Q2 CC notes:
- Revenue at $75.5M, 17.1% increase YoY. DR was down $4M to $86.6M, their Shipped, Billed, but not yet Booked went up $5.3M to $21.1M, so the latter two net out to an increase of $1.3M
- Gross Margins were down to 56.1%. Hassan explained in the Q&A it was due to product mix of shipping more new hardware and fewer line cards, which sets them up well for future expansion.
- Over the past 12 months, revenues and orders grew over 30%. Orders should grow at least 20-25% for FY2007, accelerating in 2H2007.
- 70 customers contributed to revenue in Q2, up from 63 in Q1 and a record. Two new leading network operators began initial network deployments, I saw no indication this is any different than the new Top5(FT) and new Top10(unannounced) already discussed. They did mention another of the world's Top10 operators had begun deployment in another part, but again every indication it is the previously mentioned one.
- Some random quotes. "Only supplier in all of the Top5 worldwide operators' NGN deployments." "There are really no field proven competitive solutions to Sonus" "We are in a position to dominate" "Operators are turning to Sonus as they learn their incumbent vendor cannot deliver the NGN products they require"
- Softbank BB is starting the next major phase of their core trunking upgrade. Global Crossing has decommissioned 8 legacy switches. KDDI just beginning to replace their TDM core.
- Carphone's access network has quickly ramped to 500K subs and on target for 1M by EOY.
- There are a number of large new projects they are working on, due to the size and scope they will not contribute significantly to revenue until 2008.
- US Government is using Sonus for one of its deployments.
- Not planning on adding a new COO to replace Notini.
- ATT was the only 10% customer, the Top5 were 64% of revenue in Q2. International was 25.5%.
- Later in the call they said headcount was up to 975, an increase of 62 by my figures and in line with Q1 growth. They did use a lower rate of 43 earlier, but the 975 was the only total given.
- Still expect to achieve their target non-GAAP operating margin of 17-20% in Q4 and sustain it beyond.
- Cash down to $344.7M from $366.1M, inclusive of the Zynetix acquisition.
- Guidance is for YoY revenue growth of 14-17%, weighted to Q4, with Q3 flattish with Q2 and Q4 up significantly greater than Q3.
- Pricing remains robust and stable.
- They expect some catchup in revenue growth in 2008 to make up for the lighter than expected rate in 2007. While they would not guide, indicated the concept of adding the shortfall to the 20-25% figure was conceptually correct, and later came close to guiding 08 revenue up 30-40%.
- H207 order ramp will consist of a mix of new networks with a longer 6-9 months conversion cycle and add-ons to existing networks with shorter conversion.
- Mentioned the iPhone voicemail service uses Sonus infrastructure at Cingular, but since voicemail servers are centralized this only means it is going across the Sonus core to access the mail servers and not anything directly related to provisioning the service.
- Mentioned vendor flips several times, in terms of those that have happened and those that are being looked at, but no details.
- Discussed how Europe would become their second largest market beyond NA. Also said momentum is building in Japan. |
