Sandvine Corporation (TSX:SVC) provides networking equipment that helps service providers manage such things as congestion, security, and other policy control issues.
The company released its Q2 earnings results on Monday which were less than enthusiastic. Overall year-over-year revenue was down 18% and net income was just $1.1 million (from $4 million a year ago). Product sales saw the biggest drop at 25%, compared with service revenue that was down just 3%. Earnings were estimated to come in at $0.0332 per share but instead dropped from $0.03 last year to just $0.01 for Q2.
A look at the segments shows that Europe, Middle East, and Africa increased in sales by 4%, while Canada saw an increase of over 11% (although Canada is the smallest segment). The United States, Asia Pacific, and Caribbean and Latin America segments all saw decreases of about 25% or more. Unfortunately for Sandvine its troubled quarter does not appear to be an isolated issue and impacts many of the regions they operate out of.
Cash from operations also saw a big drop from a year ago with only $10 million this quarter compared to $21 million a year ago, for a drop of over 51%. Although this did not present a big issue this quarter since the company had sufficient cash to cover any shortfall, it is not a trend they would want to see continue.
Sandvine had a very poor quarter and it will be interesting to see if this becomes a trend and their product sales continue to struggle.