VeriSign Reports Record Results for Fourth Quarter and Fiscal 1998
Revenues Grow 190% as Website and Enterprise Services Show Dramatic Growth
January 25, 1999 04:30 PM
MOUNTAIN VIEW, Calif., Jan. 25 /PRNewswire/ -- VeriSign, Inc. VRSN today announced revenue of $13.2 million for the fourth quarter ended December 31, 1998, a 164% increase over revenue of $5.0 million reported in the quarter ended December 31, 1997. Fourth quarter revenue increased 26% over the $10.5 million of revenue reported in the previous quarter ended September 30, 1998. For the 1998 fiscal year, VeriSign posted revenue of $38.9 million, a 190% increase over revenue of $13.4 million for the 1997 fiscal year. In addition, deferred revenue, which consists predominantly of unamortized subscriber fees, increased to $13.1 million as of December 31, 1998, a 147% increase over the prior fiscal year and a 25% increase from the quarter ended September 30, 1998.
VeriSign reported a net loss for the fourth quarter ended December 31, 1998 of $2.5 million, or $.11 per share compared to a net loss, excluding special charges, in the quarter ended December 31, 1997 of $5.5 million, or $0.72 per share. Net loss, excluding special charges, for the prior quarter ended September 30, 1998 was $4.2 million or $.18 per share. For fiscal year 1998, net loss, excluding special charges, was $16.2 million or $0.78 per share, compared to a net loss, excluding special charges, of $15.8 million or $2.22 per share, in the 1997 fiscal year.
VeriSign also announced that new customer acquisitions reached record levels in each of its lines of business in the fourth quarter. In its website business, VeriSign reached a milestone with more than 100,000 digital certificates having now been sold to on-line merchants, financial institutions and other organizations with over 19,500 new units in the fourth quarter, a 106% increase in unit volumes from the year ago period. Over 400 of the Fortune 500 companies and the top 25 electronic commerce sites on the Internet use VeriSign website certificates to secure their on-line transactions and communications. Notable website customers include Amazon.com, Charles Schwab, Cisco, Dell Computer, E-Trade, Fidelity, Microsoft, and Netscape.
In addition, VeriSign continued its strong penetration into the enterprise market with more than 300 businesses, government agencies and educational institutions now signed on to use its VeriSign OnSite(SM) service since its introduction in November of 1997, including over 100 new accounts in the fourth quarter. Leading organizations in financial services, manufacturing, transportation, healthcare and high technology as well as many government agencies now use VeriSign OnSite to secure their extranets, virtual private networks and electronic commerce applications.
"We are very pleased with our fourth quarter and fiscal year results and believe they demonstrate that VeriSign is now the fastest growing provider of digital certificate services for websites, enterprises and electronic commerce service providers," said Stratton Sclavos, president and CEO of VeriSign, "We further believe that our strong execution across all of our lines of business and our rapidly growing global customer base have us well positioned to deliver on our corporate mission to become the Internet trust company."
VeriSign made several new customer, partner and service announcements last week in conjunction with the RSA Data Security conference in San Jose, California. In addition to new enterprise customers such as Barclays Bank and Southwest Securities, VeriSign added over 400 ISPs, including HiWay Technologies, PSInet, and Trans Union LLC, to its Affiliate program. The company also expanded its global presence with the addition of several large international service providers, including Roccade Megaplex of The Netherlands, and Comparex Holdings of Germany, to the VeriSign Trust Network (VTN). Current members of the VTN include British Telecommunications in the U.K., AT&T in the U.S., Acer's HiTrust in Taiwan, CertPlus in France, SACA in South Africa and VeriSign Japan K.K. New services announced included the general availability of the VeriSign OnSite Key Manager and VeriSign's new Gateway Services which enable digital certificate cross-certification for enterprises, industry groups and other communities of interest. The press releases for all of the announcements can be found on the VeriSign website at www.verisign.com.
VeriSign also announced that RSA Data Security, a wholly-owned subsidiary of Security Dynamics Technologies, Inc., has become the exclusive licensee of a product based on VeriSign's OnSite technology platform. RSA will sell the new digital certificate product as part of its new Keon family of security products to OEMs and enterprises looking to deploy integrated security solutions. The Keon Certificate Server will also have the ability to connect to the VeriSign OnSite service for those customers wishing to leverage VeriSign's proven infrastructure in order to issue and manage their digital certificates for extranet, virtual private network and electronic commerce applications.
VeriSign, Inc.
VeriSign, Inc. is the leading provider of Internet-based trust services and digital certificate solutions needed by websites, enterprises, electronic commerce service providers and individuals to conduct trusted and secure electronic commerce and communications over IP networks. VeriSign's Digital Certificate services for websites and consumers are available through the Company's website. The Company's Digital Certificate services for enterprises and electronic commerce service providers are available through regional account representatives, resellers, and global affiliates.
This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the Company's limited operating history, which makes the prediction of future operating results difficult; continued growth in the use of Internet and other IP networks for communications and commerce; market acceptance of digital certificates and the Company's products and services in particular; competition; interruptions or security breaches in the Company's systems; the ability of the Company's current, as well as any future, international affiliates to increase brand awareness and revenues; and the Company's ability to manage its growth and risks related to the acquisition of SecureIT detailed in the Company's Form 8-K filed with the SEC on July 21, 1998. More information about potential factors which could affect the Company's financial results is included in the registration statement on Form S-1 originally filed with the SEC on January 5, 1999, and the Company's other reports filed with the SEC. VeriSign assumes no obligation to update the forward-looking information contained in this press release.
VERISIGN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
1998 1997(a) 1998(a) 1997(a)
Revenues $13,211 $4,996 $38,930 $13,356
Costs and expenses:
Cost of revenues 5,986 3,517 19,454 9,689
Sales and marketing 6,494 4,094 22,943 11,826
Research and development 2,194 1,660 8,435 5,303
General and administrative 1,846 1,892 7,688 5,039
Special charges -- 800 3,555 2,800
Total costs and expenses 16,520 11,963 62,075 34,657
Operating loss (3,309) (6,967) (23,145) (21,301)
Other income 443 302 2,120 1,174
Loss before minority
interest (2,866) (6,665) (21,025) (20,127)
Minority interest in
net loss of subsidiary 332 344 1,282 1,538
Net loss $(2,534) $(6,321) $(19,743) $(18,589)
Basic and diluted net
loss per share $(.11) $(.82) $(.95) $ (2.61)
Shares used in per
share computations 22,393 7,690 20,873 7,121
Pro Forma Results Excluding Special Charges
Pro forma operating
loss, excluding
special charges $ (3,309) $(6,167) $(19,590) $(18,501)
Pro forma net loss,
excluding special charges $(2,534) $(5,521) $(16,188) $(15,789)
Pro forma basic and
diluted loss per share,
excluding special charges $(.11) $(.72) $(.78) $(2.22)
Shares used in per
share computations 22,393 7,690 20,873 7,121
Note: Pro forma results for the quarter and fiscal year ended December 31, 1998, and December 31, 1997 are presented for informational purposes only. These results present the operating results for the Company excluding the special charges related to the acquisition of SecureIT in July, 1998 and other special charges during fiscal 1997. Pro forma results are not presented in accordance with generally accepted accounting principles.
VERISIGN, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
December 31, December 31,
1998 1997(a)
Assets
Current assets:
Cash and cash equivalents $22,786 $4,942
Short-term investments 18,959 7,951
Receivables 9,769 3,390
Prepaid expenses and other current assets 2,174 994
Total current assets 53,688 17,277
Property and equipment, net 9,234 8,756
Other assets 1,373 871
$64,295 $26,904
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $5,472 $3,504
Accrued liabilities 4,035 2,346
Deferred revenue 13,096 5,267
Total current liabilities 22,603 11,117
Minority interest in subsidiary 964 2,246
Commitments
Stockholders' equity:
Preferred stock, $.001 par value;
5,000,000 shares authorized
in 1998; none issued -- --
Convertible preferred stock, $.001
par value; 10,282,883 shares authorized
in 1997; 10,031,006 shares issued
and outstanding in 1997 -- 10
Common stock, $.001 par value; 21,592,117
shares authorized in 1997; 50,000,000
shares authorized in 1998; 23,086,692
and 8,786,426 shares issued
and outstanding, respectively 23 9
Additional paid-in capital 92,797 45,417
Notes receivable from stockholders (409) (644)
Deferred compensation (276) (380)
Accumulated deficit (51,407) (30,871)
Total stockholders' equity 40,728 13,541
$64,295 $26,904
(a) Reported financial results reflect the acquisition of SecureIT, Inc., which was accounted for as a pooling-of-interest transaction, and all prior period amounts have been restated.
NOTE: VeriSign is a registered trademark exclusively licensed to VeriSign, Inc. OnSite is a service mark of VeriSign, Inc. All other trademarks are properties of their respective owners.
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