|By Marketwired .||
|November 9, 2012 04:02 PM EST||
LEE, MA -- (Marketwire) -- 11/09/12 -- Wave Systems Corp. (NASDAQ: WAVX) today reported financial results for its third quarter ended September 30, 2012 (Q3 '12) and highlighted recent progress and new product launches.
Wave reported total net revenues of $7.0 million for Q3 '12, including $1.5 million in licensing revenues from its Safend subsidiary, and services revenue of $40,000 from the final billing of a government contract. Wave's Q3 '11 total net revenues were $9.5 million, including $156,000 in revenues from Safend, which was acquired in late September 2011, and $274,000 in services revenue related to a government contract. The year-ago third quarter also benefitted from approximately $2 million in additional revenue related to two "large" enterprise-customer upgrade sales recorded ratably during 2011. Total net revenues in Q2 '12 were $7.8 million.
Wave's Q3 '12 and year-to-date results reflect lower levels of OEM bundling revenue resulting from both lower PC shipment volumes as well as revisions to the Company's royalty rates starting in November 2011 which, on a blended basis, have reduced per-unit revenues. In aggregate, Q3 '12 was impacted by a $1.6 million decrease in OEM royalties versus the prior year period, and since the beginning of 2012 Wave's OEM bundling revenue has declined by $3.2 million versus a year ago, providing another headwind in year-over-year comparisons.
Total billings declined to $6.1 million in Q3 '12, compared to $6.4 million in Q3 '11 and $6.9 million in Q2 '12. Total billings for Q3 '12, Q3 '11 and Q2 '12 included $1.3 million, $143,000 and $1.4 million, respectively, from Safend.
Wave's Q3 '12 combined SG&A and R&D expenses declined to $12.6 compared to $13.7 million in Q2 '12 but rose over Q3 '11 expenses of $10.9 million. The year-over-year increase in SG&A and R&D expenses reflects expanded staffing in engineering, sales & marketing and administration, principally due to the addition of approximately 60 team members and related overhead resulting from the Safend acquisition. The increased staffing & expenses support a broader base of OEM relationships, growth in the prospective customer base and pipeline of order opportunities on a global basis and investments in the development of new products and product capabilities.
Wave recorded a Q3 '12 net loss of $6.1 million, or $0.06 per basic and diluted share, as compared to a Q2 '12 net loss of $6.5 million, or $0.07 per basic and diluted share and its Q3 '11 net loss of $1.8 million, or $0.02 per basic and diluted share. Per share figures are based on a weighted average number of basic shares outstanding during Q3 '12, Q3 '11 and Q2 '12 of 98.0 million, 83.7 million and 92.5 million, respectively.
In order to highlight its operational performance on a cash-flow basis, Wave reports EBITDAS, a non-GAAP measure defined as earnings before interest income (expense), income taxes, depreciation and amortization and stock-based compensation expense. Wave recorded negative EBITDAS of $4.2 million in Q3 '12, compared with negative EBITDAS of $0.3 million in Q3 '11 and negative EBITDAS of $4.6 million in Q2 '12.
As of September 30, 2012, Wave's total current assets were $6.5 million and total current liabilities, including the current portion of deferred revenue of $4.5 million, were $12.6 million. Cash and cash equivalents were $2.2 million at September 30, 2012, as compared to $1.6 million at June 30, 2012.
Wave continues to utilize a variety of approaches to fund its operations, including active working capital management methods, a receivables financing relationship to monetize its largest receivables and common stock sales. During Q3'12, Wave completed the sale of 2.6 million shares of Class A common stock at $0.6425 per share, yielding net proceeds of approximately $1.5 million. Purchasers also received warrants to purchase up to 1.3 million shares of Class A common stock at $0.58 which expire in August 2017. In October (Q4 '12), Wave raised approximately an additional $3.1 million in net proceeds through the sale of 3.3 million shares of Class A common stock at $1.0025 per share. Purchasers also received warrants to purchase up to 1.7 million shares of Class A common stock at $0.94 which expire in October 2017. Both of these private placements were pursuant to Wave's effective shelf registration statement.
Also during Q3 '12, Wave raised net proceeds of approximately $3.6 million through the issuance of approximately 4.0 million shares of its Class A common stock at an average price of $0.93 per share through its At The Market (ATM) structure. Since the end of Q3 '12, shares sales through the ATM raised additional net proceeds of approximately $0.3 million at an average price of $0.99. Since the ATM's inception in January 2012, Wave has raised total net proceeds of $9.1 million through the issuance of 7.9 million shares of Class A common stock at an average price of $1.18 per share. The share sales are completed at market prices, with a 3% commission and without any warrant issuance.
"During the third quarter, sales fell short of expectations due to challenges in completing enterprise deals, as well as a lower level of OEM bundling revenues. Our performance has prompted a 'redoubling' of efforts to bring sales in the pipeline to fruition in the current quarter as well as expanded efforts at developing new opportunities," commented Wave CEO Steven Sprague. "In light of our sales results, we've also taken a closer look at ways to curtail expenses, realizing a $1.2 million reduction in operating expenses in Q3 versus Q2 and a $2.2 million reduction versus Q1 of this year.
"Nonetheless, we remain optimistic about the future and our prospects in this growing market. As anticipated, Wave released several new products and product enhancements during the third quarter, including Wave Cloud, a SaaS (software as a service) offering that provides central management for hardware-based endpoint encryption, and Wave Endpoint Monitor, a first-of-its-kind solution that detects malware threats in the 'pre-boot' mode. We believe these new capabilities extend our leadership position in the Trusted Computing space at a time when Trusted Computing capabilities are receiving global visibility through the launch of the Windows 8 operating system across PCs, tablets and mobile devices.
"We view Windows 8, which utilizes industry standard hardware to deliver a range of convenient and secure new features, as a validation of the benefits of Trusted Computing and Wave's solutions. Wave is uniquely positioned to support Windows 8 deployments via server-based or cloud management solutions, as well as to deliver a range of Windows 8 capabilities to enterprise customers running Windows 7 and earlier versions. Though Trusted Computing is based on industry-standard hardware used to protect your identity, the powerful user benefits are ease of use, ease of connection, and ease of access to the critical data that you need to do your job; it just works. Further, by building these capabilities on top of Trusted Computing hardware now being deployed across PCs, tablets and mobile devices via Windows 8, governments, enterprises, and even individuals, are able to benefit and manage all of their devices using one solution."
"As the mobile security space continues to expand -- especially with the rising use of consumer smartphones in the enterprise, in mobile commerce and for sensitive applications -- Wave has taken a leadership role in promoting the adoption of hardware-based industry standards for greater security. Last quarter, Wave announced its inclusion in the influential ARM TrustZone Ready Program, whose partners have pledged to help chipset vendors design and integrate Trusted Computing hardware features in the chipsets they are building today.
"We are making great progress with scrambls to address security issues posed by the rising use of Cloud storage services in the enterprise as well as the evolution of social media into a tool increasingly used by businesses for the dissemination of critical information. We see strong interest within the corporate environment for solutions that enable the safe sharing of files and communications over the Internet and social media."
Recent News and Developments
- Wave launched several significant products in Q3, including Wave Cloud, which provides central management for hardware-based endpoint encryption, and Wave Endpoint Monitor, the first-ever solution using industry standard hardware to detect malware and other threats at the BIOS level.
- Wave outlined unique Trusted Platform Module (TPM) management capabilities within its upcoming version of EMBASSY Remote Administration Server (ERAS), including the ability to secure credentials in hardware for DirectAccess deployments and to use a TPM as a Virtual Smartcard.
- Gartner, the world's leading IT research and advisory firm, elevated Wave to the "Visionary" section of its Mobile Data Quadrant.
- SC Magazine awarded Wave's flagship server, ERAS, a four and 1/4 star rating in its group endpoint encryption review.
- Wave received broad media coverage discussing the Trusted Computing capabilities and significance of the Windows 8 launch across PCs, tablets and mobile devices: Forbes, eWeek, PC Magazine, ComputerWeekly, Redmond Magazine.
- Wave joined the ARM TrustZone Ready Enablement Program to provide support and infrastructure for implementing enterprise security capabilities in mobile devices.
About Wave Systems
Wave Systems Corp. reduces the complexity, cost and uncertainty of data protection by starting inside the device. Unlike other vendors who try to secure information by adding layers of software for security, Wave leverages the security capabilities built directly into endpoint computing platforms themselves. Wave has been a leading expert in this growing trend, leading the way with first-to-market solutions and helping shape standards through its work as a board member for the Trusted Computing Group.
Safe Harbor for Forward-Looking Statements
This press release may contain forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company's financing plans; (ii) trends affecting the company's financial condition or results of operations; (iii) the company's growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words "may," "would," "will," "expect," "estimate," "anticipate," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company's ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Wave assumes no duty to and does not undertake to update forward-looking statements.
All brands are the property of their respective owners.
WAVE SYSTEMS CORP. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) Three months ended Nine months ended September 30, September 30, September 30, September 30, 2012 2011 2012 2011 ------------- ------------- ------------- ------------- Net revenues: Licensing $ 6,930,724 $ 9,259,722 $ 20,950,093 $ 24,617,967 Services 39,539 274,416 763,781 486,533 ------------- ------------- ------------- ------------- Total net revenues 6,970,263 9,534,138 21,713,874 25,104,500 ------------- ------------- ------------- ------------- Operating expenses: Licensing - cost of net revenues 395,188 459,002 1,317,055 1,139,943 Services - cost of net revenues 7,521 28,122 144,111 102,169 Selling, general, and administrative 7,847,873 7,021,658 26,246,347 19,304,601 Research and development 4,793,453 3,869,833 14,861,557 10,717,346 ------------- ------------- ------------- ------------- Total operating expenses 13,044,035 11,378,615 42,569,070 31,264,059 ------------- ------------- ------------- ------------- Operating loss (6,073,772) (1,844,477) (20,855,196) (6,159,559) ------------- ------------- ------------- ------------- Other income (expense): Net currency transaction gain (loss) 1,965 - 11,753 231,368 Net interest expense (36,685) (1,074) (99,294) (3,128) ------------- ------------- ------------- ------------- Total other income (expense) (34,720) (1,074) (87,541) 228,240 ------------- ------------- ------------- ------------- Net loss $ (6,108,492) $ (1,845,551) $ (20,942,737) $ (5,931,319) ============= ============= ============= ============= Loss per common share - basic and diluted $ (0.06) $ (0.02) $ (0.22) $ (0.07) Weighted average number of common shares outstanding during the period 97,987,172 83,680,753 93,585,723 82,929,284 WAVE SYSTEMS CORP. AND SUBSIDIARIES Consolidated Supplemental Schedules (Unaudited) Three months ended Nine months ended September 30, September 30, September 30, September 30, 2012 2011 2012 2011 ------------- ------------- ------------- ------------- Total net revenues $ 6,970,263 $ 9,534,138 $ 21,713,874 $ 25,104,500 Increase (decrease) in deferred revenue (884,795) (3,182,659) (1,900,663) (3,823,218) ------------- ------------- ------------- ------------- Total billings (Non-GAAP) $ 6,085,468 $ 6,351,479 $ 19,813,211 $ 21,281,282 ============= ============= ============= ============= Net loss as reported $ (6,108,492) $ (1,845,551) $ (20,942,737) $ (5,931,319) Net interest expense 36,685 1,074 99,294 3,128 Depreciation and amortization 539,001 177,933 1,611,521 438,794 Stock-based compensation expense 1,343,510 1,355,100 3,987,588 3,938,605 ------------- ------------- ------------- ------------- EBITDAS (Non- GAAP) $ (4,189,296) $ (311,444) $ (15,244,334) $ (1,550,792) ============= ============= ============= =============
Non-GAAP Financial Measures:
As supplemental information, we provide the non-GAAP performance measures that we refer to as total billings and EBITDAS. Total billings is provided in addition to, but not as a substitute for, GAAP total net revenues. Total billings means the sum of total net revenues determined in accordance with GAAP, plus the increase or minus the decrease in deferred revenue. We consider total billings an important measure of our financial performance, as we believe it best represents the continued increase in our software license upgrades. Total billings is not a measure of financial performance under GAAP and, as calculated by us, may not be consistent with computations of total billings by other companies. EBITDAS is defined as net income (loss) before interest income (expense), income taxes, depreciation and amortization and stock-based compensation. EBITDAS should not be construed as a substitute for net income (loss) or net cash provided by (used in) operating activities (all as determined in accordance with GAAP) for the purpose of analyzing our operating performance, financial position and cash flows, as EBITDAS is not defined by GAAP. However, we regard EBITDAS as a complement to net income (loss) and other GAAP financial performance measures, including an indirect measure of operating cash flow.
WAVE SYSTEMS CORP. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) September 30, December 31, 2012 2011 ------------- ------------- Assets Current assets: Cash and cash equivalents $ 2,163,046 $ 3,385,035 Accounts receivable, net of allowance for doubtful accounts of $-0- September 30, 2012 and December 31, 2011 2,640,528 7,198,645 Collateralized receivables 795,416 - Prepaid expenses 886,919 823,761 ------------- ------------- Total current assets 6,485,909 11,407,441 Property and equipment, net 983,920 1,236,844 Amortizable intangible assets, net 9,711,906 10,925,306 Goodwill 6,216,059 6,216,059 Other assets 325,393 336,607 ------------- ------------- Total Assets 23,723,187 30,122,257 ============= ============= Liabilities and Stockholders' Equity Current liabilities: Secured borrowings 672,107 - Accounts payable and accrued expenses 7,366,079 6,701,026 Current portion of capital lease payable 63,197 72,074 Deferred revenue 4,484,362 6,619,257 ------------- ------------- Total current liabilities 12,585,745 13,392,357 Long-term portion of capital lease payable - 44,659 Other long-term liabilities 93,969 66,283 Royalty liability 4,116,656 4,043,163 Long-term deferred revenue 1,194,152 1,035,220 ------------- ------------- Total liabilities 17,990,522 18,581,682 ------------- ------------- Stockholders' Equity: Common stock, $.01 par value. Authorized 150,000,000 shares as Class A; 100,999,248 shares issued and outstanding in 2012 and 89,574,385 in 2011 1,009,992 895,744 Common stock, $.01 par value. Authorized 13,000,000 shares as Class B; 35,556 shares issued and outstanding in 2012 and 2011 355 355 Capital in excess of par value 388,618,723 373,598,144 Accumulated deficit (383,896,405) (362,953,668) ------------- ------------- Total Stockholders' Equity 5,732,665 11,540,575 ------------- ------------- Total Liabilities and Stockholders' Equity $ 23,723,187 $ 30,122,257 ============= ============= Conference call: Today, November 9, 2012 at 4:30 p.m. ET Webcast / Replay URL: www.wave.com/news/webcasts Dial-in numbers: 415-226-5355 or 212-231-2902
Wave Systems Corp.
Gerard T. Feeney
David Collins, Eric Lentini
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
Feb. 11, 2016 01:15 AM EST Reads: 205
Father business cycles and digital consumers are forcing enterprises to respond faster to customer needs and competitive demands. Successful integration of DevOps and Agile development will be key for business success in today’s digital economy. In his session at DevOps Summit, Pradeep Prabhu, Co-Founder & CEO of Cloudmunch, covered the critical practices that enterprises should consider to seamlessly integrate Agile and DevOps processes, barriers to implementing this in the enterprise, and pr...
Feb. 11, 2016 01:00 AM EST Reads: 399
SYS-CON Events announced today that Men & Mice, the leading global provider of DNS, DHCP and IP address management overlay solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. The Men & Mice Suite overlay solution is already known for its powerful application in heterogeneous operating environments, enabling enterprises to scale without fuss. Building on a solid range of diverse platform support,...
Feb. 11, 2016 01:00 AM EST Reads: 218
Sensors and effectors of IoT are solving problems in new ways, but small businesses have been slow to join the quantified world. They’ll need information from IoT using applications as varied as the businesses themselves. In his session at @ThingsExpo, Roger Meike, Distinguished Engineer, Director of Technology Innovation at Intuit, showed how IoT manufacturers can use open standards, public APIs and custom apps to enable the Quantified Small Business. He used a Raspberry Pi to connect sensors...
Feb. 11, 2016 12:45 AM EST Reads: 155
Data-as-a-Service is the complete package for the transformation of raw data into meaningful data assets and the delivery of those data assets. In her session at 18th Cloud Expo, Lakshmi Randall, an industry expert, analyst and strategist, will address: What is DaaS (Data-as-a-Service)? Challenges addressed by DaaS Vendors that are enabling DaaS Architecture options for DaaS
Feb. 10, 2016 11:45 PM EST Reads: 346
SYS-CON Events announced today that Avere Systems, a leading provider of enterprise storage for the hybrid cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Avere delivers a more modern architectural approach to storage that doesn’t require the overprovisioning of storage capacity to achieve performance, overspending on expensive storage media for inactive data or the overbuilding of data centers ...
Feb. 10, 2016 09:00 PM EST
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
Feb. 10, 2016 04:00 PM EST Reads: 377
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
Feb. 10, 2016 04:00 PM EST Reads: 158
SYS-CON Events announced today that Alert Logic, Inc., the leading provider of Security-as-a-Service solutions for the cloud, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Alert Logic, Inc., provides Security-as-a-Service for on-premises, cloud, and hybrid infrastructures, delivering deep security insight and continuous protection for customers at a lower cost than traditional security solutions. Ful...
Feb. 10, 2016 02:30 PM EST Reads: 428
SYS-CON Events announced today that Interoute, owner-operator of one of Europe's largest networks and a global cloud services platform, has been named “Bronze Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. Interoute is the owner-operator of one of Europe's largest networks and a global cloud services platform which encompasses 12 data centers, 14 virtual data centers and 31 colocation centers, with connections to 195 ad...
Feb. 10, 2016 02:30 PM EST Reads: 396
Recognizing the need to identify and validate information security professionals’ competency in securing cloud services, the two leading membership organizations focused on cloud and information security, the Cloud Security Alliance (CSA) and (ISC)^2, joined together to develop an international cloud security credential that reflects the most current and comprehensive best practices for securing and optimizing cloud computing environments.
Feb. 10, 2016 01:45 PM EST
Companies can harness IoT and predictive analytics to sustain business continuity; predict and manage site performance during emergencies; minimize expensive reactive maintenance; and forecast equipment and maintenance budgets and expenditures. Providing cost-effective, uninterrupted service is challenging, particularly for organizations with geographically dispersed operations.
Feb. 10, 2016 01:15 PM EST
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 18th International Cloud Expo, which will take place on June 7–9, 2016, at the Javits Center in New York City, NY, and the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management...
Feb. 10, 2016 12:15 PM EST Reads: 427
SYS-CON Events announced today that VAI, a leading ERP software provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. VAI (Vormittag Associates, Inc.) is a leading independent mid-market ERP software developer renowned for its flexible solutions and ability to automate critical business functions for the distribution, manufacturing, specialty retail and service sectors. An IBM Premier Business Part...
Feb. 10, 2016 12:00 PM EST Reads: 623
With an estimated 50 billion devices connected to the Internet by 2020, several industries will begin to expand their capabilities for retaining end point data at the edge to better utilize the range of data types and sheer volume of M2M data generated by the Internet of Things. In his session at @ThingsExpo, Don DeLoach, CEO and President of Infobright, will discuss the infrastructures businesses will need to implement to handle this explosion of data by providing specific use cases for filte...
Feb. 10, 2016 11:00 AM EST Reads: 191
In most cases, it is convenient to have some human interaction with a web (micro-)service, no matter how small it is. A traditional approach would be to create an HTTP interface, where user requests will be dispatched and HTML/CSS pages must be served. This approach is indeed very traditional for a web site, but not really convenient for a web service, which is not intended to be good looking, 24x7 up and running and UX-optimized. Instead, talking to a web service in a chat-bot mode would be muc...
Feb. 10, 2016 11:00 AM EST Reads: 262
It's easy to assume that your app will run on a fast and reliable network. The reality for your app's users, though, is often a slow, unreliable network with spotty coverage. What happens when the network doesn't work, or when the device is in airplane mode? You get unhappy, frustrated users. An offline-first app is an app that works, without error, when there is no network connection.
Feb. 10, 2016 11:00 AM EST Reads: 210
SYS-CON Events announced today that AppNeta, the leader in performance insight for business-critical web applications, will exhibit and present at SYS-CON's @DevOpsSummit at Cloud Expo New York, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. AppNeta is the only application performance monitoring (APM) company to provide solutions for all applications – applications you develop internally, business-critical SaaS applications you use and the networks that deli...
Feb. 10, 2016 10:45 AM EST Reads: 401
Fortunately, meaningful and tangible business cases for IoT are plentiful in a broad array of industries and vertical markets. These range from simple warranty cost reduction for capital intensive assets, to minimizing downtime for vital business tools, to creating feedback loops improving product design, to improving and enhancing enterprise customer experiences. All of these business cases, which will be briefly explored in this session, hinge on cost effectively extracting relevant data from ...
Feb. 10, 2016 10:45 AM EST Reads: 112
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Feb. 10, 2016 10:45 AM EST Reads: 251