K2 Design's First Quarter Net Revenue Up 218% Over First Quarter Last Year
NEW YORK--(BUSINESS WIRE)--May 16, 2000--K2 Design, Inc. (NASDAQ: KTWO, KTWOW) today reported results for the quarter ended March 31, 2000.
Net revenue for first quarter 2000 was $1,489,000, compared to $468,000 for the same period last year, or a 218% increase. Gross revenue, including media pass-through costs, for first quarter 2000 was $1,933,000, representing an increase of 34% compared to $1,444,000 for the same period last year. Gross margin improved from 6.7% for first quarter 1999 to 40.6% for first quarter 2000. Net loss for the first quarter was $(295,000), compared to a loss for the same period last year of $(681,000). The loss per share was $(0.09) per basic and diluted share for first quarter 2000, as compared to a loss of $(0.20) per basic and diluted share for the same period last year. Annualized net revenue per client-facing or direct professional grew from $93,600 in first quarter 1999 to $180,485 in first quarter 2000.
"What's behind these numbers - both the revenue growth and gross margin improvement -- is K2's strategic shift from a "dotcom" advertising agency to a provider of a wider range of professional Internet services for the Fortune 1000. And the positive momentum applies not only year-to-year, but also quarter-to-quarter," said Lynn Fantom, president and CEO of K2 Design. The first quarter 2000 net revenue of $1,489,000 surpassed fourth quarter 1999 net revenue of $1,337,000 by 11%. Net revenues increased 88% from second to third quarter 1999 and 8% from third to fourth quarter 1999.
"For clients like Hewlett-Packard, Philips Lighting, and Standard & Poor's, we are recreating their business processes and building new venues online," said Ms. Fantom. "This quarter saw increased usage of K2's end-to-end services, including strategic consulting, technical development, design and online marketing. Building upon the success to date of our business strategy, we will continue to focus on global, multi-divisional companies with our well-defined proprietary process W3 Organizational Modeling (TM)." K2 announced last week that it has been retained for a strategic consulting assignment by the U.S. subsidiary of Zurich-based ABB Group, a global engineering and technology conglomerate.
This quarter K2 also announced a joint development partnership with ThinAirApps, the leader in wireless information access software. "We are committed to forging alliances that extend our reach and resources. With ThinAirApps, K2 is well positioned to lead migration of Web content to wireless devices," noted Ms. Fantom. According to a recent Banc of America Securities report, the number of wireless Internet subscribers globally is projected to increase to approximately 70 million by 2001.
"We are focused on accelerating the positive organic growth we have created during the last three quarters. Strong client relationships and new external partnerships provide a solid platform for expansion. We plan to augment this with external growth driven by acquisitions. To that end, we have hired Wall Street veteran Gary Brown as Executive Vice President and Chief Operating Officer," added Ms. Fantom.
According to Gary Brown, the company sought to supplement its consolidated financial statements this quarter by reporting net revenue in addition to gross revenue. Net revenue represents gross revenue less reimbursable expenses, such as media pass-through costs. "Although K2 had discussed the importance of net revenue in previous press releases and filings, we felt the financial statements themselves should show this very indicative measure. It reflects K2's evolution from an online advertising agency to a strategic Internet services firm, offering a wider range of consulting and development services. That's where we make our money today - not in media pass-throughs," said Gary Brown.
About K2 Design
K2 Design, an Internet business strategy company, provides end-to-end consulting and development services including analysis, planning, systems design, creative, and implementation. Ranked by Deloitte & Touche among the fastest growing technology companies in the U.S. in 1999, K2 constructs user-centric digital channels that map to enterprise-wide processes and goals. K2's process-driven approach utilizes the strategic, conceptual, technical and marketing experience it has developed since 1993 to help multi-divisional and global companies maximize their Internet opportunities. Clients include Hewlett-Packard, Philips Lighting, Puerto Rico Convention Bureau and Standard & Poor's. For more information please visit our web site: k2design.com.
Except for the historical information herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Future results may vary significantly based on a number of factors including, but not limited to, risks in market acceptance of new products and services and continuing demand for same, the impact of competitive products and pricing, seasonality, changing economic conditions and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.
Contact:
Montner & Associates
Debra Montner or Brett Cody, 203/226-9290
e-mail dmontner@montner.com |
