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Envivio, Inc. (ENVI)
Q1 2014 Earnings Call
May 30, 2013, 05:00 pm ET
Cynthia Hiponia - IR, The Blueshirt Group
Julien Signès - President & CEO
Erik Miller - CFO
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At this time, we would like to turn the conference over to Cynthia Hiponia, Investor Relations. Please go ahead, ma’am.
Thanks Dick and good afternoon and welcome to Envivio’s first quarter fiscal 2014 financial results conference call. Joining the call today are Julien Signès, President and CEO, and Erik Miller, CFO. The agenda of today’s call includes commentary from Julien followed by discussion of financial results from Erik. This afternoon, Envivio issued a press release announcing its second quarter financial results, which is available on the company’s website at envivio.com. This call is being broadcast live over the internet and the audio of this call will be available on the Investor Relations page of the company’s website.
I would like to remind everyone that this conference call will contain forward-looking statements that are not historical facts but rather based on company’s current expectations and beliefs. Such forward-looking statements are not a guarantee of performance and Envivio’s actual results may differ materially from these forward-looking statements. Several factors that could cause or contribute to such differences are described in detail in the risk factors and other sections of our SEC filings as well as our earnings release.
Envivio undertakes no obligation to publicly release or otherwise disclose the results of any revision to these forward-looking statements that may be made as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
In addition, today’s discussion includes non-GAAP financial measures that Envivio believes may be important to investors as a metric to assess the operating performance of its business. Reconciliations to the most directly comparable GAAP financial measures are included in a table attached to the earnings release on Envivio’s website.
And now I would like to introduce Julien Signès.
Thank you, Cynthia. Joining me on the call today is Erik Miller, Envivio’s Chief Financial Officer.
Revenue for the first quarter was $7.5 million, down 3% sequentially, and down 44% year-over-year. I would note that the first quarter is typically down sequentially over the fourth quarter due to seasonality. Despite this seasonality and continues poor spending trend in our service provider customers, in the first quarter we have begun to see the impact of a rebuilding of our North American sales organization; revenues from the Americas was $2.6 million compared to $1.1 million in the prior quarter and $2.4 million in the first quarter of the prior year.
Thanks to our new American sales team and sales leadership, in the first quarter we increased the number of engagements including those with all key Tier-1 North American cable and telecom companies. Notably, IncrediTek, our reseller to Verizon contributed 18.5% of Envivio’s revenue in the first quarter. Motorola and other resellers to Tier-1 U.S. operators also contributed 11.4% of total revenue for the quarter. We also signed a new master purchase agreement with a leading Tier-1 U.S. cable multi-system operator. We are encouraged by our sales pipeline which is 50% larger than previous quarters.
Another highlight in the first quarter was our gross margin of over 63% up from 59% in Q4 and 52% in the prior year. The higher mix of software on orders and (inaudible) North American business helped the margins in the quarter; 66% of our sales came through partners and we continue to expand and strengthen our business relationships with distribution partners as well as key technology providers. Leveraging our partners to maximize our market coverage is an essential part of our distribution strategy and it helps us efficiently reach the global service provider market.
Other customer highlights during the first quarter includes the addition of six new customers with 76% of revenue coming from existing customers; several contracts for traditional pay-TV services demonstrating the success of our focus on the broader digital TV distribution market; expansions with many existing customers worldwide including the leading Western Europe and telecom operator specific to the (inaudible) for it’s IPTV and marketing strategies; increased momentum of our Halo Network Media Processor including additional orders by an existing European Tier-1 double customers. Selection by a leading global content provider for regional and GTV service delivery into connected TVs, PCs and tablets and mobile devices.
Turning to our products; on our last earnings call we discussed our HEVC Early Access Program for customers seeking to implement HEVC encoding, a new video standard promising up to twice the compression efficiency compared to current codecs. There has been a lot of interest in the earlier (inaudible) including meetings with key customers at NAB Conference in April, several Tier-1 operators are coming on board and we expect to have the first rollout later this year and ramping in to 2014 calendar year. Envivio won Streaming Media Magazine’s Best of NAB 2013 Award for the new Halo Experience Server. Launched at NAB, the Halo Experience Server is an innovative, new application server designed to enable operator to further customize the user experience based on individual viewer requests.