Mind CTI Ltd (MNDO) 2011 Q2 法說會逐字稿

Good morning, everyone, and welcome to MIND's conference call. Before we begin, I would like to point out that this call includes information that constitutes forward-looking statements. Although we believe that expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated.

These risks include, but are not limited to, the effects of general economic conditions and such other risks as discussed in our earnings release and at greater length in the Company's filings with the SEC. MIND may elect to update these forward-looking statements at some point in the future. However, the Company specifically disclaims any obligation to do so.

Today, MIND reported the results of its second quarter 2011. The financials can be found in our Form 6-K and on our website. On the call today from MIND is Mrs. Monica Iancu, MIND's CEO. I would now like to turn the call over to Monica. Monica, please go ahead.

Thank you, Andrea. Good day, ladies and gentlemen. Thank you for your interest in MIND and for joining us today.

In our call today I will summarize our major achievements in the second quarter of 2011, and discuss our business. Revenues were $4.55 million compared with $4.9 million in the second quarter of 2010. Backlog as of June 30, 2011 includes $8.6 million that is expected to be billed by year-end, compared to $7.9 million on June 30, 2010.

Similar to last quarter, the decreased revenue is mainly the result of delays in one project implementation by a customer for reasons that are not in our control. The increased backlog reflects this revenue slippage, and we expect to see the implementation completed over the next 2 to 3 quarters.

Operating income was $843,000, or 18.5% of revenue. The operating income was below our 20% target due to the decrease in revenue. As we mentioned many times in the past, we believe that we have the skills to maintain profitability even when revenues are shy of the ones we expect. We hope to return to over 20% operating income in the near term.

Net income was $967,000 or $0.05 per share. Cash flow from operating activities was $1.25 million. Our balance sheet continues to be strong with a total cash position of $17.5 million, including available for sale securities at the end of the quarter, after completion of the yearly dividend distribution and related tax payments in March and April 2011 respectively.

As previously announced, the yearly dividend declared and distributed was approximately $6 million, out of which $4.7 million was paid to the shareholders in March 2011, and $1.3 million was paid in the second quarter to the Israeli tax authorities in April 2011.

The revenue distribution is as follows. Sales in the Americas represented 51.4% and sales in Europe represented 34.6% of total revenue, the rest divided between Israel, Africa and Asia-Pacific. We expect the Americas to continue to represent a very high percentage of our revenues.

Revenue from customer care and billing software totaled $3.64 million, while revenue from enterprise call accounting software was $907,000. We believe that our proven superior solutions for large and multinational corporations help us maintain and hopefully increase the revenues from this market segment, and we are content with the diversification in our revenue stream.

This quarter MIND announced the release of its MINDBill Online Store module. MIND helps operators attract consumers and increase subscriber retention by supplying sophisticated but easy to navigate e-Store that enables subscription, selection of device, accessories, rate plans, contract terms, and payment methods.

Online stores represent the most cost-effective method to get a wide reach. Attractive to carriers as they can reduce the number of physical sale locations and agents. At the same time, it is an appealing alternative for consumers, as it becomes the most popular way to shop and allows them to save time.

MINDBill Online Store is based on the MINDBill Point-of-Sale application and is rich in detailed information on the plans and equipment that the carrier offers. Most important, it allows user interface adaptation and updates by the carrier's team and integrates easily with the existing carrier's website.

MIND's solution for online shopping enriches the end user shopping experience and supports the operator's complete sales flow, including real-time inventory items stock updates based on sales and order fulfillment. The first two implementations are expected to be deployed by year-end.

In the second quarter of 2011, we secured one new customer and multiple follow-on orders. The new customer, a provider of wireline and wireless services in the US region, has selected MIND to provide a complete prepaid billing solution platform with IN, WIN and CAMEL capabilities for IN Prepaid, Voice Messaging, Real Time/Instant Charging and Rating, Session Control, Mediation, and Provisioning.

In addition, the solution includes components for SMSC, MMSC, WAP Gateway and Enhanced Messaging. MIND will use a third-party solution to provide these additional elements. This customer is operating on both GSM and CDMA networks, and is also a provider of data services using multiple network elements.

The follow-on orders include two large upgrades for two US mobile carriers; one for system enhancements, and the other is an upgrade to a newer product release.

As mentioned in our previous conference call, MIND was chosen by Pelephone, the first Israeli mobile operator with over 2.8 million subscribers, to provide an integrated end-to-end convergent billing and customer care solution for full support of its MVNE, Mobile Virtual Network Enabler, operations. This project is expected to be completed in Q3 of 2011, reinforcing our reputation of on-time successful delivery.

As we all clearly understand, the acquisition of a profitable customer to buy from us for the first time is always difficult and expensive, sometimes almost impossible to achieve. The key to our successful business is, of course, repeat business.

We focus on high quality delivery and support, keeping our promises and enhancing our platform. The repeat sales we report each quarter show that our customers are happy with our performance and want to continue to entrust their business in our hands.

I lately visited some of our important customers in the Americas and was reassured that they appreciate our team effort, and in most cases they believe that we are the best vendor they work with. They shared with me useful information on their present and future needs, and hopefully these will materialize into more repeat business.

To summarize, while revenues were below our expectations, we are encouraged by the continued follow-on business and the opportunities in our pipeline. We are very active with multiple pre-sale activities. We believe that the demand for our solutions is strong, but there is some increased pressure on pricing, and for most potential deals, decision timing is indefinite. In order to address future needs of both existing customers and new opportunities, we continue to invest in enhancing our product offering.

Our strong cash generation and our continued profitability strengthen our belief that we will continue to execute and support our annual dividend distribution policy that we strongly believe enhances shareholder value.