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Lionbridge Technologies, Inc. (LIOX)
Q2 2008 Earnings Call
August 5, 2008 9:00 am ET
Sara Buda - Investor Relations
Rory Cowan - Chairman of the Board, President, Chief Executive Officer
Donald Muir - Chief Financial Officer
Brian Kinstlinger - Sidoti & Company
Randy Hugen - Piper Jaffray
Joseph Vafi - Jefferies & Co.
Mat McCormack - FBR
Richard Baldry - Canaccord Adams
Previous Statements by LIOX
» Lionbridge Technologies, Inc. Q3 2009 Earnings Call Transcript
» Lionbridge Technologies Inc. Q2 2009 Earnings Call Transcript
» Lionbridge Technologies Q4 2008 Earnings Call Transcript
During this call we may make certain statements that may be considered forward-looking statements under federal securities laws and which involves risks and uncertainties. Our actual future results may differ significantly from the matters discussed in any forward-looking statements. We have disclosed in greater detail in our Form-10K filed with the Securities and Exchange Commission 2008 the factors that may cause such differences and now I will turn the call over to Lionbridge Chairman and CEO Rory Cowan.
Today, of course we will walk to our second quarter results and discuss the achievements that we believe are positioning us for a continued strengthening in the second half of 2008 then I will turn it over to John who can walk you through the details in some of the financial milestones for the quarter including our balance sheet management which is really coming along very nicely.
So, first let me briefly summarize the quarter. Revenue was strong this quarter. We drove about 10% growth compared to last year and more importantly, about 7% compared to last quarter and I think that is important a sequential quarterly growth because currencies now seems to be trading within $0.04 or $0.05 range and so I think that is really a nice metric as the world begins to stabilize in this environment.
Our organic revenue growth is really starting to return and our customer quality ratings have never been higher and in fact, most importantly, the pipeline of new business, large projects has strengthened and I am delighted with our demand environment as we head into the second half of the year. So, that is the revenue side. Margins, they also improved compared to last quarter and we returned to profitability despite the continued strong position of the Euro.
It took us a few quarters to reconfigure the business and to manage our infrastructure for today's currency environment but you can see from our sequential revenue growth, margin improvement and profitability, all of that activity from Q4 and Q1 is really beginning to show through. Perhaps more importantly is we delivered strong cash flow from operations of about $11 million for the quarter. Once again, strong cash flow capability of the business is evident and that is important as we used that cash to buyback about $2 million of stock during the quarter and we paid down about $3 million of debt just to be prudent in today's uncertain credit environment.
Overall the second quarter was a success. We are growing our customers, margins are improving. We are managing currency and we returned to profitability and we continued to generate strong cash flows. Now, let me provide some detail on our two focus areas for 2008, revenue growth and cost management. Of course raising the bridge and lowering the water and the positive trends are the point to the strong second half and of course 2009.
Customer demand, for this quarter we saw increase demand across our business. We grew many of our existing account including our top two customers, Microsoft and Google and both of those, of course, we have a broad and deep and far ranging relationships. Our top ten customers grew more than 15% year on year and we won some new business including large program with a leading internet company, a global pharmaceutical organization and a security software company. It seems that one of the conclusions I am drawing here is that as the US economy softens, it seems that export markets are becoming increasingly important to our customers and there seems to be an increased level of commitment to achieve sales growth in overseas markets by all of our customers.
So, these wins combined with the continued growth of our top accounts really reflect our three positive trends in our business. First, we are leveraging our global infrastructure to broaden client relationships and provide additional services and that additional services piece is very important because we know how to manage a worldwide contract workforce and this skill set has many end market applications. For example, we are seeing strong demand for search relevancy testing service which is part of our GDT segment. What we do there is we make certain that search engines, that searches are relevant in over a 100 locales or maybe a 110 I think now, of different languages and different geographies for a variety of search companies.
This offering, of course, built on the skills we have developed in our language business. For search relevance, we used independent raters to test the intent and usability of a given search term and its certain geography. This expertise in global, mobile workforce management is allowing us to both expand our large existing account and win new business. With the record growth of internet users in global markets, you could see the broad applicability to this service going forward. So, the growth in our GDT segment demonstrates the broad applications for our global contract workforce which is really an extension of the skills from our GLT segment.