Original Source: FD (FAIR DISCLOSURE) WIRE
. Joshua Pace, Openwave Systems, CFO . Don Listwin, Openwave Systems, President & CEO
OPWV announced 4Q04 revenue of $76.8m, a 3% increase from the prior quarter, and full year revenue of $291m, a 9% increase over 2003. Co. met or exceeded almost all financial metrics. OPWV achieved positive operating income for the first time in two years and a book to bill ratio of 1.06 to 1 on more than $80m in bookings. Q&A Focus: Project Revenues, Pricing, Margins.
A. Key Data From Call 1. 4Q04 Revenue = $76.8m 2. Fiscal Year 2004 Revenue = $291m 3. Gross Margin = 69% 4. Cash & Equivalents = $341.8m
5. Bookings = $82m 6. Guidance for Upcoming Quarter Revenue = $79m
7. Guidance for Upcoming Quarter GM = 71-74%
S1. 4Q04 Results (DL) 1. Highlights: 1. For the first time in two years, achieved positive operating income. 2. Met or exceeded almost all key financial metrics. 1. Revenue was $77m.
2. Ending cash was $342m. 3. Bookings were $82m. 4. Book to bill ratio was 1.06 to 1. 5. Fiscal year 2004 revenue was $291m, a 9% increase over fiscal year 2003. 6. June 2004 bookings increased 38% from $59m in June 2003. 2. Industry: 1. Data offerings are becoming more important in driving telecom
growth. 2. By 2007, wireless is expected to grow to $110b and will accelerate over the next 18 months. 3. At Verizon, wireless contributed 4.2% to operating margin vs. 1.7% a year ago. 3. Phones: 1. Requirements and demand continue to grow.
2. Data phones expected to comprise 90% of phones shipped in
2004; one-third will be advanced feature phones. 3. Smart phones will account for 4% of phones in 2004. 4. Data phones are carrier programmable; smart phones are user programmable and require IT support. 4. Infrastructure: 1. Key challenge is reducing complexity. 2. Market migrating toward package systems. 3. Photo messaging is driving renewed interest on integration of
voice, text and video messaging. 1. Too expensive to maintain three or four unique architecture. 4. RP activity for IP based mobile messaging has grown dramatically in last six months.
5. V7 platform is focused on helping customers improve usability.
5. Growth Drivers: 1. Advanced messaging. 2. Operator customization.
3. Selling to new set of emerging OEMs. 4. Magic4 acquisition expected to close by next week. 5. As a result, OPWV becomes the top software provider for data phones. 6. V7 was shipped on first DoCoMo carrier package; seven additional carriers also have it. 7. Announced first customer with IBM web series every play microedition [phonetic]. 6. Infrastructure: 1. Mag 6 Rapp 2 gateways now have 48 customer commits and 32 live deployments, four competitive rip outs, and seven active trials. 2. Continue to bid ongoing competitive rip ups. 3. Will be supplying operators with software within managed systems and moving to more packaged systems. 7. MMS: 1. Nortel chose OPWV as preferred MMSC provider.
2. Two operators planning in Americas will launch solutions by
end of year. 3. Total subscriber base is approx. 120m, making OPWV the No. 3 provider in category. 4. OPWV won two new pieces of business in RP in Europe. 5. Will deliver new DRM technology in both V7 client and download technology. 6. Aggregated variety of content through developer network. 7. Strategy is to invest and acquire to extend offering. 8. Broadband: 1. Build footprint by replacing homegrown mail infrastructures. 2. Deliver anti-spam and anti-virus technology. 3. Deliver voicemail module to enable unified messaging. 4. Over past quarter, OPWV closed five new deals to deploy HTX, two operators are in active deployment phase, and more than 20 customers are in pipeline. 5. Co. is seeing demand for technology from mobile customers. 6. IP voicemail moving to next phase. 7. Cox Cable moved to market launch with 1000 users. 1. Cox extended contract through next year. 8. Six other trials underway. 9. Leadership: 1. Added new talent to field organization. 2. In Europe, appointed Brian Visser [phonetic] as GM of EMEA. 3. Lloyd Okey [phonetic] is GM of Asia. 4. Simon Wilkinson will lead client sales team. 5. Mark Malazzo [phonetic] will oversee business integration. 10. Summary: 1. In 2H05, expect market to grow 2. Well positioned to hit emerging growth phase of market.
S2. Financials (JP) 1. Themes: 1. Strong bookings quarter with book-to-bill of 1.06-1. 2. Positive cash flow from continuing operations.
3. Positive operating income. 4. Beginning of systems oriented revenue. 2. Financials: 1. Revenue was $76.8m, up 3% from March quarter. 2. $36.8m, or 48% coming from license fees vs. 52% in March. 3. $21.2m, or 28% from maintenance and support vs. $20.5m, or 28% last quarter. 4. $13.4m, or 17% from professional services vs .1$4.5m, or 19% in March. 5. Derived $5.4m, or 7% from systems transactions. 6. Recorded at zero margin; once contractual obligations are fulfilled, expect more normalized range. 7. Expect to see 40% GM over coming quarters. 3. By Geography:
1. 47% of revenue originated from customers in Americas. 2. 23% in Europe. 3. 30% in Asia. 1. In March, was 44%, 29% and 27% respectively. 4. By Product Line for the Quarter: 1. Infrastructure went from $32m in March to $30m this quarter. 2. Applications went from $13.6m to $13m QoverQ. 3. Client revenue went from $13.3m to $14.9m QoverQ. 4. Data handset …