Business News

Bitstream Inc. Reports Second Quarter Results for 2010

Tuesday 17. August 2010 - The Company reported that second quarter revenue increased 4% to $5,435,000, as compared to the second quarter of 2009, as well as 4% sequential growth as compared to the first quarter of 2010.

Bitstream Inc. (Nasdaq: BITS) today reported that total revenue increased by $186,000 or 4% to $5,435,000 for the three months ended June 30, 2010 as compared to total revenue of $5,249,000 for the three months ended June 30, 2009 and $227,000 or 4.4% sequentially as compared to $5,208,000 for the three months ended March 31, 2010. The Company’s aggregate cash, cash equivalents, and investments at June 30, 2010 totaled $12,133,000, a decrease of $5,896,000, as compared to a balance of $18,029,000 at December 31, 2009, reflecting the use of $6,528,000 of cash to purchase certain assets of Press-sense Ltd.

“Our revenue growth during the second quarter was due to both the continued strength of our e-commerce sales and the return to growth of our OEM font and font technology business with several new placements being signed during the quarter which we expect will generate increased royalties for us over the coming years,” said Anna Magliocco-Chagnon, President and Chief Executive Officer. “We are pleased that our bid for the assets of Press-sense during the second quarter was successful and look forward to integrating the iWay products with our Pageflex product line. Adding major OEM relationships to our Pageflex suite of products will better position Pageflex to return to growth in the long term and to come out from under the affects of the current print industry’s reluctance to make capital purchases due to economic concerns in the near term. By fully automating the creation, production, and back-office processes for document orders, we will provide the tools to enable our customers to maximize production efficiency, monitor and reduce costs, and increase profits. We are also excited to see the phenomenal growth in our BOLT user base during the second quarter. Our user base of over 10 million users worldwide will position us well as we continue to sign deals to monetize our BOLT offering through advertising. In addition to advertising, we continue to pursue monetization through device manufacturers and carriers and we are hiring senior talent from the mobile browsing space to help us expand this effort as we continue to make the investments needed to make this product line successful.”

Our e-commerce sales increased during the three months ended June 30, 2010, which led to an increase in direct third party cost of revenue, consisting primarily of royalty expenses, of $417,000 or approximately 27%, as compared to the three months ended June 30, 2009. Operating expenses increased $820,000 to $3,570,000 for the three months ended June 30, 2010 from $2,750,000 for the three months ended June 30, 2009. The increase was primarily due to increases in research and development (“R&D”) and general and administrative (“G&A”) expenses of $434,000 and $361,000, respectively. The increase in R&D expense was primarily $269,000 in salaries and benefits, including $162,000 related to the addition of R&D resources related to the iWay product line, as well as, an increase in the use of subcontractors and in facility costs of $75,000 and $69,000 respectively. The increase of G&A expense was primarily the result of $322,000 in acquisition costs associated with the purchase of assets from Press-sense Ltd. and $42,000 from additional G&A resources.

GAAP Results

Our loss from operations was $(714,000) for the three-months ended June 30, 2010, and our operating income for the three-months ended June 30, 2009 was $358,000. Our net loss for the three months ended June 30, 2010 was ($685,000) or ($.07) per share and our net income for the three months ended June 30, 2009 was $319,000 or $.03 per fully diluted share.

Non-GAAP Results

Our Non-GAAP results for the three months ended June 30, 2010 exclude stock-based compensation expense, the amortization of intangible assets primarily acquired from Press-sense Ltd. and acquisition costs for certain assets of Press-sense Ltd. Our Non-GAAP loss from operations was $(94,000) for the three months ended June 30, 2010, while our operating income for the three months ended June 30, 2009 was $571,000. Our Non-GAAP net loss was $(65,000) or $(0.01) per share for the three months ended June 30, 2010, while our net income for the three months ended June 30, 2009 was $532,000 or $0.05 per fully diluted share. A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.