TSYS » Topics » Commercial Services Revenue and Cost of Revenue:

These excerpts taken from the TSYS 10-K filed Mar 3, 2009.
Commercial Services Revenue and Cost of Revenue:
 
Our hosted offerings include our E9-1-1 service for wireless and Voice over Internet Protocol (VoIP) E9-1-1 service providers, hosted Position Determining Entity (PDE) service, and hosted Location Based Service (LBS) applications. Revenue from these offerings primarily consists of monthly recurring service fees and is recognized in the month earned. E9-1-1, PDE, VoIP and hosted LBS service fees are priced based on units served during the period, such as the number of customer cell sites served, the number of connections to Public Service Answering Points (PSAPs), or the number of customer subscribers served. Subscriber service revenue is generated by client software applications for wireless subscribers such as Rand McNally® Traffic. Maintenance fees on our systems and software licenses are collected in advance and recognized ratably over the maintenance period. Unrecognized maintenance fees are included in deferred revenue. Custom software development, implementation and maintenance services may be provided under time and materials or fixed-fee contracts.
 
Our commercial services revenue increased $5.6 million or 10% in 2008 from 2007 due to growth in hosted service customer volume and new hosted service customers and increased maintenance fees due to higher cumulative system license sales. The 2% decrease in 2007 from 2006 was due to decreases in average fees received per unit under pricing arrangements with some wireless E9-1-1 customers, and the loss of a mid-tier carrier customer in the third quarter of 2006 offset by increased maintenance revenue on our installed software base.
 
The direct cost of our services revenue consists primarily of compensation and benefits, network access, data feed and circuit costs, and equipment and software maintenance. The direct cost of maintenance revenue consists primarily of compensation and benefits expense. For the year ended December 31, 2008, the direct cost of service revenue increased 10% over the same period in 2007 in direct relation to increase in revenues. For the year ended December 31, 2007, the direct cost of services revenue decreased 6% compared to 2006. During 2007, we incurred less labor and direct costs related to custom development efforts and deployment


36


 

requirements of VoIP E9-1-1 infrastructure than in 2006. While we increased the number of cell sites, subscribers and public safety answering points (PSAPs) served, our overall circuit and data access costs were relatively consistent year to year. For 2008, the cost of circuit and other data access costs accounted for approximately 13% of total direct costs of commercial service revenues. The cost of circuit and other data access costs accounted for approximately 15% and 11% of the total direct costs of our commercial service revenues for 2007 and 2006 respectively.
 
Commercial services gross profit for the year ended December 31, 2008 was 9% higher than in 2007 on higher revenue with a comparable percentage increase in labor, fringe and contractor costs. Commercial services gross profit in 2007 was 4% higher than in 2006 based on improved operating efficiencies.
 
Commercial
Services Revenue and Cost of Revenue:



 



Our hosted offerings include our E9-1-1 service for wireless and
Voice over Internet Protocol (VoIP) E9-1-1 service providers,
hosted Position Determining Entity (PDE) service, and hosted
Location Based Service (LBS) applications. Revenue from these
offerings primarily consists of monthly recurring service fees
and is recognized in the month earned. E9-1-1, PDE, VoIP and
hosted LBS service fees are priced based on units served during
the period, such as the number of customer cell sites served,
the number of connections to Public Service Answering Points
(PSAPs), or the number of customer subscribers served.
Subscriber service revenue is generated by client software
applications for wireless subscribers such as Rand
McNally®

Traffic. Maintenance fees on our systems and software licenses
are collected in advance and recognized ratably over the
maintenance period. Unrecognized maintenance fees are included
in deferred revenue. Custom software development, implementation
and maintenance services may be provided under time and
materials or fixed-fee contracts.


 



Our commercial services revenue increased $5.6 million or
10% in 2008 from 2007 due to growth in hosted service customer
volume and new hosted service customers and increased
maintenance fees due to higher cumulative system license sales.
The 2% decrease in 2007 from 2006 was due to decreases in
average fees received per unit under pricing arrangements with
some wireless E9-1-1 customers, and the loss of a mid-tier
carrier customer in the third quarter of 2006 offset by
increased maintenance revenue on our installed software base.


 



The direct cost of our services revenue consists primarily of
compensation and benefits, network access, data feed and circuit
costs, and equipment and software maintenance. The direct cost
of maintenance revenue consists primarily of compensation and
benefits expense. For the year ended December 31, 2008, the
direct cost of service revenue increased 10% over the same
period in 2007 in direct relation to increase in revenues. For
the year ended December 31, 2007, the direct cost of
services revenue decreased 6% compared to 2006. During 2007, we
incurred less labor and direct costs related to custom
development efforts and deployment





36





 






requirements of VoIP E9-1-1 infrastructure than in 2006. While
we increased the number of cell sites, subscribers and public
safety answering points (PSAPs) served, our overall circuit and
data access costs were relatively consistent year to year. For
2008, the cost of circuit and other data access costs accounted
for approximately 13% of total direct costs of commercial
service revenues. The cost of circuit and other data access
costs accounted for approximately 15% and 11% of the total
direct costs of our commercial service revenues for 2007 and
2006 respectively.


 



Commercial services gross profit for the year ended
December 31, 2008 was 9% higher than in 2007 on higher
revenue with a comparable percentage increase in labor, fringe
and contractor costs. Commercial services gross profit in 2007
was 4% higher than in 2006 based on improved operating
efficiencies.


 




These excerpts taken from the TSYS 10-K filed Mar 5, 2008.
Commercial Services Revenue and Cost of Revenue:
 
Our hosted offerings include our E9-1-1 service for wireless and Voice Over IP service providers, hosted Position Determining Entity (PDE) service, and hosted Location Based Service (LBS) applications. Revenue from these offerings primarily consists of monthly recurring service fees and is recognized in the month earned. E9-1-1, PDE, VoIP and hosted LBS service fees are priced based on units served during the period, such as the number of customer cell sites served, the number of connections to Public Service Answering Points (PSAPs), or the number of customer subscribers served. In 2006, we expedited deployment of connections to PSAPs for VoIP and E9-1-1 service, and continued to increase the number of carriers and carrier billable units served. In addition, we increased revenue from our VoIP E9-1-1 and hosted LBS recurring services primarily due to new service contracts signed in mid-2005. These increases were partially offset by decreases in the average fee received per unit under pricing arrangements with some customers and the loss of a mid-tier wireless carrier customer during the third quarter of 2006. Subscriber service revenue is generated by client software applications for wireless subscribers such as Rand McNally® Traffic. Maintenance fees on our systems and software licenses are collected in advance and recognized ratably over the maintenance period. Unrecognized maintenance fees are included in deferred revenue. Custom software development, implementation and maintenance services may be provided under time and materials or fixed-fee contracts.
 
Overall, commercial services revenue decreased 2% in 2007 from 2006, as the effect of decreases in average fees received per unit under pricing arrangements with some wireless E9-1-1 customers, and the loss of a mid-tier carrier customer in the third quarter of 2006 offset increased maintenance revenue on our installed software base. The 10% increase in 2006 over 2005 was due to increases in maintenance revenue from our installed base of commercial systems, along with an increase in revenue from E9-1-1 services to Voice over IP service providers, which more than offset a small decrease in revenue from E9-1-1 services to wireless carrier customers.


32


 

The direct cost of our services revenue consists primarily of network access, data feed and circuit costs, compensation and benefits, equipment and software maintenance. The direct cost of maintenance revenue consists primarily of compensation and benefits expense. For the year ended December 31, 2007, the direct cost of services revenue decreased 6%. During 2007, we incurred less labor and direct costs related to custom development efforts and deployment requirements of VoIP E9-1-1 infrastructure. For the year ended December 31, 2006, the direct cost of services revenue increased 21%, principally because we increased labor and direct costs related to custom development efforts responding to customer requests and deployment requirements for VoIP. While we increased the number of cell sites, subscribers and public safety answering points (PSAPs) served, our overall circuit and data access costs were relatively consistent year to year. For 2007, the cost of circuit and other data access costs accounted for approximately 15% of total direct costs of hosted, subscriber, and maintenance revenues. The cost of circuit and other data access costs accounted for approximately 11% and 13% of the total direct costs of our commercial hosted, subscriber, and maintenance revenues for 2006 and 2005 respectively. Also, $1.1 million, $0.8 million, and nil of non-cash stock compensation cost is included in the direct cost of commercial services revenue in 2007, 2006, and 2005 respectively.
 
Commercial services gross profit in 2007 was 4% higher than 2006 based on improved operating efficiencies. Commercial services gross profit in 2006 was about equal to that in 2005 ($28.3 million), as a slightly lower average margin offset the effect of 10% higher revenue.
 
Commercial
Services Revenue and Cost of Revenue:



 



Our hosted offerings include our E9-1-1 service for wireless and
Voice Over IP service providers, hosted Position Determining
Entity (PDE) service, and hosted Location Based Service (LBS)
applications. Revenue from these offerings primarily consists of
monthly recurring service fees and is recognized in the month
earned.
E9-1-1, PDE,
VoIP and hosted LBS service fees are priced based on units
served during the period, such as the number of customer cell
sites served, the number of connections to Public Service
Answering Points (PSAPs), or the number of customer subscribers
served. In 2006, we expedited deployment of connections to PSAPs
for VoIP and E9-1-1 service, and continued to increase the
number of carriers and carrier billable units served. In
addition, we increased revenue from our VoIP E9-1-1 and hosted
LBS recurring services primarily due to new service contracts
signed in mid-2005. These increases were partially offset by
decreases in the average fee received per unit under pricing
arrangements with some customers and the loss of a mid-tier
wireless carrier customer during the third quarter of 2006.
Subscriber service revenue is generated by client software
applications for wireless subscribers such as Rand
McNally®
Traffic. Maintenance fees on our systems and software licenses
are collected in advance and recognized ratably over the
maintenance period. Unrecognized maintenance fees are included
in deferred revenue. Custom software development, implementation
and maintenance services may be provided under time and
materials or fixed-fee contracts.


 



Overall, commercial services revenue decreased 2% in 2007 from
2006, as the effect of decreases in average fees received per
unit under pricing arrangements with some wireless E9-1-1
customers, and the loss of a mid-tier carrier customer in the
third quarter of 2006 offset increased maintenance revenue on
our installed software base. The 10% increase in 2006 over 2005
was due to increases in maintenance revenue from our installed
base of commercial systems, along with an increase in revenue
from E9-1-1 services to Voice over IP service providers, which
more than offset a small decrease in revenue from E9-1-1
services to wireless carrier customers.





32





 






The direct cost of our services revenue consists primarily of
network access, data feed and circuit costs, compensation and
benefits, equipment and software maintenance. The direct cost of
maintenance revenue consists primarily of compensation and
benefits expense. For the year ended December 31, 2007, the
direct cost of services revenue decreased 6%. During 2007, we
incurred less labor and direct costs related to custom
development efforts and deployment requirements of VoIP E9-1-1
infrastructure. For the year ended December 31, 2006, the
direct cost of services revenue increased 21%, principally
because we increased labor and direct costs related to custom
development efforts responding to customer requests and
deployment requirements for VoIP. While we increased the number
of cell sites, subscribers and public safety answering points
(PSAPs) served, our overall circuit and data access costs were
relatively consistent year to year. For 2007, the cost of
circuit and other data access costs accounted for approximately
15% of total direct costs of hosted, subscriber, and maintenance
revenues. The cost of circuit and other data access costs
accounted for approximately 11% and 13% of the total direct
costs of our commercial hosted, subscriber, and maintenance
revenues for 2006 and 2005 respectively. Also,
$1.1 million, $0.8 million, and nil of non-cash stock
compensation cost is included in the direct cost of commercial
services revenue in 2007, 2006, and 2005 respectively.


 



Commercial services gross profit in 2007 was 4% higher than 2006
based on improved operating efficiencies. Commercial services
gross profit in 2006 was about equal to that in 2005
($28.3 million), as a slightly lower average margin offset
the effect of 10% higher revenue.


 




This excerpt taken from the TSYS 10-K filed Mar 13, 2007.
Commercial Services Revenue and Cost of Revenue:
 
Our hosted offerings include our E9-1-1 service for wireless and Voice Over IP service providers, hosted Position Determining Entity (PDE) service, and hosted Location Based Service (LBS) applications. Revenue from these offerings primarily consists of monthly recurring service fees and is recognized in the month earned. E9-1-1, PDE, VoIP and hosted LBS service fees are priced based on units served during the period, such as the number of customer cell sites served, the number of connections to Public Service Answering Points (PSAPs), or the number of customer subscribers served. In 2006, we expedited deployment of connections to PSAPs for VoIP and E9-1-1 service, and continued to increase the number of carriers and carrier billable units served. In addition, we increased revenue from our VoIP E9-1-1 and hosted LBS recurring services primarily due to new service contracts signed in mid-2005. These increases were partially offset by decreases in the average fee received per unit under pricing arrangements with some customers and the loss of a mid-tier wireless carrier customer during the third quarter of 2006. Subscriber service revenue is generated by client software applications for wireless subscribers such as Rand McNallytm Traffic. Maintenance fees on our systems and software licenses are collected in advance and recognized ratably over the maintenance period. Unrecognized maintenance fees are included in deferred revenue. Custom software development, implementation and maintenance services may be provided under time and materials or fixed-fee contracts.
 
Overall, commercial services revenue increased 10% in 2006 over 2005, due to increases in maintenance revenue from our installed base of commercial systems, and an increase in revenue from E9-1-1 services to Voice Over IP service providers, which more than offset a small decrease in revenue from E9-1-1 services to wireless carrier customers. The 21% increase in 2005 in the commercial service revenue over 2004 was due mainly to increases in Wireless E9-1-1 volume, commencement of Voice Over IP E9-1-1 service, a full year of


31


 

subscriber revenue from the former Kivera business acquired by us in the third quarter of 2004, and an increase in maintenance revenue from cumulative growth in our installed base of systems.
 
The direct cost of our services revenue consists primarily of network access, data feed and circuit costs, compensation and benefits, equipment and software maintenance. The direct costs of maintenance revenue consists primarily of compensation and benefits expense. For the year ended December 31, 2006, the direct cost of services revenue increased 21% principally because we increased labor and direct costs related to custom development efforts responding to customer requests and deployment requirements for VoIP. While we increased the number of cell sites, subscribers and PSAPs served, our circuit and data access costs were relatively consistent year to year. For the year ended December 31, 2006, the cost of circuit and other data access costs accounted for approximately 11% of total direct costs of hosted, subscriber, and maintenance revenues. The cost of circuit and other data access costs accounted for approximately 13% and 16% of the total direct costs of our commercial hosted, subscriber, and maintenance revenues for each of the years ended December 31, 2005 and 2004 respectively. Also, in 2006, in conjunction with the implementation of SFAS 123(R), $0.8 million of our non-cash stock compensation cost is included in the direct cost of revenue.
 
Commercial services gross profit in 2006 was about equal to that in 2005 ($28.3 million), as a slightly lower average margin offset the effect of 10% higher revenue. The 22% increase in 2005 in the commercial services gross profit over that of 2004 corresponds closely to the 21% increase in revenue in 2005.
 
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