Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=41411
Story Retrieval Date: 5/24/2013 1:59:35 AM CST
VASCO Data Security International Inc., an Oakbrook Terrace, Ill.-based Internet and data security solutions company, more than doubled its net income in the second quarter, exceeding market expectations. Shares of the company jumped almost 13 percent, or $2.97, to $26.47 in mid-afternoon trading.
The company said strength came from successful launches of new products, a large number of new customers and continuing business from existing clients worldwide.
VASCO also said it has a backlog of $27.1 million in orders in the third quarter, which represents a 45 percent jump from 2006 sales in the third quarter.
VASCO raised its forecast for 2007 and now expects full-year revenues to range between $117.9 million and $125.5 million, compared with its previous guidance of $102.7 million to $110.3 million. Analysts on Yahoo Finance are not as optimistic, with an average revenue estimate of $119.7 million.
Net income for the quarter ended June 30 rose to $6.9 million, or 18 cents per diluted share, from $3.0 million, or 8 cents per diluted share, a year ago. The results were better than the 15 cents per share that analysts on Yahoo Finance had forecast.
Revenues rose 75 percent in the quarter to $32.4 million compared with $18.5 million in the year-ago period, as 631 new customers added strength to existing customer sales.
VASCO said banks and financial institutions represented the biggest chunk of second-quarter revenues, with the majority outside the U.S. Europe accounted for 65 percent of revenues, Asia 16 percent, the U.S. 8 percent and other countries 14 percent.
Founder and CEO Ken Hunt said global expansion is part of the firm’s strategy and it plans to open offices in Tokyo and Sao Paolo, Brazil.
VASCO improved its operating efficiency in the quarter, with operating income at 29.1 percent of revenues in the second quarter of 2007, up from 22.1 percent in the second quarter of 2006.
“[VASCO] is well positioned in the sweet spot of authentication spending, as a combination of regulatory and security concerns is catalyzing more financial institutions to sign on the dotted line,” said Daniel Ives, an analyst at New York’s Friedman, Billings, Ramsey & Co. Inc.
Ives added that as the company’s success in Europe spreads to other parts of the world, investors will be “looking at a multiyear growth story unfold over the coming years.”
Robert Breza, an analyst with RBC Capital Markets Corp. in Minneapolis, said the key to VASCO’s second-quarter success was the number of new bank customers.
“It’s been the consistency of them adding a number of new banks—113 new banks this quarter. That’s up from 94 last quarter,” he said.
In the first six months of 2007, VASCO profits nearly tripled to $11.8 million, or 31 cents per diluted share, from $4.2 million, or 11 cents per diluted share in the same period a year ago. Revenues rose 83 percent to $58.8 million from $32.2 million in the first two quarters of 2006.