WALTHAM, Mass. - November 4, 2010 - Lionbridge Technologies, Inc. (Nasdaq: LIOX) today announced financial results for the quarter ended September 30, 2010. Financial and business highlights for the third quarter include:
The Company also announced two updates as part of its software-as-a-service products strategy:
“We are balancing our clients’ release cycle rhythms with new revenue momentum across industry sectors. And our new SaaS-based custom real time translation technology is gaining traction with several beta participants in process,” said Rory Cowan, CEO, Lionbridge. “With a growing base of recurring revenue clients, increasing interest in our new enterprise language platform, and accelerating cost actions we are confident in our prospects for top line growth and profit expansion in 2011 and beyond.”
The Company provided updated revenue expectations for the fourth quarter with estimated revenue of $98 - $102 million. This reflects expectations for a slower product release cycle of select top clients in the quarter.
The Company provided a preliminary outlook for revenue growth for FY 2011 with estimated top line growth of 5-10% over expected FY 2010 revenue.
Lionbridge management will conduct a conference call at 9:00 a.m. ET this morning to discuss financial performance for the quarter and other matters, including matters related to its future performance. To participate, callers within the United States can dial 800-857-9821 and international callers can dial 210-234-0023. The pass code for the call is Lionbridge. The conference call will also be available live via the Internet by accessing www.lionbridge.com/webcast/Q32010.
Non-GAAP Financial Measures
In this release, the Company's adjusted earnings and adjusted earnings per share, are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of results of operations. These measures are presented because management believes they provide additional information to investors with respect to the performance of our fundamental business activities. “Adjusted earnings” and “Adjusted Earnings Per Share (EPS)” are Non-GAAP financial measures and should not be viewed as alternatives to GAAP measures of performance. Management believes the most directly comparable GAAP financial measure for adjusted earnings and adjusted earnings per share are net income and net income per share and has provided a reconciliation of adjusted earnings and adjusted earnings per share to net income (loss) at the end of this release.
About Lionbridge
Lionbridge Technologies, Inc. (NASDAQ: LIOX) is a provider of translation, development and testing solutions. Lionbridge combines global resources with proven program management methodologies to serve as an outsource partner throughout a client's product and content lifecycle - from development to translation, testing and maintenance. Global organizations rely on Lionbridge services to increase international market share, speed adoption of global products and content, and enhance their return on enterprise applications and IT system investments. Based in Waltham, Mass., Lionbridge maintains solution centers in 26 countries and provides services under the Lionbridge and VeriTest brands. To learn more, visit http://www.lionbridge.com.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including expected financial performance, anticipated customer demand for the Company’s services and technology, profitability, and expected revenue and earnings growth of Lionbridge in the fourth quarter of 2010 and FY 2011. Lionbridge's actual experiences, actions, financial and operating results may differ materially from those discussed in the forward-looking statements. Factors that might cause such a difference include the effect of the global economic conditions on the demand for Lionbridge’s services and technologies, by customers and prospective customers; the effect of global economic conditions on the timing or scope of services procured by Lionbridge customers; given that a substantial portion of Lionbridge’s revenue is generated from a limited number of customers, the loss of or reduction in demand from one or more major client or customer would materially reduce revenue and cash flow and adversely affect Lionbridge’s business; the ability of Lionbridge to realize the expected benefits of its technology initiatives and the timing of the realization of such benefits; market acceptance of and customer demand for the Company’s SaaS-based technology offerings; errors, interruptions or delays in SaaS-based technology or Web hosting; breaches of security measures; risks associated with the financial aspects of the subscription model utilized in connection with the Translation Workspace; the cost, complexity, timing and speed of development and commercialization activities associated with real-time machine translation technology initiatives and customer and user acceptance of such technologies; the termination of customer contracts or engagements prior to the end of their term; the size, timing and recognition of revenue from clients; the impact of foreign currency fluctuations on revenue, margins, costs, operating results and profitability and the Company's ability to successfully manage this exposure through hedge instruments and other strategies; the portion of the Company's service engagements that are subject to the impact of foreign currency fluctuations; Lionbridge's ability to provide and maintain high quality services at a competitive price and related customer satisfaction with such service delivery; continued uncertainty, volatility or deterioration in global economic conditions that could negatively affect demand for the Company's services and its ability to get paid promptly for such services, including inability of customers to obtain credit to finance purchases of the Company's services and/or customer insolvencies; reduced demand for the Company’s services that adversely impacts Lionbridge’s future revenues, cash flows, results of operations and financial condition; risks associated with conducting business outside of the United States, including compliance with changing and potentially conflicting laws and regulations, restrictions on downsizing operations in Europe and other jurisdictions (i.e. regulatory or works council restrictions) and expenses and delays associated with any such activities; longer collection cycles in particular jurisdictions; risks associated with competition; costs associated with restructuring of certain operations in Europe and other locations, the timing of actions and any anticipated benefits and the ability to realize such benefits; the duration and outcome of negotiations with works councils with respect to the timing of restructuring and the details of proposed actions; Lionbridge's ability to forecast revenue, profitability, technology adoption, customer demand and operating results; Lionbridge's ability to perform services in lower cost operational locations and the timing of its transfer of service execution to such locations, and customer acceptance of service execution in such locations; changes in tax rates applicable to the Company and changes to the interpretations of applicable tax rates; changes to or elimination of the international tax holiday for companies doing business in India; the Company's dependence on clients' product releases, production schedules and procurement strategies to generate revenues; the impact of competing language technology on the Company's existing customer relationships and ability to secure new customers; the failure of Lionbridge to keep pace with technological changes or changing customer needs; Lionbridge's ability to further develop and deploy its translation technologies, including Translation Workspace and real-time translation software; the risk of claims by third parties of intellectual property claims; the ability of Lionbridge to respond to fluctuations in the complexity, timing and mix of services required by customers; and Lionbridge being held liable for defects or errors in its service offerings. For a more detailed description of the risk factors associated with Lionbridge, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2009 and subsequent filings with the SEC (copies of which may be accessed through the SEC's website at http://www.sec.gov).
LIONBRIDGE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share data)
Three Months Ended
Nine Months Ended
September 30,
2010
2009
Revenue
$ 99,221
$ 97,822
$ 304,873
$ 284,253
Operating expenses:
Cost of revenue (excluding depreciation and amortization shown separately below)
67,564
67,384
206,152
194,260
Sales and marketing
8,190
6,921
22,623
21,636
General and administrative
18,032
17,909
55,522
55,154
Research and development
1,021
919
2,731
3,200
Depreciation and amortization
1,266
1,155
3,571
3,450
Amortization of acquisition-related intangible assets
1,223
1,380
3,669
4,140
Merger, restructuring and other charges
4,026
1,340
5,881
3,978
Total operating expenses
101,322
97,008
300,149
285,818
Income (loss) from operations
(2,101)
814
4,724
(1,565)
Interest expense:
Interest on outstanding debt
191
426
770
1,428
Amortization of deferred financing costs and discount on debt
199
44
287
133
Interest income
30
19
63
98
Other expense, net
1,607
2,990
1,150
3,715
Income (loss) before income taxes
(4,068)
(2,627)
2,580
(6,743)
Provision for (benefit from) income taxes
(295)
(1,612)
1,318
(404)
Net income (loss)
$ (3,773)
$ (1,015)
$ 1,262
$ (6,339)
Net income (loss) per share of common stock:
Basic
$ (0.07)
$ (0.02)
$ 0.02
$ (0.11)
Diluted
Weighted average number of common shares outstanding:
Basic and diluted
56,814
56,099
56,606
55,993
59,240
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
December 31,
ASSETS
Current assets:
Cash and cash equivalents
$ 29,450
$ 27,432
Accounts receivable, net of allowances of $500 at September 30, 2010 and December 31, 2009
52,580
55,501
Unbilled receivables
21,320
17,246
Other current assets
10,034
8,290
Total current assets
113,384
108,469
Property and equipment, net
16,612
12,681
Goodwill
9,675
Other intangible assets, net
10,811
14,480
Other assets
7,639
7,414
Total assets
$ 158,121
$ 152,719
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 18,107
$ 20,831
Accrued compensation and benefits
19,160
16,524
Other accrued expenses and current liabilities
25,631
23,448
Deferred revenue
8,735
11,484
Total current liabilities
71,633
72,287
Long-term debt
24,700
Deferred income taxes, long-term
643
Other long-term liabilities
15,023
14,060
Total stockholders' equity
46,122
41,029
Total liabilities and stockholders' equity
Reconciliation of GAAP Net Income (Loss) to Non-GAAP Adjusted EPS (Unaudited)
Stock-based compensation
970
696
2,964
2,779
Adjusted earnings
$ 2,446
$ 2,401
$ 13,776
$ 4,558
Fully diluted weighted average number of common shares outstanding
59,695
57,160
56,384
Adjusted EPS
$ 0.04
$ 0.23
$ 0.08
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