Starent Blazes Q1 Trail
The mobile packet core specialist also raised its full year earnings projection, a move that helped send its share price up by $2.60, nearly 16.5 percent, to $18.50 in early trading this morning.
Starent reported first-quarter revenues of $73.2 million and net income of $12.8 million, up 30 percent and 32.4 percent, respectively, from a year ago. Net income after non-cash stock-based compensation expenses, or "non-GAAP" net income, was $16.1 million, or $0.22 per share. Financial analysts had been expecting sales of $72.1 million and non-GAAP earnings of $0.16 per share.
In the company's investors' conference call, the vendor's CFO, Paul Milbury, said the first-quarter gross margin was higher than expected at 80.9 percent, due to a greater proportion of software sales for capacity upgrades. While he said that rate would come down as new customers come on board, Starent has raised its full year gross margin guidance to between 76 percent and 76.5 percent, up from the previous guidance of 75 percent.
That margin increase is set to filter through to the bottom line, so Starent has raised its full year non-GAAP earnings guidance to between 71 cents and 74 cents, an increase from its previous guidance of 65 cents to 68 cents. Full year revenues are still set to be around $315 million.
Milbury also noted that Starent had only one customer that contributed more than 10 percent of revenues during the first quarter, with that customer -- not named by the CFO, but known to be Verizon Wireless -- generating 75 percent of sales, or nearly $55 million.
Verizon Wireless cropped up again as analysts posed questions to Starent's executives, though CEO Ash Dahod declined to provide further details of Starent's involvement in the CDMA operator's plans to build a next-generation network using LTE (Long-Term Evolution) radio access and EPC (Evolved Packet Core) equipment. (See MWC 2009: Verizon Picks LTE Vendors and MWC 2009: Starent Dines on LTE.)
The CEO did, though, take a swipe at Starent's EPC rivals. "We continue to see competitors introducing 4G solutions retrofitted from other markets and applications," said Dahod. Whoever could he mean? (See AlcaLu Mines IP Smarts for LTE Core.)
Dahod also said Starent has landed another deal for its recently launched XT30 Service Convergence Platform, which is OEMed from partner Mavenir Systems Inc. (See Starent Intros Convergence Platform.)
With one small deal already under its belt, Starent has now, according to the CEO, landed a deal with an unnamed "Tier 1 UMTS carrier" for its IP Multimedia Subsystem (IMS) platform. (See Cellcom Picks Starent for Femtos and Femtocells Go to Wisconsin.)
Hear more from Dahod about Starent's approach to the LTE market in this LRTV interview:
— Ray Le Maistre, International News Editor, Light Reading