OpenTV Reports Third Quarter 2009 Results
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SAN FRANCISCO--(BUSINESS WIRE)-- OpenTV Corp. (NASDAQ: OPTV), a leading software and technology provider of advanced digital television solutions, today announced financial results for its third quarter ended September 30, 2009.
"OpenTV's third quarter results demonstrate solid operational improvements achieved in what is still a challenging global economic environment," said Ben Bennett, OpenTV's Chief Executive Officer. "The company is focused on building and delivering its suite of next generation products, which are critical for our long-term success. We remain on track to achieve our full year 2009 financial guidance."
Key Operating Measures
Three Three months Nine months Nine months
USD months ended ended ended
Millions ended Sept. 30, Change Sept. 30, Sept. 30, Change
Sept. 30, 2008 2009 2008
2009
Revenues $31.8m $26.9m 18.2% $88.8m $87.5m 1.5%
Net Income $2.6m $1.0m $1.6m $5.5m $7.3m $(1.8)m
Adjusted
EBITDA
before $4.4m $3.7m $0.7m $12.5m $13.7m $(1.2)m
unusual
items
Cash, Cash
Equivalents
and $113.8m $98.7m 15.3% $113.8m $98.7m 15.3%
Marketable
Debt
Securities
Third Quarter 2009 Results
For the quarter ended September 30, 2009, revenues were $31.8 million, an increase of 18% compared to $26.9 million for the third quarter of 2008. Royalties and licenses revenues increased 25.5% to $20.7 million. Services and other revenues increased 7% to $11.1 million. Adjusted EBITDA, before unusual items, increased to $4.4 million for the quarter ended September 30, 2009, compared to $3.7 million for the third quarter of 2008.
Net income for the third quarter of 2009 was $2.6 million, or $0.02 per share, compared to $1.0 million, or $0.01 per share, for the third quarter of 2008.
Cash flow from operations was $4.0 million in the third quarter of 2009, compared to cash flow from operations of $0.3 million in the comparable 2008 period.
As of September 30, 2009, the Company had a balance of $39.0 million in deferred revenue, compared to $33.2 million as of December 31, 2008.
As of September 30, 2009, the Company had cash, cash equivalents and short and long-term marketable debt securities totaling $113.8 million, compared to $102.8 million as of December 31, 2008.
Segment Information
Revenues
-- In the third quarter of 2009, revenues from the Middleware Solutions
segment were $28.9 million, compared to $23.9 million for the same
period in the prior year.
-- In the third quarter of 2009, revenues from the Advertising Solutions
segment were $2.9 million, compared to $3.0 million for the same period
in the prior year.
Contribution Margin
-- In the third quarter of 2009, Middleware Solutions' contribution margin
was $11.6 million, compared to $9.3 million for the same period in the
prior year.
-- In the third quarter of 2009, Advertising Solutions' contribution margin
was $0.2 million, compared to $(0.1) million for the same period in the
prior year.
For the third quarter of 2009, total contribution margin from the Company's operating segments was $11.8 million, compared to $9.2 million in the third quarter of 2008. Unallocated corporate overhead was $7.4 million in the third quarter of 2009, compared to unallocated corporate overhead of $5.5 million in the third quarter of 2008.
Adjusted EBITDA before unusual items and contribution margin are non-GAAP financial measures. Reconciliations of the differences between these non-GAAP financial measures and net income, which is the most directly comparable GAAP financial measure, are included at the end of this press release. Additional information regarding the derivation of Adjusted EBITDA and contribution margin and a statement of the relevance to management of this information and its possible usefulness to investors are also included at the end of this release and on the investor relations page of our Web site located at www.opentv.com.
Summary of Other Recent Announcements
The following is a summary of key press releases since the Company's last earnings release:
-- OpenTV extended its partnership with longstanding customer BSkyB and
commenced work on a proof of concept which could lead to the deployment
of OpenTV Core3(TM). As part of the arrangement, BSkyB also licensed
OpenTV's intellectual property rights to support ongoing development of
the company's digital television platform.
-- OpenTV won "Best Graphic and Design" at the AFDESI awards for OpenTV
Core nX(TM), its advanced user interface. In addition, Dishtv, India's
leading direct-to-home operator, won AFDESI's "New Entrant" award for
its Dish ACTIVE portal, which is powered by OpenTV middleware.
-- Digiturk, a leading Turkish direct-to-home network operator, launched
video-on-demand and high-definition personal video recording solutions
through an innovative partnership with OpenTV, Irdeto, Pace and
TeleIDEA. Digiturk is deploying advanced digital video offerings to its
customers, including push and subscription video on demand (P/S-VOD)
with high-definition personal video recording (HD PVR) functionalities.
This is one of the first P/S-VOD offerings to be launched in a satellite
environment and one of the most innovative solutions in the region.
-- OpenTV announced OpenTV Core3, a pioneering approach to the delivery of
advanced television services. Engineered to enable technology choice by
operators, OpenTV Core3 combines a top-to-bottom open architecture with
a unique design that simplifies the integration and deployment of
everything from complex user interfaces to consumer services and
application widgets.
-- OpenTV announced that it is licensing its suite of application
development tools to the developer community at no charge. The OpenTV
SDK Development Suite is an integrated interactive application
development environment for OpenTV middleware that allows developers to
create applications for interactive television using the complete
functionality of an OpenTV-enabled set-top box.
-- OpenTV announced that it will open its TV measurement platform allowing
the developer community, data analysis partners and other service
providers to integrate with OpenTV's measurement solution more easily,
and foster the creation of next generation set-top-box services with
enhanced personalization features, such as addressable and interactive
advertising, content addressability, and other value-added services.
-- OpenTV announced that EclipsePlus(TM), its campaign management
technology, went live at Suddenlink Media, the advertising division of
Suddenlink Communications, a leading US operator of cable broadband
systems. OpenTV EclipsePlus will manage all of Suddenlink's local ad
sales operations for the operator's Central and Western U.S. ad sales
divisions.
Conference Call Details
OpenTV will conduct a conference call to discuss the Company's financial results for the quarter ended September 30, 2009. The details of the call are as follows:
Date and Time: Tuesday, November 3, 2009, at 5:00pm ET / 2:00pm
PT
Dial-in Number US: 866.770.7120
Dial-in Number International: 617.213.8065
Passcode: 47 09 93 83
Participants: Ben Bennett, Chief Executive Officer
Shum Mukherjee, Chief Financial Officer
Mark Beariault, General Counsel
The Company will also make available on the Investor Relations section of its Web site a slide presentation in PDF format containing additional information about the Company that may be discussed on the conference call.
The conference call replay will be available from November 3, 2009 at 5:00pm PT / 8:00pm ET through November 10, 2009 at 11:59pm PT / 2:59am ET (next day).
Replay Number US: 888.286.8010 Replay Number International: 617.801.6888 Passcode: 34 21 04 43
About Segment Information
Because our business segments reflect the manner in which management reviews our business, they necessarily involve judgments that management believes are reasonable in light of the circumstances under which they are made. These judgments may change over time or may be modified to reflect new facts or circumstances. Segments may also be changed or modified from time to time to reflect technologies and applications that are newly created or that have changed, or other business conditions that evolve, each of which may result in management reassessing specific segments, the elements included therein and the methodologies used to assess segment performance.
Non-GAAP Financial Measures
"EBITDA" is an acronym for earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA, as used in this release, removes from EBITDA the effects of amortization of intangible assets, share-based compensation expense, other income and expense, and minority interest. "Adjusted EBITDA before unusual items" removes from Adjusted EBITDA the effects of contract amendments that mitigated potential loss positions and restructuring costs.
"Contribution margin," as used in this release, is defined by the company as segment revenues less related direct or indirect allocable costs, including headcount and headcount-related overhead costs, consulting and subcontractor costs, travel, marketing and network infrastructure and bandwidth costs. Contribution margin excludes unallocated corporate support, interest, taxes, depreciation and amortization, amortization of intangible assets, share-based compensation, impairment of goodwill, impairment of intangibles, other income, noncontrolling interest, restructuring provisions, and unusual items such as contract amendments that mitigated potential loss positions. These exclusions reflect costs not considered directly allocable to individual business segments and result in a definition of contribution margin that does not take into account the substantial cost of doing business.
Management believes that "Adjusted EBITDA before unusual items" and "contribution margin" are relevant and useful measures, when considered in conjunction with the comparable GAAP measures, for use by investors in evaluating the operational performance of the company. They are some of the principal measures used by OpenTV's management to assess the financial performance of its business. OpenTV's management believes that both Adjusted EBITDA before unusual items and contribution margin provide meaningful information because each measure represents a transparent view of OpenTV's recurring operating performance and allows management to readily view operating trends, perform analytical comparisons and benchmarking between segments and identify strategies to improve operating performance. While OpenTV's management may consider Adjusted EBITDA before unusual items and contribution margin to be important measures of comparative operating performance, they should be considered in addition to, but not as a substitute for, profit from operations, net income, cash flow and other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States that are presented in the financial statements included in this press release. Additionally, OpenTV's calculation of Adjusted EBITDA before unusual items and contribution margin may be different from the calculation used by other companies and, therefore, comparability may be affected. OpenTV reconciles Adjusted EBITDA before unusual items and each reported segment's contribution margin to its consolidated net income as presented in the accompanying financial statements, because OpenTV believes consolidated net income is the most directly comparable financial measure presented in accordance with GAAP.
While OpenTV believes that the presentation of non-GAAP financial measures contained in this press release complies with the rules and guidance of the SEC, it can give no assurance that it will be able to provide the same or comparable measures in future press releases or announcements. OpenTV may, in the future, present non-GAAP financial measures other than "Adjusted EBITDA before unusual items," "Adjusted EBITDA" and "contribution margin" that it believes may be useful to investors. Any such determinations will be made with the intention of providing the most useful information to investors and will reflect the information used by OpenTV's management in assessing its business, which may change from time to time.
Cautionary Language Regarding Forward-Looking Information
This press release contains certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in political, economic, business, competitive, market and regulatory factors. In particular, factors that could cause our actual results to differ include risks related to: delays in the development or introduction of new versions of our products; technical difficulties with networks or operating systems; deterioration of worldwide economic conditions and the potential impact of such conditions on our customer's purchasing and investment decisions; our ability to manage our resources effectively; changes in technologies that affect the television industry; and the protection of our intellectual property rights. These and other risks are more fully described in our periodic reports and registration statements filed with the Securities and Exchange Commission and can be obtained online at the Commission's web site at http://www.sec.gov. Readers should consider the information contained in this release together with other publicly available information about our company for a more informed overview of our company. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About OpenTV
OpenTV is one of the world's leading providers of advanced digital television solutions dedicated to creating and delivering compelling viewing experiences to consumers of digital content worldwide. The company's software has been integrated in more than 138 million devices around the world, and enables enhanced program guides, video-on-demand, personal video recording, interactive and addressable advertising, and a variety of enhanced television applications. For more information, please visit www.opentv.com.
OPENTV CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
September 30, December 31,
2009 2008 *
ASSETS
Current assets:
Cash and cash equivalents $ 78,016 $ 93,887
Short-term marketable debt securities 30,833 7,768
Accounts receivable, net of allowance for
doubtful accounts of $926 and $1,076 at 30,289 27,275
September 30, 2009 and December 31, 2008,
respectively
Prepaid expenses and other current assets 5,530 4,628
Total current assets 144,668 133,558
Long-term marketable debt securities 4,995 1,178
Property and equipment, net 7,824 7,974
Goodwill 95,443 95,250
Intangible assets, net 7,505 8,519
Other assets 2,761 2,471
Total assets $ 263,196 $ 248,950
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 2,649 $ 2,287
Accrued liabilities 18,639 17,602
Accrued restructuring 325 238
Deferred revenue 23,315 16,130
Total current liabilities 44,928 36,257
Accrued liabilities, net of current portion 986 1,160
Accrued restructuring, net of current portion 1,091 1,146
Deferred revenue, net of current portion 15,738 17,092
Total liabilities 62,743 55,655
Commitments and contingencies
OpenTV Shareholders' equity:
Preference shares, no par value, 500,000,000 - -
shares authorized; none issued and outstanding
Class A ordinary shares, no par value,
500,000,000 shares authorized; 107,891,190 and
108,385,176 shares issued and outstanding, 2,234,287 2,234,687
including treasury shares, at September 30,
2009 and December 31, 2008, respectively
Class B ordinary shares, no par value,
200,000,000 shares authorized; 30,206,154 35,953 35,953
shares issued and outstanding at September 30,
2009 and December 31, 2008
Additional paid-in capital 516,304 515,506
Treasury shares at cost, zero and 523,647
shares at September 30, 2009 and December 31, - (623 )
2008, respectively
Accumulated other comprehensive loss (1,521 ) (2,163 )
Accumulated deficit (2,584,996 ) (2,590,496 )
Total OpenTV shareholders' equity 200,027 192,864
Noncontrolling interest 426 431
Total equity 200,453 193,295
Total liabilities and equity $ 263,196 $ 248,950
* The condensed consolidated balance sheet at December 31, 2008 has been
derived from the company's audited consolidated financial statements at that
date.
OPENTV CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
Three Months Ended September Nine Months Ended September 30,
30,
2009 2008 2009 2008
Revenues:
Royalties and $ 20,711 $ 16,494 $ 61,865 $ 56,911
licenses
Services and 11,071 10,427 26,930 30,638
other
Total 31,782 26,921 88,795 87,549
revenues
Cost of
revenues:
Royalties and 868 1,202 2,801 3,960
licenses
Services and 10,945 9,106 31,115 29,185
other
Total cost of 11,813 10,308 33,916 33,145
revenues
Gross profit 19,969 16,613 54,879 54,404
Operating
expenses:
Research and 8,731 8,031 25,900 25,769
development
Sales and 2,407 2,818 6,125 7,503
marketing
General and 6,052 4,121 15,559 15,030
administrative
Restructuring 157 (7 ) 149 575
and impairment
Amortization
of intangible 62 181 200 551
assets
Total
operating 17,409 15,144 47,933 49,428
expenses
Profit from 2,560 1,469 6,946 4,976
operations
Interest 96 514 286 1,866
income
Other income 168 (1,471 ) (789 ) 776
(expense)
Profit before 2,824 512 6,443 7,618
income taxes
Income tax
expense 213 (445 ) 943 325
(benefit)
Net income 2,611 957 5,500 7,293
Less: Net
income
attributable - (2 ) (5 ) (18 )
to the
noncontrolling
interest
Net income
attributable to $ 2,611 $ 955 $ 5,495 $ 7,275
OpenTV
Net income
attributable to $ 0.02 $ 0.01 $ 0.04 $ 0.05
OpenTV per
share, basic
Net income
attributable to $ 0.02 $ 0.01 $ 0.04 $ 0.05
OpenTV per
share, diluted
Shares used in
per share 138,107,816 139,465,910 138,098,719 139,629,135
calculation,
basic
Shares used in
per share 138,798,654 140,197,701 138,818,274 140,347,942
calculation,
diluted
OPENTV CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended September 30,
2009 2008
Cash flows from operating activities:
Net income $ 5,500 $ 7,293
Less: Net income attributable to the (5 ) (18 )
noncontrolling interest
Net income attributable to OpenTV 5,495 7,275
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of property and 3,320 3,120
equipment
Amortization of intangible assets 1,013 2,848
Share-based compensation 1,088 2,205
Non-cash employee compensation 2 8
Non-cash restructuring costs 19 -
Provision for doubtful accounts 621 (23 )
Write-off of accounts receivable (88 ) -
Gain on sale of cost investment - (143 )
Loss on disposal of fixed assets 23 1
Changes in operating assets and liabilities:
Accounts receivable (3,865 ) (10,707 )
Prepaid expenses and other current assets (902 ) (269 )
Other assets (291 ) (716 )
Accounts payable 590 (1,021 )
Accrued liabilities 727 (2,799 )
Accrued restructuring 32 (677 )
Deferred revenue 6,149 6,333
Net cash provided by operating activities 13,933 5,435
Cash flows from investing activities:
Purchase of property and equipment (3,098 ) (3,514 )
Cash used in acquisition, net of cash acquired - (96 )
Proceeds from sale of cost investment - 1,882
Proceeds from disposal of property and 2 -
equipment
Proceeds from sale of marketable debt 6,044 18,105
securities
Purchase of marketable debt securities (33,123 ) (5,137 )
Net cash provided by (used in) investing (30,175 ) 11,240
activities of continuing operations
Net cash provided by investing activities of - 225
discontinued operations
Net cash provided by (used in) investing (30,175 ) 11,465
activities
Cash flows from financing activities:
Repurchase of restricted shares (127 ) (454 )
Repurchase of treasury shares (228 ) -
Capital contribution from the former - 14,333
controlling shareholder
Proceeds from issuance of ordinary shares 21 17
Net cash provided by (used in) financing (334 ) 13,896
activities
Effect of exchange rate changes on cash and 705 (674 )
cash equivalents
Net increase (decrease) in cash and cash (15,871 ) 30,122
equivalents
Cash and cash equivalents, beginning of period 93,887 58,599
Cash and cash equivalents, end of period $ 78,016 $ 88,721
Supplemental disclosure of cash flow
information:
Cash paid for income taxes $ (516 ) $ (1,412 )
Non-cash investing and financing activities:
Conversion of exchangeable shares $ 18 $ 2
Retirement of treasury shares $ 623 $ -
OPENTV CORP.
UNAUDITED SEGMENT INFORMATION AND RECONCILIATION OF
CONTRIBUTION MARGIN AND ADJUSTED EBITDA TO NET INCOME
(In thousands)
Three Months Ended September Nine Months Ended September 30,
30,
2009 2008 2009 2008
Revenues:
Middleware
solutions
Royalties and $ 20,064 $ 15,135 $ 59,956 $ 52,345
licenses
Services and 8,812 8,792 20,721 25,187
other
Subtotal -
Middleware 28,876 23,927 80,677 77,532
solutions
Advertising
solutions
Royalties and 647 1,359 1,909 4,567
licenses
Services and 2,259 1,635 6,209 5,450
other
Subtotal -
Advertising 2,906 2,994 8,118 10,017
solutions
Total $ 31,782 $ 26,921 $ 88,795 $ 87,549
revenues
Contribution
margin (loss):
Middleware $ 11,639 $ 9,324 $ 30,985 $ 30,932
solutions
Advertising 213 (117 ) 155 802
solutions
Total
contribution 11,852 9,207 31,140 31,734
margin
Unallocated
corporate (7,427 ) (5,539 ) (18,624 ) (18,002 )
support
Adjusted
EBITDA before 4,425 3,668 12,516 13,732
unusual items
Restructuring (157 ) 7 (149 ) (575 )
and impairment
Adjusted 4,268 3,675 12,367 13,157
EBITDA
Depreciation
and (1,106 ) (1,044 ) (3,320 ) (3,120 )
amortization
Amortization of
intangible (333 ) (798 ) (1,013 ) (2,848 )
assets
Share-based and
non-cash (269 ) (364 ) (1,088 ) (2,213 )
compensation
Interest income 96 514 286 1,866
Other income 168 (1,471 ) (789 ) 776
(expense)
Profit before 2,824 512 6,443 7,618
income taxes
Income tax
expense 213 (445 ) 943 325
(benefit)
Net income 2,611 957 5,500 7,293
Less: Net
income
attributable - (2 ) (5 ) (18 )
to the
noncontrolling
interest
Net income
attributable to $ 2,611 $ 955 $ 5,495 $ 7,275
OpenTV
Source: OpenTV Corp.
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