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NEON
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Wednesday October 20, 2:11 pm Eastern Time
Company Press Release
SOURCE: New Era of Networks
NEON Reports Record Revenues
Revenues Reach Record High of $32 Million; E-Business Integration Fuels Growth
ENGLEWOOD, Colo., Oct. 20 /PRNewswire/ -- New Era of Networks(TM), Inc. (Nasdaq: NEON - news) today announced financial results for the third quarter ending September 30, 1999.
NEON achieved third-quarter revenues of $32 million, an 82 percent increase over the same quarter last year and an increase of 22 percent over the second quarter of 1999. Net of charges noted below, the company reported a net loss per share of 17 cents in the third quarter of 1999, slightly better than expectations. This compares to a net loss per share of 19 cents in the second quarter. The company ended the third quarter with $90 million in cash and liquid investments, and no long-term debt.
Previously-announced charges which are excluded from the net income and earnings per share figures on this page include approximately $7 million for restructuring, $25 million relating primarily to additional consideration provided to the former shareholders of Convoy Corporation and Microscript, and acquisition-related amortization of $7 million.
Q399 Q398 Growth
Revenue ($M) 31.9 17.5 +82%
Net Income (Loss)(1)($M) (5.7) 1.7 NM
Per Share(1) ($0.17) $0.06 NM
(1) Adjusted for 2:1 stock split in December 1998. Excluding acquisition-related and restructuring charges, and assuming a normalized tax rate of 35%. See attached tables for complete financial details.
The company's results for the period ended September 30 include no third-quarter IBM royalty revenue. As previously announced, this revenue is now recognized on a one-quarter lag.
``We have focused our sales, marketing and R&D resources on the major growth areas of the company -- e-Business and Enterprise Application Integration (EAI) -- at the same time as we have achieved company-wide reductions in costs,' said NEON CEO George F. (Rick) Adam. ``In the third quarter, we also made major progress in integrating our prior acquisitions. We are particularly pleased that we accomplished that integration while generating year-over-year revenue growth in excess of 80 percent.'
Third-Quarter Accomplishments
``Our primary objectives during the quarter were to continue our revenue growth, formalize our e-Business positioning, rationalize our business processes across the recently completed acquisitions, and significantly improve operational productivity,' said Patrick J. Fortune, chief operating officer of NEON. ``We have reduced staffing by about 12 percent since June 30 and cut operating expenses, on a run-rate basis, by approximately 15 percent. We expect these efforts to result in continuing improvements to the top and bottom lines going forward. Both our revenue and development pipelines look promising for the balance of 1999 and into 2000.'
During the quarter, NEON and its channel partners signed contracts for new and add-on business with more than 90 customers including CapitalOne, Children's Hospital Chicago, Citizen's Bank, Countrywide, CS First Boston, Data General S.A., Deluxe Corporation, DePaul University, Ernst & Young, Jato Communications Corporation, Metropolitan Life Insurance Company, Pepsi Cola General Bottlers Inc., Primark Corporation, Samsung, and Woolworths.
E-business represents a major strategic opportunity for NEON. With the emerging growth market in e-Business, a corresponding growth market in Internet infrastructure also is emerging. The demands of this market include the need to connect backoffice transaction systems to Web-based front-end systems, and are directly in line with NEON's expertise in connecting older applications to new applications. The e-Business market provides significant growth opportunity to NEON in addition to the solid growth that continues in EAI.
NEON saw strong demand from the e-Business market during the third quarter, with approximately 30 percent of revenue, nearly $10 million, attributable to e-Business. E-Business initiatives in the quarter included six major customer installations. VF Corporation, manufacturer of many well-known clothing brands including Wrangler, Lee, Vanity Fair and Jantzen, completed the initial phase of a comprehensive application integration initiative that includes the company's e-Business activities. In this first phase, VF Corporation is migrating from over a dozen disparate operating environments to a common set of systems and installing Internet-ready application architecture based on NEON's E-Biz Integrator components.
Dresdner Kleinwort Benson (DrKB) uses NEON Rapport, NEON's Web-based relationship management system, as the backbone of its equities-based global client database and contact management application, ClientScape. ClientScape now operates on more than 500 desktop terminals in 16 DrKB offices throughout the United States, Europe and Asia.
In other NEON e-Business activity in the quarter, a new interactive service for digital TV in Britain, called Open, was recently launched. Open uses NEON Internet infrastructure products to allow customers to use a television screen and remote control to pay bills, buy goods from a range of stores, handle personal banking, play video games, send e-mail, or even order pizza delivery. In addition, NEON completed the first installation of My SAP, SAP's new Web-enabling application for retail and e-Business, for one of Europe's largest direct-mail businesses.
In the U.S., NEON's infrastructure is enabling e-Business for Deluxe Corporation, integrating multiple business-to-business Web-based financial services applications including fraud detection, automatic check reorders and demand deposit accounts. IBM Corporation signed a deal with NEON to replace its existing software with NEON products to Web-enable its worldwide order-entry system.
NEON announced a key partnership agreement with Hewlett-Packard in September. The combined solution offered by HP Changengine and NEON will help enterprises in all industry sectors looking to implement e-services by addressing the requirements of cross-industry process management systems. Other new partners signed in the third quarter include Meridian, Remy, Data Dimensions, Intrasolv, HiNext, and Digital Medical Systems. NEON has a total of more than 50 channel partners.
In the quarter, NEON introduced several new products and added functionality to address the growing market for e-Business and to provide more complete solutions for customers, including:
-- e-Biz Integrator - Web-enables legacy and packaged applications by
providing tight integration with leading Web application servers
-- Convoy/DM Version 3.5 - New version offers substantial product
enhancements for greater flexibility, heightened performance, and
easier development and maintenance for interfacing key business
applications
-- NEONtrack 3.1 - An enterprise software tool that allows users to
monitor and control transactions and messages within queues
-- NEONadapters for SAP R/3, i2, and Siebel, and Terminals and Protocols
adapters for accessing data on screens and in data streams
Other highlights of the third quarter include:
-- In August, authorization from the NEON Board of Directors for the
company's repurchase of up to 10 percent of NEON's outstanding shares
of common stock over a 12-month period
-- Granting of NEON's third patent, for its messaging technology
-- Award to NEON Chief Technology Officer Harold Piskiel, co-founder of
the company, of the Albert Einstein Technology Medal, which is
presented to outstanding individuals who have made significant
accomplishments in their field
-- Appointment of Douglas Jeffrey as president of the Global Financial
Services business unit
-- Formation of an Enterprise Applications and e-Business business unit |
