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Published Feb 13, 2025 • 17 minute read
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Q2 Revenue up 15% to $71.2M; Gross Margin 36.4%; Adjusted EBITDA $1.1M
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Q2 Entra Sales Grow 29% YoY to $56.2M
VICTORIA, British Columbia — Vecima Networks Inc. (TSX: VCM) today reported financial results for the three and six months ended December 31, 2024.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions except percentages, employees, and per share data)
Q2FY25
Q1FY25
Q2FY24
Revenue
$71.2
$81.9
$62.0
Gross Margin6
36.4%
41.7%
49.8%
Net Income (Loss)
$(7.9)
$2.1
$3.6
Earnings (Loss) Per Share1
$(0.32)
$0.09
$0.15
Adjusted Earnings (Loss) Per Share1,2,3,4,5
$(0.25)
$0.10
$0.15
Adjusted EBITDA2,5
$1.1
$11.6
$12.5
Employees
590
612
585
1 Based on weighted average number of shares outstanding.
2 Adjusted Earnings Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. See “Adjusted EBITDA and Adjusted Earnings Per Share” below.
3 For a reconciliation of Adjusted Earnings Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the second quarter of fiscal 2025.
4 Adjusted earnings per share includes non-cash share-based compensation of $0.5 million or $0.02 per share for the three months ended December 31, 2024, and $0.3 million or $0.01 per share for the three months ended December 31, 2023. The non-cash share-based compensation primarily reflects certain performance-based vesting thresholds achieved under the Company’s Performance Share Unit Plan.
5 Adjusted earnings per share and Adjusted EBITDA include foreign exchange gain (loss) of $(4.3) million or $(0.18) per share for the three months ended December 31, 2024, and a foreign exchange gain of $1.8 million or $0.08 per share for the three months ended December 31, 2023.
6 The Company has restated the comparative period for a change in commissions expense presentation. Refer to Note 23 of the Interim Condensed Financial Statements for the three-month period ended December 31, 2024.
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“Notwithstanding these challenges, we achieved critical milestones as we continued to lay the foundation for anticipated future demand growth in our Video and Broadband Solutions (VBS) and Content Delivery and Storage (CDS) segments,” added Mr. Kumar. “We also moved decisively to better align our teams and program investments with customer needs and to enhance our operating efficiency going forward. While our recent reorganization further impacted Q2 results with one-time restructuring costs of approximately $2.8 million, our initiatives are expected to deliver ongoing annualized cash savings of approximately $17.5 million, with initial benefits beginning to be realized in the second half.”
“Financially, consolidated sales of $71.2 million grew 15% year-over-year, despite being 13% lower on a sequential quarterly basis. In our VBS segment, sales of $59.3 million were up 21% compared to Q2 fiscal 2024. Entra DAA products contributed $56.2 million to the Q2 VBS segment results in a mixed quarter that saw delays in orders for certain products, offset by continued expansion of our node market share with record shipments of our flagship EN9000 and initial deployment of our EN8400 1.8GHz access nodes. The EN9000 is pivotal technology that is expected to house successive generations of higher-margin software-driven access modules. As we have discussed previously, these platforms carry a lower margin when fulfilled on a standalone basis but ultimately help to drive higher margins as software-driven access modules are populated within the node. As such, adoption, deployment and hardwiring in of this future-proof node platform provides a powerful foundation for Vecima’s future growth and success.”
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“In the Telematics segment, second quarter revenues increased 2% year-over-year to $1.7 million, in line with our expectations and we continue to anticipate solid incremental growth from this segment.”
“Going forward, we recognize that demand volatility could continue into the second half of fiscal 2025 depending on customer project timing. Delays to date have primarily reflected ongoing system level field qualifications, which are typically challenging for customers undertaking very large system upgrades. Vecima’s technology has performed exceptionally well through these qualification processes, and we anticipate increased product rollouts once qualifications are completed. The prospect of trade actions between the U.S. and Canada has added further uncertainty to the outlook. With about 90% of our sales in the U.S., an estimated half of which we believe could potentially be exposed to tariff actions, we are underway with plans to mitigate potential risks, regardless of the outcome of current trade discussions.”
“While accurate forecasting in the near and medium term will be more difficult in light of the current trade and timing uncertainties, adapting to rapidly changing business conditions is one of Vecima’s core strengths. We are moving forward with global market share leadership in the high-growth DAA and IPTV markets, a proven track record as a provider of innovative technology, services, and products to the world’s most sophisticated cable and broadcast providers, and compelling opportunities provided by our growing portfolio of next-generation solutions. We remain confident in our future growth prospects and our ability to continue creating strong value for our customers and shareholders,” said Mr. Kumar.
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BUSINESS HIGHLIGHTS
Financial and Corporate
Second quarter revenue increased by 15% year-over-year to $71.2 million, from $62.0 million in Q2 fiscal 2024 and $81.9 million in Q1 fiscal 2025.Gross profit of $25.9 million, compared to $30.8 million in Q2 fiscal 2024 and $34.2 million in Q1 fiscal 2025.Gross margin of 36.4%, compared to 50.1% in Q2 fiscal 2024 and 41.7% in Q1 fiscal 2025.Adjusted EBITDA of $1.1 million, compared to $12.5 million in Q2 fiscal 2024 and $11.6 million in Q1 fiscal 2025.Loss per share of $0.32 and Adjusted loss per share of $0.25, compared to earnings per share and Adjusted earnings per share of $0.15 and $0.22, respectively, in Q2 fiscal 2024, and $0.09 and $0.10, respectively, in Q1 fiscal 2025.Completed a cost restructuring in December 2024, including a workforce reduction of approximately 12%, to better align teams and investments with customers’ needs and to enhance operating efficiency. The restructuring is expected to result in annualized cash cost savings of approximately $17.5 million, with initial benefits anticipated in the second half of fiscal 2025. Second quarter fiscal 2025 results include a one-time restructuring expense of $2.8 million related to this initiative.Ended the second quarter with working capital of $63.8 million at December 31, 2024, compared to $84.9 million at June 30, 2024.
Video and Broadband Solutions (VBS)
Video and Broadband Solutions segment sales increased 21% year-over-year to $59.3 million (Q2 fiscal 2024 – $49.1 million; Q1 fiscal 2025 – $72.9 million).
DAA (Entra Family)
Achieved next-generation Entra product sales of $56.2 million, a year-over-year increase of 29% (Q2 fiscal 2024 – $43.8 million; Q1 fiscal 2025 – $68.3 million).Increased total customer engagements to 123 MSOs worldwide, from 110 a year earlier. Sixty-three of these customers are ordering Entra products as broader DAA deployment progresses.Expanded volume shipments of our flagship EN9000 GAP Node, with over 10,000 nodes delivered in Q2 and significant interest from an expanding group of customers. The modular EN9000 provides customers with a future-proof path to 10G, protecting today’s network investment by ensuring operators can easily transition to future technologies, including DOCSIS 4.0 and 10G FTTH. In addition to strong uptake from our lead customer, we continued to see growth in interest from additional customers.Completed first deliveries of the 1.8GHz-ready EN8400 ‘Forever Node’ to a lead customer and secured and delivered an additional order with a second customer. The EN8400 provides a clear and cost-effective path to 10G by supporting DAA today while also supporting future technologies, including DOCSIS 4.0 and Remote Optical Line Terminal (OLT) applications.Customer engagement for our new vCMTS platform increased with lab trials underway with four North American MSOs during the quarter, including the lead Tier 1 customer. Secured new lab trial commitments with additional Tier 2 and Tier 3 operators, which are expected to commence this year.On October 11, 2024, acquired Falcon V Systems, a provider of innovative software orchestration products that help operators manage, test and deliver services across converged cable, fiber and mobile networks. Secured licenses for the Falcon Principal Core platform with a lead Tier 1 customer in North AmericaSecured first order for the Falcon Test Suite with a customer outside of North America
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Commercial Video (Terrace Family)
Generated Commercial Video product sales of $3.0 million (Q2 fiscal 2024 – $5.3 million, Q1 fiscal 2025 $4.5 million). The year-over-year change in sales was anticipated and reflects the transition to next-generation platforms and the impact of some of Vecima’s newer DAA-driven Commercial Video solutions being accounted for as part of Entra family sales.
Content Delivery and Storage (CDS)
The Content Delivery and Storage segment generated sales of $10.2 million (Q2 fiscal 2024 – $11.3 million; Q1 fiscal 2025 – $7.2 million). Achieved CDS gross margin of 56.5% (Q2 fiscal 2024 – 57.0%; Q1 fiscal 2025 – 60.2%).Positioned MediaScale Dynamic Ad Insertion platform with several new customers, building on our initial deployments with three customers.Continued progress in development of the standards-compliant MediaScale Open CDN platform.On November 13, 2024 announced global agreement with Digital Harmonic to exclusively resell its innovative dh/KeyFrame™ technology, which significantly elevates video quality while reducing content bitrates, providing material cost savings and network capacity increases. Secured initial lab equipment order for dh/KeyFrame during the quarter.
Telematics
Telematics segment sales grew 7.1% year-over-year to $1.7 million (Q2 fiscal 2024 – $1.6 million; Q1 fiscal 2025 – $1.7 million). Generated additional deployments in high-value verticals, including municipal government and moveable asset customers in areas such as restoration and emergency medical services.Added nine new customers for the NERO asset tracking platform. The Telematics business as a whole is now tracking over 100,000 assets, including over 20,000 vehicles and 80,000 asset tags.Achieved strong gross margin percentage of 66.5%.
As previously reported, Vecima’s Board of Directors declared a quarterly dividend of $0.055 per share for the period. The dividend will be payable on March 24, 2025 to shareholders of record as at February 28, 2025.
CONFERENCE CALL
A conference call and live audio webcast will be held today, February 13, 2025 at 1 p.m. ET to discuss the Company’s second quarter results. Vecima’s unaudited interim condensed consolidated financial statements and management’s discussion and analysis for the three and six months ended December 31, 2024 are available under the Company’s profile at www.sedarplus.ca, and at https://vecima.com/investor-relations/financial-reports/.
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To participate in the teleconference, dial 1-844-763-8274 or 1-647-484-8814. The webcast will be available in real time at and will be archived on the Vecima website at https://vecima.com/investor-relations/earnings-call-archive/.
About Vecima Networks
Vecima Networks Inc. (TSX: VCM) is leading the global evolution to the multi-gigabit, content-rich networks of the future. Our talented people deliver future-ready software, services, and integrated platforms that power broadband and video streaming networks, monitor and manage transportation, and transform experiences in homes, businesses, and everywhere people connect. We help our customers evolve their networks with cloud-based solutions that deliver ground-breaking speed, superior video quality, and exciting new services to their subscribers. There is power in connectivity – it enables people, businesses, and communities to grow and thrive. Learn more at www.vecima.com.
Adjusted EBITDA and Adjusted Earnings Per Share
Adjusted EBITDA and Adjusted Earnings Per Share do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. Accordingly, investors are cautioned that Adjusted EBITDA or Adjusted Earnings Per Share should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of the Company’s financial performance or as a measure of its liquidity and cash flows. For a reconciliation of Adjusted EBITDA or Adjusted Earnings Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the second quarter of fiscal 2025.
Forward-Looking Statements
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A more complete discussion of the risks and uncertainties facing Vecima is disclosed under the heading “Risk Factors” in the Company’s Annual Information Form dated September 19, 2024, as well as the Company’s continuous disclosure filings with Canadian securities regulatory authorities available at www.sedarplus.ca. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Vecima disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.
VECIMA NETWORKS INC.
Interim Condensed Consolidated Statements of Financial Position
(unaudited – in thousands of Canadian dollars)
As at
December 31,
2024
June 30,
2024
Assets
Current assets
Cash and cash equivalents
$
2,356
$
2,136
Accounts receivable
36,230
70,139
Income tax receivable
371
359
Inventories
134,221
136,040
Prepaid expenses and other current assets
4,252
6,632
Contract assets
1,662
2,276
Total current assets
179,092
217,582
Non-current assets
Property, plant and equipment
11,344
11,908
Right-of-use assets
4,914
4,670
Goodwill
16,627
15,308
Intangible assets
104,608
93,893
Investment tax credits
20,967
21,760
Deferred tax assets
27,736
21,420
Other long-term assets
638
1,282
Total assets
$
365,926
$
387,823
Liabilities and shareholders’ equity
Current liabilities
Revolving line of credit
$
32,112
$
51,732
Accounts payable and accrued liabilities
53,400
57,583
Provisions
1,358
591
Income tax payable
3,172
2,757
Deferred revenue
16,188
15,856
Current portion of financial liability
1,676
1,773
Current portion of long-term debt
7,405
2,433
Total current liabilities
115,311
132,725
Non-current liabilities
Provisions
423
375
Deferred revenue
2,311
3,511
Long-term portion of financial liability
–
853
Long-term debt
15,221
15,399
Total liabilities
133,266
152,863
Shareholders’ equity
Share capital
24,140
24,117
Reserves
5,122
4,120
Retained earnings
196,554
204,968
Accumulated other comprehensive loss
6,844
1,755
Total shareholders’ equity
232,660
234,960
Total liabilities and shareholders’ equity
$
365,926
$
387,823
VECIMA NETWORKS INC.
Interim Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited – in thousands of Canadian dollars, except per share amounts)
Three months
Six months
Periods ended December 31,
2024
2023
2024
2023
Sales
$
71,223
$
61,954
$
153,128
$
123,432
Cost of sales (1)
45,307
31,109
93,041
62,569
Gross profit
25,916
30,845
60,087
60,863
Operating expenses
Research and development
11,679
11,551
23,562
21,847
Sales and marketing (1)
7,257
7,673
16,699
16,107
General and administrative (1)
6,929
6,608
14,390
14,781
Restructuring costs
2,798
–
2,798
–
Share-based compensation
462
257
1,008
513
Other expense
194
97
487
267
Total operating expenses
29,319
26,186
58,944
53,515
Operating income (loss)
(3,403
)
4,659
1,143
7,348
Finance expense
(2,345
)
(1,660
)
(4,718
)
(2,360
)
Foreign exchange gain (loss)
(4,272
)
1,837
(3,764
)
1,253
Income (loss) before income taxes
(10,020
)
4,836
(7,339
)
6,241
Income tax expense (benefit)
(2,135
)
1,247
(1,599
)
907
Net income (loss)
$
(7,885
)
$
3,589
$
(5,740
)
$
5,334
Other comprehensive income (loss):
Item that may be subsequently reclassified to net income:
Exchange differences on translation of foreign operations
$
6,001
$
(1,157
)
$
5,089
$
(184
)
Comprehensive income (loss)
$
(1,884
)
$
2,432
$
(651
)
$
5,150
Net income (loss) per share
Basic
$
(0.32
)
$
0.15
$
(0.24
)
$
0.22
Diluted
$
(0.32
)
$
0.15
$
(0.24
)
$
0.22
Weighted average number of common shares
Shares outstanding – basic
24,311,812
24,310,794
24,312,185
24,303,312
Shares outstanding – diluted
24,311,812
24,318,211
24,312,185
24,311,772
(1) The Company has restated the comparative period for a change in commissions expense presentation. Refer to Note 22 of the Interim Condensed Consolidated Financial Statements for the three and six months ended December 31, 2024.
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VECIMA NETWORKS INC.
Interim Condensed Consolidated Statements of Equity
(unaudited – in thousands of Canadian dollars)
Share capital
Reserves
Retained
earnings
Accumulated
other
comprehensive income (loss)
Total
Balance as at June 30, 2023
$
23,997
$
3,111
$
190,926
$
(381
)
$
217,653
Net income
–
–
5,334
–
5,334
Other comprehensive loss
–
–
–
(184
)
(184
)
Dividends
–
–
(2,673
)
–
(2,673
)
Shares issued by exercising options
110
(23
)
–
–
87
Share-based payment expense
–
513
–
–
513
Balance as at December 31, 2023
$
24,107
$
3,601
$
193,587
$
(565
)
$
220,730
Balance as at June 30, 2024
$
24,117
$
4,120
$
204,968
$
1,755
$
234,960
Net loss
–
–
(5,740
)
–
(5,740
)
Other comprehensive income
–
–
–
5,089
5,089
Dividends
–
–
(2,674
)
–
(2,674
)
Shares issued by exercising options
23
(6
)
–
–
17
Share-based payment expense
–
1,008
–
–
1,008
Balance as at December 31, 2024
$
24,140
$
5,122
$
196,554
$
6,844
$
232,660
VECIMA NETWORKS INC.
Interim Condensed Consolidated Statements of Cash Flows
(unaudited – in thousands of Canadian dollars)
Three months
Six months
Periods ended December 31,
2024
2023
2024
2023
OPERATING ACTIVITIES
Net income (loss)
$
(7,885
)
$
3,589
$
(5,740
)
$
5,334
Adjustments for non-cash items:
Loss on sale of property, plant and equipment
79
18
99
19
Depreciation and amortization
6,158
5,480
11,728
10,603
Share-based compensation
462
257
1,008
513
Warrant expense (recovery)
(871
)
217
(765
)
855
Income tax expense
983
1,270
2,923
3,981
Deferred income tax recovery
(3,118
)
(23
)
(4,522
)
(3,074
)
Interest expense
2,105
1,662
4,505
2,362
Interest income
–
(2
)
(27
)
(4
)
Net change in working capital
19,219
(14,603
)
35,384
(10,369
)
Decrease in other long-term assets
106
299
182
311
Increase (decrease) in provisions
707
(47
)
814
(1,265
)
Increase in investment tax credits
(45
)
(35
)
(94
)
(68
)
Income tax paid
(526
)
(9,647
)
(1,113
)
(11,597
)
Interest received
–
2
27
4
Interest paid
(2,164
)
(1,633
)
(4,751
)
(2,360
)
Cash provided by (used in) operating activities
15,210
(13,196
)
39,658
(4,755
)
INVESTING ACTIVITIES
Capital expenditures, net
(339
)
(631
)
(1,327
)
(1,394
)
Deferred development costs
(8,426
)
(7,079
)
(15,102
)
(13,310
)
Business acquisition, net of cash acquired
(3,881
)
–
(3,881
)
–
Cash used in investing activities
(12,646
)
(7,710
)
(20,310
)
(14,704
)
FINANCING ACTIVITIES
Net draws (repayments) of the revolving line of credit
(3,853
)
24,389
(19,620
)
23,553
Principal repayments of lease liabilities
(418
)
(503
)
(655
)
(908
)
Principal repayments of long-term debt
(406
)
(320
)
(860
)
(600
)
Proceeds from shareholder loan
5,000
–
5,000
–
Dividends paid
(2,674
)
(2,673
)
(2,674
)
(2,673
)
Issuance of shares through exercised options
14
87
23
87
Cash provided by (used in) financing activities
(2,337
)
20,980
(18,786
)
19,459
Net increase in cash and cash equivalents
227
74
562
–
Effect of change in exchange rates on cash
(91
)
220
(342
)
308
Cash and cash equivalents, beginning of period
2,220
2,292
2,136
2,278
Cash and cash equivalents, end of period
$
2,356
$
2,586
$
2,356
$
2,586
View source version on businesswire.com: https://www.businesswire.com/news/home/20250213202520/en/
Contacts
Vecima Networks
Investor Relations – 250-881-1982
invest@vecima.com
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