Vimicro Intl Shs Sponsored American Deposit Receipt Repr 4 Shs (NASDAQ:VIMC) Q4 2015 Earnings Conference Call - Final Transcript

Mar 18, 2015 • 06:00 am ET

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Vimicro Intl Shs Sponsored American Deposit Receipt Repr 4 Shs (NASDAQ:VIMC) Q4 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good morning to everyone in the U.S. and Good Evening to everyone in China. Welcome to the Vimicro International Corporation Fourth Quarter and Full Year 2014 Conference Call.

With us today are Vimicro's Chairman and CEO, Dr. John Deng, Co-COO, Kevin Jin and CFO, Peter Li. The format of the call will be as follows. After I read the Safe Harbor statement, Dr. Deng will offer some introductory remarks and financial highlights, and then Peter will offer the financial discussion and discuss the outlook. Later on Dr. Deng, Kevin Jin and Peter Li will be available for the question-and-answer session afterwards. (Forward-Looking Cautionary Statements) Now it's my pleasure to turn the conference over to Vimicro's Chairman and CEO, Mr. John Deng.

Executive
John Deng

All right. Thank you. Welcome everyone and thank you for joining us today. We are very pleased and excited to report a strong financial and operational result for the fourth quarter and full year 2014, in which year, Vimicro achieved turning profitable with a meaningful net income and EPS reported after consecutive years of loss.

First, our revenue for 2014 reached $100.4 million, up by 55.7%. And our growth of our video surveillance business was up by 94.3% in 2014. Our annual gross margin was at 38.9%, compared with 34.7% in the previous year.

The non-GAAP net income was at $6.4 million or $0.22 EPS for the year. We are even more pleased with our progress and continuous expansion in China's video surveillance market by not only contract wins but also much increased recognition of SVAC national standard and its advantages in the industry.

The year of 2014 was marked a milestone year of our solid foothold established in China's video surveillance industry due to our proven SVAC-compliant technology and solution and expedited adoption of SVAC national standard across the country. Vimicro is the only surveillance solution provider supported by its own proprietary chip and algorithm technology in China. It is our proprietary chip and also the algorithm technology and capability that differentiate us from the rest of the players and enable our leading advantages in SVAC-compliant solution and technology provision together with being one of the only two leading developers of SVAC national standard.

We continuously invest in new chip development to ensure our products and solution to meet our client's expectation at a reasonable cost. We released the two new chips in 2014. Chip-718 is capable of supporting all technical requirements of SVAC national standard with powerful processing capabilities and functionalities of imaging processing, coding and decoding, encryption, smart analysis and Internet protocol. Our Chip-736 is a DVR or NVR core-chip for the back-end of video surveillance system supporting full DVR technical requirements with better performance and cost advantages.

These two new chips will bring the competitiveness of our video surveillance products and solution to a higher level. We successfully brought Vimicro story back home to Chinese investors in 2014, resulting in much improved valuation multiples and recently acquired coverage of two local Chinese brokerage firms, culminating in