7/18...WGRD Technologies Announces Record Second-Quarter Results
Year-Over-Year Sales Increase 196%, Achieves Positive Pro forma Earnings
SEATTLE--(BUSINESS WIRE)--July 18, 2000-- Expanding Worldwide Network of Resellers, ISPs and OEM
Relationships
WatchGuard Technologies, Inc. (Nasdaq:WGRD - news), a leading provider of Internet security and VPN solutions, today announced its results for the quarter ended June 30, 2000.
For the second quarter of 2000, WatchGuard reported net revenues of $13.7 million, an increase of 196% from $4.6 million in the second quarter of 1999, and up 40% sequentially from the previous quarter. Pro forma net income for the second quarter, excluding acquisition related costs and non-cash stock-based compensation, was $218,000 or $0.01 per share, up from a pro forma net loss of $3.2 million or ($0.21) per share for the same period of 1999.
The Company's strong revenue growth was the result of increased product shipments and the expanding subscriber base for its Internet security and VPN solutions. Product sales for the quarter were $12.0 million, up 213% from the second quarter of 1999, and up 41% sequentially from the previous quarter. The Company saw strong sales increases for its new SOHO and Telecommuter products for the growing broadband market. Service subscription revenue was $1.7 million, up 116% from the second quarter of 1999, and up 33% sequentially from the previous quarter.
For the first six months of fiscal 2000, the Company reported net revenues of $23.5 million, up 175% from $8.6 million for the same period of fiscal 1999. The pro forma net loss for the six months was $1.9 million or ($0.08) per share, compared to a pro forma net loss of $6.2 million or ($0.41) per share for the same period of 1999. As of June 30, 2000, the Company had cash and securities of $113.6 million.
During the second quarter, WatchGuard continued to establish strategic marketing and distribution relationships throughout the world, including new agreements with Unisys Corporation and the Canadian subsidiaries of Ingram Micro and Tech Data Corporation, as well as service providers in Korea, France, Switzerland, Hong Kong and the U.S. The Company now has signed agreements with over 50 service providers and has relationships with over 80 distributors, representing a potential reach to more than 200,000 resellers worldwide.
WatchGuard also announced new agreements with Compaq Computer Corporation and SMC Networks Corporation during the second quarter, and recently with NEC Corporation. These OEM relationships reflect the Company's strategy to license its technology to major computer and networking companies to be embedded in their devices, while WatchGuard extends its LiveSecurity service to the customers of these OEM partners. WatchGuard expects to continue to expand its new OEM channel in coming periods.
``We are very pleased with our strong sales growth and our expanding worldwide network of distributors, resellers, service providers and new OEM partnerships,'' said Christopher Slatt, President and Chief Executive Officer. ``We see strong demand in all regions and across all product lines. We continue to make progress toward operational profitability and execute our strategy of enhancing our products and services, expanding our global sales channels and broadening the spectrum of companies that we serve, from larger geographically distributed enterprises to small offices with broadband connections.''
A live Internet broadcast of WatchGuard's second quarter conference call (2:00 PM Pacific/5:00 PM Eastern) will be available today at www.watchguard.com under ``Investor Relations.''
About WatchGuard Technologies
WatchGuard Technologies is a leading provider of Internet security solutions for organizations that use the Internet for electronic commerce and communications. The award-winning WatchGuard LiveSecurity System delivers security to medium-sized businesses and large distributed enterprises, and is powered by the plug-in Firebox II family of appliances and innovative LiveSecurity Service. WatchGuard delivers security solutions for DSL, cable modem and ISDN users with the WatchGuard SOHO and Firebox Telecommuter. Organizations can also receive protection by subscribing to a WatchGuard-based security service from a service provider implementing the WatchGuard for MSS system. For more information, visit www.watchguard.com.
Certain statements in this press release are ``forward-looking statements'' within the meaning of the Securities Act of 1933, as amended. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect WatchGuard's actual results include, but are not limited to, the ``Risk Factors'' described in our Securities and Exchange Commission filings, including the Prospectus related to our public offering dated February 15, 2000. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. WatchGuard® is either a trademark or registered trademark of WatchGuard Technologies, Inc. in the United States and other countries. Firebox and LiveSecurity are trademarks of WatchGuard Technologies, Inc.
WATCHGUARD TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(in 000's, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues, net
Product $ 12,000 $ 3,831 $ 20,494 $ 7,218
Service 1,740 806 3,048 1,357
Total revenues 13,740 4,637 23,542 8,575
Cost of revenues 4,898 1,846 8,421 3,481
Gross margin 8,842 2,791 15,121 5,094
Operating expenses:
Sales and marketing 5,967 3,242 11,526 6,083
Research and development 3,262 1,614 5,782 3,040
General and
administrative 1,249 862 2,404 1,774
Stock-based compensation 228 258 464 511
Amortization of goodwill
and other intangibles 368 -- 736 --
Total operating
expenses 11,074 5,976 20,912 11,408
Loss from operations (2,232) (3,185) (5,791) (6,314)
Interest income
(expense), net 1,854 (263) 2,717 (347)
Net loss $ (378) $ (3,448) $ (3,074) $ (6,661)
Basic and diluted net
loss per share: $ (0.02) $ (2.36) $ (0.14) $ (4.65)
Shares used in computation
of basic and diluted
net loss per share 23,160 1,459 22,223 1,433
Pro Forma Information:
(See note below)
Pro forma net income
(loss) $ 218 $ (3,190) $ (1,874) $ (6,150)
Pro forma net income
(loss) per share:
Basic $ 0.01 $ (0.21) $ (0.08) $ (0.41)
Diluted $ 0.01 $ (0.21) $ (0.08) $ (0.41)
Shares used in computation of pro forma net income (loss) per
share:
Basic 23,160 14,884 22,223 14,858
Diluted 27,446 14,884 22,223 14,858
Note: Pro forma information is presented for informational
purposes only and is not prepared in accordance with generally
accepted accounting principles. Pro forma results: i) assume the
conversion of all preferred stock to common stock at the time of
issuance; ii) exclude amortization of goodwill and other intangibles
arising from WatchGuard's acquisition of BeadleNet, LLC in October
1999; and iii) exclude non-cash stock-based compensation expenses. |
