Openwave Systems Inc. (OPWV)
Q4 2010 Earnings Call
August 05, 2010 05:00 PM ET
Mike Bishop – Investor Relations
Ken Denman – Chief Executive Officer
Anne Brennan – Chief Financial Officer
Tom Roderick – Stifel Nicolaus
Matthew Hoffman – Cowen & Company
Mike Abramsky – RBC Capital Markets
Scott Sutherland – Wedbush Securities
Charlie Anderson – Dougherty & Company
Scott Zeller – Needham & Company
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Ladies and gentlemen, thank you for standing by. Welcome to the Openwave Fourth Quarter Fiscal Year 2010 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions.
(Operator instructions) This conference is being recorded today, Thursday, August 5th, 2010. I would now like to turn the conference over to our host Mike Bishop from Investor Relations. Please go ahead.
Thank you. Good afternoon, everyone and thank you for joining us today to discuss the results of Openwave Systems fourth quarter of fiscal year 2010. Joining me today from Redwood City are Ken Denman, Chief Executive Officer; and Anne Brennan, Chief Financial Officer.
Before we discuss the results of the quarter, I want to remind everybody that we are operating under the rules of Regulation FD. The fourth quarter financial results press release was distributed at the close of market today. And, if you've not yet seen a copy, you can find one at our website at openwave.com. For your convenience, this call is being recorded and will be available for playback from our website for three months.
Before we begin, I'd like to remind you that any remarks that maybe made on this call or in our earnings press release about future expectations, plans or prospects for the company may constitute forward-looking statements for the purpose of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
The actual results may differ materially from those indicated by the forward-looking statements as a result of various important factors. These factors include the specific risk factors discussed in the Company's press release that was distributed today, and in the company's filings with the SEC, including but not limited to the fiscal 2009 financial results on Form 10-K and any other reports subsequently filed with the SEC. We intend to make several forward-looking statements during the call that are based on management's current outlook as of today.
We do not intend to update these business outlook statements until the release of Openwave's next quarterly earnings report and disclaim any obligation to do so prior to that time. We reserved the right to update the outlook for any reason during the quarter.
I would like to note that during the discussion of the financial result unless otherwise indicated, gross margin expense and earnings related item are reported on a non-GAAP basis which excludes stock based compensation, realized losses and impairments on investment and goodwill, amortization of intangible, restructuring expensed and amounts related to unusual event.
Please access our financial metric summary which is available on the investor section of openwave.com to review Openwave historical financial performance, as well as reconciliations of the non-GAAP measures we report to the corresponding GAAP measures.
Now, I'd like to turn the call over to Ken.
Thanks, Mike. And good afternoon everyone. Today we reported revenue for the fourth fiscal quarter up $43.6 million and breakeven non-GAAP net income. Bookings for the quarter were $35.8 million. For the full fiscal year, revenue was $183.3 million with bookings of $170.7 million. We did not get our revenue and bookings scores. We improved bookings by 10% from the prior fiscal year but of short of our absolute bookings target.
Today, I want to talk about two things. The first is the factors that led to our not meeting our goals and second is to discuss the progress we made over the past year to improve our prior portfolio. Specifically, the mediation family of products, Media Optimizer, Analytics and Smart Policy, which all built on a foundation of Integra our next generation platform.
First, our performance. As we discussed on the last call, there was a customer concentration risk that took its toll in the back half of the fiscal year. In the first half, we had solid bookings levels. In Q3, FY '10 our largest customers dramatically and certainly reduced spending as a result of an internal assessment.
When we need a sales forecast by beyond at fiscal 2010, we were prepared to absorb a 15, 20, maybe even 25% reduction in purchases by our largest customer, if that scenario will happened. We certainly did not anticipate kind of more than 80% in the second half of the year, reducing the results in our bookings numbers.
Giving some idea of discovered their involvement with us, our pipeline for this customer on the symmetry one showed several bills valued at multiple 10s of millions of dollars which bolstered our confident.
By June, we booked less than $10 million from that customer. Generally speaking some operations has been delayed platform purchases until we have more certainly of market trends. Plan migrations before have GD closed – some near-term decisions. I'll point out that this particular customer remains a very good customer. In support of several core platforms and we believe the Integra family including our comprehensive suite of service enablers, analytics, content application and optimization will handle a greater and greater proportion of enable traffic.
We don’t know when or if this customer will return to historical buying patterns. We expect they will continue to purchase our product but we expect they will contribute a lower amount in fiscal 2011 relative to what we saw in past years. To reiterate, we were indeed impacted on back half of fiscal 2010 by the issue of customer concentration, clustering things for me personally is that the headline numbers betrayed the real progress we have made as a company in our 18 months, that brings to move to item two.