Press Releases
Intrinsyc Reports 2008 Second Quarter Financial Results
Strong Financial Results Include 23% Revenue Contribution from Software Solutions Business
Vancouver, BC – August 12, 2008 – Intrinsyc Software International, Inc. (TSX: ICS), a global wireless software solutions provider, today announced its financial results for the second quarter ended June 30, 2008, reported in United States dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP). The Company has presented its results compared to the three month period ended March 31, 2008 and the three month period ended May 31, 2007. As previously reported, Intrinsyc changed its fiscal year-end from August 31 to December 31.
The Company reported second quarter revenue of $5.6 million as compared to $5.6 million for the period ended March 31, 2008 and $4.5 million in the period ended May 31, 2007. The year-over-year improvement in revenue of 23 percent was primarily due to increased revenues from the Soleus software offering, together with consistent revenue generation by the Company’s wireless engineering services. Total revenues attributable to the Company’s software solutions increased to 23 percent of revenues, including software licensing, maintenance/support and software-related services, as compared to 18 percent and 11 percent in the respective comparative quarters.
Gross margin was 47 percent for the second quarter of 2008, up from 46 percent in the three months ended March 31, 2008. When compared to the three months ended May 31, 2007, the total gross profit of $2.6 million increased by 12 percent, while gross margin of 47 percent was lower than the 52 percent achieved in that period based on a unique engineering services contract completed in 2007 at higher than traditional margins.
“We are pleased that in the second quarter of 2008, we again generated strong revenues from engineering services and saw meaningful growth in software solutions revenues,” commented Glenda Dorchak, Chairman and Chief Executive Officer of Intrinsyc Software. “Our 2008 first half revenue of $11.1 million sets the pace for healthy 2008 revenue growth compared with Intrinsyc’s 2007 full year revenue of $17.6 million. Our first half growth reflects continuing strength in our engineering services business that executed engagements for Symbian, Linux and Microsoft platforms during the period. Additionally, almost one quarter of our revenue was attributable to our own software solutions, on track with our strategy to make software solutions the primary revenue stream for Intrinsyc.”
“Our Soleus business achieved an important milestone with the market launch of the first Soleus-based production-ready device by MiTAC Corporation. MiTAC’s Mio Moov 380 is a connected personal navigation device (PND) targeting Taiwan initially, with plans for expansion to Europe later this year. Also in the quarter, we announced the availability of Soleus version 1.5, which supports third-generation (3G and 3.5G) connection speeds, accelerates time-to-market for media-centric handheld devices and is the platform enabling the mobile device planned for release this fall by Soleus licensee, Quanta Computer. Our silicon vendor licensees are moving forward with their products and are now actively marketing their Soleus-based solutions to handset makers. Finally, Intrinsyc was recognized by winning the Microsoft Windows Embedded Excellence Award for the achievement of our Soleus software platform in driving Windows Embedded designs for PNDs.”
“Also in the quarter, we announced plans to acquire certain assets and operations of Destinator Technologies Inc. (DTI), a developer of wireless software for global positioning system (GPS) devices and navigation software for wireless handsets, which subsequently closed on July 9, 2008. Since announcing the Destinator acquisition, Intrinsyc has signed over 20 new software license agreements with navigation software customers, including LG. Most importantly, Intrinsyc has now signed a global agreement with Motorola to deliver the GPS navigation application for the Motorola A1600 MING handset, and other products, based on the Destinator software product. GPS navigation is an increasingly popular consumer wireless application and the new A1600 device that was launched by Motorola in China on July 8, 2008, joins the MING device family, which continues to be one of the best selling handsets in China.”
Ms. Dorchak concluded, “In the second half we expect to see increased market adoption for Soleus focused on the PND segment and for our navigation application as a component of a complete Soleus solution. Through this acquisition we expanded Intrinsyc’s development resources and customer base making Intrinsyc a stronger, global wireless software solutions company. Our wireless services business, which earned certification as a Symbian Competence Center in the second quarter, has steadily grown and is expanding to support our software business with the integration of the platform engineers from the Destinator operation. Soleus and Destinator software development have been integrated, and with our new low-cost software development center in China and the advanced development center in Israel, we are accelerating the delivery of innovative Soleus-based solutions that leverage the new navigation software. This is expanding the design win opportunities for both product lines.”
Loss before interest, amortization, stock-based compensation expense and income tax (“EBITDA”) for the three months ended June 30, 2008 was $3.9 million, compared to $3.5 million in the three month period ended March 31, 2008 and $3.6 million for the three months ended May 31, 2007. Total operating expenses, excluding amortization and stock-based compensation, for the three months ended June 30, 2008 were $6.5 million compared to $6.2 million in the three months ended March 31, 2008 and $5.5 million for the three months ended May 31, 2007. Operating expenses included Soleus-related research and development expenditures of $2.7 million in the three months ended June 30, 2008 compared to $2.5 million in the three months ended March 31, 2008 and $2.6 million in the three months ended May 31, 2007. See further discussion on EBITDA under the heading “Supplemental Information” later in this press release.
Cash on hand at the end of the second quarter was $30.0 million, compared to $35.2 million as of March 31, 2008.
Subsequent Event
Subsequent to quarter-end, on July 9, 2008, the Company completed the acquisition of certain assets and operations of DTI and certain of its affiliates for $15.9 million, inclusive of estimated related transaction expenses. The purchase price consisted of $8.4 million in cash or assumption of liabilities of DTI and the issuance of 11.0 million Intrinsyc common shares from treasury. The financial results for the Company’s second quarter of 2008 do not include any revenue or cash impact from the closing of the transaction, except for approximately $1.4 million in deferred acquisition costs for the purchase of assets from DTI. The financial results of the Destinator software business will be consolidated with the Company commencing in the third quarter of 2008 as of the transaction closing date.
Supplemental Information
In addition to results disclosed in accordance with Canadian GAAP, Intrinsyc discloses a non-GAAP measure of EBITDA as a method to evaluate the Company’s operating performance. This non-GAAP measure should not be considered a substitute for measurements required by accounting principles generally accepted in Canada such as loss and loss per share. Management believes that this non-GAAP metric provides additional information allowing comparability regarding the Company’s ongoing operating performance and the items excluded are considered to be non-operational and/or non-recurring. EBITDA is defined as earnings before interest, tax, depreciation and amortization. This non-GAAP measure is not necessarily comparable to non-GAAP information provided by other issuers. A reconciliation of the Company’s EBITDA loss to the loss under Canadian GAAP is provided in the table attached.
Conference Call
Consolidated unaudited financial statements are attached and a conference call to discuss these results will be held at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time), today. To listen to the conference call live by telephone, dial +1-866-400-2280 toll free for participants in North America, and +1-416-850-9143 for Toronto area and international participants, approximately 10 minutes before the start time. A telephone playback will be available for three business days, beginning approximately two hours after the call. To listen to the telephone replay please dial +1-866-245-6755 toll free, and for international callers, dial +1-416-915-1035. Enter access code 989655.
The Audit Committee of the Company has reviewed the contents of this news release.
2008 Second Quarter Financial Statements (PDF)
Need
Adobe Reader?
Forward Looking Statements
This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation. Such forward-looking statements or information may include financial and other projections as well as statements regarding the Company's future plans, objectives, performance, revenues, growth, profits, operating expenses or the company's underlying assumptions. The words "may", "would", "could", "will", "likely", "expect," "anticipate," "intend", "plan", "forecast", "project", "estimate" and "believe" or other similar words and phrases may identify forward-looking statements or information. Persons reading this press release are cautioned that such statements or information are only predictions, and that the Company's actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to: the Company’s ability to continue to earn the revenue from Destinator products after the acquisition, and to integrate the acquired business into its own operations; the need to develop, integrate and deploy software solutions to meet our customer's requirements; the possibility of development or deployment difficulties or delays; the dependence on our customer's satisfaction; the timing of entering into significant contracts; our customers’ continued commitment to the deployment of our solutions; the risks involved in developing integrated software solutions and integrating them with third-party products and services; the performance of the global economy and growth in software industry sales; market acceptance of the Company’s products and services; customer and industry analyst perception of the Company and its technology vision and future prospects; the success of certain business combinations engaged in by the Company or by its competitors; political unrest or acts of war; possible disruptive effects of organizational or personnel changes; technological change, new products and standards; risks related to acquisitions and international expansion; reliance on large customers; concentration of sales; international operations and sales; management of growth and expansion; dependence upon key personnel and hiring; reliance on a limited number of suppliers; industry growth; competition; intellectual property; product defects and product liability; currency exchange rate risk; and including but not limited to other factors described in the Company’s reports filed on SEDAR, including its Annual Information Form and financial report for the year ended December 31, 2007. In drawing a conclusion or making a forecast or projection set out in the forward-looking information, the Company takes into account the following material factors and assumptions in addition to the above factors: the Company’s ability to execute on its business plan; the acceptance of the Company’s products and services by its customers; the timing of execution of outstanding or potential customer contracts by the Company; the sales opportunities available to the Company; the Company's subjective assessment of the likelihood of success of a sales lead or opportunity; the Company's historic ability to generate sales leads or opportunities; and that sales will be completed at or above the Company's estimated margins. This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
About Intrinsyc Software International, Inc.
Intrinsyc provides software solutions that enable next-generation handheld products, including mobile handsets, smart phones, and embedded devices. The company’s products include the Soleus® software platform for converged device development and Destinator® navigation software. Combined with award winning Solutions Engineering and 12 years of systems integration expertise, these solutions help device makers, and silicon vendors deliver compelling mobile and embedded products with faster time-to-market and higher quality. Intrinsyc is a Microsoft Windows Embedded Gold Partner and a winner of Windows Embedded Excellence Awards in 2007 and 2008, a Symbian Competence Center and Symbian Platinum Partner. Intrinsyc is publicly traded (TSX: ICS) and headquartered in Vancouver, Canada, with offices in China, Israel, Taiwan, U.K., and the United States.
www.Intrinsyc.com
© 2008 Intrinsyc Software International, Inc. All rights reserved.
Intrinsyc, Soleus, Destinator and their respective logos are trademarks, registered and otherwise, of Intrinsyc Software International, Inc. in Canada, European Union, Taiwan, United States of America and other jurisdictions. Other products and services mentioned in this document are identified by the trademarks or service marks of their respective companies or organizations.
For more information, please contact:
George Reznik
Chief Financial Officer
Intrinsyc Software International, Inc.
Email: greznik@intrinsyc.com
Phone: +1-604-678-3734
Investor Relations:
Beverly Twing
Shelton Investor Relations
Email: btwing@sheltongroup.com
Phone: +1-972-239-5119 ext. 126