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Sandvine Reports Q2 2012 Results

Waterloo, Canada; July 6, 2012 – Sandvine, (TSX:SVC; AIM:SAND) a leading provider of intelligent network policy control solutions for fixed and mobile operators, today reported $18.6 million in revenue for its second quarter of 2012, a non-IFRS loss of $3.5 million and a net loss of $4.2 million. All results are reported in U.S. dollars under International Financial Reporting Standards (IFRS).

Q2 2012 highlights:

• Revenue by access technology market: DSL 43%; wireless 30%; cable 25%; other 2%
• Revenue by geography: NA 48%; EMEA 18%; APAC 22%; CALA 12%
• Revenue by sales channel: reseller 47%; direct 53%
• Gross margin was 74%
• Cash, cash equivalents and short-term investments balance grew by $2.8 million to $77.0 million
• Won three new customers, including a Tier-1 Asian telco and a Top-10 US telecom provider
• Won an additional expansion order of over $1.5 million from a Tier 1 US cable operator

“Our second quarter revenue was consistent with the estimate that we provided in June,” said Dave Caputo, Sandvine’s President and CEO. “We continue to believe that we will soon be able to win some initial business related to opportunities with Tier 1 operators, globally, and conclude a global supply arrangement for a major multinational operator customer.”

FINANCIAL HIGHLIGHTS (All amounts are in U.S. dollars)

¹ See Table 1 in the full release link below regarding non-IFRS financial measures
² Q1 2012 figures include $3.7 million ($0.027 per diluted share) related to an inventory write-down

CONFERENCE CALL

The Company will discuss the financial results and business outlook on a conference call at 8:30 a.m. Eastern time (1:30 BST) today. A webcast will be available on Sandvine’s website.

Local dial-in number 416 644 3414
Toll-free North America 800 814 4859
Toll-free United Kingdom 0800 358 5263

To download the complete results in PDF format (~150kb) please click the link below:
[download release]

A replay of the call will be available at 416-640-1917 or toll-free at 877-289-8525 (passcode 4545032#) from approximately 10:30 a.m. Eastern time today through July 13.

ABOUT SANDVINE

Sandvine’s network policy control solutions focus on protecting and improving the quality of experience on the Internet.

Our award-winning network equipment and software helps DSL, FTTx, cable, fixed wireless and mobile operators better understand network traffic, manage network congestion, create new services and revenues, mitigate traffic that is malicious or undesirable to subscribers, deliver QoS-prioritized multimedia services and increase subscriber satisfaction. With over 200 service provider customers in more than 85 countries serving hundreds of millions of broadband and mobile data subscribers, Sandvine is enhancing the Internet experience worldwide. For more information, please visit www.sandvine.com
 
INVESTOR RELATIONS CONTACT
Rick Wadsworth
Sandvine
+1 519 880 2400 ext. 3503
rwadsworth@sandvine.com

MEDIA CONTACT
Sacha DeGroot
Sandvine
+1 519 880 2232
sdegroot@sandvine.com

AIM NOMAD
Andrew Chubb/Simon Bridges
Canaccord Genuity Limited
+44 0207 523 8000

CAUTION REGARDING FORWARD LOOKING INFORMATION

Certain statements in this press release which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements related to Sandvine’s projected revenues, earnings, growth rates, revenue mix and product plans are forward-looking statements as are any statements relating to future events, conditions or circumstances. The use of terms such as “may”, “anticipated”, “expected”, “projected”, “targeting”, “estimate”, “intend” and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance, achievements or developments of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements.   Forward-looking statements are based on management’s current plans, estimates, projections, beliefs and opinions, and the Company does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.

Many factors could cause the actual results of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements, including, without limitation, each of the following factors, and those factors which are further discussed in the Company’s Annual Information Form (“AIF”), a copy of which is available on SEDAR at www.sedar.com.

• The forecasted demand or opportunity with any particular customer is subject to change and is not in any way guaranteed or committed and the ultimate timing of receipt of any orders from any such customer is uncertain as is the timing of when any such order may translate to revenue for the Company;
• The Company’s revenues may fluctuate from quarter to quarter and year to year depending upon sales cycles, customer demand and the timing of customer purchase decisions;
• The Company’s gross margins may fluctuate from period to period depending upon a variety of factors including product mix in the quarter, competitive pricing pressures and the level of sales generated through indirect channels;
• The Company is dependent upon and expects to continue to derive a large percentage of its revenue from both a small number of key customers and key reseller partners, none of whom are bound to any fixed purchase commitment or exclusivity obligations and could change their buying patterns and/or source of supply at any time, which could have a material impact on the Company’s revenues.  The Company’s reseller partners may offer their own products which are competitive with the Company’s products;
• The Company faces intense competition in markets where there are typically several different competing technologies and rapid technological changes.  The Company faces the risk of emergence of new technologies that may be either competitive to those of the Company or that change the requirements of the Company’s customers for solutions such as those offered by the Company;
• The Company’s growth is dependent on the development of the market for network policy control solutions and the decisions of the Company’s target customers to deploy and further invest in those technologies, which decisions may be impacted upon by changing requirements in the area of broadband network management policies and/or changes in the regulatory framework to which the Company’s customers may be subject.  In particular, numerous telecommunications legislators and regulators in various jurisdictions have considered or are considering what, if any, regulations might be appropriate with respect to how internet service providers manage the impact of different types of traffic on their networks.  These ongoing processes may cause uncertainty in the network investment decisions of the Company’s target customers, and any new rules or regulations that result from these considerations may impact the demand for the Company’s products within various markets, including markets that may not be considering any new regulation but where the Company’s customers may look to other markets for future guidance or trends;
• The majority of the Company’s operating expenses are denominated in Canadian dollars, U.S. dollars, New Israeli Shekels and Indian rupees. The Company’s earnings are impacted by fluctuations in the exchange rates between the U.S. dollar and these currencies.