Revenue from continuing operations for the fourth quarter and full-year2015 was $50.9 million and $241.4 million, respectively,adecrease of 18% comparedto the fourth quarter of 2014 and an increase of 20% compared to full-year 2014.Operating income from continuing operationsfor the fourth quarter and full-year2015was $5.2million and $50.5 million, respectively, a decrease of 59% compared to the fourth quarter of2014 and an increase of 32% compared to the full-year 2014. Financial results for the periods ended December 31, 2015and guidance for full-year 2016 to be discussed on conference call today at 4:30p.m. ET.
OAKBROOK TERRACE, IL, and ZURICH, February 16, 2016 – VASCO Data Security International, Inc. (NASDAQ: VDSI), today reported financial results for the fourth quarter and full-year ended December 31, 2015.
Revenue from continuing operations for the fourth quarter of 2015decreased 18% to $50.9 million from $62.4 million in the fourth quarter of 2014, and for the full-year2015, increased20% to $241.4million from $201.5 millionin2014.
Net income from continuing operations for the fourth quarter of 2015 was $3.5 million, or $0.09 perfully diluted share, a decrease of $7.5 million, or 68% from $11.0 million, or $0.28 per fully diluted share, for the fourth quarter of 2014.Net income from continuing operations for the full-year 2015 was $42.2million, or $1.06 per fully diluted share, anincrease of $9.6 million, or 29%, from $32.6million, or $0.83per fully diluted share for the full-year2014.
Net income, which includes the impact of our discontinued operations, was $3.5 million, or $0.09 per diluted share and $42.2 million or $1.06 per diluted share for the fourth quarter and full-year 2015, respectively. Net income for the fourth quarter and full-year 2014 was $11.9 million, or $0.30 per diluted share and $33.5 million, or $0.85 per diluted share, respectively.
On November 25, 2015, VASCO completed its acquisition of Silanis Technology, Inc., a leading provider of e-signature solutions used to sign, send and manage documents. VASCO believes the acquisition will allow it to deliver new solutions that are in high demand and accelerate its transition to a recurring revenue model, among other benefits. Results for Silanis, following the closing of the acquisition, are included in fourth quarter and full-year 2015 results, more fully described in “Other Financial Highlights.”
Other Financial Highlights:
Gross profit from continuing operations was $33.6 million or 66% of revenue for the fourth quarter of 2015 and $146.1million or 61% of revenue for the full-year 2015. Gross profit was $35.4 million and $127.8 million forthe fourth quarter and the full-year 2014, respectively, which was 57% and 63% of revenue, respectively.
Operating expenses from continuing operations for the fourth quarter and full-year2015 were $28.5million and $95.6 million, respectively, anincrease of 26% from $22.6million reported for the fourth quarter of 2014and an increase of 7% from $89.7 million reported for the full-year 2014.Operating expenses from continuing operations for the fourth quarter and full-year 2015 include transaction fees related to the Silanis acquisition of $1.9 million and $2.4 million, respectivelyand expenses of $1.5 million and $2.7 million, respectively, related to our internal investigation of the possible sale of our products by a distributor into Iran.
Operating income from continuing operations for the fourth quarter and full-year 2015 was $5.2million and $50.5 million, respectively, a decrease of $7.5million, or 59%, from $12.7 million reported for the fourth quarter of 2014 and anincrease of $12.4million, or 32%, from $38.1 million reported for the full-year2014. Operating income from continuing operations, as a percentage of revenue, was 10% and 21% for the fourth quarter and full-year2015, respectively, compared to 20% and 19%for the comparable periods in 2014.Operating income from continuing operations for the fourth quarter included Silanis post acquisition operating loss of $2.5 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations was $7.2million and $56.8million for the fourth quarter and full-year2015, respectively, a decrease of 49% from $14.2 million reported for the fourth quarter of 2014 and anincrease of 29% from $44.0 million reported for the full-year2014.
Cash, cash equivalents and short-term investments at December 31, 2015 totaled $123.5 million compared to $184.0million and $137.4 million at September 30, 2015 and December 31, 2014, respectively. There were no bank borrowings at any of the periods ended December 31, 2015, September 30, 2015 or December 31, 2014.
Operational and Other Highlights:
VASCO announced two solutions targeting the rapidly growing healthcare segment; DIGIPASS Authentication for Epic Hyperspace, a plug-in for IDENTIKEY Authentication Server; and DIGIPASS GO 7, a one-button hardware authenticator that has been validated as FIPS 140-2 Level 2 compliant by the federal National Institute of Standards and Technology (NIST).
Mark Hoyt, former Groupon EMEA CFO, joined VASCO and commenced serving as Chief Financial Officer, Secretary and Treasurer as of November 4, 2015.
Guidance for full-year 2016:
VASCO is providing guidance for the full-year 2016 as follows:
Revenue is expected to be in the range of $205 million to $215million, and
Operating income as a percentage of revenue, excluding the amortization of purchased intangible assets, is projected to be in the range of 10% to 12%.
“Our results for the fourth quarter were solid and our full-year revenue for 2015 was the best in the Company’s history,” stated T. Kendall Hunt, Chairman & CEO. “Implementing multifactor authentication against criminal and state-sponsored hacking attacks has become a necessity for every businesses and this continues to be a significant contributor to our growth. During 2015, we continued to extend our leadership position through the introduction of innovative anti-fraud solutions. Enhancements to our product line during 2015 included, but were not limited to, additional products featuring our Cronto technology, Runtime Application Self-Protection (RASP) capabilities in our DIGIPASS for Apps mobile application security library, the IDENTIKEY Risk Manager comprehensive risk management solution, and a FIPS 140-2 level 2 certified authenticator engineered to meet the strict regulatory requirements of the healthcare market. We completed the acquisition of Silanis Technology, Inc., a leading provider of e-signature solutions bringing VASCO a new product category that is already in high demand among our customers and that allows us to accelerate our transition to a recurring revenue model and expand our customer base into additional verticals. Our continuing strong performance and ability to generate cash will facilitate additional acquisitions that we expect will contribute to future revenue growth. For 2016, we will continue to deliver growth in strategic areas while maintaining positive operating results that reflect our commitment to the proper balance of growth and financial stability.
“Our operating performance in 2015 demonstrated our strength and stability,” said Jan Valcke, VASCO’s President and COO. “The results for the full-year 2015 reflected a 20% increase in revenue. Gross margin for the fourth quarter of 2015 was 66%, returning to the historic levels of previous few years as the mix of products sold shifted back to higher margin authenticators and software solutions. We believe we are making substantial progress with important proofs of concept with large customers that will help drive future revenue. Many of these projects are for our new solutions, Cronto and DIGIPASS for Apps. We anticipate significant growth in our software solutions revenue in 2016 and we believe that substantially all of this revenue will be incremental to our hardware revenue. We are well positioned in the market with the optimal mix of durable customer relationships, strong demand for our solutions, and a unique technology platform that is not available from competitors.”