Sandvine Reports Q4 2014 Results

Waterloo, Canada; January 15, 2015 – Sandvine, (TSX:SVC) a leading provider of intelligent network policy control solutions for fixed and mobile operators, today reported revenue of $34.2 million for its fourth quarter of 2014 and net income of $8.1 million. All results are reported in U.S. dollars under International Financial Reporting Standards (IFRS), unless otherwise specified.

Sandvine’s annual revenue for fiscal 2014 increased by 16% to $123.4 million (FY 2013: $106.5 million) and annual net income grew 78% to $23.0 million (FY 2013: $12.9 million), or $0.15 per diluted share.

FINANCIAL HIGHLIGHTS (All amounts are in U.S. dollars)

Millions of dollars, except per share data and where otherwise indicated








Gross Margin percent








Net Income




Diluted Earnings Per Share




Non-IFRS Income1




Non-IFRS Diluted Earnings Per Share1




1 See Table 1 below regarding non-IFRS financial measures
2 During the three months ended November 30, 2014, the Company recognized $1.9 million of non-refundable investment tax credits, which reduced operating expenses in the period, compared to $4.3 million recognized in the same period of last year. These accounting adjustments resulted in corresponding increases in current income tax expense in the respective period but had no impact on net income and did not represent current cash taxes. During Q4 2013, the Company also recognized $1.4 million of other government assistance that further reduced operating expenses in that quarter.

Other Q4 2014 results highlights:

  • Revenue by access technology market: cable 41%; wireless 39%; DSL 19%
  • Revenue by geography: NA 49%; EMEA 23%; APAC 17%; CALA 12%
  • Revenue by sales channel: direct 52%; reseller 48%
  • Cash, cash equivalents and investments: $151.1 million
  • Customers: Won 8 new service provider customers

“This was an excellent year for Sandvine. We finished 2014 with record quarterly revenue. I am pleased that we managed to improve profitability for the year while continuing to invest in our business and launch industry-leading new products like the PTS 32000,” said Dave Caputo, Sandvine’s President and CEO. “We won 36 new customers in 2014, saw large existing customers expand their implementations, and continued to help operators launch some of the world’s most innovative new service tiers – a trend we expect will continue in 2015.”

Since the last quarterly results announcement, Sandvine:

  • Announced shipment and revenue related to its 100GE standalone network policy control switch, the industry-leading PTS 32000. Orders totaled multiple millions of dollars
  • Won new implementations for its Virtual Series products, including with SpeedConnect in Michigan and another through its partner ClearSky
  • Won “Best Real Time Charging Platform for Customers” at the Global Broadband Traffic Management Congress in Barcelona, Spain. The award recognizes Sandvine’s leadership in helping customers launch innovative new service tiers globally
  • Continued to penetrate the Mobile Virtual Network Operator market, with partner I-New.


The Company will discuss the financial results and business outlook on a conference call at 8:30 a.m. Eastern time today.

Toll-free North America: (866)-215-5508 | Confirmation Number: 38680900
Webcast: www.sandvine.com/investors

A replay of the Q4 2014 results call will be available at: (888)-843-7419 (passcode 38680900#) today at 11:00 a.m. ET through January 25, 2015.

To download the complete report in PDF format please click the link below:
[download release]


Sandvine’s network policy control solutions add intelligence to fixed, mobile and converged communications service provider networks to enable services that can increase revenue and reduce network costs. Powered by Sandvine’s Policy Engine and SandScript policy language, Sandvine’s networking equipment provides end-to-end policy control functions including traffic classification, and policy decision and enforcement across the data, control and business planes. Sandvine’s products provide actionable business insight, the ability to deploy new subscriber services and tools to optimize traffic while enhancing subscriber Internet quality of experience.

Sandvine’s network policy control solutions are deployed in more than 250 networks in over 90 countries, serving hundreds of millions of data subscribers worldwide, www.sandvine.com.

Rick Wadsworth
+1 519 880 2400 ext. 3503

Dan Deeth
+1 519 880 2232


Certain statements in this press release constitute “forward-looking information” within the meaning of applicable Canadian securities laws and are based on expectations, estimates and projections as of the date of this press release. Forward-looking statements include, without limitation, statements with respect to projected revenues, earnings, growth rates, targets, revenue mix and product plans and the Company’s future growth, results of operations, performance and business prospects and opportunities. Forward-looking statements are necessarily based upon management’s perceptions of historical trends, current conditions and expected future developments, as well as a number of specific factors and assumptions that, while considered reasonable by the Company as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies which could result in the forward-looking statements ultimately being incorrect. In addition to the various factors and assumptions set forth in this press release, the material factors and assumptions used to develop the forward-looking information include, but are not limited to the following: the overall Network Policy Control market including reliance on major customers; adoption of Virtual Series solutions; the requirement for increasingly innovative product solutions; its growth strategy and the need for increasing investment in sales and marketing efforts; the target business model and its assumptions; the demand for the Company’s products and fluctuations in future revenues; expectations of growth in the DSL and Wireless markets; expectations for DSO; sufficiency of current working capital to support future operating and working capital requirements; the stability of general economic and market conditions; currency exchange rates and interest rates; equity and debt markets continuing to provide the Company with access to capital; and its continued compliance with third party intellectual property rights; foreign exchange hedging; and that the risk factors noted below, collectively, do not have a material impact on the Company. Such risk factors include, but are not limited to

  • The Company’s revenues may fluctuate from quarter to quarter and year to year depending upon sales cycles, customer demand and the timing of customer purchase decisions;
  • The Company’s gross margins may fluctuate from quarter to quarter and year to year depending upon a variety of factors including product mix in the quarter, competitive pricing pressures and the level of sales generated through indirect channels;
  • The Company is dependent upon and expects to continue to derive a large percentage of its revenue from both a small number of key customers and key reseller partners, none of whom are bound to any fixed purchase commitment or exclusivity obligations and could change their buying patterns and/or source of supply at any time, which could have a material impact on the Company’s revenues. In addition, the Company extends credit to its customers and resellers by virtue of agreed upon payment terms and could be exposed to collection risk on its receivables particularly if any key customer or key reseller were to face financial challenges. The Company’s reseller partners may also offer their own products which are competitive with the Company’s products;
  • By selling its products in certain markets through resellers, the Company is able to avoid certain costs relating to operating in those markets including but not limited to local support costs, costs of maintaining a local legal entity, administration costs, and logistics. Should the Company chose or be required to sell direct in these markets (due to customer preference, termination of a reseller relationship or other reasons) the cost advantages described will no longer be available to the Company which could results in an increase in operating costs;
  • The Company faces intense competition in markets where there are typically several different competing technologies and rapid technological changes. The Company faces the risk of the emergence of new technologies and new approaches to network architecture that may be either competitive to those of the Company or that change the requirements of the Company’s customers for solutions such as those offered by the Company. If the Company is unable to adapt its offerings in response to these trends it could have a material impact on the ability of the Company to market its solutions;
  • The Company’s growth is dependent on the development of the market for network policy control solutions and the decisions of the Company’s target customers to deploy and further invest in those technologies, which decisions may be impacted by changing requirements in the area of broadband network management policies and/or changes in the regulatory framework to which the Company’s customers may be subject. In particular, numerous telecommunications legislators and regulators in various jurisdictions have considered or are considering what, if any, regulations might be appropriate with respect to how internet service providers manage the impact of different types of traffic on their networks. These ongoing processes may cause uncertainty in the network investment decisions of the Company’s target customers, and any new rules or regulations that result from these considerations may impact the demand for the Company’s products within various markets, including markets that may not be considering any new regulation but where the Company’s customers may look to other markets for future guidance or trends;
  • With the adoption of network functions virtualization (“NFV”) and software defined networks (“SDN”), the market in which Sandvine operates may face a shift in how some of its customers purchase the Company’s products. It is the Company’s intention to continue to offer and develop Network Policy Control products for customer networks architected for NFV or SDN. These products will run on commercial off-the-shelf hardware. The introduction of these product offerings could see a shift in the Company’s pricing practices from perpetual based software licenses to term based software licenses. It is anticipated that revenues from term-based licenses would be recognized over the license term while revenues from perpetual licenses are generally recognized at the time of delivery. While the timing and impact of this shift is not anticipated to materially impact the Company’s results in 2015 it is difficult for the Company to accurately predict. As such, depending on the rate of adoption, the Company could experience a loss or delay in hardware and/or software revenue and reduced profits in 2015 or beyond;
  • The Company is dependent on certain third party sub-assembly manufacturers in its supply chain and any disruption in the operations or quality of those suppliers or any increase in expected lead times from those suppliers could result in lost or delayed revenue and/or reduced profits;
  • The majority of the Company’s operating expenses are denominated in Canadian dollars, U.S. dollars, and Indian rupees. The Company’s earnings are impacted by fluctuations in the exchange rates between the U.S. dollar and these currencies;
  • The Company operates in various jurisdictions throughout the world and generates revenues through its international sales efforts. The Company’s financial results may be impacted by political and economic developments of a particular country or geography, including but not limited to the economic and political climate in Argentina. If the current economic and/or political climate in Argentina continues or deteriorates it may negatively impact the Company’s financial results including the ultimate collection of outstanding receivables. The Company has operations in India and Hong Kong, both considered by management to be emerging markets. The operations in India are predominantly a contract research and development facility and the Company conducts business in Hong Kong through a branch sales representative office;

and those factors which are discussed in the Company’s 2014 Annual Information Form, a copy of which is available on SEDAR at www.sedar.com. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.

UPDATED : 2015-01-14 21:39:39