, noted: "We
have taken this matter extremely seriously from the second our
suspicions were raised and based on our investigations, have immediately
dismissed the perpetrator for cause. We have subsequently received
written representation from each of our sales managers, stating that
they are aware of no wrongdoings. Based on these letters and the review
on our current receivables balance, we believe that this matter was an
isolated incident. We have also been working non-stop with the Board’s
Audit Committee and our Statutory Auditors, among others, to reinforce
our internal control procedures in order to preclude any reoccurrence.” Impairment Charge
As a result of the correction that is required by the discovery of the
side letter in October 2007, the Board of Directors will be required
(on 7th November 2007) to re-approve the
fiscal year 06/07 financial statements and related footnotes, prior to
their submission to the shareholders for approval. These corrected
financial statements are currently being audited by our Statutory
Auditors. Therefore, the Company is required to adjust for any
subsequent events or information that it receives.
In October 2007, additional information became available in regards to
the valuation of the Company’s investment
in Network Physics, which required a full write-off of the investment
of €1.5 million compared to the previously
reported charge of €1.1 million.
Acquisition of Accellent
InfoVista announced today that it has entered into an agreement to
acquire France-based privately held Accellent, whose application
network monitoring solutions are used by large French and
international organizations to ensure the delivery of mission-critical
and revenue-generating services. The acquisition adds advanced
application response and traffic monitoring to InfoVista’s
solutions that already include best-in-class infrastructure
performance management and end-to-end application and service quality
monitoring capabilities. The acquisition price, without taking into
account an earn-out component payable in 2011 based on high growth
objectives, was €13.5 million. This works
out to an enterprise value revenue multiple of 2.6x as Accellent’s
expected revenue for the current fiscal year, ending in June 2008, is
approximately €4 million and the Company
is expected to have cash and cash equivalent of approximately €3
million as at the date of acquisition. InfoVista plans to exploit
additional revenue opportunities and leverage potential synergies
through the acquisition of Accellent with top-line synergies expected
to enhance the operating performance of InfoVista as early as fiscal
year 07/08. The acquisition, subject to customary closing conditions
and regulatory approvals, is expected to be completed by November 21.
Outlook
As InfoVista’s transformation and
reorganization progresses, InfoVista is positive about its outlook for
the coming quarters. In the second quarter, InfoVista’s
revenues objectives, which exclude contributions from Accellent, are
between €9.8 million and €10.3
million. With continued investment in research and development this
quarter, the Company’s bottom line is
expected to be negative.
Commenting on the outlook, Mr. Tingaud said: "We
will provide additional light on our objectives, including Accellent
contribution to InfoVista’s top and bottom
line, at our forthcoming Shareholders Meeting, where we will present our
Transformation and Execution Plan (TEP).” Conference call
InfoVista will host an investor conference call today at 10:00 a.m.
(EST) / 2:00 p.m. (UK) / 3:00 p.m. (Continental Europe). The call will
be available by dialing +33 (0)1 70 99 42 98 in France, +44 (0)20 7806
1967 in the UK, or +1 718 354 1391 in North America and in each case
followed by access code 4238450. A replay will be available shortly
after the end of the call at the following numbers: France: +33 (0)1 71
23 02 48 UK: +44 (0)20 7806 1970 North America: +1 718 354 1112 –
all with Pin code 4238450# .
About InfoVista
InfoVista is the Service-Centric Performance Management Software Company
that assures the optimal delivery of business-critical IT services.
Driven by a uniquely adaptive and real-time technology foundation,
InfoVista solutions improve business effectiveness, reduce operating
risk, lower cost of operations, increase agility and create competitive
advantage. Eighty percent of the world's largest service providers as
ranked by Fortune®, as well as leading
Global 2000 enterprises, rely on InfoVista to enhance the business value
of their technology assets. Representative customers include ABN AMRO,
Allstream, Banques Populaires, AXA, Banque de France, Bell Canada,
British Telecom, Broadwing Communications, Cable & Wireless,
Com Hem, Defense Information Systems Agency (DISA), Deloitte, Deutsche
Telekom, France Telecom, Savvis Corporation, SingTel, Telefonica, and US
Cellular. A Software Magazine 500 company, InfoVista stock is
traded on Eurolist by Euronext (FR0004031649). For more information
about the company, please visit www.infovista.com.
Cautionary Statement: Except for historical information contained
herein, the matters discussed in this news release are "forward looking
statements." These statements involve risks and uncertainties which
could cause actual results to differ materially from those in such
forward-looking statements; including, without limitation, risks and
uncertainties arising from the rapid evolution of our markets,
competition, market acceptance of our products, our dependence upon
spending by the telecommunications industry and our ability to develop
and protect new technologies. For a description of other factors which
might affect our actual results, please see the "Risk Factors" section
and other disclosures in InfoVista's public filings with French Autorité
des Marchés Financiers or on its website www.infovista.com.
Readers of this news release are cautioned not to put undue reliance on
any forward-looking statement. The Company undertakes no obligation to
publicly update any forward-looking statements, whether as a result of
new information, future events or otherwise.
INFOVISTA CONSOLIDATED INCOME STATEMENTS (In thousands, except for share and per share data)
The table presented below represents the consolidated income
statements in accordance with IFRS
For the three months ended September 30, 2007
2006
(As corrected*)
Revenues
License revenues
€ 4,406
€ 3,149
Service revenues
5,811
5,062
Total 10,217 8,211
Cost of revenues
Cost of licenses
134
175
Cost of services
2,151
1,623
Total 2,285 1,798
Gross profit 7,932 6,413
Operating expenses
Sales and marketing expenses
3,821
4,193
Research and development expenses
2,310
1,792
General and administrative expenses
1,636
1,694
Total 7,767 7,679
Operating income (loss) 165 (1,266)
Financial revenue
166
284
Financial costs
(402)
(3)
Net foreign currency transaction losses
(119)
-
Financial (loss) profit (355) 281
Loss before income taxes (190) (985)
Income tax expense
(37)
(93)
Loss € (227)
€ (1,078)
Basic loss per share
€ (0.01)
€ (0.06)
Diluted loss per share
€ (0.01)
€ (0.06)
Basic weighted average shares outstanding
18,624,276
18,055,494
Diluted weighted average shares outstanding
18,624,276
18,055,494
*(Corrected and unaudited)
INFOVISTA CONSOLIDATED BALANCE SHEETS
(In thousands)
The table presented below represents the consolidated balance sheets
in accordance with IFRS
As of September 30,
June 30, 2007 2007
(As corrected*)
ASSETS
Intangible assets, net
€ 1,157
€ 1,268
Tangible assets, net
1,801
1,887
Deposits and other financial assets
491
491
Total non-current assets 3,449
3,646
Accounts receivables, net
7,340
9,778
Other current assets
1,919
1,580
Financial assets - current
7,301
28,910
Cash and cash equivalents
29,181
7,352
Total current assets 45,741
47,620
Total assets € 49,190
€ 51,266
EQUITY
Issued capital
€ 10,667
€ 10,653
Share premium
84,944
85,072
Treasury shares
(5,594)
(5,627)
Currency translation differences
(1,703)
(1,543)
Accumulated deficit
(51,513)
(51,286)
Total equity 36,801
37,269
LIABILITIES
Deferred revenues - non-current
641
851
Other non-current liabilities
202
184
Total non-current liabilities 843
1,035
Accounts payables
2,309
1,774
Accrued salaries and commissions
1,496
1,771
Accrued social security and payroll taxes
1,529
1,461
Accrued VAT
289
548
Deferred revenues - current
5,699
7,245
Other current liabilities
224
163
Total current liabilities 11,546
12,962
Total liabilities and equity € 49,190
€ 51,266
*(Corrected and unaudited)
INVOVISTACORRECTION OF FY2007 RESULTS
The Company was required to correct its fiscal year 2007 results for the
reasons described in the current earnings announcement. As a consequence
of the above matter, the financial results of InfoVista for its fiscal
year 2007 needed to be corrected as follows:
For the three months ended September 30, 2006
For the twelve months ended June 30, 2007 As reported As corrected* As reported As corrected* (In thousands, except for share and per share data)
License revenues
€ 4,109
€ 3,149
€ 19,169
€ 18,209
Service revenues
€ 5,062
€ 5,062
€ 20,716
€ 20,572
Total revenues
€ 9,171
€ 8,211
€ 39,885
€ 38,781
Gross profit
€ 7,373
€ 6,413
€ 32,182
€ 31,078
Operating loss
€ (305)
€ (1,266)
€ (1,516)
€ (2,620)
Impairment on investment in equity security
N/A
N/A
€ (1,100)
€ (1,477)
Net loss
€ (118)
€ (1,078)
€ (2,094)
€ (3,575)
Basic and diluted loss per share
€ (0.01)
€ (0.06)
€ (0.11)
€ (0.20)
As of June 30, 2007 As reported As corrected* (In thousands)
Accounts receivable
€ 11,176
€ 9,778
Other current assets
€ 1,382
€ 1,580
Financial assets - non-current
€ 377
€ -
Deferred revenues
€ 7,341
€ 7,245
Accumulated deficit
€ (49,805)
€ (51,286)
*Corrected and unaudited
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