This summary is based on the first quarter fiscal 2007 earnings call conducted by AsiaInfo Holdings, Inc. (ASIA) on April 25, 2007.
Key Investors Issues
- Net revenue for the first quarter was $23.5 million, an increase of 25% from a year ago, and a decrease of 7% sequentially.
- Gross revenue for the quarter was $30.1 million, 13% higher than a year ago and down 6% sequentially.
- Gross margins were 43% in the first quarter vs. 36% in the year-ago period and 42% in the previous quarter.
- AsiaInfo expects second quarter net revenue to be $25 million to US$27 million and net income from continuing operations per basic share to be 6 to 7 cents.
First Quarter Financial Highlights
Net revenue for the first quarter grew by 25% years over year and the company exceeded its EPS guidance for the quarter.
The company was encouraged by continued growth in its telecom software solutions business as net revenues from this division grew by 19% year over year. The company’s securities products and the service business delivered healthy results within the expectations. It must be noted that the first quarter is generally the slowest of the year for many Chinese companies due to the long break for the Chinese New Year. This is the case for both the company’s telecom and IT security business.
In the quarter there was healthy demand for the company’s market leading BOSS and the BI systems and the client contracts enhanced business intelligence systems for non-China Mobile and AsiaInfo committed to upgrading China Mobile’s BOSS system in both provinces. The company also grew its market share in the telecom software space with new contacts to develop business intelligence system for Unimobile and Tibet Mobile. With these two additions the company’s leadership in the China Mobile market has extended to 15 provinces and the company headquarters.
Today AsiaInfo’s business intelligence systems support more that 150 million users and over 500 terabytes of data that are 50% of China’s total business intelligence market.
With high product thickness in the company’s telecom software solutions, AsiaInfo’s leading market position gives a strong platform to deliver regular system upgrades and to provide complimentary telecom solutions.
Beyond the core telecom solutions, the company also went 2 contracts during the quarter for its new telecom software solutions:
- First, AsiaInfo partnered with China Unicom to create a CDMA push mail platform that will allow users to synchronize email accounts and send and receive emails on the go.
- Second, the company recently went on contract to develop China’s first mobile device management platform for China Mobile. This premiering system, which enhances a user experience by allowing automatic software updates, will trial in China Mobile’s headquarters before being expanded to other China Mobile subsidiaries.
- Third, the company recently won on its first 3G BOSS space to be an exclusive provider for China Mobile’s entire extended TD-SCDMA provincial trials covering 4 provinces and the 3 municipalities. The management believes that this deal gives a solid foundation for future growth momentum in China’s telecom software market. While this recent win collectively demonstrates industry confidence in Asia’s import ability to deliver quality in innovative solutions, the company will then focus our future growth.
During the quarter the company added around 40 people to its R&D and software service teams.
AsiaInfo also achieved Level 5 CMMI Certification, which certifies the maturity and the quality of the company’s software development processes.
There’s a strong seasonality impact in the IT Security business in the first quarter.
Because of this the company saw excellent growth here on a year-over-year basis. In 2007 the company remains focused on execution and scaling the height of the market by introducing new products and product upgrades.
First quarter telecom software products and solutions revenue rose 21% year-over-year and decreased 3% sequentially as AsiaInfo continues to see strong demands for AsiaInfo stock and BI Solutions.
- Telecom software revenues increased 15% year-over-year and 3% sequentially.
- Total net revenue for the Telecom Software Solution business increased 19% year-over-year and decreased 2% sequentially.
- The sequential decrease was primarily due to the seasonality impact in the first quarter of 2007.
Lenovo-Asiainfo’s net revenue increased 144% year-over-year and decreased 40% sequentially.
