Scientific Learning Corp. (SCIL, Financial) filed Quarterly Report for the period ended 2010-09-30.
Scientific Learning Corp. has a market cap of $64 million; its shares were traded at around $3.4 with and P/S ratio of 1.1.
For the three and nine months ended September 30, 2010, product revenue decreased by 67% and 31% respectively, compared to the same periods in 2009, mainly as a result of lower booked product sales. Service and support revenue grew by 8% and 14% for the three and nine month periods in 2010 as compared to the same periods in 2009, primarily due to the increased delivery of both on-line and traditional service offerings for training and implementation, and more schools using our Progress Tracker reporting tool.
Booked sales in the K-12 sector decreased by 59% to $10.4 million during the three months ended September 30, 2010, and decreased by 33% to $28.5 million during the nine months ended September 30, 2010, compared to $25.3 million and $42.4 million during the respective three and nine month periods in 2009. As described above, state budget pressures caused many school districts to delay purchases during the third quarter of 2010. Booked sales to the K-12 sector for the three and nine months ended September 30, 2010 were 92% and 91%, respectively, of total booked sales. Booked sales to the K-12 sector for the three and nine months ended September 30, 2009 were 97% and 94%, respectively, of total booked sales.
Booked sales to non-school customers increased by 16% to $1 million for the three months ended September 30, 2010 compared to the same period in 2009. This increase reflects higher sales to private practice clinicians, international VARs, consumers and virtual schools. For the nine months ended September 30, 2010, sales to non-school customers increased 9% to $2.9 million compared to the prior year period as growth in the consumer, virtual school and OEM businesses offsets declines in sales to private providers.
The overall gross profit margin declined by 11% in the third quarter and 5% in the first nine months of 2010 compared to the corresponding periods in 2009. These decreases in gross margin were driven by declines in the proportion of higher margin product revenue.
Higher margin product revenues made up 49% and 53% of total revenues in the three and nine months ending September 30, 2010 respectively, compared to 76% and 65% in the same periods in 2009. Product margins decreased by 4% and 1% in the three and nine months ending September 30, 2010, respectively, over the same periods in 2009, mainly due to lower revenues over which fixed costs could be allocated. Service and support margins increased by 3% and 2% in the three and nine months ending September 30, 2010, respectively, compared to the same periods in 2009, reflecting higher delivery of services in 2010.
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Scientific Learning Corp. has a market cap of $64 million; its shares were traded at around $3.4 with and P/S ratio of 1.1.
Highlight of Business Operations:
For the three months ended September 30, 2010, our total revenue decreased by 50% compared to the three months ended September 30, 2009 and for the nine months ended September 30, 2010 our total revenue decreased 15% over the corresponding period in 2009. Our total booked sales decreased by 56% for the three months ended September 30, 2010 and decreased 30% for the nine months ended September 30, 2010 compared to the same periods in 2009. (Booked sales is a non-GAAP financial measure. For more explanation on booked sales, see Revenues below). K-12 booked sales decreased by 59% in the three months ended September 30, 2010, and by 33% in the nine months ended September 30, 2010 compared to the same periods in 2009. For the three months ended September 30, 2010, we closed 19 transactions in excess of $100,000, compared to 38 in the three months ended September 30, 2009. Non-school sales, including private practice, international, direct to consumer, virtual schools and OEM customers, increased by 16% in the three months ended September 30, 2010 and 9% in the nine months ended September 30, 2010 compared to the same periods in 2009. Operating expenses decreased by 20% and increased by 3% in the three and nine months ended September 30, 2010 compared with the same period in 2009.For the three and nine months ended September 30, 2010, product revenue decreased by 67% and 31% respectively, compared to the same periods in 2009, mainly as a result of lower booked product sales. Service and support revenue grew by 8% and 14% for the three and nine month periods in 2010 as compared to the same periods in 2009, primarily due to the increased delivery of both on-line and traditional service offerings for training and implementation, and more schools using our Progress Tracker reporting tool.
Booked sales in the K-12 sector decreased by 59% to $10.4 million during the three months ended September 30, 2010, and decreased by 33% to $28.5 million during the nine months ended September 30, 2010, compared to $25.3 million and $42.4 million during the respective three and nine month periods in 2009. As described above, state budget pressures caused many school districts to delay purchases during the third quarter of 2010. Booked sales to the K-12 sector for the three and nine months ended September 30, 2010 were 92% and 91%, respectively, of total booked sales. Booked sales to the K-12 sector for the three and nine months ended September 30, 2009 were 97% and 94%, respectively, of total booked sales.
Booked sales to non-school customers increased by 16% to $1 million for the three months ended September 30, 2010 compared to the same period in 2009. This increase reflects higher sales to private practice clinicians, international VARs, consumers and virtual schools. For the nine months ended September 30, 2010, sales to non-school customers increased 9% to $2.9 million compared to the prior year period as growth in the consumer, virtual school and OEM businesses offsets declines in sales to private providers.
The overall gross profit margin declined by 11% in the third quarter and 5% in the first nine months of 2010 compared to the corresponding periods in 2009. These decreases in gross margin were driven by declines in the proportion of higher margin product revenue.
Higher margin product revenues made up 49% and 53% of total revenues in the three and nine months ending September 30, 2010 respectively, compared to 76% and 65% in the same periods in 2009. Product margins decreased by 4% and 1% in the three and nine months ending September 30, 2010, respectively, over the same periods in 2009, mainly due to lower revenues over which fixed costs could be allocated. Service and support margins increased by 3% and 2% in the three and nine months ending September 30, 2010, respectively, compared to the same periods in 2009, reflecting higher delivery of services in 2010.
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