Wave Q3 '08 Revenue Grew 6% to $1.8 Million as Q3 '08 Billings Rose 36% to $2.3 Million
Market Wire
4:02 PM (GMT-05:00) Eastern Time (US & Canada) Nov 10, 2008
Wave Systems Corp.
LEE, MA, Nov 10 (MARKET WIRE) --
Wave Systems Corp. (NASDAQ: WAVX) (www.wave.com) today reported results
for the third quarter (Q3) and nine months ended September 30, 2008 and
reviewed recent corporate progress and developments. Wave's Q3 2008 net
revenues rose 6% to $1,835,000, compared to Q3 2007 net revenues of
$1,734,000, reflecting increased bundled software royalties, as well as
growth in contribution from software license upgrades.
Reflecting continued increases in Wave's software license activity, Q3
2008 billings (a non-GAAP measure of demand, which reflects upgrade
contracts signed during the period but which may be recognized over
future periods) rose 36% to $2,297,000, versus Q3 2007 billings of
$1,695,000.
As disclosed in its Q2 2008 news announcement, Wave's software upgrade
sales are being recorded as deferred revenue and recognized generally over
a 365-day period. As a result of this treatment and the additional growth
in Wave's upgrade sales in Q3, deferred revenue increased 78% or $462,000
to $1,050,000 in Q3 2008, compared to deferred revenue at June 30, 2008 of
$589,000, which was $233,000 higher than the Q1 2008 level. Gross profit
for Q3 2008 rose, in both dollar amount and percentage terms, to
$1,628,000 (88.7%), compared to $1,524,000 (87.9%) in Q3 2007.
As a result of higher levels of SG&A and R&D expense to support a growing
base of sales activity, partners, customers and prospective customers,
Wave reported a net loss of $5,605,000, or $0.10 per basic and diluted
share, in Q3 2008, compared to a Q3 2007 net loss of $4,778,000 or $0.10
per basic and diluted share. Per-share figures are based on a weighted
average number of basic shares outstanding in the third quarters of 2008
and 2007 of 57,896,000 and 49,737,000, respectively.
As of September 30, 2008, Wave had total assets of $2,985,000. Subsequent
to the close of Q3 2008, Wave completed a $721,500 offering of Series J
convertible preferred stock and began to implement a series of cost
reduction measures aimed at reducing the Company's ongoing operating
expenses.
Steven Sprague, Wave's President and CEO, commented, "As reflected in
revenue, billings and deferred revenue in Q3, Wave continued to make
progress in expanding its base of customer installations both on a bundled
and upgrade basis, despite growing global economic challenges. Among the
highlights in Q3 was Wave's role in Dell's largest-ever product launch:
the Latitude E-Series notebooks in late September. This new PC line
integrates Wave's EMBASSY(R) client software within Dell's new
ControlPoint application, giving users a set of robust tools for managing
a wide array of embedded security, from Trusted Platform Modules (TPMs)
to fingerprint sensors. As we have previously reported, under our
arrangement with Dell, Wave will now begin to receive higher per-unit
royalties on shipments of those products. Wave anticipates beginning to
record bundling revenues from the E-Series product line in Q4. Going
forward, we believe that our inclusion on these platforms, combined with
the higher per-unit bundling royalty, will benefit our financial
performance in Q4 and subsequent quarters. Further, as we announced
earlier today, our partner Seagate is now providing its higher-capacity
FDE drives as an upgrade option on the E-Series. These drives are bundled
with Wave software and should represent additional revenue opportunities
for Wave.
