ADVA Optical Networking announced Q2 2011 financial results for the quarter ended June 30, 2011, and prepared in accordance with International Financial Reporting Standards (IFRS).
July 21, 2011
Revenues in Q2 2011 at EUR 77.8 million were slightly above guidance of between EUR 72 million and EUR 77 million, up a sound 13.4% vs. EUR 68.6 million achieved in Q2 2010 and up 10.6% vs. EUR 70.4 million reported in Q1 2011. IFRS pro forma operating income, excluding stock-based compensation and amortization & impairment of goodwill & acquisition-related intangible assets, amounted to EUR 3.5 million or 4.5% of revenues in Q2 2011, also slightly above guidance of between 1% and 4% of revenues. This compares to EUR 1.9 million or 2.8% of revenues in Q2 2010 and EUR 0.9 million or 1.3% of revenues in Q1 2011. Both the year-on-year and the quarter-on-quarter increases of pro forma operating income are largely related to higher revenues.
The IFRS operating income rose to EUR 2.4 million in Q2 2011, after EUR 1.0 million in Q2 2010. The key driver for this improvement is the above-mentioned increase of pro forma operating income.
The IFRS net income amounted to EUR 0.8 million in Q2 2011, up from EUR 0.6 million in Q2 2010. The positive development of the operating income was mostly compensated by net foreign currency exchange losses of EUR 1.0 million in Q2 2011 after a gain of EUR 0.7 million in Q2 2010, and a loss of EUR 1.6 million in Q1 2011. Basic and diluted IFRS net earnings per share were EUR 0.02 each after EUR 0.01 each in Q2 2010.
“We are very pleased with our Q2 2011 revenues of EUR 77.8 million, which exceed guidance and are up 11% vs. the previous quarter and 13% vs. Q2 2010. The quarter-on-quarter rise is based on increased carrier infrastructure as well as enterprise business, reflecting continued network traffic growth driven by video applications and increasing adoption of cloud computing services. Year-on-year, in addition to the above, the pick-up is also due to higher demand for Ethernet access solutions. Our pro forma gross margin increased from 41.2% in Q1 2011 and 41.0% in Q2 2010 to 43.0% in Q2 2011. This improvement is due to changes in product and customer mix and positive effects of our cost reduction programs. With significant investment driven by our partnership with Juniper Networks and tight management of operational expenses, our pro forma operating income came in at 4.5% of revenues. Furthermore, cash and cash equivalents were at EUR 55.4 million at the end of Q2 2011, up a strong 24% from EUR 44.7 million at the end of the previous quarter. This sound development is driven by working capital improvements and results in a net liquidity improvement to EUR 27.3 million, up EUR 11.3 million or 70% vs. the end of the previous quarter. This represents a quarter-end all-time high and demonstrates our commitment to strongly managing our cash flows and balance sheet,” commented Jaswir Singh, chief financial officer & chief operating officer of ADVA Optical Networking.
In conjunction with the release of its Q2 2011 financial results on July 21, 2011, ADVA Optical Networking will host a conference call for analysts and investors at 3:00 p.m. CEST / 9:00 a.m. EDT. Participating in the call will be ADVA Optical Networking’s chief executive officer, Brian Protiva, and chief financial officer & chief operating officer, Jaswir Singh. Interested parties may dial in at +49 69 201744 210 or +1 877 423 0830, pin code 916221#, and download the corresponding presentation from ADVA Optical Networking’s website, located on the “financial results” page under “conference calls” in the investor relations section of ADVA Optical Networking’s website at www.advaoptical.com.
Q3 2011 Outlook
With its sound business model, ADVA Optical Networking remains flexible and is able to respond quickly to continuous change in the global market. Although the global economic sentiment is still creating mixed messages, the Company expects Q3 2011 revenues of between EUR 73 million and EUR 78 million. Further, ADVA Optical Networking anticipates Q3 2011 pro forma operating income to range between 2% and 5% of revenues. ADVA Optical Networking notes that it will continue to perform detailed quarterly reviews of the expected business development with respect to all intangible assets, including capitalized research and development expenses. These reviews may result in non-cash impairment charges in Q3 2011 and beyond. The pro forma operating income guidance provided above excludes any such potential impairment charges. ADVA Optical Networking will publish its Q3 2011 financial results on October 20, 2011.
“While the Optical+Ethernet transport market in H1 2011 developed slowly, ADVA Optical Networking’s revenues in Q2 2011 grew nicely. Citing growth in mobile backhaul and business Ethernet as key reasons for our market leadership, Infonetics Research confirms that we continue to dominate the Ethernet Access Device (EAD) market for the fifth consecutive year. Over the past several years, ADVA Optical Networking has focused extensively on streamlining and developing its business effectively, from daily operations to the consolidation of our product platform and investment in our engineering and services teams. This has proven to be key in achieving agility and flexibility during swift changes in the economic landscape. Our current market position is a strong basis from which we will drive profitability and revenue growth beyond market growth rates. Over time, we will see gross margin improvements, based on the development of our product mix, further effects from the consolidation of our product portfolio to two hardware platforms, and our cost reduction focus. These drivers should create further value for shareholders. We are excited about creatively shaping a market which is projected to accelerate rapidly due to rising data traffic and emergence of new applications and devices,” stated Brian Protiva, chief executive officer of ADVA Optical Networking.
Six-Month IFRS Consolidated Income Statement
ADVA Optical Networking Reports Q1 2011 Financial Results In Line With Guidance
ADVA Optical Networking Reports Audited 2010 IFRS Financial Results In Line With Expectations
ADVA Optical Networking reports Q3 2010 financial results with revenues exceeding guidance