Q4 2006 Lightbridge Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Good afternoon. My name is Marcus, and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter 2006 conference call. [OPERATOR INSTRUCTIONS] It is now my pleasure to turn the floor over to your host, Ms. Lynn Ricci, Director of Investor Relations. Ma'am, you may begin your conference.

LYNN RICCI, DIRECTOR, IR, LIGHTBRIDGE: Thank you, Marcus. Good afternoon, everyone, and thank you for joining us. Our principal speakers will be Bob Donahue, our President Chief Executive Officer, and Tim O'Brien, our Chief Financial Officer. We are also happy to have with us today Roy Banks, the President of Authorize.Net, who will be available during the Q & A portion of today's call. Today we will review our fourth quarter and year-end 2006 results which were released earlier this afternoon after the market close. A replay of this discussion will be available approximately one hour after the call and can be accessed by dialing 877-519-4471. And entering the passcode number 8315509. The replay will be available until February 14, 2007. In addition, the call will also be available for webcast playback at the investor relations section of our website, www.lightbridge.com.

Before we begin, let me review our Safe Harbor statement. Certain statements in this conference call that do not describe historical fact, including without limitations statements concerning future financial and operating performance, the expectations with regard to acquisitions or divestitures, partnerships, alliances, and the company's decision to exit the TDS business. Future strategies, goals and plans, or general market expectations constitute forward-looking statements. Such statements are based on our current belief and subject to a number of risks and uncertainties that may cause actual results to differ materially from those made in such statements. Any forward-looking statements should be considered in light of the risk factors that appear in today's press release as well our 2005 annual report on Form 10-K, most recently quarterly report on Form 10-Q, and other documents filed with the Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements that we make today. In addition, during today's conference call we will be referencing both GAAP and non-GAAP financial measures. The non-GAAP measures are not in accordance with or an alternative for GAAP and may differ from measures used by other companies. Non-GAAP measures include in the release and mentioned during the conference call are not meant to be considered superior to or a substitute for results prepared in the accordance to GAAP. Investors are encouraged to review the information on how to reconcile the non-GAAP financial measures to GAAP found in our press release as well as on our website. With that, I will turn the call over to Bob.

BOB DONAHUE, PRESIDENT & CEO, LIGHTBRIDGE: Thank you, Lynn. Good afternoon, everyone, and thank you for joining us for our quarter 4 2006 in year-end earnings call. We will follow our usual format today. I will discuss the business and then Tim O'Brien, our Chief Financial Officer, will review our financial performance for the quarter in the year. I will then have some brief wrap up comments before we open the call up for questions.

Lightbridge achieved solid fourth quarter results, delivering $20.6 million in revenue versus the guidance range of $19.3 to $21.1 million. GAAP EPS was $0.77 and included a partial reversal of the valuation allowance for deferred tax assets that Tim will cover in just a few minutes. If adjusted for the valuation allowance reversal, our EPS would have been $0.06, exceeding the high end of our guidance range. On the non-GAAP basis, excluding stock-based compensation expense, restructuring and asset impairment charges and the tax reversal just mentioned, we achieved EPS of $0.14, hitting the high end of our guidance range. As you may know, on October 4th, 2006, we announced that decision to exit the telecom decisioning business. Those plans remain on track. Tim will provide an update in his commentary.

Moving now to our payment processing business. Authorize.Net enjoyed another strong quarter and capped an excellent year of revenue growth. In the fourth quarter we achieved a record $15.7 million in revenue, an increase of 23% year-over-year and an 8% sequential increase over quarter 3, 2006. As you know, the holiday period is important to us as it is a seasonally strong quarter. It is also an indicator as to how our small to medium size merchant base competes with the large retailers during the busy holiday shopping period. On Cyber Monday -- the Monday following Thanksgiving -- comScore reported e-commerce payment volumes were up 25% year-over-year, while at Authorize.Net, payment volume was up over Cyber Monday last year. Our peak for transactions was on December 11, surpassing 1.5 million transactions in a single day. ComScore also reported that payment volume during the holiday shopping period, defined as November through December was $24.6 billion, up 26% over 2005's holiday season and above comScore's original forecast of 24% for the 2006 holiday season. Authorize.Net processed 6 billion dollars during November and December, up 27% over last year. We are very pleased to see that we not only kept pace with overall e-commerce volumes, but exceeded them in some areas. We believe the small and medium sized business merchants continue to benefit from consumers feeling more comfortable shopping online.

Residential broadband adoption is now at 78% in the U.S., a jump over the 65% penetration in 2005 according to Nielsen//NetRatings. This increased broadband …