US : Novatel Wireless reported financial results for the first quarter ended March 31, 2007.
Revenue for the first quarter was up 43% sequentially to approximately $110 million versus revenue of $77 million in the prior quarter and up 174% over revenue of $40.2 million reported in the same period last year. First quarter GAAP net income was $10.1 million or $0.34 per diluted share. This compares to GAAP net loss of $1.3 million or a loss of $0.05 per diluted share in the prior year period. 2007 first quarter GAAP results include approximately $2.0 million of non-cash share-based compensation, or $0.06 per diluted share, net of taxes. Excluding the effect of these charges, non-GAAP net income was $12.1 million or $0.40 per diluted share for the first quarter of 2007.
“Our first quarter performance was the best in Company history, with record sales, strong gross margins and impressive operating leverage,” commented Brad Weinert, Novatel Wireless’ acting Chief Executive Officer. “Sales were even higher than forecasted in our revised guidance due to strong end-of-the-quarter momentum for newly introduced ExpressCards and Ovation USB devices. During the quarter, shipments of the Company’s ExpressCards – the most successful new product introduction in our history – grew to almost $50 million in sales. Additionally, some initial stocking orders for Ovation USB modems, previously expected to be shipped in Q2, were shipped within the quarter contributing to the higher-than-expected revenue. Over the last month, we have received more follow-on orders for Ovation devices and are seeing strong demand across our multi-pronged 3G product portfolio, offering clear evidence of the success of our diversification strategy and the increasing demand for innovative wide-area wireless data solutions.”
“The first quarter demonstrated the strong operating leverage in our model,” added Dan Halvorson, Novatel Wireless’ Chief Financial Officer. “Gross margin increased to 31.1%, benefiting from improved operational efficiencies and the increase in sales of our Ovation product line, and our operating margin more than doubled to 16.1% of sales, excluding share-based compensation charges. In the second quarter, we will continue to scale our internal infrastructure to meet the growth in our business and sector. Given our strong operating leverage and impressive year-over-year revenue growth, we are raising our non-GAAP earnings guidance by over 50% for the year to $1.00 to $1.05 per diluted share.”
Q2 and 2007 Outlook
The following statements are forward-looking and actual results may differ materially. Please see the section titled, “Cautionary Note Regarding Forward-Looking Statements” at the end of this press release for a description of risks. Please see the Company’s quarterly and annual reports on file with the Securities and Exchange Commission (SEC) for a more detailed description of risk factors.
The following table summarizes the Company’s financial guidance for the second quarter of 2007 and the year ending December 31, 2007. These estimates are based on the Company’s current business outlook as of the date of this press release. Non-GAAP earnings per diluted share are based on a projected tax rate of 35% and exclude FAS 123R share-based compensation expenses.
