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Genesys Reports Q2

Genesys Conferencing reports total call volume increased to 569.5M minutes compared to 510.5M minutes in 2Q05

August 14, 2006

4 Min Read

VIENNA, Virginia and MONTPELLIER, France -- Genesys Conferencing (Euronext Eurolist: FR0004270270) (NASDAQ: GNSY), a global multimedia conferencing service leader, today reported financial results for the second quarter ended June 30, 2006. All results are reported under International Financial Reporting Standards (IFRS).

Revenue and Margin

In the second quarter of 2006, total volume increased to 569.5 million minutes compared to 510.5 million minutes in the second quarter of 2005. On a sequential basis compared to the first quarter of 2006, total volume increased by an additional 17.3 million minutes. Genesys Meeting Center volume increased to 534.6 million minutes, of which over 68.0% was generated under the Multimedia Minute program.

In the second quarter of 2006, revenue(1) was EUR 35.9 million compared to revenue of EUR 36.2 million in the second quarter of 2005. In U.S. dollars, revenue was USD 45.1 million compared to USD 45.6 million in the second quarter of 2005. Strong revenue growth from new and existing customers significantly offset the effect of the previously announced loss of a major customer at the end of 2005.

"Our strong volume growth continues to demonstrate the appeal of our value proposition to large enterprises," said Francois Legros, Chairman and CEO of Genesys Conferencing. "This quarter, volume based on the Multimedia Minute reached over five million minutes daily, reflecting new business wins as well as our ability to effectively drive enterprise-wide adoption of our collaboration solutions by this demanding market segment."

Gross profit for the second quarter of 2006 was EUR 24.1 million, resulting in a gross margin of 67.2%. Excluding a one-time federal excise tax credit of approximately EUR 1.4 million, gross profit was EUR 22.7 million compared to gross profit of EUR 23.8 million in the second quarter of 2005. Gross margin, excluding the one-time credit, was 63.1% in the second quarter of 2006, and, while down compared to a gross margin of 65.5% in the second quarter of 2005, it remained stable compared to the first quarter of 2006.

Profitability

Operating expenses in the second quarter of 2006 were EUR 18.9 million compared to EUR 19.7 million in the second quarter of 2005. These costs were comprised of: research and development expenses of EUR 1.1 million in the second quarter of 2006 compared to EUR 0.6 million in the second quarter of 2005; selling and marketing expenses of EUR 10.4 million in both the second quarter of 2006 and 2005; and general and administrative expenses of EUR 7.4 million in the second quarter of 2006 compared to EUR 8.7 million in the second quarter of 2005. Excluding a EUR 0.6 million benefit recorded this period in connection with a reevaluation of a balance sheet reserve, operating expenses were EUR 19.5 million in the second quarter of 2006 compared to EUR 19.7 million in the second quarter of 2005 and reflect the company's efforts to stabilize total operating costs while consistently reinvesting in growth initiatives.

"Our investment in research and development reflects our commitment to technological innovation, such as Voice over IP. Our expanded R&D capability enables us to respond quickly to customer requirements and to be well positioned to leverage the market's growth," Legros said.

Earnings before interest, taxes, depreciation and amortization (EBITDA(2)) and before stock-based compensation expenses were EUR 7.5 million for the second quarter of 2006. EBITDA, excluding both credits noted above, was EUR 5.4 million for the second quarter of 2006 compared to EUR 6.6 million in the second quarter of 2005 and compared with EUR 4.8 million in the first quarter of 2006. Stock-based compensation expense was EUR 63,000 and EUR 327,000 for the second quarter of 2006 and 2005, respectively.

Net income for the second quarter of 2006 was EUR 1.0 million, or EUR 0.01 per diluted share, compared to net income of EUR 1.0 million, or EUR 0.06 per diluted share, in the second quarter of 2005.

Liquidity

As of June 30, 2006, the company's net cash(3) was EUR 4.4 million and its net debt was EUR 25.3 million compared to net debt of EUR 72.0 million as of December 31, 2005.

Genesys

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