Liquid Audio Reports First-Quarter 2000 Results: Strong Revenue GrowthAnd Cash Position
3.0 Million Revenues, $0.30 Net Loss Per Share; New Partnerships With AOL,
Microsoft, Sony, BMG, and IBM
REDWOOD CITY, Calif., April 17 /PRNewswire/ -- Liquid Audio, Inc. (Nasdaq: LQID), a leading provider of software and services for the Internet delivery of music, today announced its financial results for the first quarter ended March 31, 2000. During the quarter, the company established and began executing new strategic partnerships with America Online, Microsoft, Sony Electronics, BMG Entertainment, and IBM.
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Total net revenues for the first quarter were $3.0 million, compared with $1.3 million for the fourth quarter of 1999 and with $531,000 for the first quarter of 1999. Net loss was $6.5 million, or a loss of $0.30 per share (basic and diluted), compared sequentially with a net loss of $8.2 million, or a loss of $0.43 per share, and year-over-year with a net loss of $4.1 million, or a pro forma loss of $0.19 per share. Cash, cash equivalents and short-term investments were $152.4 million at March 31, compared with $157.8 million at year-end.
"Our strategy is to leverage Liquid Audio's open architecture as the business-to-business e-commerce infrastructure platform for the music industry worldwide," said Gerry Kearby, president and chief executive officer of Liquid Audio. "We are now executing this strategy through the formation and implementation of key partnerships with Internet powers AOL, Microsoft and IBM; the consumer electronics giant, Sony; and the major record label, BMG. In the first quarter, we recorded strong revenue growth and achieved new milestones in content, syndication and platform adoption. Overall, we're pleased with our momentum in the new year, the increasing strength of our fundamentals and our position as the emerging de facto standard for global music distribution."
Excluding strategic marketing and stock compensation expenses, first-quarter 2000 net loss on operations was $5.8 million, or a loss of $0.26 per share (basic and diluted), compared with a net loss on operations of $7.0 million, or a loss of $0.36 per share, for the preceding quarter and a net loss on operations of $3.7 million, or a loss of $0.17 per share, for the year-ago quarter.
The pro forma computations for the year-ago quarter are based on 21.9 million weighted average shares outstanding, reflecting the issuance of common stock for the initial and follow-on public offerings and the conversion of preferred stock to common stock prior to the IPO.
Execution of Strategy Drives Continued Growth of Business
By the end of first-quarter 2000, Liquid Audio's global music distribution network was used by more than 8,500 recording artists and 1,400 record labels to promote, syndicate and sell one of the largest commercially available catalogs of secure music online, comprising more than 67,000 songs. At March 31, Liquid Audio content was syndicated to more than 750 music and retail Web sites for preview and sale over the Internet. These figures were up from 6,000 artists (42%), 1,000 labels (40%), 50,000 songs (34%), and 450 sites (67%) at the end of the prior quarter.
Liquid Audio's first-quarter 2000 business highlights included:
-- A multi-year strategic alliance with America Online to add e-commerce
capabilities to the Nullsoft Winamp audio player and integrate the two
companies' respective Internet music delivery systems, thereby
significantly expanding Liquid Audio's retail network and consumer
reach
-- An agreement with Microsoft to support Windows Media Technologies in
Liquid Audio's open, multi-format distribution system, followed by the
first Liquid Music downloads available in Windows Media format to a
broad consumer audience through retail Web sites
-- Completion of Liquid Audio and Sony Electronics' integration of their
respective Internet music delivery systems, and the availability of the
entire Liquid Music catalog on Sony's Musiclub Web site to users of the
VAIO Music Clip and Memory Stick Walkman portable digital music players
-- Toshiba's and Sanyo's launches of their new audio players -- the mobile
digital MEA110AS and the solid-state SSP-PD7, respectively -- with
which consumers can securely download and play back copyright-protected
Liquid Music in multiple formats
-- The successful deployment of in-store digital music kiosks for the
preview and purchase of singles and the creation of custom-compilation
CDs at TopShop/TopMan stores in London, followed by the launch of
Liquid Kiosk Network software in the United States.
Major Label Selects Liquid Audio for Integration and Interoperability
Recently, BMG Entertainment, one of the world's four major record labels, announced a comprehensive strategy for the secure digital download and sale of its music through online retailers, beginning this summer. As part of this strategy, BMG selected Liquid Audio to integrate component technologies from IBM, InterTrust Technologies, Microsoft, Reciprocal, and Digital World Services with the Liquid Music Distribution System. The result will be one interoperable system that enables BMG to control the online flow of its content from the point of creation to retail delivery.
In conjunction with the BMG partnership, Liquid Audio has formed a strategic relationship with IBM to license the digital rights management (DRM) technology from its Electronic Media Management System (EMMS) for integration with the Liquid Music Distribution System, resulting in interoperability of multi-vendor solutions and a single, uniform publishing and retail integration interface for record labels and retailers. The BMG and IBM partnerships both leverage and extend Liquid Audio's open business-to-business platform for music distribution.
The Company
Liquid Audio, Inc. is a leading provider of software and services for the digital delivery of music over the Internet. The Liquid Audio solution gives musicians, record labels, Web sites, and music retailers the ability to publish, syndicate and securely sell recorded music online with copy protection and copyright management. Using the Liquid Player software, available for free download at www.liquidaudio.com, music fans can preview and purchase downloadable music from the more than 750 affiliate Web sites in the Liquid Music Network. Traded on Nasdaq under the symbol LQID, Liquid Audio is located in Redwood City, California.
This news release contains forward-looking statements relating to future performance, technology and product development that may impact future results and the future viability of the company. Actual results could be affected or differ materially from those anticipated in the forward-looking statements as a result of new contracts or relationships that may not produce significant revenue or net income. Other risk factors that could cause results to vary include: future products and results; technological shifts; potential technical difficulties that could delay new products; competition; general economic conditions in the markets in which the company operates; pricing pressures; and the uncertainty of market acceptance of new products by OEM and end-user customers. Readers should refer to the "Risk Factors" section of the company's public offering prospectus, dated December 14, 1999, and Annual Report on Form 10-K, dated March 30, 2000, and other filings with the Securities and Exchange Commission.
NOTE: Liquid; Liquid Audio; Liquid Audio, Inc.; the Liquid Audio logo; Liquid Kiosk Network; Liquid Music; Liquid Music Distribution Network; Liquid System; Liquid Player; and Liquid Music Network are trademarks of Liquid Audio, Inc. All other trademarks are the property of their respective owners. For more information about Liquid Audio software and services, call 888-Liquid-0 or visit www.liquidaudio.com.
Liquid Audio, Inc.
Condensed Statements of Operations
(in thousands, except per-share amounts; unaudited)
Three months ended
March 31
2000 1999
Net revenues:
License revenue $ 231 $ 259
Service revenue 401 89
Business development revenue 2,363 183
Total net revenues 2,995 531
Cost of revenues:
Cost of license revenue 18 46
Cost of service revenue 661 153
Cost of business development revenue -- 2
Total cost of revenues 679 201
Gross profit 2,316 330
Operating expenses:
Sales and marketing 3,403 2,119
Research and development 4,920 1,560
General and administrative 1,862 502
Strategic marketing -- equity instruments 561 --
Stock compensation expense 192 425
Total operating expenses 10,938 4,606
Loss from operations (8,622) (4,276)
Interest and other income, net 2,314 133
Minority interest in loss of strategic partner (216) --
Net loss $(6,524) $(4,143)
Net loss per share:
Basic and diluted $(0.30) $(1.39)
Weighted average shares 21,918 2,972
Liquid Audio, Inc.
Condensed Balance Sheets
(in thousands)
March 31 Dec. 31
2000 1999
(unaudited) (audited)
Assets
Current assets:
Cash, cash equivalents and
short-term investments $ 152,417 $ 157,849
Accounts receivable, net 548 316
Receivables from related parties 435 435
Other current assets 604 638
Total current assets 154,004 159,238
Investment in strategic partner 1,743 1,959
Property and equipment, net 6,316 4,857
Other assets 216 220
Total assets $ 162,279 $ 166,274
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $2,689 $1,952
Accrued expenses and other current liabilities 4,550 2,901
Deferred revenue 1,277 1,572
Capital lease obligations, current portion 172 194
Equipment loan, current portion 589 589
Total current liabilities 9,277 7,208
Capital lease obligations, non-current portion 119 149
Equipment loan, non-current portion 585 731
Note payable to related party 426 441
Total liabilities 10,407 8,529
Stockholders' equity 151,872 157,745
Total liabilities and stockholders' equity $ 162,279 $ 166,274
SOURCE Liquid Audio, Inc.
CO: Liquid Audio, Inc.
ST: California
IN: MLM ENT
SU: ERN
04/17/2000 16:15 EDT prnewswire.com
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