INVISIO (IVSO) Q1 2009 earnings summary

Executive summary

• Q1 broadly followed plan; Professional Products sales missed internal targets, while end-customer and distributor interest exceeded expectations. Costs remained controlled and Motorola cooperation was on track.

• The VoIP patent sale generated an extraordinary positive operating result; excluding the sale, underlying operating profit improved 7%, or SEK 1.1m YoY.

• Strategy centered on wired professional headsets and complementary products, with Motorola cooperation and future consumer royalties replacing own-brand consumer development.

Financial highlights

• Net sales were SEK 35.6m vs SEK 9.5m; excluding the VoIP patent sale, sales were SEK 4.3m vs SEK 9.5m.

• Gross profit was SEK 32.5m vs SEK 3.1m; gross margin was 91.0% vs 32.4%, with the increase attributable to the patent sale.

• Operating profit was SEK 18.0m vs a SEK 14.4m loss; net profit was SEK 17.3m vs a SEK 15.0m loss; EPS was SEK 0.83 vs -SEK 0.76.

• Operating expenses fell by more than 18% to SEK 14.4m from SEK 17.5m; net financial items were -SEK 0.7m vs -SEK 0.6m.

• Cash flow from operating activities was -SEK 3.8m vs -SEK 11.9m.

Outlook and guidance

• Significant Professional Products sales growth remained expected for 2009 despite longer customer testing and decision cycles.

• Q2 operating expenses were expected to be level with Q1.

• Motorola’s first co-developed consumer product was expected to launch during 2009, followed by regular royalty revenue.

• Professional Products sales were expected to vary by quarter; additional distributor and major-partner agreements were anticipated in Q2.