TeleCommunication Systems Inc. (TSYS, Financial) filed Quarterly Report for the period ended 2011-06-30.
Telecommunication Systems Inc. has a market cap of $300.1 million; its shares were traded at around $5.29 with a P/E ratio of 13.5 and P/S ratio of 0.8. Telecommunication Systems Inc. had an annual average earning growth of 47.9% over the past 5 years.
The direct cost of commercial services revenue consists primarily of compensation and benefits, network access, data feed and circuit costs for network operation centers and co-location facilities, and equipment and software maintenance. The direct cost of services also includes amortization of capitalized software development costs of $1.7 million for both the three-months ended June 30, 2011 and June 30, 2010. For the three-months ended June 30, 2011, the direct cost of services revenue decreased $1.0 million, or 5%, from 2010, due mainly to savings in labor and other direct costs. Amortization of capitalized software development costs were $3.5 million and $3.3 million, respectively, for the six-months ended June 30, 2011 and 2010. For the six-months ended June 30, 2011 the direct cost of services revenue decreased $0.5 million, or 1%, compared to the same period in 2010 due to savings in labor and other direct costs, such as licensed content.
The direct cost of our commercial systems revenue consists primarily of compensation and benefits, third-party hardware and software purchased for integration and resale, travel expenses, consulting fees as well as the amortization of acquired and capitalized software development. The direct costs of systems revenue for the three- and six-months ended June 30, 2011 were relatively flat compared to the same periods in 2010. The direct cost of the license component of systems revenue is normally very low, and the gross profit very high since much of the software development costs were expensed in prior periods, so that changes in the license component of the systems revenue mix significantly affects the average gross margin in a period. During the three- and six-months ended June 30, 2011, direct costs of systems revenue included $0.9 million and $1.8 million, respectively, of amortization of software development costs. Comparatively, in the three- and six-months ended June 30, 2010, direct cost of systems revenue included $0.7 million and $1.3 million, respectively, of amortization of software development costs.
Our commercial systems gross profit for the three-months ended June 30, 2011 decreased to $0.2 million, or 5% of commercial systems revenue, compared to $3.2 million, or 48% of commercial systems revenue, for the three-months ended June 30, 2010. Commercial systems gross profit for the six-months ended June 30, 2011 was $1.7 million, or 20% of commercial systems revenue compared to $8.4 million, or 55% of revenue in the comparable periods of 2010. Commercial systems gross profit decreased $3.0 million and $6.7 million for the three- and six-months ended June 30, 2011 compared to the same periods in 2010, mainly due to lower high-margin text messaging license software capacity sales.
Our gross profit from government services increased to $11.0 million and $19.7 in the three- and six-months ended June 30, 2011, respectively, compared to $6.7 million and $12.2 million in the three- and six-months ended June 30, 2010, respectively, as a result of a higher volume of services. Government services gross margin was 34% and 30% of revenue for the three-months ended June 30, 2011 and 2010, respectively. Government services gross margin was 31% compared to 29% of revenue for the six-months ended June 30, 2011 and 2010, respectively.
Our government systems gross profit was $2.5 million, or 12% of government systems revenue in the three-months ended June 30, 2011, generally flat compared to $2.4 million, or 11% of revenue in the comparable period of 2010. Our government systems gross profit was $4.4 million, or 14% of government systems revenue in the six-months ended June 30, 2011, was down from $5.3 million, or 12% of government systems revenue in the six-months ended June 30, 2010, due in part to federal government budget process issues leading to funding delays, and to the mix of sales between our SwiftLink® product line, lower margin equipment pass-throughs, and highly reliable electronic components sold by our Trident acquisition.
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Telecommunication Systems Inc. has a market cap of $300.1 million; its shares were traded at around $5.29 with a P/E ratio of 13.5 and P/S ratio of 0.8. Telecommunication Systems Inc. had an annual average earning growth of 47.9% over the past 5 years.
Highlight of Business Operations:
On January 31, 2011, the Company acquired privately-held Trident Space & Defense, LLC, a leading provider of engineering and electronics solutions for global space and defense markets, located in Torrance, California. Total consideration for the acquisition was $29.5 million including, $17.2 million paid in cash and $12.3 million or approximately three million shares of our Class A common stock. Substantially all of the Trident revenue stream is from the supply of highly reliable electronic parts, materials, radiation tolerant components, products and services for aerospace, military and industrial markets. Trident adds engineering and design depth to our government solution operations. The Company believes Trident will help expand the overall market reach of the combined entities. Most of Tridents business is from international customers to which the Company intends to sell other products and services, and the Company expects to sell Tridents solutions to the U.S. military and space markets. The newly acquired business operations are included in our Government Segment.The direct cost of commercial services revenue consists primarily of compensation and benefits, network access, data feed and circuit costs for network operation centers and co-location facilities, and equipment and software maintenance. The direct cost of services also includes amortization of capitalized software development costs of $1.7 million for both the three-months ended June 30, 2011 and June 30, 2010. For the three-months ended June 30, 2011, the direct cost of services revenue decreased $1.0 million, or 5%, from 2010, due mainly to savings in labor and other direct costs. Amortization of capitalized software development costs were $3.5 million and $3.3 million, respectively, for the six-months ended June 30, 2011 and 2010. For the six-months ended June 30, 2011 the direct cost of services revenue decreased $0.5 million, or 1%, compared to the same period in 2010 due to savings in labor and other direct costs, such as licensed content.
The direct cost of our commercial systems revenue consists primarily of compensation and benefits, third-party hardware and software purchased for integration and resale, travel expenses, consulting fees as well as the amortization of acquired and capitalized software development. The direct costs of systems revenue for the three- and six-months ended June 30, 2011 were relatively flat compared to the same periods in 2010. The direct cost of the license component of systems revenue is normally very low, and the gross profit very high since much of the software development costs were expensed in prior periods, so that changes in the license component of the systems revenue mix significantly affects the average gross margin in a period. During the three- and six-months ended June 30, 2011, direct costs of systems revenue included $0.9 million and $1.8 million, respectively, of amortization of software development costs. Comparatively, in the three- and six-months ended June 30, 2010, direct cost of systems revenue included $0.7 million and $1.3 million, respectively, of amortization of software development costs.
Our commercial systems gross profit for the three-months ended June 30, 2011 decreased to $0.2 million, or 5% of commercial systems revenue, compared to $3.2 million, or 48% of commercial systems revenue, for the three-months ended June 30, 2010. Commercial systems gross profit for the six-months ended June 30, 2011 was $1.7 million, or 20% of commercial systems revenue compared to $8.4 million, or 55% of revenue in the comparable periods of 2010. Commercial systems gross profit decreased $3.0 million and $6.7 million for the three- and six-months ended June 30, 2011 compared to the same periods in 2010, mainly due to lower high-margin text messaging license software capacity sales.
Our gross profit from government services increased to $11.0 million and $19.7 in the three- and six-months ended June 30, 2011, respectively, compared to $6.7 million and $12.2 million in the three- and six-months ended June 30, 2010, respectively, as a result of a higher volume of services. Government services gross margin was 34% and 30% of revenue for the three-months ended June 30, 2011 and 2010, respectively. Government services gross margin was 31% compared to 29% of revenue for the six-months ended June 30, 2011 and 2010, respectively.
Our government systems gross profit was $2.5 million, or 12% of government systems revenue in the three-months ended June 30, 2011, generally flat compared to $2.4 million, or 11% of revenue in the comparable period of 2010. Our government systems gross profit was $4.4 million, or 14% of government systems revenue in the six-months ended June 30, 2011, was down from $5.3 million, or 12% of government systems revenue in the six-months ended June 30, 2010, due in part to federal government budget process issues leading to funding delays, and to the mix of sales between our SwiftLink® product line, lower margin equipment pass-throughs, and highly reliable electronic components sold by our Trident acquisition.
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