AuthenTec Reports First Quarter 2012 Financial Results
MELBOURNE, Fla., May 03, 2012 (BUSINESS WIRE) -- AuthenTec (AUTH), a leading
provider of mobile and network security, today reported financial results for the
first quarter ended March 30, 2012.
First Quarter Highlights:
-- Recorded revenue of $17.5 million, up 13 percent from the year ago quarter
-- Achieved third consecutive quarter of non-GAAP profitability
-- Added $2.3 million of cash to the balance sheet
-- Began pre-production of sensors supporting smartphone win with top tier OEM
outside of Japan
-- Commenced volume shipments of touch sensors to support bank anti-fraud
programs in China
AuthenTec achieved revenue of $17.5 million for the first quarter of 2012, which
was at the high end of the Company's guidance of $16.5 million to $17.7 million.
First quarter revenue was comprised of approximately $10.5 million from Smart
Sensor Solutions and $7.0 million from Embedded Security Solutions.
GAAP Results:
Under Generally Accepted Accounting Principles in the United States of America
(GAAP), consolidated net loss for the first quarter of 2012 was $1.5 million, or
$0.03 per diluted share. This compares to GAAP net loss of $0.6 million, or $0.01
per diluted share, in the fourth quarter of 2011 and a GAAP net loss of $5.6
million, or $0.13 per diluted share, in the first quarter of 2011.
GAAP gross margin in the first quarter was 57.5 percent, compared to 60.4 percent
reported in the fourth quarter of 2011 and the 48.0 percent in the first quarter
of 2011. The sequential decrease in GAAP gross margin was due to mix changes from
lower sales within the Company's Embedded Security segment during the quarter.
Total operating expenses on a GAAP basis in the first quarter were $11.4 million,
compared to $11.8 million in the fourth quarter of 2011 and $12.6 million in the
first quarter of 2011. The $0.4 million sequential decrease in operating expenses
was due primarily to lower outside service costs.
Non-GAAP Results:
On a non-GAAP basis, consolidated net income for the first quarter of 2012 was
$0.3 million, or $0.01 per diluted share, and at the high end of the Company's
guidance of a loss of $0.01 to income of $0.01 per diluted share. Non-GAAP
results exclude certain legal and other costs, stock-based compensation, as well
as the amortization of acquired intangible assets. The first quarter net income
compares to non-GAAP net income of $1.8 million, or $0.04 per diluted share, in
the fourth quarter of 2011 and a non-GAAP net loss of $2.6 million, or $0.06 per
diluted share, in the first quarter of 2011.
Non-GAAP gross margin in the first quarter was 58.7 percent, compared to 63.7
percent in the fourth quarter of 2011 and 52.6 percent in the first quarter of
2011.
Total operating expenses on a non-GAAP basis were $9.8 million, a decrease from
the $10.0 million reported in the fourth quarter of 2011 and the $10.3 million in
the first quarter of 2011. A reconciliation of first quarter GAAP to non-GAAP
results is provided in Table 2 following the text of this press release.
As of March 30, 2012, AuthenTec had approximately $22.8 million in cash and
investments, up from the $20.4 million cash and investments at the end of the
fourth quarter of 2011. The Company had no debt as of March 30, 2012.
Business Update:
"Our first quarter results were better than typical industry seasonality and at
the high end of our guidance range for both revenue and non-GAAP EPS. In addition
to achieving our third consecutive quarter of non-GAAP profitability, we also
added $2.3 million in cash to our balance sheet," said AuthenTec CEO Larry
Ciaccia. "We are focused on making substantial improvements to both the top line
and bottom line and our results reflect the benefit from our programs, design
wins and ongoing investments. Our Smart Sensor revenue was slightly up
sequentially to $10.5 million. Growth in government programs and software in the
quarter was partially offset by seasonally lower sales in the mobile and PC
markets. Our Embedded Security business revenue was $7.0 million, declining
sequentially following a quarter in which we benefited from particularly strong
license and royalty revenues.
"Within our Smart Sensor segment, we began pre-production to support a new
enterprise-class smartphone with a top tier handset OEM outside of Japan. This
smartphone is expected to ship later this year and will combine one of our newest
sensors with our fingerprint-enabled software application. Our smart sensors
continue to gain strong traction in the mobile market, primarily in Japan, and
are now designed into, or are part of active programs on more new smartphones
than at any time in our past. Also during the quarter, we made further progress
with reference design opportunities for integrating our fingerprint-based
security into various architectures spanning NFC, baseband and application
processors, mobile operating systems and the secure element architecture.
Additionally, in our government and access control business, we commenced volume
shipments to support one of two volume deployments of our TouchChip area sensors
in support of large banking anti-fraud programs throughout China, a targeted
growth opportunity for our company. The first of those two deployments is through
Miaxis, a leader in biometric solutions for banking and security, in which they
will use our TCS2 sensors in ID terminals throughout China to reduce bank teller
fraud.
"Within our Embedded Security segment, we signed a license agreement with a top
three handset OEM to integrate our VPN client solution into new enterprise-class
smartphones. We also secured several other VPN wins during the quarter including
additional handset OEMs, a license deal with a major wireless carrier, and a
licensing agreement for government-focused secure smartphones. Through the end of
the first quarter, our VPN client has now shipped on more than 10 million
smartphones. AuthenTec also continues to build momentum around our DRM solutions
for mobile. We signed a record number of DRM licenses during the quarter
including those with a major network company in Europe, a major worldwide content
provider, a major carrier in Korea, and one of the largest content distributors
in Japan. These new DRM licensing agreements represent various customer programs
that are anticipated to launch throughout the remainder of 2012. We expect to
begin realizing incremental revenue from a few of these programs as soon as the
second quarter.
"Looking forward, we continue to focus on generating profitable revenue growth
and will continue to invest appropriately to fund future growth in our target
markets. Security represents a huge opportunity for us across mobile, network
computing and ID markets, and we believe AuthenTec is in a very good position to
leverage our unique portfolio and technology. I am very optimistic about the
opportunities ahead of us this year as well as the significant programs that we
are pursuing for 2013."
Business Outlook:
Mr. Ciaccia concluded, "Based on our expectations for strong growth in the Smart
Sensor segment, primarily resulting from new design wins in mobile and
smartphones, we anticipate revenue in the second quarter of 2012 to increase to a
range between $18.2 million to $19.4 million. We continue to fund R&D and Sales
and Marketing activities to drive future growth, and expect non-GAAP operating
expenses in the second quarter to be in a range between $10.4 million and $11.0
million. Non-GAAP EPS in the second quarter is anticipated to be in a range
between breakeven and $0.01."
First Quarter 2012 Financial Results Webcast and Conference Call:
AuthenTec will host a conference call to discuss its first quarter 2012 financial
results and other information that may be material to investors at 5:00 p.m.
Eastern Time (ET) today, May 3, 2012. Investors and analysts may join the
conference call by dialing 1-800-706-7741 and providing the participant pass code
14072891. International callers may join the teleconference by dialing
+1-617-614-3471 and using the same pass code. A replay of the conference call
will be available beginning at 8:00 p.m. ET on May 3 and will remain available
until midnight ET on Thursday, May 10, 2012. The U.S. replay number is
888-286-8010, with a confirmation code of 35817971. International callers should
dial +1-617-801-6888, with the same confirmation code. A live web cast of the
conference call will be accessible from the Investor section of the Company's web
site at investors.authentec.com. Following the live webcast, an archived
version will be made available on AuthenTec's web site.
Use of GAAP and Non-GAAP Financial Metrics:
To supplement AuthenTec's consolidated financial statements presented in
accordance with GAAP, the Company uses non-GAAP financial measures that exclude
from the statement of operations the effects of stock-based compensation, certain
acquisition-related charges, amortization of certain intangible assets,
impairments on investments, and costs related to a reduction in workforce.
AuthenTec uses the above non-GAAP financial measures internally to understand,
manage and evaluate the business. Management believes it is useful for itself and
investors to review, as applicable, both GAAP information and the non-GAAP
measures in order to assess the performance of continuing operations and for
planning and forecasting in future periods. The presentation of these non-GAAP
measures is intended to provide investors with an understanding of the Company's
operational results and trends that enables them to analyze the base financial
and operating performance and facilitate period-to-period comparisons and
analysis of operational trends. AuthenTec believes the presentation of these
non-GAAP financial measures is useful to investors in allowing for greater
transparency with respect to supplemental information used by management in its
financial and operational decision-making. Non-GAAP financial measures should be
considered in addition to results prepared in accordance with GAAP, but should
not be considered substitutes for or superior to GAAP results. In addition, our
non-GAAP financial measures may not be comparable to similarly titled measures
utilized by other companies since such other companies may not calculate such
measures in the same manner as we do.
Investors are encouraged to review the reconciliation of these non-GAAP financial
measures to the comparable GAAP results, which is provided in Table 2 after the
text of this release. For additional information regarding these non-GAAP
financial measures, and management's explanation of why it considers such
measures to be useful, refer to the filings made from time to time with the
Securities and Exchange Commission.
Forward Looking Statements:
This press release contains statements that may relate to expected future results
and business trends that are based upon AuthenTec's current estimate,
expectations, and projections about the industry, and upon management's beliefs,
and certain assumptions it has made that are "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995, including,
without limitation, statements relating to revenue, operating expenses and
non-GAAP net income in our second quarter, our position for continued success in
2012, our ability to capitalize on our first Android based NFC smartphone with
fingerprint-based security in the Asian-Pacific region, and our strong position
for NFC-based mobile commerce opportunities in the future. Words such as
"anticipates," "guidance," "expects," "intends," "plans," "believes," "seeks,"
"estimates," "may," "should," "will," "prospects," "outlook," "forecast," and
variations of these words or similar expressions are intended to identify
"forward-looking statements." In addition, any statements that refer to
expectations, projections, or other characterizations of future events or
circumstances, including any underlying assumptions, are "forward-looking
statements." Such statements are not guarantees of future performance and are
subject to certain risks, uncertainties, and assumptions that are difficult to
predict. Therefore, the Company's actual results may differ materially and
adversely from those expressed in any "forward-looking statement" as a result of
various factors. These factors include, but are not limited to: the Company's
ability to integrate acquired businesses and operate such businesses profitably,
demand for, and market acceptance of, new and existing fingerprint sensors,
identity management software and embedded security products, the Company's
ability to secure design wins for enterprise and consumer laptops, wireless
devices and products aimed at Government markets, customer design wins
materializing into production programs, the timely introduction of new products,
the rate at which the Company increases its activity and opportunities in the
wireless market, and additional opportunities in various markets for applications
that might use AuthenTec's products, the Company's ability to develop and
capitalize on its NFC solutions and changes in product mix, as well as other
risks detailed from time to time in its SEC filings, including those described in
AuthenTec's annual report on Form 10-K filed with the SEC on March 9, 2012. These
"forward-looking statements" are made only as of the date hereof, and the Company
undertakes no obligation to update or revise the "forward-looking statements,"
whether as a result of new information, future events or otherwise.
About AuthenTec
AuthenTec is a leading provider of mobile and network security. The Company's
diverse product and technology offering helps protect individuals and
organizations through secure networking, content and data protection, access
control and strong fingerprint security on PCs and mobile devices. AuthenTec
encryption technology, fingerprint sensors and identity management software are
deployed by the leading mobile device, networking and computing companies,
content and service providers, and governments worldwide. AuthenTec's products
and technologies provide security on hundreds of millions of devices, and the
Company has shipped more than 100 million fingerprint sensors for integration in
a wide range of portable electronics including over 20 million mobile phones. Top
tier customers include Alcatel-Lucent, Cisco, Fujitsu, HBO, HP, Lenovo, LG,
Motorola, Nokia, Orange, Samsung, Sky, and Texas Instruments. Learn more at
authentec.com or follow us on twitter.com/authentecnews.
AuthenTec, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Table 1
Three months ended
----------------------------------------------
March 30,December 30,April 1,
201220112011
--------------- ----------------- ------------
Revenue$ 17,460$ 18,787$ 15,476
Cost of revenue7,4217,4398,051
Gross profit10,03911,3487,425
57.5 %60.4 %48.0 %
Operating expenses:
Research and development5,7296,0625,887
Selling and marketing3,8983,5473,990
General and administrative1,7582,1532,457
Restructuring and impairment related charges-3283
------------------
Total operating expenses11,38511,76512,617
Operating loss(1,346)(417)(5,192)
Other income (expenses)(71)100(274)
------ --------------- -
Total other income (expense), net(71)100(274)
Provision for income taxes100306136
Net loss$ (1,517)$(623)$ (5,602)
=== ====== ======= ====== ======== ====== =
Net loss per share:
Basic$(0.03)$(0.01)$(0.13)
=== ====== ======= ====== ======== ====== =
Diluted$(0.03)$(0.01)$(0.13)
=== ====== ======= ====== ======== ====== =
Shares used in computing net income (loss) per common share:
Basic44,40143,97443,600
==================
Diluted44,40143,97443,600
==================
Three months ended
----------------------------------------------
March 30,December 30,April 1,
201220112011
--------------- ----------------- ------------
Other Financial Metrics:
Stock-based compensation expense:
Cost of revenue2919153
Research and development158359339
Selling and marketing15672274
General and administrative15667378
Costs related to reduction in workforce
Selling and marketing-131-
Legal and acquisition related costs
Research and development1718583
Selling and marketing10030249
General and administrative34318-
Amortization of purchased tangible and intangible assets
Cost of revenue177605569
Research and development300250236
Selling and marketing499476465
Restructuring and impairment related charges-3283
AuthenTec, Inc.
Non-GAAP Financial Information - Consolidated
(In thousands, except per share amounts)
(Unaudited)
Table 2
Three months ended
---------------------------------------------
March 30,December 30,April 1,
201220112011
--------------- --------------------------
Net loss on GAAP basis:$ (1,517)$(623)$ (5,602)
Stock-based compensation expense4995171,144
Costs related to reduction in workforce-131-
Legal and acquisition related costs305433332
Amortization of purchased tangible and intangible assets9761,3311,270
Restructuring and impairment related charges-3283
------------------
Net income (loss) on non-GAAP basis:$263$1,792$ (2,573)
=== ============ ========== ====== =
Non-GAAP basic earnings per share$0.01$0.04$(0.06)
Non-GAAP diluted earnings per share$0.01$0.04$(0.06)
Three months ended
---------------------------------------------
March 30,December 30,April 1,
201220112011
--------------- --------------------------
Gross profit on GAAP basis:$ 10,039$ 11,348$7,425
Stock-based compensation expense2919153
Amortization of purchased tangible and intangible assets177605569
------------------
Gross profit on non-GAAP basis:$ 10,245$ 11,972$8,147
=== ============ ========== ======
Non-GAAP gross margin58.7 %63.7 %52.6 %
Three months ended
---------------------------------------------
March 30,December 30,April 1,
201220112011
-------------------------------------
Operating expenses on GAAP basis:$ 11,385$ 11,765$ 12,617
Stock-based compensation expense(470)(498)(991)
Costs related to reduction in workforce-(131)-
Legal and acquisition related costs(305)(433)(332)
Amortization of purchased tangible and intangible assets(799)(726)(701)
Restructuring and impairment related charges-(3)(283)
------------ ------- -
Operating expenses on non-GAAP basis:$9,811$9,974$ 10,310
=== ============ ========== ======
AuthenTec, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
Table 3
As of
------------------------------
March 30,December 30,
20122011
---------------------------
Assets
Current assets
Cash and cash equivalents$18,798$17,200
Restricted Cash750-
Accounts receivable9,3839,444
Inventory7,6078,111
Other current assets2,0681,716
----------------
Total current assets38,60636,471
Long-term investments3,2293,249
Purchased intangibles19,35120,287
Goodwill3,5013,501
Property and equipment, net3,4233,640
----------------
Total assets$68,110$67,148
================
Liabilities and stockholders' equity
Current liabilities
Accounts payable$5,384$3,539
Accrued compensation and benefits2,4584,399
Deferred revenue5,7784,145
Accrued litigation related legal fees-114
Other accrued liabilities3,3412,634
----------------
Total current liabilities16,96114,831
Long-term liabilities
Deferred rent353398
Other liabilities354768
----------------
Total long-term liabilities7071,166
Total liabilities17,66815,997
----------------
Stockholders' equity
Common stock445443
Additional paid-in capital193,284192,694
Accumulated other comprehensive income26650
Accumulated deficit(143,553)(142,036)
-------- ------------ ---
Total stockholders' equity$50,442$51,151
----------------
Total liabilities and stockholders' equity$68,110$67,148
================
SOURCE: AuthenTec, Inc.
AuthenTec, Inc.
Investor Contact:
Shelton Group
Brett L Perry, +1-972-239-5119 ext 159
Director of Investor Relations
E: bperry@sheltongroup.com
or
Media Contact:
AuthenTec
Brent Dietz, +1-321-308-1320
Director of Communications
E: brent.dietz@authentec.com |
