KIT digital Reports Record Q3 2011 Results
finance.yahoo.com
Revenue Up 124% Y-o-Y and 29% Sequentially to $62.3 Million and Op. EBITDA Up 223% Y-o-Y and 49% Sequentially to $14.3 Million, Delivering Net Income of $4.8 Million or $0.11 per Share
"These record results, particularly in what has historically been a seasonally weak quarter, reflect our ability to drive strong organic revenue growth while increasing the operating leverage and margin profile of our business," said KIT digital's chairman and CEO, Kaleil Isaza Tuzman. "The third quarter marked an important milestone for the company, as we crossed over to GAAP net profitability and recognized the last remaining restructuring and integration charges related to the acquisitions we completed in the first half of the year. This will allow us to take advantage of strong free cash flow generation going forward, which we expect to be at least $2.5 million per month by the end of Q4. "We are supported by the growth of our sector, driven by the ongoing proliferation of connected devices, enhanced broadband connectivity, and global 4G and LTE introduction. Our KIT Video Platform is rapidly becoming a 'core vendor' solution set for large MSOs, telcos and major broadcasters taking advantage of these trends."
Gavin Campion, KIT digital's president, commented: "This industry-wide evolution from traditional broadcast television to multi-screen OTT and multi-platform premium VoD solutions is evidenced by many large commercial wins and upsells we have recently announced, including Sky, Liberty Global, LG Electronics and AT&T. The $32 million funding we completed in September and the resulting stronger balance sheet have been instrumental in facilitating the establishment or expansion of these large-scale deployments. We estimate this has already translated into more than $25 million in annualized contract extensions and new client wins for 2012.
"We also delivered a defining quarter from a technology perspective. We released the KIT Video Platform, our next generation cloud-based video asset management system, in both the tier 1-oriented KIT Cosmos edition and the mid-tier KIT Cloud edition. This release represents the culmination of more than a year of internal development and innovation, as well as the integration of 'best-of-breed' elements from recently acquired companies."
The company launched three further components of the KIT Video Platform in Q3: the KIT Connected Device Framework, KIT Social TV and the KIT Operations Manager.
- The KIT Connected Device Framework addresses a lack of common industry standards for video delivery across device platforms, providing a unified consumer experience and single editorial workflow for high quality content delivery across many of the industry's leading smartphones, tablets, game consoles, Smart TV's and OTT retail STBs.
- The KIT Social TV solution, based on technologies acquired from KickApps, Kyte and Polymedia at the beginning of 2011, allows multi-channel video service providers to offer socially enabled experiences around the TV viewing experience with second-screen companion content and interactivity.
- The KIT Operations Manager is an underlying operational support system for the KIT Video Platform's broadband head-end deployments, ensuring broadcast-grade levels of reliability with lower cost and time to market than traditional hardware and labor-intensive solutions. The KIT Operations Manager, initially developed within ioko, represents years of development and monitors and manages systems and signal uptime, content delivery network and storage calls and adaptors with clients' billing, identity management and CRM Systems.
Campion continued: "As we advance into Q4 and plan for 2012, our product offering is stronger than ever and we have a strong client pipeline in all the client verticals that are undergoing major transitions to multiscreen IP video. This includes telcos, cable and satellite pay TV operators looking to deliver competitive 'TV Everywhere' initiatives, as well as device manufacturers acting as virtual network operators, and non-media enterprises shifting to IP video for internal communications and training."
KIT digital expects revenues in Q4 2011 of at least $67 million, representing a prospective 8% sequential and organic increase over Q3, and up 74% from $38.4 million in the same year-ago period. This Q4 guidance implies a revenue expectation for the full year of 2011 of approximately $212 million, representing an increase over 2010 of approximately 100% overall and more than 35% organically.
KIT digital expects record operating EBITDA in Q4 2011 of approximately $17.5 million, representing an increase of over 20% sequentially, and up over 150% from $6.7 million in the same period a year ago.
In Q4 2011, the company plans to include the reporting of a new non-GAAP metric, "adjusted EPS," which is defined as cash EPS after adding back direct acquisition fees. The company will not add back acquisition-related restructuring and integration expenses in calculating this adjusted EPS metric. Management believes adjusted EPS will provide a more transparent measure of its financial performance than the historical operating EBITDA metric, and is more appropriate to the company's current net income-positive and cash-generative phase of development.
Management expects to report adjusted EPS in Q4 2011 of at least $0.33 per share, and adjusted EPS of at least $1.45 per share for the full year of 2012.
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