PTEK: Revenues of $114 Million Fall Short, IP-Based Initiatives Grow
Deutsche Banc Alex. Brown - US Equities
Cato D. Carpenter,Richard A. Church
July 30, 1999
Carpenter, Cato D. 410-895-3269 07/30/1999
Church, Richard A. 410-895-3327
Deutsche Banc Alex. Brown
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PREMIERE TECHNOLOGIES INC. [PTEK] "BUY"
Revenues of $114 Million Fall Short, IP-Based Initiatives Grow
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Date: 07/29/1999 EPS 1998A 1999E 2000E
Price: 9.5 1Q 0.25 (0.54) NE
52-Wk Range: 21 - 2 2Q 0.11 (0.56)A NE
Ann Dividend: 0.0 3Q 0.05 (0.39) NE
Ann Div Yld: 0.00% 4Q (0.35) (0.52) NE
Mkt Cap (mm): 437 FY(Dec.) 0.07 (1.99) (1.90)
3-Yr Growth: 23% FY P/EPS NM NM NM
CY EPS 0.07 (1.99) (1.90)
Est. Changed Yes CY P/EPS NM NM NM
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Industry: SOFTWARE & SERVICES
Shares Outstanding(Mil.): 45.998
Return On Equity (1998) : -15.0%
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Estimates are preliminary, pending further conversations with management.
HIGHLIGHTS:
* In 2Q99, revenues were $114.4 million versus $121.4 million, about
$5.6 million below our expectations. The Company reported a loss per
share of $0.56 versus $0.11, $0.01 better than our estimate.
* Based on 2Q99 results, we are reducing our 1999 EPS estimate to a loss
per share of $1.99 from $1.81. This reduction is preliminary, pending
further discussions with the Company.
* EBITDA was $11 million, down $7 million sequentially due primarily to
increased sales and marketing support of the Orchestrate E-mail by
Phone product introduction.
* Corporate Enterprise Solutions (CES) increased sequentially and
accounted for $84 million (73%) of total revenues in 2Q99. Emerging
Enterprise Solutions (EES) declined sequentially to $30 million, due
to softness in Enhanced Calling Services, which declined by 15%
sequentially.
* The Company received commitments for 30,000 Orchestrate E-mail by
Phone subscriptions. Combined with WebMD's commitment for 50,000
subscriptions, the Company has 80,000 commitments for subscriptions to
date.
* The Company is in the process of evaluating each of its businesses in
terms of their fit with PTEK's ongoing core business. To this extent,
the Company has retained a firm specializing in mergers and
acquisitions to determine its options.
* Total IP-based revenues were about $31 million in the quarter,
including both data and voice applications.
* Based on 2Q99 results, we are maintaining our BUY rating. We believe
the Company is in a transition and needs to invest in its businesses
accordingly to maximize its future potential.
DETAILS:
QUARTER RESULTS
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In 2Q99, revenues were $114.4 million versus $121.4 million, about $5.6
million below our expectations. The Company reported a loss per share of
$0.56 versus $0.11, $0.01 better than our estimate.
Based on 2Q99 results, we are reducing our 1999 EPS estimate to a loss per
share of $1.99 from $1.81. This reduction is preliminary, pending further
discussions with the Company.
EBITDA was $11 million, down $7 million sequentially due primarily to
increased sales and marketing support of the Orchestrate E-mail by Phone
product introduction.
Gross margins increased to 71.9% in the quarter from 68.9% sequentially and
69.8% in the prior year quarter. Gross margins across each product line
have improved in line with the Company's expectations.
BUSINESS UNITS
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Corporate Enterprise Solutions (CES) increased sequentially and accounted
for $84 million (73%) of total revenues in 2Q99.
Emerging Enterprise Solutions (EES) declined sequentially to $30 million.
Enhanced Calling Services declined by 15% sequentially and represented
about 11% of total company revenues. The Company now expects this product
line to continue to decline at about 10-15% going forward.
Revenues from Document Distribution increased by 4.1% sequentially and 4.2%
year-over-year, with growth in all geographies. The Voice and Data
Messaging product segment reversed its decline in subscribers and revenue.
Network Voice Messaging grew by 3% sequentially and quarter-end mailbox
count increased by 4% sequentially. Conferencing sales rose almost 4%
sequentially and the Company is rolling out its services in Europe and Asia
/ Pacific to further grow this business.
IP-BASED REVENUES
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Total IP-based revenues were about $31 million in the quarter, including
both data and voice applications.
IP data traffic, including gateway applications, was about $9.9 million of
revenue in Q2. In June alone, the Company had $3.8 million in revenue in
this area. The Company estimates that its Internet-based data services
(i.e., Document Traffic) exited the quarter at a $45 million annualized
runrate of recurring revenues.
In addition, IP voice traffic was about $21 million in the latest quarter.
BUSINESS UNIT RATIONALIZATION
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The Company is in the process of evaluating each of its businesses in terms
of their fit with PTEK's ongoing core business. To this extent, the
Company has retained a firm specializing in mergers and acquisitions to
determine its options.
The Company is in the process of clarifying and communicating its strategy
as an IP-focused Company, rather than a calling card or fax company.
ORCHESTRATE
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The Company received commitments for 30,000 Orchestrate E-mail by Phone
subscriptions. Combined with WebMD's commitment for 50,000 subscriptions,
the Company has 80,000 commitments for subscriptions to date.
Additional Information Available Upon Request
Deutsche Bank Securities Inc. maintains a net primary market in the common
stock of Premiere Technologies Inc.
Within the past three years, Deutsche Bank Securities Inc. or its wholly
owned subsidiary, BT Alex. Brown Incorporated, has managed or comanaged a
public offering of Premiere Technologies Inc.
The following stock(s) is (are) optionable: Premiere Technologies Inc.
There is a (are) convertible issue(s) outstanding on Premiere Technologies
Inc. |
