Quest - Software Reports 110% Revenue Growth for Third Quarter Ended Sept. 30, 1999
License Revenue Growth Of 126% Driven By Strong Demand For e-Commerce Infrastructure
IRVINE, Calif.--(BUSINESS WIRE)--Oct. 26, 1999--Quest Software, Inc., (Nasdaq: QSFT) a leading provider of application and information availability software solutions, today announced that revenues for the third quarter of 1999 and nine months ended September 30, 1999, more than doubled relative to the same periods last year. Financial results reported were for Quest Software's first quarter as a publicly traded company.
For the quarter ended September 30, 1999, revenues increased 110% to $18.3 million compared with revenues of $8.7 million for the same period a year ago. Net income from operations, excluding compensation and related charges, for the quarter was $708,000, or $0.02 per diluted share, versus net income of $627,000, or $0.01 per diluted share for the third quarter of 1998. License revenues in the third quarter increased 126% compared to the third quarter of 1998, while service revenues increased 70% compared to the same period a year ago.
"We're very happy with the strong new license revenue growth and our overall performance for the quarter. We're beginning to see the return from substantial investments over the last twelve months across all parts of the company, especially in our sales, marketing and research and development organizations," said Vincent C. Smith, chairman and chief executive officer of Quest.
"During the quarter, we capitalized on the growing demand for high availability solutions for the e-commerce market, addressed by our SharePlex(R) product and entire production support suite. `Dot-com' companies represented a significant percentage of new customers purchasing over $100,000 of our products in the third quarter. We also achieved deeper penetration of existing accounts specializing in e-business, such as EarthLink and Andersen Consulting," continued Smith.
Including compensation and related charges, and a one-time preferred stock dividend payment made in conjunction with the redemption of the company's Series B Preferred Stock in August 1999 with a portion of the proceeds from Quest's initial public offering, net income applicable to common shareholders for the third quarter was $272,000, or $0.01 per share.
"We also continue to see strong after-market demand for our products which enhance the performance and accessibility of ERP applications. As an example, we received our first ever $1 million order for Vista Plus, which was from a large food manufacturing company supporting their SAP, PeopleSoft and Oracle Financials applications with enterprise report management," added Smith.
For the nine months ended September 30, 1999, revenues increased 105% to $46.6 million compared with revenues of $22.8 million for the same period a year ago. Net income from operations, excluding compensation related charges, for the first nine months of 1999 was $2.8 million or $0.07 per diluted share compared with net income of $1.5 million, or $0.03 per diluted share, for the nine months ended September 30, 1998.
Including compensation and related charges and a one-time preferred stock dividend payment made in conjunction with the redemption of the company's Series B preferred stock with a portion of the proceeds from Quest's initial public offering, net income applicable to common shareholders for the first nine months of 1999 was $1.2 million or $0.03 per diluted share.
Quest completed its initial public offering on August 13, 1999, selling 4.4 million shares of common stock at $14 per share. In addition, the company's underwriters exercised an overallotment option of 660,000 shares at $14 per share.
"After IPO expenses, and the redemption of our Series B preferred stock for $10.6 million and the retirement of $10.0 million in term debt and accrued interest, these transactions generated net proceeds of $44.3 million for the company," said John J. Laskey, vice president and chief financial officer. "These resources will enable us to fund product development and acquisition activities, as well as programs to expand our sales, marketing and distribution efforts," Laskey added.
Quest Software provides application and information availability software solutions that enhance the performance and reliability of an organization's e-business, enterprise and custom applications and enable the delivery of information across the entire enterprise. The company has more than 4000 customers, including many of the Fortune 500 companies, as well as governmental and other organizations. The company serves markets such as technology, healthcare/pharmaceuticals, telecommunications, financial services and manufacturing. Quest Software is headquartered in Irvine, Calif. and has locations in Atlanta, Boston, Chicago, Dallas, New York, San Francisco, Washington D.C., Germany, the United Kingdom, Israel and Australia.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This release may contain forward-looking statements based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us. Words such as "anticipates," "expects," "believes," "may," "will" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.
Important factors that may cause such a difference for Quest Software include, but are not limited to, variations in the size and timing of customer orders; dependence on Oracle's technologies; vulnerability to direct competition with Oracle; strains placed on the Company as a result of past and future growth; significant increases in operating expenses in the foreseeable future; disruptions caused by acquisitions of companies and/or technologies; the exposure to risk from our international operations; unanticipated year 2000 issues; the difficulty in predicting the buying patterns of customers because of year 2000 issues; and the need to attract and retain qualified personnel.
Our recent filing on Form S-1 and forthcoming Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and other Securities and Exchange Commission filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Quest Software, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
(unaudited) (unaudited)
Revenues:
Licenses $13,995 $6,190 $35,360 $15,770
Services 4,313 2,544 11,237 6,999
Total revenues 18,308 8,734 46,597 22,769
Cost of revenues:
Licenses 734 1,081 2,138 2,585
Services 1,154 609 2,892 1,653
Total cost of
revenues 1,888 1,690 5,030 4,238
Gross profit 16,420 7,044 41,567 18,531
Operating expenses:
Sales and
marketing 8,321 3,169 20,479 7,540
Research and
development 4,502 1,928 10,536 5,557
General and
administrative 2,787 980 6,776 3,050
Compensation and
other costs 186 961
Total operating
expenses 15,796 6,077 38,752 16,147
Income from
operations 624 967 2,815 2,384
Other income 278 106 360 225
Income before income
tax provision 902 1,073 3,175 2,609
Income tax provision 380 446 1,339 1,083
Net Income $522 $627 $1,836 $1,526
Preferred stock
dividends 250 590
Net income available to
common shareholders $272 $627 $1,246 $1,526
Net income per share:
Basic $0.01 $0.01 $0.03 $0.03
Diluted $0.01 $0.01 $0.03 $0.03
Weighted average shares
outstanding:
Basic 34,449 44,538 40,108 44,172
Diluted 40,421 44,538 42,537 44,172
Quest Software, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
1999 1998
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $43,358 $8,981
Short-term marketable securities 9,250
Accounts receivable, net 13,359 7,443
Prepaid expenses and other
current assets 1,122 720
Prepaid income taxes 329
Deferred income taxes 198 198
Total current assets 67,616 17,342
Property and equipment, net 3,864 1,388
Long-term marketable securities 2,903
Purchased technology and software
licenses, net 591 527
Deferred income taxes 267 267
Other assets 393 121
Total assets $75,634 $19,645
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,168 $1,468
Accrued compensation 3,731 1,937
Other accrued expenses 4,598 2,243
Deferred support revenue 10,547 7,298
Deferred license revenue 4,046 1,625
Total current liabilities 24,090 14,571
Shareholders' equity 51,544 5,074
Total liabilities and
shareholders' equity $75,634 $19,645
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Contact:
Quest Software Inc., Irvine
John Laskey (financial) or Nicole Makos (editorial)
949/754-8100
jlaskey@quest.com
nmakos@quest.com |
