Vizrt

Vizrt Reports 2007 Annual Results. Revenue up 37%. Record Revenue totaling USD 86.5 M

Vizrt 2007 Revenue

Financial highlights for the year ended December 31 2007

• Total Revenues: USD 86.5M, an increase of 37% compared to USD 63.4M for 2006.
• EBIT – GAAP: USD 16.7M, an increase of 42% compared to USD 11.8M for 2006.
• EBIT – Non-GAAP¹: USD 20.2M, an increase of 40% compared to Non USD 14.5M in 2006. Non-GAAP EBIT excludes equity-based compensation expenses and acquisition-related charges².
• Earnings per diluted share – GAAP: USD 0.25 compared to USD 0.19 in 2006.
• Earnings per diluted share – Non GAAP: USD 0.29 compared to USD 0.23 for 2006.Non-GAAP earnings per diluted share exclude equity-based compensation expenses and acquisition-related charges.
• Cash status: USD 48.0M (including cash and short term deposits) compared to USD 38.2M as of December 31, 2006. On July 31, 2007, Vizrt distributed a special dividend to its shareholders totaling USD 8.2 Million. Including the dividend distribution, USD 18.0M in cash was generated during 2007.
• Share split: On August 20, 2007, the company distributed two bonus shares for every one share held by the shareholders of the company. All share and per share data were retroactively adjusted.

¹See "Use of Non-GAAP Financial Information" and "Reconciliation of Supplemental Financial Information" below for more information regarding Vizrt's use of non-GAAP measures.

²"Equity-based compensation expenses" refer to the amortized fair value of all equity based awards granted to employees. "Acquisition- related charges" refer to the impact of the amortization of intangible assets and other acquisition-related expenses.

Financial highlights for the three months ended December 31, 2007

• Total Revenues: USD 24.1M, an increased of 27% compared to USD 19.0M in Q4 2006, and USD 21.2M in Q3 2007.
• EBIT – GAAP: USD 5.5M, an increase of 30% compared to USD 4.2M in Q4 2006.
• EBIT – Non GAAP: USD 6.4M, an increase of 25% compared to USD 5.1M for Q4 2006. Non-GAAP EBIT excludes equity-based compensation expenses and acquisition-related charges.
• Earnings per diluted share – GAAP: USD 0.08 compared to USD 0.06 in Q4 2006.
• Earnings per diluted share – Non GAAP: USD 0.09, compared to USD 0.07 in Q4 2006. Non-GAAP earnings per diluted share exclude equity-based compensation expenses and acquisition-related charges.
• Cash status: In Q4 2007 the company generated USD 5.9M in cash.

2008 Outlook

Although it is too early to tell whether broadcasters will hold back on spending due to the turbulence in the financial markets, so far the Company has not witnessed any slow down. Vizrt’s backlog and pipeline are growing steadily and management is confident that the MAM (Media Asset Management) business will grow substantially over the year. The growth from 2006 to 2007 was in excess of 40 percent. Based on customer feed back the Company does not expect investments in MAM to slow down in the coming years.

The same holds true for Broadcast Graphics, which is showing similar positive developments. The recent primaries in the US were like a Superbowl for graphics, with more and more broadcasters acknowledging that the use of graphics can make the difference between good and mediocre election coverage.

Furthermore, the launch of the first product suites integrating both MAM and traditional Broadcast Graphics has shown promising results. Although currently low on features, new versions will be released, the first planned for April, which Management believes will generate a significant increase in the rate of sales. Demand for plug-ins to NLEs, such as Final Cut Pro, have also recorded strong growth and as better versions are released at NAB, the Company hopes to be able to create a significant interest in these products.

Revenue highlights:

• Revenues increased by 37% compared to 2006. All major regions contributed to the strong growth, led by Asia & Pacific, which recorded a 96% increase, while The Americas achieved 34% growth and Europe 28%.
• Continued growth in broadcast graphics by 28% YoY and MAM growth of 48% on an adjusted YoY basis (MAM consolidated since May 2006) accounted for the reported growth in 2007.
• Geographic breakdown of revenue:

Gross Margin

GM remained at 68% in 2007. Non GAAP GM came in at 71%, up 1% compared to 2006.

Operating Expenses

Total operating expenses amounted to USD 42.2M in 2007.

The following table represents the total expenses

• Increase in total operating expenses was primarily due to staff expansion from 274 as of year-end 2006 to 363 as of year-end 2007. Furthermore, operating in a multi currency environment, currency translation impacted the operating expenses, mainly due to the USD. However, the company has taken measures to minimize the exchange rate effects on its operational results.
• S&M expenses increased by 36% in 2007 compared to 2006. This increase is mainly due to the continuous growth and expansion of the company. Furthermore, part of S&M expenses are directly related to the revenue growth of 37% for the period. S&M expenses remain at 27% to revenue.
• R&D expenses increased by 42% in 2007 compared to 2006. The increase was primarily due to continuous product development, combined with the addition of new features and improved functionality based on customer feedback, as well as resources allocated to the integration of the MAM & Broadcast Graphics technology. Consequently R&D expenses came in at 16% to revenue compared to 15% in 2006.
• G&A expenses increased by 17% in 2007 compared to 2006. The increase is mainly due to the company’s operational growth and expansion globally, which requires additional facilities and back-office staff for the growing number of the Company’s locations. However, G&A expenses are at 6% to revenue compared to 7% in 2006.
• Total operating expenses increased by 35% or USD 11.0M in 2007 compared to 2006.

Taxes on income

Taxes on income for 2007 came in at USD 3.2M, representing an effective tax rate of 17% on pre-tax earnings. The effective tax rate is a combination of the different tax rates in the multiple tax jurisdictions Vizrt operates in, including estimated tax benefits deriving from the “Approved Enterprise” status in Israel and are subject to audit in those jurisdictions.

Cash Position

As of December 31, 2007 the company had a balance of USD 48.0M in cash and short-term deposits compared with USD 38.2M as of December 31, 2006. Cash was generated primarily from operating activities totaling USD 18.8M. Net cash used in investing activities totaled USD 2.8M, and net cash used in financing activities, primarily for the dividend distribution offset by receipt from exercise of options by Vizrt employees as part of the Stock Option Plan, totaled USD 6.6M.

A conference call will be held at 11:00 (CEST) today to offer analysts, investors and media the opportunity to directly discuss the results and recent developments with Bjarne Berg, CEO, and Ofra Brown, CFO of the company. Please use one of the following dial-in-numbers: +44 20 8602 0812 (UK), +47 2316 2819 (Norway), +49 69 71044 5513 (Germany), Participant. Pass code: 859466.

Press contacts:

About Vizrt:

Vizrt offers a new vision for content creation and delivery with an end-to-end solution from ingest to visualization. Our solution combines Vizrt’s true 2D/3D graphics tools with Curious Software’s World Maps and Ardendo’s Asset Management. Running on non proprietary software and hardware, the combination of these unique cutting edge products ensures a seamless workflow from conception to multi-format distribution. The latest addition to the Vizrt product range is the Viz|Multi Platform Solution. Vizrt’s product suite is used by the world’s leading broadcasters including: CNN, CBS, Fox, BBC, Sky, ITN, ZDF, Star TV, TV Today, CCTV and NHK. Also, many world-class production houses and corporate institutions, including both the New York and London Stock Exchanges, utilize Vizrt solutions. Vizrt is a public company traded on the Frankfurt Prime Standard and on the Oslo Main List: VIZ, ISIN: IL0010838154. For further information please refer to www.vizrt.com

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Vizrt uses non-GAAP measures of gross margin, net income, EBIT and earnings per share, which are adjustments from results based on GAAP to exclude non-cash equity-based compensation charges in accordance with SFAS 123R and acquisition related charges. Vizrt's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of Vizrt's on-going operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such has determined that it is important to provide this information to investors.

Safe Harbor Regarding Forward Looking Statements

This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Vizrt and its affiliates. These statements are based on the current expectations or beliefs of Vizrt's management and are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties relate to changes in technology and market requirements, the company’s concentration on one industry, decline in demand for the company’s products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Vizrt undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.