NMS Communications Announces Financial Results for the Third Quarter Ended September 30, 2007

Business Wire,  Oct 30, 2007  

Tags: NMS Communications

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FRAMINGHAM, Mass. -- NMS Communications Corp. (NASDAQ: NMSS), a leading provider of applications and platforms for value-added services in mobile telecommunications today announced financial results for the third quarter ended September 30, 2007.

Total revenues for the third quarter of 2007 were $23.2 million, an increase of 11% compared to $20.8 million for the corresponding quarter in 2006 and 8% compared to $21.4 million for the second quarter of 2007. GAAP net loss for the third quarter was $1.5 million, or $(0.03) per share, an improvement compared to a GAAP net loss of $5.9 million, or $(0.12) per share, for the third quarter of 2006.

Non-GAAP net income was $14,000, or $0.00 per share, for the third quarter of 2007, an improvement compared to a non-GAAP net loss of $4.1 million, or $(0.09) per share, in the third quarter of 2006. The non-GAAP net loss for the third quarter of 2007 excludes $1.5 million in non-cash charges, comprised of $1.2 million of stock-based compensation expense and $0.3 million of amortization of acquired intangible assets.

The cash, cash equivalents and marketable securities balances totaled $28.3 million on September 30, 2007, compared to $30.4 million at the end of the previous quarter.

Business Perspective

"Our results for the third quarter were in-line to slightly better than our expectations. The quarter was highlighted by a return to revenue growth, both sequentially and on a year-over-year basis. Combined with strong gross margins and continued tight spending controls, we are on track to achieve our second half target of returning to break-even non-GAAP profitability. While we have made significant progress toward improving our financial profile over the past year, we believe there is still substantial room for improvement," said Bob Schechter, NMS Communications' Chairman and CEO.

"Our Communications Platforms (CP) business experienced solid sequential and year-over-year growth for the first time in over a year. Looking ahead, we believe that our CP business is well positioned to deliver modest growth, driven by new design wins, mobile video and speech-enabled applications, especially in Asia where subscriber growth is forecast to remain very strong. In addition, our CP business continued to generate strong gross margins and contribution margin exceeding 20%, which has provided the capital to invest in our high growth Mobile Applications business," Schechter continued.

"We continue to be very excited about our Mobile Applications business, which grew over 50% year-over-year in the third quarter. The underlying drivers to the Ringback market remain robust, and we are on track to triple the number of subscribers using our market leading MyCaller[TM] solution for the second consecutive year. These trends are particularly exciting as we begin to transition our business to a managed services model, which we believe will maximize our revenue opportunity, visibility and predictability.

"AccessGate [TM], which is the smallest component to our business, more than doubled sequentially and on a year-over-year basis. Growth was driven by strong demand, particularly in Latin America. With a solid pipeline of opportunities, we believe AccessGate is well positioned to finish the year with strong annual growth.

In summary, we are pleased with our progress this quarter and recognize there is a good deal more to be done. We continue to see the Mobile Applications market as an area for strategic expansion and believe our ongoing shift to managed services will enable us to offer our customers an end-to-end service platform and provide NMS a more repeatable and predictable revenue stream. Our focus on the Communications Platform group is paying off, and we believe that the erosion in the low end of our customer base, which has been a primary contributor to this segment's decline in the past year, has largely run its course. We remain highly focused on continuing to improve our financial performance in order to drive long-term shareholder value," Schechter concluded.

Guidance

We currently expect growth in Q4 to be positive on a year-over-year basis and leading to revenue that is up modestly from what was delivered in the recently completed Q3. The timing of revenue recognition in our Mobile Applications business can add an element of variability in quarterly performance. From a profitability perspective, we continue to expect to operate at about break-even on a non-GAAP basis in Q4 based on modest growth in revenues, gross margin levels a bit below the unusually strong performance in Q3, and continued tight expense controls.

NMS Conference Call Web Cast

NMS Communications issues web casts for its conference calls to assure the broad dissemination of information in real time. The Third Quarter 2007 conference call, which is scheduled for 5:00 p.m. ET today, October 30, 2007, will be available live via the Internet by accessing the NMS web site at http://www.nmscommunications.com, under the Investor Relations section. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software. The webcast is also being distributed using CCBN's Investor Distribution Network to both institutional investors at StreetEvents (www.streetevents.com) and individual investors at www.companyboardroom.com.