NCR Voyix Corp (VYX) 2010 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Retalix conference call. As a reminder this conference is being recorded August 11, 2010. Leading the call today is CEO of Retalix Mr. Shuky Sheffer, joining him is Hugo Goldman the Company's Chief Financial Officer. Before I turn the call over to them, I would like to remind our listeners that management's remarks contain forward-looking statements. These statements include comments regarding the guidance and expectations about revenue, net income, impairment testing, margins, expenses and tax rate, the Company's ability to improve cash flow and profitability and to cut expenses, expectations about the Company's expected pipeline of customers, anticipated demand for the Company's software products and management's expectations as to the Company's future financial performance. Such forward-looking statements are subject to risks and uncertainties and therefore Retalix claims the protection for such statements contained in the Private Securities Litigation Reform Act of 1995 and other security laws. Actual results may differ from those discussed today and we like to refer you to a more detailed discussion of all risks and uncertainties contained in today's press release and in the Company's filings with the SEC, and in particular on Annual Report on Form 20F, filed with the SEC on June 22, 2009.

Also, I would like to remind you that the Retalix report, its operating income, net income, and earnings per share on both the GAAP basis and on an adjusted non-GAAP basis. Today's press release includes reconciliation of non-GAAP information to the most directly comparable GAAP information and posted in the investor section of the Company's web site at www.retalix.com. Now I will turn the call over to the CEO of Retalix, Mr. Sheffer, please begin.

Thank you Sarah, thank you for joining us on this call. This morning we reported our results for the second quarter and first half of 2010. On this call we wanted to review with you the financial results I will also give an outlook on our business and our view of the markets opportunities for Retalix. It was another solid quarter for Retalix as we continue to execute on our plans. We have now had two quarters of sequential growth in total revenue and operating income. We continued to generate positive cash flow from operations. Total revenue $52 million in non-GAAP operating income of $5.3 million, for the three months ended June 30, 2010. These results are improvement over the previous quarters and on track with our plans. Combined in the first quarter we had solid results for the first half of 2010.

For the good quarter the leading projects we also continued to focus on such opportunities across our markets. In a moment I will discuss three of our customer wins this quarter including 81 new local to our customer list. We are also making good progress on developing and enhancing our product offering and services (Inaudible - Highly Accented). We are also seeing initial growth signs of growth while there continues to be uncertainty in the economy the results give us confidence in our able to execute on our plans. I will talk in more detail about the market environment in our next set but first let me hand the call over to Hugo to review the financial results for the second quarter and the first half of 2010.

Thank you. Total revenue for the second quarter of 2010 were up versus both the previous quarter and versus the year ago second quarter. We reported $52 million in revenues from the three months ended June 30, 2010, compared to $48.9 million in the year ago second quarter. For the six months of 2010 we reported total revenue of $100.7 million this is compared to $95.9 million in the first six months a year ago. Looking at the revenue mix in the second quarter as Shuky mentioned we had a good quarter delivering projects to customers this contributes to larger revenues. Professional services [46%] of total revenues maintaining strong financial, (Inaudible - Technical Difficulty). Total revenues grew during the Q2 of 2010. Compared to up 11% of the Q2 of 2009. Adjusted income from operations non-GAAP was $5.3 million this compares with $4.7 million in the previous quarter and $4.5 million in the second quarter of 2009. As a result of our focus on operating efficiencies and with increase revenues our non-GAAP operating margin included in the second quarter was 10.1%. We continued to carefully manage our total operating expenses with R&D, sales and marketing G&A each stable as a percent of total revenues during the second quarter. Our total operating expenses were $17.6 million for the second quarter and $34.6 million for the first half of 2010. As we have discussed with you on previous quarter we have been working to use our resources more efficiently, shifting resources within the Company and aligning our operations with the opportunities we see with in the marketplace.

In line with our operating plan expenses increased during the first quarter as we continue to recruit and take steps to expand our service offering, customers facing operations and further development. In the second quarter of 2010 we reported a financial expense of $0.8 million related to fluctuations in the exchange rates (Inaudible - Highly Accented) This compares with a financial income of $3.7 million in the year ago second quarter. First six months of 2010 we reported a financial expense of $1.1 million versus financial income of $80,000 for the first six months of 2009, for the second quarter of 2010 our non-GAAP net income was $3.3 million or $0.14 per diluted share. After taking into account the financial expenses I just mentioned our non-GAAP net income was a slight improvement versus the first quarter. For the second quarter of 2010 our net income GAAP was $1.6 million or $0.06 per diluted share. Our GAAP net income figures including more (Inaudible) stock option compensation cost during the second quarter of 2010 we incurred additional share based compensation expenses versus previous and year ago quarter. In the year ago second quarter non-GAAP net income was $61 million, or $0.30 per diluted share and our net income GAAP was $4.9 million or $0.24 per diluted share this includes $3.7 million financial income as I just mentioned.

For the six months of 2010, we are reporting $10 million in income for operations non-GAAP, the six months adjusted net income non-GAAP is $6.6 million or $0.27 per diluted share and the net income GAAP $3.5 million or $0.14 per diluted share For the first six months of 2009 we reported $10.4 million in income from operations non-GAAP, $7.9 million or [$0.39] per diluted share in adjusted net income non-GAAP and $5.6 million or $0.28 per diluted share to net income GAAP including (Inaudible - Highly Accented) $1.7 million contribution. Total benefit of $1.9 million in net income as a result of (inaudible) arbitration back in 2009. Fully diluted shares outstanding were 24.2 million, in the second quarter of 2010 versus 20.4 million in the year ago second quarter. Turning to the cash flow this quarter we generated $4 million in cash and from operations, receivables and collections again improved the number of days out standing at the end of this quarter our DSO was 101 days, versus 106 days in the third quarter of 2010. Total receivable amounted to $59.1 million at the end of the second quarter. Increase $1.1 million versus the first quarter related to increasing revenues during the second quarter. Our balance sheet strength continues with $107.5 million in cash and cash equivalence, marketing securities up from $105 million at the end of the first quarter and $66.3 million a year ago. To remind you in November 2009 we are $2.9 million in proceeds from the private placement. We also continue to (Inaudible) negligible debt. Now I will turn the call back to Shuky.

Thank you, Hugo. I will continue by giving you a brief outlook on operations and our market outlook. As I said in my opening, although it's early after our first quarter we are satisfied. We achieved our financial goals for the first half and we are making steady progress across all the areas of the Company. We are continuing to focus on (Inaudible) debt opportunity for Retalix. We are executing our plan described in prior calls. (Inaudible) strong foundation for (inaudible) global presence, deep domain, knowledge and unique solution designed to help (inaudible) operate and improve their businesses. Our core strength is our innovation (inaudible). Continue to focus on building and enhancing product portfolio. (Inaudible) ensuring that we are providing architecture that enables quick sign to markets, mostly for deployment options in a full range of sale channels and support application waiting for (inaudible). We are regularly speaking with or customers and these conversation (inaudible) that this is what they need (inaudible). We are also (inaudible) to build opportunities and to (inaudible) from our customers on our service offering. When engaging our customers discussions on type of services, we provide the support and improve the use of our product.

Last quarter I told you we launched our global service group. We continue to recruit and build our team as we view this a growth for Retalix. As Hugo mentioned, we also continued to focus our (inaudible) ensuring that we are affectively managing our the areas of our business. We are working on building the areas with the strongest growth opportunities. At the end of the second quarter of 2010 our headcount is up to over [1218] employees and we expect to keep portions of our business services group and customer operations. During this quarter we had a number of success in delivering product to our customers one example is Zen Nippon, one of Japan's largest retail market chains. We completed successful pilot for the Tokyo base (Inaudible). We are now in the process of rolling out (inaudible) royalty and promotion (inaudible) for more than 1,000 stores, Zen Nippon in the (inaudible) and we have the strength of position in this market. Our focus and sales on expanding relationship with existing customers help us add one new logo to our customer list this quarter, as well to extend two long-term customer relationships. New customers for Retalix (inaudible). Spain is also a new territory for Retalix. (Inaudible) improve the customers shopping experience and enhance operations. They will deploy integrity in integrated area (inaudible) services including our (inaudible) royalty solution (inaudible).

In North America (inaudible) a convenient store is expanding successful business with Retalix. We have a long-term relationship with this retailer and we are happy with a leadership and (inaudible) product and services (inaudible) with the Company. Now they've selected to expand (inaudible) to the newest location. (Inaudible) another retail store in North America also selected during the second quarter to expand current (inaudible).

Turning (inaudible) Flying J, they are rolling out (inaudible) to all the Flying J locations. These new engagements are some example of Retalix market activities . We are also identifying the future opportunities to market and it's clear Retalix (inaudible) the market dynamics are playing to Retalix core strengths. (Inaudible) in the market and the need for (inaudible) shopping experience across all platforms. The [petition] increasing and the recent segments are blurring. (Inaudible) as well as examining the offering in health and beauty. At the same time, (inaudible) such as department stores and drug stores, are increasingly offering food in those stores. Our strategic planning has contributed to Retalix' (inaudible) position and our (inaudible) should be aligned with opportunities (inaudible). We've completed our (inaudible). Our research identified a 60% of internal application at (inaudible) is coming in areas around [stores]. These areas were Retalix' clear leadership. Our research also showed the discussion (inaudible) convenient store segment. This (inaudible) are areas where we have (inaudible). As part of our strategic planning we have defined the geography (inaudible). (Inaudible) and even more opportunity for Retalix. We are excited about (inaudible), however, there appears to be a concern over global rate of recovery for the global economy. While (inaudible) uncertainty and inconsistencies in the economy, our result in the in the [third part] are also giving us confidence in our guidance and outlook. We continue to (inaudible) from our customers on our products and services in our new (inaudible). As I said at the beginning of the call, we see (inaudible) so that we can (inaudible) opportunities in the market. (Inaudible) gives us the confidence (inaudible) guidance for 2010. We now expect Retalix total revenue for 2010 will be in the range of $200 million to $210 million and similar or better profitability than 2009.

In conclusion, we believe it was another solid quarter as we (inaudible) and continue to make steady improvements across the Company. We continue to see positive customer feedback and generate good (Inaudible - Highly Accented). We are confident we have the strength expertise leadership as we continue with our plans for Retalix.

Finally, before I close I would like to invite you to join us Monday November 8, 2010 in the annual conference (inaudible). It will be an excellent opportunity for you to learn about our region of product and industry trends, meet management team, talk to customers partners and hear about case studies. Please use our web site for future information. Thank you for your attention. Now we are open to answering questions.

Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. (Operator Instructions) Please standby as we pull for your questions. First question is from David Levinson of Hapoalim Bank.

Good afternoon, Shuky and Hugo. I would like to ask you about the shop increasing and gross profit and cost of services which impact also the gross margin.

Well, hi. How are you? (Inaudible) we increased our services we had very good deliveries this quarter (Inaudible - Highly Accented).

In terms of gross profit was decreased.

Well, this is a part of the cause associated as I said with the services revenue.

Okay. Thank you.

You're welcome.

(Operator Instructions). Please standby while we pull for more questions. There are no further questions at this time. I would like to turn the call back over to Mr. Sheffer. Mr. Sheffer, would you like to make your concluding statement?

Thank you for participation looking forward to seeing you in Dallas. Looking forward to talking to you next quarter, thank you very much.

This concludes the Retalix second quarter 2010 results conference call, thank you for your participation. You may go ahead and disconnect.