Ditech Networks Declares Financial Results for Three Month Period Ending July 31

Todd Simpson (News - Alert), Ditech Networks CEO said the company has experienced good growth in their PhoneTag product offering this quarter even though some anticipated VQA orders did not arrive within the quarter.

Also, Simpson noted that voicemail to text continues to accelerate in the marketplace, and as previously stated, the company expects calendar year 2011 to be a growth year for voicemail to text services. PhoneTag represents recurring, and growing, revenues and is the company’s main focus. While their VQA business remained difficult to time across quarters, and is typically comprised of a small number of large deals, Simpson noted that it had an impact on the company in the third quarter of the last fiscal year, and again this last quarter.

The first quarter of fiscal 2011

Revenue for the first quarter of fiscal 2011 was just over $4.0 million. PhoneTag contributed $0.9 million to this total, which reflects a 13 percent quarter over quarter growth rate in voice to text with the majority of the growth being with Ditech Networks wholesale customers. The drop in VQA revenue was largely due to slower than expected sales processes in international markets. VQA revenue is expected to be higher in the second quarter based on shipments, bookings and recurring service revenues. Ditech Networks’ VQA sales pipeline provides additional upside; however the timing of VQA orders remains difficult to predict, and therefore, achieving the revenue projections for the first half of fiscal 2011 given on May 27, 2010 is unlikely.