3SOF

Q3 update:
VASCO Reports Strong Results for Third Quarter and First Nine Months of 2007
Thursday , October 25, 2007 03:00ET

OAKBROOK TERRACE, Ill., and ZURICH, Switzerland, Oct. 25 /PRNewswire-FirstCall/ -- VASCO Data Security International, Inc. (Nasdaq: VDSI) (http://www.vasco.com) today reported financial results for the third quarter and nine months ended September 30, 2007.

Revenues for the third quarter of 2007 increased 60% to $30.0 million from $18.7 million in 2006 and, for the first nine months of 2007, increased 74% to $88.8 million from $50.9 million in 2006.

Net income for the third quarter of 2007 was $5.9 million or $0.15 per diluted share, an increase of $2.6 million or 79% from $3.3 million, or $0.09 per diluted share in 2006. Net income for the first nine months of 2007 was $17.7 million, or $0.46 per diluted share, an increase of $10.2 million or 136% from $7.5 million, or $0.20 per diluted share, in 2006.

    Financial Highlights:
    -- Gross profit was $20.0 million or 67% of revenue for the third quarter
       and $58.2 million or 66% of revenue for the first nine months of 2007.
       Gross profit was $12.8 million or 68% of revenue for the third quarter
       and $34.1 million or 67% of revenue for the first nine months of 2006.
    -- Operating expenses for the third quarter and first nine months of 2007
       were $11.7 million and $33.6 million, respectively, an increase of 50%
       from $7.8 million reported for the third quarter 2006 and an increase
       of 52% from $22.1 million reported for the first nine months of 2006.
       Operating expenses for the third quarter and first nine months of 2007
       included $0.6 million and $1.5 million, respectively, related to
       stock-based incentives.  Operating expenses for the third quarter and
       first nine months of 2006 included $0.5 million and $1.2 million,
       respectively, related to stock-based incentives.
    -- Operating income for the third quarter and first nine months of 2007
       was $8.3 million and $24.6 million, respectively, an increase of $3.3
       million or 66% from $5.0 million reported for the third quarter of 2006
       and an increase of $12.6 million or 105% from the $12.0 million
       reported for the first nine months of 2006.  Operating income, as a
       percentage of revenue, for the third quarter and first nine months of
       2007 was 27.5% and 27.7%, respectively, compared to 26.6% and 23.5% for
       the comparable periods in 2006.
    -- Earnings before interest, taxes, depreciation and amortization (EBITDA)
       was $8.7 million and $26.5 million for the third quarter and first nine
       months of 2007, respectively, an increase of 64% from $5.3 million
       reported for the third quarter of 2006 and an increase of 117% from
       $12.2 million reported for the first nine months of 2006.
    -- Net cash balances, cash balances less borrowing under VASCO's line of
       credit, at September 30, 2007 totaled $36.7 million compared to $26.0
       million and $12.6 million at June 30, 2007 and December 31, 2006,
       respectively.


    Operational and Other Highlights:
    -- VASCO won 608 new customers in the third quarter of 2007 (106 banks and
       502 enterprise security) and 1,858 in the first nine months of 2007
       (313 banks and 1,545 enterprise security).
    -- People's United Bank to use VASCO's strong authentication.
    -- Azlan-Tech Data to distribute Digipass Pack in EMEA.
    -- VASCO turns Belgian eID into Digipass Strong Authentication.
    -- VASCO launches next generation of Digipass Packs for small and
       medium-sized enterprises; Digipass Pack for Remote Authentication and
       Digipass Pack for Network Authentication.
    -- VASCO expands international management team in Zurich -- hires Victor
       Hoogland as Chief Information Officer and Alexandra Spirig as Director
       of Contracts and Compliance.
    -- VASCO opens subsidiary in Sao Paulo, Brazil.
    -- VASCO opens sales office in Tokyo, Japan.


    Guidance for full-year 2007:
    VASCO reaffirmed its guidance for the full-year 2007 as follows:
    -- Revenue growth is projected to be 55% to 65% for the full-year 2007
       over full-year 2006;
    -- Gross profit (margin) as a percentage of revenue for full-year 2007 is
       projected to be in the range of 60% to 68%; and
    -- Operating profit (margin) as a percentage of revenue for full-year 2007
       is projected to be in the range of 23% to 30%.


"The results for the quarter, and year-to-date, continue to demonstrate that our core strategies are working," said Ken Hunt, VASCO's CEO and Chairman. "Our Full-Option, All-Terrain product strategy is generating large numbers of new customers. Our existing customers, which are the source of our sustainable, repeatable revenues, are contributing strongly to our growth in revenues. In addition, our strategy of increased focus on software is generating higher levels of deferred revenue that will be recognized over the life of the contracts. We expect that the recurring revenue that comes from these new contracts will become a more significant part of our revenues in future periods. And, finally, our operating margin of approximately 28% of revenue for both the third quarter and the first nine months of 2007 demonstrates the efficiency of our operating model."

"The results of the third quarter continue the trend of strong growth," said Jan Valcke, VASCO's President and COO. "During the last few months, there has been a significant increase in criminal activity directed at online banking. This fact has been covered by media all over the world. We believe that our growth continues to reflect an increase in the size of the market and recognition by the market that it needs stronger forms of authentication to combat the increasing sophistication of the criminals in their attempts to steal persons' identities. We are also seeing important growth in the size of our distribution channel as evidenced by the recent agreement we signed with Azlan-Tech Data. We believe that Azlan-Tech Data and other new distributors will be important contributors to our future growth. As we start the fourth quarter, we have a backlog of firm orders to be shipped in the fourth quarter of $33.4 million, which is 55% higher than the $21.5 million backlog we had when entering the fourth quarter of 2006 and 33% higher than the $25.2 million in actual sales reported for Q4 2006."

Cliff Bown, Executive Vice President and CFO added, "Our balance sheet continues to strengthen as a result of the strong operating performance. Our net cash balance has increased by approximately $19.9 million over the last two quarters. At September 30, 2007, our net cash balance was $36.7 million, an increase of $10.7 million or 41% from $26.0 million at June 30, 2007. The increase in cash in the third quarter was also due in part to a reduction in days sales outstanding (DSO) in our net accounts receivable. DSO decreased to approximately 55 days at September 30, 2007, from 67 days at June 30, 2007."

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Vasco Data Security upgraded to "outperform" - update

Monday, November 12, 2007 11:39:38 AM ET
Morgan Keegan

NEW YORK, November 12 (newratings.com) - Analysts at Morgan Keegan upgrade Vasco Data Security International (VDSI.NAS) from "market perform" to "outperform."

In a research note published this morning, the analysts mention that the company has posted its 3Q EPS and revenues short of the consensus. While Vasco Data Security's revenue growth is likely to moderate from the 60%-95% seen so far this year, the company is expected to continue to post +40% growth going forward, the analysts say. The decline in the company's share price, following the 3Q results, offers an attractive investment option, Morgan Keegan adds.

Chart & Research File:

update:

VASCO Reports Results for Second Quarter and First Six Months of 2008.
Thursday , July 24, 2008 03:00ET

OAKBROOK TERRACE, Ill. and ZURICH, Switzerland, July 24 /PRNewswire-FirstCall/ -- VASCO Data Security International, Inc. (Nasdaq: VDSI) (http://www.vasco.com) today reported financial results for the second quarter and six months ended June 30, 2008.

Revenue for the second quarter of 2008 increased 9% to $35.4 million from $32.4 million for the second quarter of 2007, and for the first six months of 2008, increased 9% to $64.3 million from $58.8 million for the first six months of 2007.

Net income for the second quarter of 2008 was $7.5 million, or $0.20 per diluted share, an increase of $0.6 million, or 9%, from $6.9 million, or $0.18 per diluted share, for the comparable period in 2007. Net income for the first six months of 2008 was $12.4 million, or $0.32 per diluted share, an increase of $0.5 million, or 5%, from $11.8 million, or $0.31 per diluted share, for the comparable period in 2007.

Other Financial Highlights:

-- Gross profit was $25.4 million, or 72% of revenue, for the second quarter of 2008 and $45.4 million, or 71% of revenue, for the first six months of 2008. Gross profit was $20.7 million, or 64% of revenue for the second quarter of 2007 and $38.2 million, or 65% of revenue, for the first six months of 2007.

-- Operating expenses for the second quarter and first six months of 2008 were $16.4 million and $30.6 million, respectively, an increase of 46% from $11.2 million reported for the second quarter of 2007 and an increase of 40% from $21.9 million reported for the first six months of 2007. Operating expenses for the second quarter and first six months of 2008 included $0.8 million and $1.5 million, respectively, related to stock-based incentives.

-- Operating income for the second quarter and first six months of 2008 was $9.0 million and $14.9 million, respectively, a decrease of $0.4 million, or 4%, from $9.4 million reported for the second quarter of 2007 and a decrease of $1.4 million, or 9%, from $16.3 million reported for the first six months of 2007. Operating income, as a percentage of revenue, for the second quarter and first six months of 2008 was 26% and 23%, respectively, compared to 29% and 28% for the comparable periods in 2007.

-- Earnings before interest, taxes, depreciation and amortization (EBITDA) was $9.9 million and $16.9 million for the second quarter and first six months of 2008, respectively, a decrease of 3% from $10.2 million reported for the second quarter of 2007 and a decrease of 5% from $17.7 million reported for the first six months of 2007.

-- Net cash balances, cash balances less borrowing under VASCO's line of credit, at June 30, 2008 totaled $42.1 million compared to $47.8 million and $38.8 million at March 31, 2008 and December 31, 2007, respectively.

Operational and Other Highlights:
    -- VASCO won 516 new customers in Q2 2008 (79 new banks and 437 new
       enterprise security customers).  For the first six months of 2008,
       VASCO won 1,107 new customers (150 banks and 957 enterprise security
       customers).
    -- Banco Itau (Brazil) secures more than 1.6 million end users with VACMAN
       Controller/Digipass GO3
    -- Independent Bankers' Bank (U.S.) secures online banking with VACMAN
       Controller/Digipass GO6
    -- Mizuho Bank (Japan), Intesa Sanpaolo (Italy) and Banco Itau (Brazil)
       receive VASCO's Market Vision Award
    -- Digipass integrated into SonicWall SSL-VPN
    -- VASCO opens subsidiary in Mumbai India
    -- VASCO expands US Channel Partner Program
    -- VASCO ranks 5th in Fortune Small Business Top 100 and 14th in
       BusinessWeek's Hot Growth Companies top 50.


Guidance for full-year 2008:
VASCO updated its full-year 2008 guidance as follows:

-- Revenue growth of 15% to 25% for the full-year 2008 over full-year 2007, a reduction from its previous guidance of 10 percentage points in each end of the range,

-- Gross margins as a percentage of revenue of 60% to 68% for full-year 2008, which is unchanged from previous guidance, and

-- Operating margins as a percentage of revenue of 20% to 25% for full- year 2008, which is also unchanged from previous guidance.

"We are pleased with the progress we saw in the business in Q2," stated T. Kendall Hunt, Chairman & CEO. "Not only did we report a record level of revenues for a quarter, but we also increased our deferred revenues and saw a strong order flow throughout the quarter. The current order flow reinforces our belief that our growth rates over 2007 will accelerate in the second half of the year. We are, however, reducing our revenue guidance for two primary reasons. One is to more fully consider the impact of our business strategies where a larger portion of our business activity relates to recurring software revenue, which may be deferred and recognized in future periods. The second is to reflect a more conservative outlook for the full year given the uncertainty of the world economies."

"We are continuing to make investments in our infrastructure and continuing our aggressive hiring plan," said Jan Valcke, VASCO's President and COO. "Our business mix is evolving favorably, as expressed by the increase in gross margins. It is our goal to accelerate our growth in enterprise security and other non-traditional markets while strengthening our position in the banking sector."

Cliff Bown, Executive Vice President and CFO added, "The continued strong operating performance has allowed us to both invest strongly in the business and strengthen our balance sheet. While our net cash balance decreased $5.7 million or 12% during the quarter, our working capital increased $7.8 million or 13% from March 31, 2008. Days Sales Outstanding (DSO) in net accounts receivable increased to approximately 83 days at June 30, 2008 from 67 days and 76 days at March 31, 2008 and December 31, 2007, respectively."

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VASCO Data Security upgraded to "buy"
12:15p.m. - Lazard Capital Markets
NEW YORK, July 25 (newratings.com) - Analysts at Lazard Capital upgrade VASCO Data Security (VDSI) from "hold" to "buy." The target price is set to $17.

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VASCO Data Security upgraded to "market outperform"
11:59a.m. - Avondale Partners
NEW YORK, July 25 (newratings.com) - Analysts at Avondale Partners upgrade VASCO Data Security (VDSI) from "market perform" to "market outperform." The target price has been raised from $13.50 to $18.60.

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VASCO Data Security International "sector perform," target price raised
11:47a.m. - RBC Capital Markets
NEW YORK, July 25 (newratings.com) - Analysts at RBC Capital Markets reiterate their "sector perform" rating on VASCO Data Security International Inc (VDSI). The target price has been raised from $14 to $15.