Vecima Reports Q3 Fiscal 2018 Results

Revenue – $24.1M, Gross Margin – 51%, EPS – $0.03

Cash balances of $64.1M

Continued progress on Entra DOCSIS 3.1 platform

Strong performance from newly acquired Concurrent operations

VICTORIA – (May 10, 2018) – Vecima Networks Inc. (TSX:VCM) today reported financial results for the three and nine months ended March 31, 2018.

FINANCIAL HIGHLIGHTS

“The third quarter was a period of rapid momentum for Vecima as we achieved important milestones on our Entra DOCSIS 3.1 development pathway and generated strong results from our Content Delivery and Storage segment after bringing the Concurrent acquisition on board, creating a compelling combined operation spanning both more customers and more reach at top tier customers,” said Sumit Kumar, Vecima Networks’ President and CEO.

BUSINESS HIGHLIGHTS

Video and Broadband Solutions

• Achieved significant progress on Entra DOCSIS 3.1 solution:
  • continued convergence of multiple Tier 1 MSOs to Remote PHY further substantiates Vecima’s focus on execution of the Entra Remote PHY node with marked progress in the quarter;
  • Vecima’s Entra Remote PHY node was shortlisted in an RFP with an additional major North American MSO;
  • shipped Remote PHY Access node to multiple customer labs for integration and vendor qualification;
  • furthered interoperability progress on Entra Access nodes with major CCAP core providers within Tier 1 MSO labs;
  • completed initial DAA release for Entra Access Switch and initiated further customer trials; and
  • completed additional customer lab demonstrations for Entra Legacy QAM Adapter.
• Increased sales of Terrace family of products in the quarter by 79% YOY, reflecting strong demand for TC600E
• Progressed Terrace DVB field trials with a Tier 1 MSO in Europe

Content Delivery and Storage

• Completed integration and initial quarter of operations following the December 31, 2017 acquisition of the assets of Concurrent Computer Corporation
• Achieved strong sales momentum with Q3 2018 sales exceeding Concurrent’s prior-year and prior-quarter results by 14.3% and 4.5% respectively, on a comparative basis
• Deployment of Concurrent platforms initiated by a large Tier 2 MSO for end-to-end IPTV services
• Strong deployments of Zephyr™ Transcode and Laguna™ Cache, along with corresponding hardware upgrades, at a Tier 1 Japanese MSO
• Feature enhancement for Laguna™ Cache completed for a large Tier 1 U.S. MSO, leading to strong order flow in early Q4
• Subsequent to quarter end, Concurrent’s Software Defined Content Platform, Laguna™ Cache, won NewBay Media’s Best of Show award at NAB 2018

Telematics

• Additional software release provided by Telematics division to address fleet management requirements for municipal government customers

Corporate

• Declared a quarterly dividend of $0.055 per share payable on June 19, 2018 to shareholders of record on May 25, 2018. This represents the 16th consecutive quarterly dividend paid by Vecima since October 28, 2014. Including the dividend declared today, this represents $18.8 million returned to shareholders through regular dividends

“On the Entra front, the shortlisting of our Remote PHY node by another of the world’s leading MSO customers further validates our solution and signifies the third major Tier 1 MSO to ‘downselect’ Entra as they move towards deployment. We also made further progress on interoperability testing with CCAP core vendors during the quarter, demonstrating this directly to Tier 1 MSOs where interoperability is a critical care-about as the volume deployment phase of DAA is approached. All indicators continue to confirm the size and scope of the market opportunity that DOCSIS 3.1 represents, as well as Vecima’s position as a highly-regarded vendor in this large and upcoming new market.”

“In our Content Delivery and Storage segment, we achieved strong third quarter revenue as our new Concurrent operations ramped up deployments of Content Delivery Network and storage systems to customers in the US, Japan, and Europe. Our strong sales reflect both the global growth in demand for IP video storage, delivery and streaming solutions, as well as our ability to meet these needs with innovative products including Aquari, Zephyr and Laguna,” said Mr. Kumar.

On a consolidated basis, Vecima achieved third quarter revenues of $24.1 million and Adjusted EBITDA of $3.8 million. The Company closed the quarter with cash balances of $64.1 million, which is available to fund continued development and future acquisitions.

“As we move into the final quarter of this 2018 transition year, we are entering with a great position at the forefront of two of the most significant evolutions driving the cable industry: the move to gigabit internet and the rapid growth of IP video. We are very excited about the innovative product solutions we are creating in response, and we have the technical and financial strength to continue pursuing our robust technology roadmap to capture the opportunities ahead of us,” added Mr. Kumar. “The inherent and recently enhanced strength of our technology portfolio ideally situates Vecima to broadly capitalize on these large, global trends.”

As previously reported, Vecima’s Board of Directors declared a quarterly dividend of $0.055 per share for the period. The dividend will be payable on June 19, 2018 to shareholders of record on May 25, 2018.

OUTLOOK FOR FISCAL 2018

Vecima continues to view fiscal 2018 as a transition year for its Video and Broadband Solutions segment as the North American cable industry prepares for the new DOCSIS 3.1 standard and demand for legacy products continues to taper off. While initial deployments of the Entra platforms could begin as early as the end of calendar 2018, most MSOs are continuing to refine their upgrade plans and the exact timing of the volume phase of the transition remains difficult to predict.

Demand for the IP Video Content Delivery and Storage products acquired as part of the Concurrent acquisition is expected to remain robust through the balance of fiscal 2018 as Vecima responds to the cable industry’s need to deliver increasing content over an IP framework and capitalizes on Concurrent’s strong customer relationships. Concurrent’s products broadly address ongoing network upgrades to IP-oriented video technologies.

Demand for Vecima’s Telematics products is expected to remain solid through the balance of fiscal 2018, with opportunities associated with asset tracking and compliance with the U.S. trucking industry’s adoption of hours of service requirements.

Overall, management expects fiscal 2018 to be a year of continued investment and development as it positions Vecima for industry leadership in the emerging DOCSIS 3.1 market and the IP video content delivery and storage space. With a strong financial position, Vecima is well positioned to pursue its product strategies, while also continuing to assess attractive acquisitions that provide significant accretion and give rapid access to technologies that will help drive the Company’s growth and success.

CONFERENCE CALL

A conference call and live audio webcast will be held today, May 10, 2018 at 1 p.m. ET to discuss the Company’s third quarter results. Vecima’s unaudited condensed interim consolidated financial statements and management’s discussion and analysis for the three and nine months ended March 31, 2018 are available under the Company’s profile at www.sedar.com, and at www.vecima.com/financials.

To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-9020. The webcast will be available in real time at services.choruscall.ca/links/vecima20180510.html and will be archived on the Vecima website at www.vecima.com/shareholder-events.