Service assurance and next-generation test solutions have weathered the recession nicely. For EXFO, the strength of this market has lead to the company’s sixth consecutive quarter of sales growth.
According to research firm Analysys Mason, the global service assurance market is forecast to grow from $2.3 billion in 2009 to $3.4 billion in 2014, an 8.3 percent compound annual growth rate.
EXFO sells test and service assurance solutions to wireless and wireline network operators and equipment manufacturers in the global telecommunications industry, focusing on solutions for the development, installation, management and maintenance of converged, IP fixed and mobile networks. Its sales increased 50.2 percent in the second quarter of fiscal 2011 to $72.0 million. It increased its cash position by $41.8 million.
Net bookings increased 11.5 percent to $57.6 million in the quarter and gross margin reached 61.4 percent of sales in the second quarter of fiscal 2011 compared to 60.8 percent in the second quarter of 2010 and 62.2 percent in the first quarter of 2011.
Germain Lamonde, chairman, president and CEO of EXFO, said that overall he was satisfied with the company’s financial performance.
"As expected, second-quarter bookings were down sequentially due to seasonality and significant year-end money received in the first quarter," Lamonde said. "Nonetheless, our backlog is now at a more manageable level in our typically strong third quarter. I remain confident that the trends toward explosive bandwidth demand and IP network convergence compel fixed and mobile operators to accelerate their strategic investments in wireless backhaul, 3G/4G, FTTH and VDSL deployments as well as 40G and 100G network upgrades."
EXFO also acquired NetHawk in March of 2010, which posted $4.9 million in sales and $8.7 million in bookings. It added deep-packet inspection (DPI) technology to its wireless analyzers and service assurance systems during the quarter. This value-added solution will enable subscriber-based, application-level monitoring for assessing long-term evolution (LTE) and other packet-based networks.
EXFO is forecasting similar results for the third quarter, expecting sales between $67 million and $72 million.
