DigiNotar bankruptcy pulls down VASCO’s 3Q net income

Oakbrook Terrace-based VASCO Data Security International reported net income for the third quarter of 2011 fell, primarily due to the bankruptcy of its subsidiary, digiNotar B.V. in Belgium.

Net income for the quarter was $2.2 million, a loss of $3.7 million over the same period last year. For the year, income was $7.4 million, down $5.6 million from the same time last year, the company said in a statement., respectively, related to DigiNotar, which Vasco acquired in January, ceased operations after a Dutch court declared it bankrupt following a hacker attack on the operation last summer.

Revenue for the third quarter of increased 57 percent to $41.4 million from $26.3 million in the third quarter of 2010, and for the first nine months of 2011, increased 59 percent to $119.6 million from $75.0 million for the first nine months of 2010, the company said.

“Revenues for the third quarter of 2011 were the second highest in our company’s history and were second only to the previous quarter of 2011,” said T. Kendall Hunt, chairman & CEO. “Revenues from both the banking and enterprise and application security markets increased substantially over the same periods in 2010.

“While we were disappointed with the closure of the DigiNotar business, we believe that VASCO’s customers understand that the certificate authority business of DigiNotar was separate and distinct from our core authentication business.  We continue to experience strong order intake for our authentication products and expect to show strong growth in the fourth quarter of 2011 over 2010,” Hunt added.

The company revised its projections upward for the remainder of 2011, expecting revenue growth from continuing operations to be in the range of 45 percent to 55 percent for the full-year 2011 over last year. Operating expenses are expected to increase to 13 percent to 18 percent of revenues as well, the company anticipates.

“The results of the third quarter indicate that we are making progress in a number of important areas,” said Jan Valcke, VASCO’s president and COO. “Revenue from the banking market grew in most all of our geographic markets, including the European market where the concerns related to sovereign debt have been highly publicized.  In addition, we saw strong orders from and shipments to customers in the enterprise and application security market.”