VASCO Reports Results for First Quarter 2016

- Q1 Total revenue of $46.8 million
- Q1 GAAP operating income of $3.1 million
- Q1 GAAP earnings per share of $0.06
- Q1 Non-GAAP earnings per share of $0.14(1)

OAKBROOK TERRACE, Ill. and ZURICH, April 28, 2016 /PRNewswire/ -- VASCO Data Security International, Inc. (VDSI), today reported financial results for the first quarter ended March 31, 2016.

"We delivered a strong performance during the first quarter and made important progress in achieving our 2016 strategic initiatives of transitioning to a recurring revenue model, increasing our software business, and integrating our acquisition of Silanis, which we now present under the trade name eSignLive," stated T. Kendall Hunt, Chairman & CEO. "Q1 2015 included significant revenue from the largest deal in VASCO's history making year-over-year comparisons challenging. Nevertheless, our core business remained solid and we more than doubled our mobile application security business."

Revenue from continuing operations for the first quarter of 2016 decreased 28% to $46.8 million from $65.1 million in the first quarter of 2015. Net income from continuing operations for the first quarter of 2016 was $2.2 million, or $0.06 per fully diluted share, a decrease of $11.5 million, or 84% from $13.7 million, $0.34 per fully diluted share, for the first quarter of 2015.  

Operating income from continuing operations for the first quarter of 2016 was $3.1 million, a decrease of $13.0 million, or 81%, from $16.1 million reported for the first quarter of 2015. Operating income from continuing operations, as a percentage of revenue, was 7% for the first quarter 2016, compared to 25% for the comparable period in 2015.

Net income, which includes the impact of our discontinued operations, was $2.2 million, or $0.06 per diluted share for the first quarter of 2016. Net income for the first quarter 2015 was $13.6 million, or $0.34 per diluted share.

Non-GAAP net income from continuing operations (which excludes both long-term incentive compensation and amortization of intangible assets) for the first quarter of 2016 was $5.6 million, or $0.14 per fully diluted share, a decrease of $9.9 million, or 64% from $15.5 million, or $0.39 per fully diluted share, for the first quarter of 2015.

(1)  An explanation of the use of Non-GAAP measures is included below under the heading "Non-GAAP Financial Measures". A reconciliation of GAAP to Non-GAAP financial measures has also been provided in tables below.

Other Financial Highlights:

Gross profit from continuing operations was $33.9 million or 73% of revenue for the first quarter of 2016. Gross profit was $37.7 million, or 58%, of revenue for the first quarter of 2015.
Operating expenses from continuing operations for the first quarter of 2016 were $30.8 million, an increase of 43% from $21.6 million reported for the first quarter of 2015. The increase in operating expenses from continuing operations for the first quarter of 2016 is primarily related to eSignLive operations.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations was $6.1 million for the first quarter of 2016, a decrease of 65% from $17.3 million reported for the first quarter of 2015.
Cash, cash equivalents and short-term investments at March 31, 2016 totaled $125.2 million compared to $123.5 million at December 31, 2015. There were no bank borrowings at any of the periods ended March 31, 2016 or December 31, 2015.
Operational and Other Highlights:

VASCO demonstrated face recognition "Selfie Authentication" technology and RASP mobile application security at RSA Conference 2016 and CeBIT 2016.
VASCO announced DIGIPASS 770, a Cronto visual authentication and transaction signing product with an entry-level price point.
eSignLive announced it will launch data centers on IBM Cloud in Europe and Australia to allow customers to meet local data residency requirements.
eSignLive became the first comprehensive e-signature solution available in a FedRAMP SaaS-level compliant cloud.
Guidance for full-year 2016:

VASCO is maintaining guidance for the full-year 2016 as follows:

Revenue is expected to be in the range of $205 million to $215 million, and
Operating income as a percentage of revenue, excluding the amortization of purchased intangible assets, is projected to be in the range of 10% to 12%.         

About VASCO:

VASCO is a world leader in providing two-factor authentication and digital signature solutions to financial institutions.  More than half of the top 100 global banks rely on VASCO solutions to enhance security, protect mobile applications and meet regulatory requirements.  VASCO also secures access to data and applications in enterprise environments, and provides tools for application developers to easily integrate security functions into their web-based and mobile applications. VASCO enables more than 10,000 customers in 100 countries to secure access, manage identities, verify transactions, electronically sign documents and protect assets across financial, enterprise, E-commerce, government and healthcare markets.  Learn more about VASCO at vasco.com and on Twitter, LinkedIn and Facebook.

Forward Looking Statements:

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, including, without limitation the guidance for full year 2016.  These forward-looking statements (1) are identified by use of terms and phrases such as "expect", "believe", "will", "anticipate", "emerging", "intend", "plan", "could", "may", "estimate", "should", "objective", "goal", "possible", "potential", "project"  and similar words and expressions, but such words and phrases are not the exclusive means of identifying them, and (2) are subject to risks and uncertainties and represent our present expectations or beliefs concerning future events.  VASCO cautions that the forward-looking statements are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements.  These  risks, uncertainties and other factors have been described in our Annual Report on Form 10-K for the year ended December 31, 2015 and include, but are not limited to, (a) risks of general market conditions, including currency fluctuations and the uncertainties resulting from turmoil in world economic and financial markets, (b) risks inherent to the computer and network security industry, including rapidly changing technology, evolving industry standards, increasingly sophisticated hacking attempts, increasing numbers of patent infringement claims, changes in customer requirements, price competitive bidding, and changing government regulations, and (c) risks specific to VASCO, including demand for our products and services, competition from more established firms and others, pressures on price levels and our historical dependence on relatively few products, certain suppliers and certain key customers. These risks, uncertainties and other factors include VASCO's ability to integrate Silanis into the business of VASCO successfully and the amount of time and expense spent and incurred in connection with the integration; the risk that the revenue synergies, cost savings and other economic benefits that VASCO anticipates as a result of the acquisition of Silanis are not fully realized or take longer to realize than expected.  Thus, the results that we actually achieve may differ materially from any anticipated results included in, or implied by these statements. Except for our ongoing obligations to disclose material information as required by the U.S. federal securities laws, we do not have any obligations or intention to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events.