AppNet Continues Exceptional Growth in Second Quarter 2000; Revenue Doubles, Margins Improve, Momentum Builds in e-Marketplaces
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BETHESDA, Md.--(BUSINESS WIRE)--July 24, 2000--AppNet, Inc.
(NASDAQ:APNT)
Second Quarter 2000 Highlights
-- Revenue of $51.2 million, up more than 100% over second
quarter 1999 and up 14% sequentially, exceeding analysts'
estimates
-- Billable employees up nearly 9% sequentially to 965 at the end
of the quarter
-- Annualized revenue per billable employee up nearly 40% from
last year to $220,000
-- Adjusted EBITDA up 150% from second quarter 1999 to $3.2
million
-- 7 cents positive fully-taxed cash EPS, versus breakeven
fully-taxed cash EPS in the second quarter of 1999
AppNet, Inc. (NASDAQ:APNT), a premier provider of end-to-end
e-business solutions, today announced strong second quarter financial
results that demonstrate growth and expanding momentum in the
execution of large business-to-business (B2B) engagements,
particularly around Internet-based e-Marketplaces.
For the three months ended June 30, 2000, revenue was $51.2
million, 104% higher than revenue of $25.1 million for the second
quarter of 1999 and 14% higher than revenue of $44.7 million in the
first quarter of 2000. Gross margin improved to 46.9%, an increase of
230 basis points from the first quarter of 2000 and an increase of 360
basis points from the second quarter of 1999.
Earnings before interest, taxes, depreciation, amortization and
stock-based and acquisition-related compensation (adjusted EBITDA)
were $3.2 million, or 6.2% of revenue in the quarter. Fully-taxed (35%
effective tax rate) cash EPS was 7 cents in the quarter, including
expenses related to the pending merger with Commerce One (NASDAQ:CMRC), compared to breakeven cash EPS in the second quarter of 1999.
These results exceeded analysts' consensus expectations.
"These stellar results demonstrate our surge of momentum as we
strive to become the de facto B2B e-business solutions provider," said
Ken Bajaj, chairman and CEO of AppNet. "We are now the architects of a
dozen B2B e-Marketplaces, the e-business consultants to 25 of the
Fortune 50 companies, and the builders of enterprise portals for
global players like BP Amoco."
Recent Customer Wins and Major Announcements
In the second quarter of 2000, the company announced a string of
major engagements, positioning itself as a leader in building
e-Marketplaces and helping global companies become players in that
exciting new business model. During the quarter, AppNet announced:
-- Strategic alliances with Commerce One, eCredit, Intershop and
Web Methods that strengthen its e-Marketplace solutions
offering.
-- The launch of ProcureZone, a B2B e-Marketplace for the $600
billion construction industry.
-- The launch of TelecomSmart, a B2B e-Marketplace for small and
medium businesses in the telecommunications industry.
-- The selection by MortgageRamp, a GMAC company, to construct
the first comprehensive commercial mortgage e-Marketplace.
-- The selection by BP Amoco's natural gas and liquids division,
to implement a corporate portal to create real time
communications and transactions with its employees, partners,
and customers.
-- The recipient of 17 International Web Page Awards in
recognition of its strong design and user experience
capabilities, the most awarded to a single company in 2000.
-- The execution of a definitive agreement to be acquired by
Commerce One on June 20, 2000. The combined companies will
create the first fully integrated e-commerce applications,
strategy consulting, and Internet professional services firm
in the industry.
"We have increased our lead in the critical B2B and e-Marketplace
arenas in the second quarter of this year," concluded Mr. Bajaj. "Our
pending acquisition by Commerce One positions us very well for the
long-term as together we will create the backbone for B2B trade on the
Internet in building the Global Trading Web."
About AppNet, Inc.
AppNet (NASDAQ:APNT) is a premier provider of end-to-end
e-business solutions, from interactive marketing to back-office
integration. For companies transforming themselves for the new
Internet economy, the firm offers a unique mix of Internet strategy,
interactive marketing, and e-business technology services.
AppNet has been ranked one of the 10 largest interactive marketing
agencies by Advertising Age and Brand Week, and one of the 50 largest
pure Internet companies by Internet World. AppNet works with Fortune
1000 and dot.com companies. Customers include Sprint, UCCnet,
ProcureZone.com, BP Amoco, Ford, Hyundai, bet.com, and NASA.
For more information about how AppNet can bring the power of
e-business to your business, visit appnet.com.
This press release may include "forward-looking statements" for
purposes of the Securities Exchange Act of 1934. All statements
herein, other than those of historical fact, including statements
regarding future contractual arrangements or performance, competitive
strengths, and business strategy, are forward-looking.
Actual results or events may differ materially from those
projected in such forward-looking statements. Information regarding
the factors that could cause such differences is contained in AppNet's
filings with the Securities and Exchange Commission and in the
Registration Statement on Form S-4 filed by Commerce One, Inc. on July
20, 2000.
*T
AppNet, Inc.
Condensed consolidated statements of operations
(as adjusted for non-recurring, non-cash items and taxes)
(Amounts in thousands, except per share data)
-------------------- --------------------
Three months ended Six months ended
June 30, June 30, June 30, June 30,
1999 2000 1999 2000
-------------------- --------------------
Actual Actual Pro Forma(a) Actual
-------------------- --------------------
(as adjusted) (as adjusted)
(Unaudited) (Unaudited)
Revenues $ 25,063 $ 51,157 $ 47,334 $ 95,888
Cost of revenues 14,220 27,174 27,352 51,936
-------------------- --------------------
Gross profit 10,843 23,983 19,982 43,952
-------------------- --------------------
Selling and
marketing 1,594 5,625 2,947 9,161
General and
administrative
(b) 7,957 15,203 15,359 28,100
-------------------- --------------------
Adjusted EBITDA
(c) 1,292 3,155 1,676 6,691
-------------------- --------------------
Interest income (4) (744) - (1,617)
Interest expense
and other
expense, net
(d) (e) 1,431 144 1,859 311
-------------------- --------------------
Cash income
(loss) before
income taxes (135) 3,755 (183) 7,997
-------------------- --------------------
Fully-taxed
income tax
(benefit)
expense (f) (47) 1,314 (64) 2,799
-------------------- --------------------
Fully-taxed cash
net income
(loss) $ (88) $ 2,441 $ (119) $ 5,198
==================== ====================
-------------------- --------------------
Fully-taxed cash
net income
(loss) per
share $ - $ 0.07 $ (0.01) $ 0.15
==================== ====================
-------------------- --------------------
Weighted average
common shares
outstanding 21,580 34,068 20,936 33,955
==================== ====================
(a) Pro forma results of operations give effect to the acquisitions we
made in 1999 as if these transactions had occurred on
January 1, 1999. The pro forma results of operations are not
adjusted to reflect certain financing transactions related to our
public offerings in June 1999.
(b) General and administrative expenses for the six months ended
June 30, 2000 does not include a non-recurring bad debt charge of
$3.4 million.
(c) Adjusted EBITDA is defined as earnings before interest, taxes,
depreciation and amortization, stock-based and other
acquisition-related compensation.
(d) Excludes a one-time interest charge of $1.1 million for the three
and six months ended June 30, 1999 related to beneficial
conversion rights of certain convertible notes.
(e) A one-time charge of $0.6 million recorded in the three months
ended June 30, 1999 related to the refinancing of our credit
facilities is excluded from other expense, net.
(f) In order to demonstrate the future impact of taxes when the
Company has utilized its tax net operating losses, the fully-taxed
income tax (benefit) expense has been calculated using an
effective tax rate of 35%.
AppNet, Inc.
Consolidated statements of operations
(Amounts in thousands, except per share data)
-------------------- --------------------
Three months ended Six months ended
-------------------- --------------------
June 30, June 30, June 30, June 30,
1999 2000 1999 2000
Actual Actual Actual Actual
-------------------- --------------------
(Unaudited) (Unaudited)
Revenues $ 25,063 $ 51,157 $ 44,706 $ 95,888
Cost of revenues 14,220 27,174 25,677 51,936
-------------------- --------------------
Gross profit 10,843 23,983 19,029 43,952
-------------------- --------------------
Selling and
marketing 1,594 5,625 2,784 9,161
General and
administrative 7,957 15,203 14,711 31,500
-------------------- --------------------
Adjusted EBITDA
(a) 1,292 3,155 1,534 3,291
-------------------- --------------------
Stock-based and
other
acquisition-
related
compensation 5,464 5,439 7,951 10,555
Depreciation and
amortization 15,104 14,461 27,839 29,308
-------------------- --------------------
Loss from
operations (19,276) (16,745) (34,256) (36,572)
-------------------- --------------------
Interest income - (744) - (1,617)
Interest expense 2,479 144 3,741 311
Other expense,
net 558 - 558 -
-------------------- --------------------
Loss before
income taxes (22,313) (16,145) (38,555) (35,266)
-------------------- --------------------
Income taxes 50 122 150 392
-------------------- --------------------
Net loss $(22,363) $(16,267) $(38,705) $(35,658)
==================== ====================
Dividends on and
accretion of
preferred stock (1,100) - (2,139) -
-------------------- --------------------
Net loss
attributable to
common
stockholders $(23,463) $(16,267) $(40,844) $(35,658)
==================== ====================
-------------------- --------------------
Basic and
diluted net
loss per common
share $ (1.09) $ (0.48) $ (1.97) $ (1.05)
==================== ====================
-------------------- --------------------
Weighted average
common shares
outstanding 21,580 34,068 20,681 33,955
==================== ====================
-------------------- --------------------
Cash net income
(loss) (b) $ (1,795) $ 3,633 $ (2,915) $ 4,205
==================== ====================
-------------------- --------------------
Cash net income
(loss) per share $ (0.08) $ 0.11 $ (0.14) $ 0.12
==================== ====================
(a) Adjusted EBITDA is defined as earnings before interest, taxes,
depreciation and amortization and stock-based and other
acquisition-related compensation.
(b) Cash net income (loss) is defined as net income (loss) before
depreciation and amortization and stock-based and other
acquisition-related compensation.
AppNet, Inc.
Condensed consolidated balance sheets
(Amounts in thousands)
-------- --------
12/31/99 6/30/00
-------- --------
(Unaudited)
Current assets
Cash and cash equivalents $ 66,549 $ 41,178
Accounts receivable, net 31,661 47,576
Other current assets 1,300 3,344
-------- --------
Total current assets 99,510 92,098
-------- --------
Property and equipment, net 8,958 14,800
Intangible assets, net 97,247 70,477
Other assets 2,111 5,033
-------- --------
Total assets $207,826 $182,408
======== ========
Total current liabilities $ 38,204 $ 38,153
Long-term debt and other
liabilities 4,780 4,926
-------- --------
Total liabilities 42,984 43,079
-------- --------
Stockholders' equity 164,842 139,329
-------- --------
Total liabilities,
redeemable stock and
stockholders' equity $207,826 $182,408
======== ========
*T
CONTACT: AppNet
Media
Alla Iaquinto, 301/581-2489
press@appnet.com
or
Investors
Kevin Taback, 877/551-2323
ir@appnet.com
KEYWORD: MARYLAND
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS E-COMMERCE INTERNET
TELECOMMUNICATIONS EARNINGS
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