ECtel Presents Second Quarter Results
with 34% Year-over-Year Revenue Increase
ROSH HA'AYIN, Israel, August 5, 2008. ECtel Ltd. (NASDAQ: ECTX), a leading global provider of
Integrated Revenue Management (TM) (IRM(TM)) solutions,
today reported financial results for the second quarter of 2008.
Second Quarter Highlights
o Revenues up 34% year-over-year to $6.7 million;
o Gross margin improvement reaching 50%;
Revenues for the second quarter of 2008 totaled $6.7 million, a 34% increase, compared to $5 million in the second quarter of 2007, and slightly up from first quarter of 2008 revenues of $6.5 million.
Non-GAAP gross margin for the second quarter of 2008 was 50.4%, compared to the 46% margin in the second quarter 2007. Non-GAAP gross margin in the first quarter of 2008 was 44.2%.
Non-GAAP operating loss for the second quarter of 2008 reached $1.7 million, a 22% improvement compared to a non-GAAP operating loss of $2.1 million in the second quarter of 2007, and slightly improved on the non-GAAP operating loss for the prior quarter of $1.8 million.
Non-GAAP net loss for the second quarter of 2008 totaled $1.4 million, or $0.08 loss per share, a 22% improvement compared with a net loss of $1.8 million, or $0.11 loss per share, in the second quarter of 2007. Non-GAAP net loss for the first quarter 2008 totaled $1.1 million, or $0.07 per share.
During the second quarter 2008, the Company’s results were negatively impacted by the continued weakening of the US dollar against the Israeli shekel, which during the quarter devalued by 5.7% against the Israeli Shekel. This directly contributed to an approximate $300 thousand decline in the net income for the period. Results were also affected by the contribution of two lower-margin, yet strategically important projects with major telecom groups and potential for higher-margin follow-on business.
On a GAAP basis, gross margin for the second quarter 2008 totaled 50.2%, compared to the 45.4% margin in the second quarter of 2007, and 43.8% margin in the first quarter 2008. Operating loss for the second quarter of 2008 reached $2.0 million, compared to an operating loss of $2.3 million in the second quarter of 2007 and an operating loss for the first quarter of 2008 of $2 million. On a GAAP basis, net loss for the second quarter of 2008 totaled $1.7 million or $0.10 loss per share, compared to $1.9 million or $0.12 per share in the second quarter of 2007. Net loss for the first quarter 2008 totaled $1.3 million or $0.08 per share.
ECtel's non-GAAP net income differs from results reported under U.S. GAAP. This is due to adjustments made for amortization of acquisition related intangible assets, share-based compensation expenses, expenses related to a one-time due-diligence process and the impact of the permanent impairment charge related to certain securities in December 2007. The accompanying tables provide a full reconciliation from GAAP to Non-GAAP results.
Cash, cash equivalents, and marketable bonds and securities as of June 30, 2008 were $22.8 million or $1.37 per share, compared to $28.5 million or $1.71 per share as of March 31, 2008.
”The second quarter of 2008, was both a period of business development in which we made a synergistic acquisition, acquiring the assets of Compwise, as well as improved financial results- particularly in terms of revenue and gross margins,” commented Itzik Weinstein, President and CEO of ECtel. "At the same time, we are reviewing ways to better manage our cost structure, while improving efficiency and cutting costs particularly on the manufacturing and procurement side, without sacrificing our growth potential, with the aim to quickly reach the breakeven level.”
“During the quarter, we completed the acquisition of Compwise’s assets, an Israeli-based provider of business analytic solutions for telecom operators. We see the acquisition as very much aligned with our long-term growth strategy, which focuses on solid execution, innovation and M&A activity. We continue to work on strengthening our foundations for future growth and execution, while reducing costs, with the goal of enhancing our position as a major player in the integrated revenue management and assurance space,” concluded Mr. Weinstein.
Conference call
ECtel management will host a teleconference later today at 10:00 am ET (9:00am CT, 7:00am PT, and 5:00pm Israel time) to discuss its second quarter results.
To participate in the call, please dial one of the following numbers and request ECtel's second quarter 2008 Earnings Results Conference call:
From the United States: 1-888-668-9141
From Israel: 03-918 0688
From the United Kingdom: 0-800-404-8418
All other international callers: +972-3-918-0688
A Webcast replay of the earnings call will be available after the call on the Company’s web site at: www.ectel.com
About ECtel Ltd.
ECtel (NASDAQ: ECTX) is a leading global provider of Integrated Revenue Management™ (IRM™) solutions for communications service providers. A pioneering market leader for nearly 20 years, ECtel offers carrier-grade solutions that enable wireline, wireless, converged and next generation operators to fully manage their revenue and cost processes. ECtel serves prominent Tier One operators, and has more than 100 implementations in over 50 countries worldwide. Established in 1990, ECtel maintains offices in the Americas and Europe. For more information, visit www.ectel.com
Certain statements contained in this release contain forward-looking information with respect to plans, projections or future performance and products of the Company, the occurrence of which involves certain risks and uncertainties, including, but not limited to, the reoccurrence of sales to existing customers, sales to new accounts, the ability to recognize revenue in future periods as anticipated, the possible slow-down in expenditures by telecom operators, the unpredictability of the telecom market, product and market acceptance risks, ability to complete development and market introduction of new products, the impact of competitive pricing and offerings, fluctuations in quarterly and annual results of operations, dependence on several large customers, commercialization and technological difficulties, risks related to our operations in Israel and other risks detailed in the Company's annual report on Form 20-F and other filings with the Securities and Exchange Commission. ECtel undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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** Tables to follow **
ECtel Ltd.
Consolidated Balance Sheets
$ in thousands
|
|
June 30, |
March 31, |
December 31 |
|
|
2008 |
2008 |
2007 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
4,229 |
8,572 |
5,668 |
|
Short-term investments |
- |
1,484 |
5,652 |
|
Receivables: |
|
|
|
|
Trade, net |
8,811 |
7,772 |
8,612 |
|
Other |
2,196 |
1,565 |
1,372 |
|
Related parties |
100 |
189 |
17 |
|
Work in progress |
657 |
977 |
282 |
|
Inventories |
2,274 |
2,360 |
2,247 |
|
|
|
|
|
|
Total current assets |
18,267 |
22,919 |
23,850 |
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities |
18,564 |
18,470 |
17,760 |
|
|
|
|
|
|
Long-term other assets |
1,952 |
1,785 |
1,612 |
|
|
|
|
|
Property, plant and equipment, net |
2,316 |
2,192 |
2,115 |
|
|
|
|
|
|
Goodwill |
12,792 |
11,322 |
11,322 |
|
|
|
|
|
|
Other intangible assets, net |
912 |
269 |
292 |
|
|
|
|
|
|
|
|
|
|
|
Total assets |
54,803 |
56,957 |
56,951 |
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade payables |
4,349 |
5,554 |
4,737 |
|
Related parties |
68 |
82 |
18 |
|
Advances from customers |
527 |
1,111 |
966 |
|
Other payables and accrued liabilities |
6,878 |
5,902 |
5,796 |
|
|
|
|
|
|
Total current liabilities |
11,822 |
12,649 |
11,517 |
|
|
|
|
|
|
Long-term liabilities |
|
|
|
|
Liability for employee severance benefits |
2,989 |
2,626 |
2,352 |
|
|
|
|
|
|
Total liabilities |
14,811 |
15,275 |
13,869 |
|
|
|
|
|
Total shareholders’ equity, net |
39,992 |
41,682 |
43,082 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders’ equity |
54,803 |
56,957 |
56,951 |
ECtel Ltd.
Consolidated Statements of Operations - GAAP
$ in thousands except share and per share data
|
|
Three months ended |
Six months ended |
Three months |
||
|
|
June 30, |
June 30, |
ended March 31, |
||
|
|
2008 |
2007 |
2008 |
2007 |
2008 |
|
Revenues |
6,655 |
4,964 |
13,160 |
8,515 |
6,505 |
|
Cost of revenues |
3,313 |
2,709 |
6,967 |
4,784 |
3,654 |
|
|
|
|
|
|
|
|
Gross profit |
3,342 |
2,255 |
6,193 |
3,731 |
2,851 |
|
|
|
|
|
|
|
|
Research and development costs, net |
1,304 |
1,212 |
2,493 |
2,506 |
1,189 |
|
Selling and marketing expenses |
2,261 |
2,100 |
4,008 |
4,359 |
1,747 |
|
General and administrative expenses |
1,709 |
1,191 |
3,559 |
3,342 |
1,850 |
|
Amortization of acquisition-related intangible assets |
23 |
23 |
46 |
46 |
23 |
|
|
|
|
|
|
|
|
Operating loss |
(1,955) |
(2,271) |
(3,913) |
(6,522) |
(1,958) |
|
Financial income, net |
278 |
353 |
519 |
635 |
241 |
|
Other income, net (*) |
- |
|
430 |
|
430 |
|
|
|
|
|
|
|
|
Net (loss) income |
(1,677) |
(1,918) |
(2,964) |
(5,887) |
(1,287) |
|
|
|
|
|
|
|
|
Basic (loss) earnings per share |
(0.10) |
(0.12) |
(0.18) |
(0.35) |
(0.08) |
|
Diluted (loss) earnings per share |
(0.10) |
(0.12) |
(0.18) |
(0.35) |
(0.08) |
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding used to compute basic (loss) earnings per share |
16,686,401 |
16,663,746 |
16,686,401 |
16,656,576 |
16,686,401 |
|
Weighted average number of shares outstanding used to compute diluted (loss) earnings per share |
16,686,401 |
16,663,746 |
16,686,401 |
16,656,576 |
16,686,401 |
(*) includes $450 thousand gain on sale of patent.
ECtel Ltd.
Consolidated Statements of Operations - NON-GAAP
$ in thousands except share and per share data
To supplement the consolidated financial results prepared in accordance with GAAP, we include Pro-forma Net Income (Loss), Pro-forma Basic Net Earnings (Loss) Per Share and Pro-forma Diluted Net Earnings (Loss) Per Share, which are non-GAAP financial measures. These non-GAAP financial measures consist of GAAP financial measures adjusted for acquisition related amortization of intangible assets, expenses related to a due-diligence process which was carried out in the framework of an examination of a potential acquisition which had reached advanced stages and share-based compensation expenses. These non-GAAP financial measures exclude the effects of aforesaid elements because we believe these excluded costs are not related to our operating performance and measures. Also, it provides consistent and comparable measures to help investors understand our current and future operating performance that our management uses as a basis for planning and forecasting future periods.
These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies and should not be regarded as a replacement for corresponding GAAP measures.
The following table reconciles Pro-forma Net Income (Loss), Pro-forma Basic Net Earnings (Loss) Per Share and Pro-forma Diluted Net Earnings (Loss) Per Share to Net Income (Loss), Basic Net Earnings (Loss) Per Share and Diluted Net Earnings (Loss) Per Share, and the line items contributing to such figures, respectively, in each case the most directly comparable GAAP measure, ($ in thousands, except share and per share data).
|
|
Three months ended |
Six months ended |
||||
|
|
June 30, 2008 |
June 30, 2008 |
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|
|
GAAP |
Adj. |
NON-GAAP |
GAAP |
Adj. |
NON-GAAP |
|
Revenues |
6,655 |
|
|
6,655 |
13,160 |
|
|
13,160 |
|
Cost of revenues |
3,313 |
(13) |
(*) |
3,300 |
6,967 |
(34) |
(*) |
6,933 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
3,342 |
13 |
|
3,355 |
6,193 |
34 |
|
6,227 |
|
|
|
|
|
|
|
|
|
|
|
Research and development costs, net |
1,304 |
(1) |
(*) |
1,303 |
2,493 |
(6) |
(*) |
2,487 |
|
Selling and marketing expenses |
2,261 |
(28) |
(*) |
2,233 |
4,008 |
(57) |