Mind CTI Ltd (MNDO) 2011 Q3 法說會逐字稿

Thank you. 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 third-quarter 2011. The financials can be found in our Form 6-K and on our website.

Before I turn the call over to Mrs. Monica Iancu, MIND's CEO, I would like to update you on our Annual General Meeting. MIND's Annual General Meeting was held on Tuesday, September 27, 2011, at the offices of the Company; and all the proposed resolutions were approved, among them the re-election of two directors and a new option plan.

Under the Company's Articles of Association, our Board of Directors, excluding our external directors, is divided into three classes of directors designated as Class I, Class II, and Class III, which are differentiated by the dates of expiration of the terms of office of their respective directors.

Mr. Mihail Rotenberg was appointed by the Board of Directors of the Company as a Class II director in 2008. At this AGM the re-election of Mr. Mihail Rotenberg as a Class II director of the Company for an additional term as well as his new compensation were approved.

The MIND 1998 Share Option Plan and MIND 2000 Share Option Plan expired on December 31, 2010. The purpose and intent of the new Plan is to provide incentives to employees, directors, consultants, and/or contractors of the Company by providing them with opportunities to purchase shares in the Company. The Plan was included in our materials for the AGM.

The Plan shall expire 10 years from the date of adoption of the Plan. The Board of Directors is authorized to determine the terms of any options granted under the Plan, including variations from the terms set in the plan. The approved pool under the Plan is up to 1,800,000 ordinary shares.

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 third quarter of 2011 and discuss our business. The financials can be found in our press release.

Yesterday we reported our business results for the third quarter of 2011. They include the revenue for the third quarter at $4.63 million; the revenue from our customer care and billing was $3.57 million; and revenue from our enterprise call accounting solutions was approximately $1 million. The geographic revenue breakdown was roughly 50% from the Americas and 36% from Europe.

Operating income was $992,000, and net income was $891,000 or $0.05 per share. Our balance sheet continues to be strong with our total cash position of $17.6 million at the end of the quarter, including the available-for-sale securities.

During the third quarter we signed one new customer and received multiple follow-on orders. The new win is with an Israeli MVNO that is expected to offer cellular services in Israel's communication market starting 2012. MIND will supply a complete MVNO-in-a-box solution, including the platform required as well as the integration and implementation services.

A mobile virtual network operator, or MVNO, is a company that resells wireless services under its brand. It provides mobile phone services but does not have its own licensed frequency allocation of radio spectrum, nor does it necessarily have the entire infrastructure required to provide mobile telephone services.

A company that does have frequency allocation and the required infrastructure to run an independent mobile network is known simply as a mobile network operator, or MNO. MVNOs are roughly equivalent to the switchless resellers of the traditional landline telephone market.

MVNOs can generally set their own service offering and pricing structures. Usually, the MVNO does not own any GSM or CDMA, or other core mobile network-related infrastructure, such as mobile switching centers or a radio access network.

Some may own their own home location register, or HLR, which allows more flexibility and ownership of the subscriber's mobile phone numbers. In this case, the MVNO appears as a roaming partner to other networks abroad, and as a network within its own region.

Some MVNOs run their own billing and customer care solutions. And others use the services of a mobile virtual network enabler.

Mobile virtual network operators, MVNOs, and enablers, MVNEs, are the most dynamic and innovative players in the mobile telecoms market now, capturing revenues from the expanding market. MVNO-in-a-box is a one-stop-shop solution that contains everything that a company needs to start its own MVNO or MVNE operation.

Following the completion of this new win, where MIND will deploy a full network implementation and business support systems for the MVNO, we will be able to package this solution and sell it further. MIND will be able to provide the fully-pre-integrated turn-key solution. For this project and future MVNO-in-a-box projects, as the solution prime contractor, MIND will provide the MVNO or MVNE with a single point of contact for the implementation phase and for the ongoing support.

MIND builds and supports the full network requirement of a virtual operator through its selected partners, where all solutions are delivered quickly and are designed to allow easy modification of the architecture and service offerings. In addition, where the customer is an MVNE, the entire architecture easily supports multi-tenancy so that many MVNOs can be supported and managed on the same solution.

Mobile providers have to focus on niche markets today. The current legacy existing systems can in most cases not fulfill the requirements of this wholesale telecommunications market anymore. Smarter and more flexible billing solutions are required in order to help the operator to get the best and most out of his infrastructure investment.

We were chosen, as mentioned in our two previous conference calls, by Pelephone, the first Israeli mobile operator with over 2.8 million subscribers, to provide an end-to-end convergent billing and customer care solution for full support of its MVNE -- mobile virtual network enabler -- operations. The exact reason for choosing us was the need for highly flexible rating and product catalog and fast deployment.

This project was completed as expected, reinforcing our reputation of on-time successful delivery. The MVNO announced moving into commercial services this week.

Currently installed legacy systems used by the telecom industry are highly cost-intensive, offering low flexibility and demanding intensive support efforts. CapEx and OpEx costs are extremely high, and therefore only support existing business models that focus on the mass market.

New niche market business models with less than 100,000 subscribers, that are the future core business of MVNOs, cannot be operated profitably with old solutions. With the MIND solution, they can prove a shorter return-on-investment.

MIND's existing satisfied customers initiate each quarter follow-on orders, mainly for support of new business models or additional functionality. And we proudly announced multiple such orders this quarter as well.

One of the follow-on orders is with a North American customer we previously announced a year ago, for integration with the cable legacy system. MIND provides the end-to-end prepaid and postpaid convergent billing solution for full support of its mobile operation that will start in 2012.

Another upgrade is with one of the leading providers of Internet, long distance, wireless and paging located in Guam, to enhance capabilities and presentation for financial transactions and to add support for additional mediation. Some smaller follow-on orders include, among others, a license upgrade with a carrier in Central Europe and feature enhancements for a mobile service provider in the US that is a customer of MIND since 2006.

An update on the dividend. In July 2003, our Board of Directors adopted our dividend policy; and in October 2010, our Board of Directors updated this policy slightly.

Since 2003, we have distributed yearly dividends eight times, as well as one special dividend distributed in December 2009, with an aggregated amount of approximately $2.37 per share. We intend to continue to distribute cash dividends based on factors that include our cash position and activities.

In the last years, we needed to receive court approval formally required in order to enable a distribution, since under Israeli law a company with insufficient retained earnings is required to obtain approval from the court for such a cash distribution. Since we believe that by the end of 2011 we will have sufficient earnings to enable an additional dividend distribution, we expect to declare the 2011 dividend in February 2012, without the need for court approval.

To summarize, we are excited to have been selected for the second time by an Israeli MVNO. We believe that this win, after a long selection process, was mainly based on our proven delivery execution. We expect to complete this project on time and within budget, just as we did with our previous implementations.

Operator?

(Operator Instructions) We have no questions at this time.

Okay. Thank you.