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» Lionbridge Technologies CEO Discusses Q3 2010 Results – Earnings Call Transcript
So, first let’s start with the financial highlights for the quarter, we saw we delivered revenue about 107.8 million this quarter reflecting a reasonably solid growth of $8.4 million or about 8% year-on-year. This is slightly below our expected range to the shift in the product strategy within our largest technology plans some things are coming forth, some things are going back. Excluding revenue for this plan, we grew about 12% year-on-year. So, we are beginning to see that the diversification effort of our revenue base into new vertical markets and offerings is really beginning to take hold.We’re successfully delivering on that goal and now that our investments in sales and marketing are paying off, we expect this to continue. Overall, technology is still a strong market for us and more diverse revenue across verticals and offerings to build on as well. Total gross margin was about 31.5% reflecting on-going improvement from last quarter, and growth from last year in constant currency. As a reminder, from a profit standpoint, we prefer a stronger U.S. dollar. In fact, but it is an evidence on the statement our analysis shows that a 60% conversion of incremental revenue to operating profit year-on-year in constant currency, we operate about 27 currencies around the world. So, we have an internal analysis that shows at constant currency conversion rate. To our cost management actions are starting to have a positive impact on profitability as we began to generate top line growth. Q3 GAAP earnings were about $0.04 reflecting a profit increase of $6.2 million or $0.10 a share year-on-year despite the currency headwind. This reflects the benefits of increased revenue volume, improving margins, lower restructuring expense and better other expense FX management below the line year-on-year. So, on a sequential basis we kept earnings relatively flat despite of course the seasonally lower revenue that happens in Europe during Q3.
We are here to manage our cost for investing appropriately in the business and as a result as we grow revenue we expect continued margin improvement and earnings growth. Finally, we generated about 4.5 million in cash flow from operations during the quarter and we ended the quarter with almost 21 million in cash. So, the balance sheet remain strong despite our on-going investments in our software business.So, q3 was a solid quarter, we grew about 8% year-on-year, 12% excluding the volatility of the timing of things one large technology plan. Our cost management is showing benefits, we are expanding margins and profitability. So, let’s talk about the revenue opportunities across end markets and various offerings. As you know during the past few quarters we have been investing in a number of growth initiatives to put them in place to accelerate our revenue. We are seeing the results of that revenue growth across various segments. So, we will take them segment-by-segment. Our GLC language business is generating solid growth. In Q1 GLC grew 6% year-on-year despite its concentration with our largest technology plans. So, let me provide some context. As you heard from the recent Analyst Day, they shifted spend from a mature product businesses for their newer cloud consumer and mobile initiatives. This is having a short-term headwind on us given our foothold and some of their more mature product groups. But it should give us a longer term positive impact as we won a number of multi-year programs within these new cloud, consumer and mobile businesses. So, we expect those to ramp during ’12. And overtime, it should mean more consistent, less lumpy revenue as these are more business process outsourcing relationships rather than episodic IT services engagements, because they deliver new releases and updates to the market far more frequently. Read the rest of this transcript for free on seekingalpha.com