Wit Capital Group, Inc. Announces Record Revenues and First Profitable Quarter
4/17/00 4:05:16 PM
NEW YORK, Apr 17, 2000 (BUSINESS WIRE) --
Earnings Per Share of $0.08
Board of Directors Authorizes Buyback of Up To 2 Million Shares
Wit Capital Group, Inc. (Nasdaq: WITC), parent of online
investment banking group Wit SoundView(SM), today reported record
revenues of $106.6 million for the quarter ended March 31, 2000.
Net income for the quarter was $7.5 million, or $0.08 per diluted
share. Excluding the impact of amortization of intangible assets,
goodwill and non-cash tax charges, earnings on a cash basis were $19.3
million or $0.20 per diluted share. These figures compare to Wit
Capital?s first quarter 1999 results of $3.9 million in revenues and a
loss of $(0.67) per share.
These are Wit Capital Group, Inc.?s first results following the
acquisition of SoundView Technology Group, Inc. on January 31, 2000,
and reflect contribution from SoundView?s business for the months of
February and March.
Commenting on the results, co-CEO Ron Readmond stated, "Our
results for the quarter clearly demonstrate that our merger has
created a ?network? effect on our business, enabling us to realize
significantly higher revenues as a combined entity than we could have
produced working independently of each other. Where we had pro-forma
banking and brokerage revenue of $189 million for all of 1999, the
effect of our collaborative efforts during February and March has
enabled us to report $96.9 million for these categories for the first
quarter of this year. This growth rate highlights the scalability of
our business model."SUMMARY FINANCIAL HIGHLIGHTS
Three Months Ended
3/31/2000 3/31/1999 Revenues
Investment banking $ 60,349,094 $ 3,122,420
Brokerage 36,524,953 434,207
Asset management fees 7,833,034 -
Interest and investment
income 1,819,213 191,670
Unrealized gains on
investments 61,880 154,824
Total revenues 106,588,174 3,903,121
Total expenses 86,769,690 8,803,287
--------------- --------- Net income (loss) before
equity in net loss of 19,818,484 (4,900,166) Equity in net loss of
affiliates (1,709,689) --
-------------- --------- Income (loss) before
income taxes 18,108,795 (4,900,166) Provision for income
taxes 10,608,166 --
-------------- Net income (loss) $ 7,500,629 $ (4,900,166)
============== ==============
Net income
(loss) per share:
Basic...................$ 0.10 $ (0.67)
Diluted.................$ 0.08 $ (0.67)
Weighted average
shares used in
the computation
of net
income (loss)
per share:
Basic.................... 72,997,204 7,266,428
Diluted................... 98,085,755 7,266,428-- Investment banking revenues for the quarter were up significantly
to $60.3 million from $3.1 million a year ago. Wit SoundView
participated in a total of 61 deals in the quarter, co-managing
31 deals and serving as a syndicate member in an additional 30.
This compares to 12 co-managed deals and 22 syndicate deals in
the fourth quarter of 1999.
-- Brokerage revenues were $36.5 million, which includes $32.5
million of institutional sales and trading and $4.0 million of
online, or individual, trading. For comparison purposes, online
trading in the same period a year ago contributed $434,000 to
total revenues.
-- Asset management contributed $7.8 million to revenues. Of this,
$2.8 million was from management and syndicate fees associated
with Wit SoundView?s venture capital activities and $5.0 million
was from incentive royalties from hedge funds that were formerly
managed by SoundView Technology Group, Inc.
-- Total expenses for the quarter were $86.8 million versus $8.8
million for the first quarter of 1999. Compensation and benefits
accounted for $64.9 million as a result of accruals for incentive
pay on higher revenues and represented 61% of total revenues, an
improvement on pro-forma 1999 levels.
QUARTERLY HIGHLIGHTS
Investment Banking & Research
Mr. Readmond stated, "An important objective this quarter was to
improve our position and visibility as a co-manager, which we
accomplished by meaningfully increasing our role and associated
economics in our 31 co-managed transactions. That 16 of these
transactions were follow-on offerings demonstrates that we are
successfully extending our relationships with issuers beyond initial
public offerings. We will continue to capitalize on our experience and
knowledge of the Internet and technology to extend our relationships
with issuers even further into areas such as strategic advisory and
private placements."
To broaden its investment banking platform, Wit SoundView hired
Mack Rossoff, formerly of JP Morgan and a founding partner at
Wasserstein Perella, as Managing Director and Head of Mergers &
Acquisitions. On the venture capital front, Wit SoundView Ventures
announced that Dawntreader Fund II raised approximately $270 million
in February and March of this year. Wit SoundView Ventures manages Wit
Capital Group?s venture capital funds and focuses primarily on early
stage investments in technology and Internet businesses, with a
particular focus on e-commerce, Internet-enabling technologies,
Internet infrastructure and products and services that enhance digital
businesses. In addition, Wit Capital Group, Inc. signed a letter of
intent to form a joint venture with Alley Capital Partners LLC, a
financial advisory firm that will offer financing and consultancy
services as well as direct investments to seed and early stage
Internet companies. The Company also made an investment in Internet
HealthCare Group (IHCG), a leading business-to-business e-commerce
company focused on e-healthcare and e-insurance. The relationship with
IHCG enhances Wit SoundView?s presence in the e-healthcare sector.
Wit SoundView initiated coverage on an additional 28 companies
this quarter, bringing the total number of companies under coverage to
287. The Company?s research team includes 43 equity analysts dedicated
exclusively to Internet and technology companies. "We continue to
create a world-class, ubiquitous research product," said Mr. Readmond.
"The depth of our research and its wide-spread availability is a key
differentiator for Wit SoundView. We have begun the process of
integrating SoundView research on the Wit Capital site and currently
provide two daily summaries from our morning and afternoon research
meetings. In addition, we announced a relationship with Yahoo! this
quarter that enables us to provide research insights on the companies
we cover to Yahoo! FinanceVision viewers. Our analysts also continue
to be featured on America Online in a weekly chat session with AOL
members."
Institutional and Online Brokerage
With the completion of the merger, Wit SoundView?s brokerage
services expanded to include institutional sales and trading. Average
daily institutional trading commissions rose 31% during the quarter,
while the number of stocks in which we make markets grew to 219 from
181. On the online retail side, active accounts and trading activity
continued to trend upward. Active accounts grew more than 32% to
83,100 at March 31, 2000 compared to 62,800 at December 31, 1999.
Average daily retail trades rose approximately 30%, to 3,000 trades in
the first quarter from 2,300 trades in the fourth quarter of last
year. Secondary trading volume grew over 30% to 192,054 trades
executed in the first quarter, up from 147,000 trades in the fourth
quarter of last year.
Shares allocated to online customers were down in the first
quarter to 2.7 million from 5.4 million in the fourth quarter of last
year. Several factors contributed to fewer shares being distributed to
our online customers, including lower share retention for co-managers
generally and a relatively high proportion of follow-on offerings. Mr.
Readmond stated, "While the number of online shares was down from the
last quarter, we are confident in our long term ability to deliver a
significantly higher number of shares to our online customers. We are
committed to winning more retail shares and expect to improve our
online distribution going forward."
International Developments
Wit Capital Europe continued to develop during the quarter. Edward
Annunziato and Richard Sansom were appointed CEO and CFO of Wit
Capital Europe, respectively. In addition, Wit Capital Europe entered
a strategic partnership with Cazenove & Co., who took a stake of
approximately 10% in the firm. "Wit Capital Europe has already
generated considerable interest within the issuing community in the UK
and Europe," stated Mr. Readmond, "and the investment by Cazenove is a
very positive step towards establishing our business overseas."
In addition, Wit Capital Group, Inc. completed its previously
announced acquisition of approximately 10.5% of enba plc, its joint
venture partner in the formation of Wit Capital Europe.
Wit Capital Japan also achieved several milestones during the
quarter. Hiring during the quarter brought total headcount as of March
31, 2000 to over 50 employees. In February Wit Capital Japan
successfully completed its securities trading registration. Brokerage
operations are scheduled to begin in late May. The company is
currently pursuing its securities underwriting registration.
Board Authorizes Buyback of Up To 2 Million Shares
Separately, the Company announced that its Board of Directors had
authorized a stock repurchase of up to two million shares. These
purchases may be made from time to time in open market or privately
negotiated transactions.
About Wit Capital Group, Inc.
Wit Capital Group, Inc. (NASDAQ: WITC) is the parent of online
investment banking group Wit SoundView(SM). Wit SoundViewSM was
created in early 2000 when Wit Capital joined with SoundView
Technology Group, Inc., which has changed its name to Wit SoundView
Corporation. Wit SoundView(SM) is the largest online investment banking
group focused exclusively on the Internet and technology sectors. Wit
SoundView(SM) offers a strong complement of investment banking services,
from Internet-strategic advisory, venture capital and private equity
placements, to public offerings and M&A advisory. With one of the
largest research teams in the sector, Wit SoundView(SM) produces
comprehensive sell-side research on over 285 Internet and technology
companies, developed for our online and institutional audiences.
Wit SoundView(SM) is recognized as the first firm to bring online
individual investors directly into the capital formation process in a
meaningful way and continues to leverage the Internet to revolutionize
the way in which issuers and investors communicate. For more
information, please see www.witsoundview.com.
Wit SoundView(SM) is a service mark of Wit Capital Corporation.
Services are offered through Wit Capital Corporation and Wit SoundView
Corporation. Members NASD/SIPC. WIT CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS0
Three Months Ended
------------------
March 31, March 31,
2000 1999
(Unaudited) REVENUES:
Investment banking $ 60,349,094 $ 3,122,420
Brokerage 36,524,953 434,207
Asset management fees 7,833,034 --
Interest and investment
income 1,819,213 191,670
Unrealized gains on
investments 61,880 154,824
--------------- ---------------
Total revenues 106,588,174 3,903,121
--------------- ---------------EXPENSES:
Compensation and benefits 64,942,356 6,558,126
Brokerage and clearance 6,196,706 260,628
Marketing and business
development 3,047,030 212,339
Amortization of intangible
assets and goodwill 2,749,400 --
Professional services 2,277,121 681,509
Data processing and
communications 1,772,263 299,611
Write-off of computer
software and equipment 1,339,772 --
Depreciation and
amortization 1,275,834 220,495
Technology development 1,042,801 335,795
Occupancy 792,115 90,007
Other 1,334,292 144,777
--------------- ---------------
Total expenses 86,769,690 8,803,287
--------------- ---------------
Net income (loss)
before equity in net 19,818,484 $ (4,900,166)
Equity in net loss
of affiliates (1,709,689) --
----------------
Net income(loss)
before income taxes 18,108,795 (4,900,166) Provision for income
taxes 10,608,166 --
---------------
Net income
(loss) $ 7,500,629 $ (4,900,166)
=============== =============== Net income (loss)
per share:
Basic....... $ 0.10 $ (0.67)
Diluted..... $ 0.08 $ (0.67) Weighted average
shares used in the
Basic...............72,997,204 7,266,428
Diluted....... 98,085,755 7,266,428
WIT CAPITAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS March 31, December 31,
2000 1999
(Unaudited)CASH AND CASH
EQUIVALENTS $ 62,898,235 $ 12,447,885RECEIVABLE FROM
CLEARING BROKERS 42,904,545 681,807SECURITIES OWNED,
at market or
fair value 50,546,658 114,468,173INVESTMENT BANKING
FEES RECEIVABLE 50,636,727 3,570,176INVESTMENTS 76,955,367INVESTMENTS IN
AFFILIATES 15,261,179 17,511,403INTANGIBLE ASSETS,
net of accumulated
amortization 273,108,020 -FURNITURE, EQUIPMENT
AND LEASEHOLD
IMPROVEMENTS,
net of accumulated
depreciation 11,665,508 6,312,242
and amortizationCOMPUTER SOFTWARE,
net of accumulated
amortization 2,631,475 3,706,112PREPAID EXPENSES 3,289,671 1,610,628OTHER ASSETS 37,349,721 3,309,750
-------------- --------------
Total assets $ 627,247,106 $ 163,618,176
============== ==============
LIABILITIES AND STOCKHOLDERS? EQUITY
LIABILITIES:
Securities sold
but not yet purchased,
at market value $ 1,031,084 $ 39,234
Accounts payable and
accrued expenses 11,160,630 5,130,675
Accrued compensation 93,008,142 13,506,087 93,008,142 13,506,087
Deferred tax
liabilities 32,000,720 -
Other liabilities 5,884,212 540,647
-------------- --------------
Total liabilities 143,084,788 19,216,643
-------------- --------------
STOCKHOLDERS? EQUITY:
Preferred Stock, $.01
par value, 104,000,000
shares authorized,
no shares
outstanding at March
31, 2000 and December 31, 1999 - -
Common Stock, $.01 par value,
500,000,000 shares authorized,
78,256,233 and 61,629,828
shares issued and outstanding at
March 31, 2000 and December 31,
1999, respectively 782,562 616,298
Common Stock, Class B, $.01 par
value, 75,000,000 shares authorized,
11,666,666 shares issued and
outstanding 116,667 116,667
Common Stock, Class C, $.01 par
value, 159,000,000 shares
authorized; no shares issued and
outstanding at March 31, 2000
and December 31, 1999 - -
Additional paid-in capital 554,894,523 196,777,759 Notes receivable from stockholders (23,074,732) (15,333,070) Deferred compensation (21,592,975) (3,311,765) Accumulated deficit (26,963,727) (34,464,356)
Total stockholders? equity 484,162,318 144,401,533Total liabilities and
stockholders? equity $ 627,247,106 $ 163,618,176Distributed via COMTEX.Copyright (C) 2000 Business Wire. All rights reserved.
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