Sandvine Swings to Profit
Sandvine reported record first-quarter revenues of $15.4 million Canadian dollars (US$13.5 million) from C$6.9 million (US$6.0 million) in the year-ago quarter. This marked the company's ninth consecutive quarter of revenue growth.
Just as importantly, the company reported a profit of C$5.9 million (US$5.2 million), compared to a net loss of C$0.2 million in the first quarter of 2006.
The company attributes the strong first-quarter results to increased contract wins and greater margins from higher follow-on sales to existing customers.
Sandvine says it won 12 new customers in the quarter, including seven DSL providers, four cable companies, and one wireless operator. The DPI vendor now has more than 80 customers, including seven of the top 20 broadband service providers in the U.S.
During the company's conference call, Sandvine CEO Dave Caputo pointed to increased spending on sales and marketing, including three new regional channel partners to drive international sales.
Also beneficial was a greater focus on large customers. Caputo noted that "among our 12 new customers was another Tier 1 U.S. cable company which has over 5 million broadband subscribers." (See Sandvine Signs.)
Sandvine's stronger-than-expected results came in stark contrast to that of one of its competitors in the DPI market, Allot Ltd. (Nasdaq: ALLT). Just last week, Allot lowered its first-quarter revenue guidance on weakness in the Americas. (See Allot Alters Estimate.)
Due to slow sales from some of its distributors, Allot lowered its first-quarter revenue forecast to $8.2 to $8.3 million, from its previous guidance of $9.6 million. Allot also expects net income to decline in the quarter.
The stock prices of the two companies have also taken divergent paths. Since its IPO at $1.90, Sandvine's stock has risen as high as $4.40 today. Allot, on the other hand, has seen its shares fall from a high of $14.33 at the close of its IPO to $7.39. (See Sandvine Closes Offering and Allot Leaps on Nasdaq Debut.)
In late afternoon trading, Sandvine stock had risen $0.42 (11.11%) on the strength of its earnings announcement.
— Ryan Lawler, Reporter, Light Reading