7/24....FMKT...Reports Record Second Quarter Results
Company Grows Revenues 363%
Beats First Call Earnings Estimate by Seven Cents Per Share
PITTSBURGH--(BUSINESS WIRE)--July 24, 2000--FreeMarkets, Inc. (Nasdaq:FMKT - news), the leading B2B eMarketplace, today reported record results for the second quarter ended June 30, 2000.
Market volumes for the second quarter grew to $2.189 billion, an increase of 62% over the previous quarter, while revenues increased to $19.4 million, up 80% over the previous quarter and 363% over the same period last year. Gross margins increased to 43% from 41% in the prior quarter. Net loss for the second quarter, excluding stock-based expense and non-cash acquisition-related costs, was $12.8 million, or $0.34 per diluted share, beating the First Call estimate by $0.07 cents per share.
``Our second quarter results demonstrate the strength and increasing scalability of our business model as well as our ability to execute,'' said Glen T. Meakem, Chairman and CEO of FreeMarkets. ``During the quarter, we grew our market volumes, revenues, gross margins and customer wins above expectations. We also continued to deliver substantial benefits to customers, including savings and reductions in sourcing process time. Additionally, we introduced new, web-based sourcing tools that enhance our customers' ability to conduct strategic purchasing. We will continue to lead the B2B e-Commerce industry in creating innovations for sourcing and asset recovery that deliver value to customers.''
Among the highlights of FreeMarkets' second quarter:
Volume and Savings
The amount of commerce conducted through the FreeMarkets® B2B eMarketplace continued to grow during the second quarter, with 1,400 auctions conducted for $2.189 billion worth of direct materials, commodities and services. This represents an increase in market volume of 62% over the previous quarter and 432% over the same period last year.
Savings to FreeMarkets' customers also rose, with an estimated $365 million in potential savings identified during the quarter, compared to $80 million in the same period a year earlier.
Since 1995, FreeMarkets has conducted more than 5,000 online auctions for over $7.6 billion worth of goods and services in more than 130 different supply verticals and generated nearly $1.5 billion in potential savings for its customers.
Customers
The number of customers using the FreeMarkets B2B eMarketplace grew to 64 during the second quarter, up from 13 in the same period a year earlier.
During the quarter, FreeMarkets conducted the first reverse auctions ever held for the Federal Government. These auctions were conducted on behalf of the United States Postal Service and the United States Navy.
The company also announced agreements with: American Airlines, Anheuser-Busch, Cooper Industries, Deere & Co., Diebold Inc., International Specialty Products, Mayne Nickless, Pilkington plc, Schering-Plough, Singapore Technologies Engineering, Solutia Inc. and Visteon Corp.
Already in the third quarter, FreeMarkets has announced new agreements with BP Amoco, Armstrong World Industries and Myplant.com, a B2B exchange sponsored by Microsoft Corp., Honeywell International and VerticalNet. The Company has signed three additional technology licensing agreements with other exchanges.
Suppliers
The number of global suppliers participating in the FreeMarkets B2B eMarketplace grew by 1,500 during the quarter, bringing the total number of active supplier participants to more than 5,600.
Alliances
In an effort to enhance its ability to deliver best-of-breed sourcing solutions to its customers around the world, FreeMarkets formed a number of strategic alliances during the quarter with world-class technology and service providers, including Arthur Andersen, webPLAN, Sapiens and Xelus.
FreeMarkets and Arthur Andersen aligned to jointly serve Global 1000 and mid-sized customers with a combination of the FreeMarkets B2B eMarketplace and Arthur Andersen's broad range of eBusiness and supply chain solutions. The combined solutions will allow customers to consolidate and strategically analyze purchasing spend as well as deliver significant cost savings through implementing online markets.
FreeMarkets and webPLAN joined forces to provide customers with a single-point solution for conducting web-based sourcing and supply chain management. The partnership will enable customers using the FreeMarkets B2B eMarketplace to access a set of best-of-breed, web-based supply chain and product life cycle management solutions.
FreeMarkets and Sapiens eZoneXchange.com teamed to provide eFulfillment and integration solutions to Global 1000 companies. The relationship will allow customers to integrate their existing front and back-end systems, including Enterprise Resource Planning (ERP) and supply management technologies, with the FreeMarkets B2B eMarketplace.
FreeMarkets partnered with Xelus to deliver its B2B eMarketplace for sourcing and asset recovery in conjunction with Xelus' supply chain solution. The alliance will enable FreeMarkets' customers to rationalize and better manage service part inventories.
Technology
As part of continuing efforts to enhance its industry-leading sourcing technologies, FreeMarkets announced the availability of FreeMarkets Desktop, a web-based suite of collaborative commerce tools for professional buyers. FreeMarkets Desktop integrates and automates the activities and information exchange necessary for buyers to conduct strategic purchasing and suppliers to bid on business opportunities in the FreeMarkets B2B eMarketplace. Using FreeMarkets Desktop, buyers and suppliers work in a secure environment and complete critical tasks over the web such as building, publishing and updating online RFQs (request for quotations), identifying and researching global suppliers, matching bidding opportunities to supplier profiles and managing multiple projects, among other things.
Today, FreeMarkets announced the availability of the FreeMarkets Integration Suite, an advanced sourcing platform that integrates Enterprise Resource Management (ERP) and Product Data Management (PDM) solutions with the FreeMarkets B2B eMarketplace.
About FreeMarkets
FreeMarkets is the leading B2B eMarketplace. FreeMarkets combines its industry-leading technology platform with unparalleled sourcing information and world-class services to deliver huge savings to customers. FreeMarkets has executed over 5,000 online auctions for more than $7.6 billion worth of goods and services to date, and created estimated savings of nearly $1.5 billion for its customers. The FreeMarkets B2B eMarketplace enables buying organizations to source products from more than 130 supply verticals. More than 5,600 suppliers from over 50 countries have participated in the FreeMarkets B2B eMarketplace. FreeMarkets can be found on the Web at www.freemarkets.com. FreeMarkets is a registered trademark of FreeMarkets, Inc.
Forward-looking statements
Statements in this press release that are not historical facts, including those statements that refer to FreeMarkets' plans, prospects, expectations, strategies, intentions, hopes and beliefs, are forward-looking statements. These forward-looking statements are based on information available to FreeMarkets today, and FreeMarkets assumes no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including, without limitation, market acceptance of FreeMarkets' B2B eMarketplace, the competitive nature of the market for business-to-business online auction services, FreeMarkets' ability to retain and increase revenue from existing customers and to attract new customers, FreeMarkets' ability to attract and retain qualified personnel, the size of the market for used equipment and surplus inventory, the demand for online auction and other asset recovery services by buyers and suppliers, and FreeMarkets' ability to integrate acquisitions. Risk factors are described in more detail in FreeMarkets' filings with the Securities and Exchange Commission.
FreeMarkets, Inc
Consolidated Statement of Operations
(Unaudited; $ in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
Revenues $ 19,374 $ 4,183 $ 30,182 $ 7,682
Cost of revenues 10,965 2,583 17,299 4,149
---------- ---------- ---------- ----------
Gross profit 8,409 1,600 12,883 3,533
---------- ---------- ---------- ----------
Operating costs:
Research & development 4,795 806 7,679 1,361
Sales & marketing 10,122 1,869 17,542 2,462
General &
administrative 7,881 2,158 13,047 3,401
Stock-based expense 4,200 -- 4,426 --
Non-cash
acquisition-related
costs 29,558 -- 39,100 --
---------- ---------- ---------- ----------
Total operating costs 56,556 4,833 81,794 7,224
---------- ---------- ---------- ----------
Operating loss (48,147) (3,233) (68,911) (3,691)
Interest income
(expense), net 1,625 (32) 4,252 (66)
---------- ---------- ---------- ----------
Net loss $ (46,522) $ (3,265) $ (64,659) $ (3,757)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic & diluted EPS $ (1.25) $ (0.23) $ (1.78) $ (0.29)
Weighted average
shares 37,320,756 14,244,454 36,409,792 13,028,751
Net loss excluding
stock-based expense
& non-cash
acquisition-
related costs $ (12,764) $ (3,265) $ (21,133) $ (3,757)
Per basic & diluted
share $ (0.34) $ (0.23) $ (0.58) $ (0.29)
Operational data:
Auction volume $2,189,119 $ 411,586 $3,544,211 $ 632,252
Number of auctions 1,400 345 2,284 557
Estimated potential
savings $ 365,000 $ 80,000 $ 665,000 $ 116,000
Number of customers 64 13 n/a n/a
Cumulative number
of suppliers 5,600 1,500 n/a n/a
Cumulative number
of product
categories 130 45 n/a n/a
Number of employees 648 239 n/a n/a
FreeMarkets, Inc.
Consolidated Balance Sheet
(Unaudited; $ in thousands)
June 30, December 31,
Assets 2000 1999
-------- --------
Current assets:
Cash, cash equivalents and
short-term investments $148,240 $210,244
Accounts receivable, net 19,102 6,887
Other current assets 4,745 1,441
-------- --------
Total current assets 172,087 218,572
Property & equipment, net 24,652 12,115
Goodwill & other assets, net 323,459 967
-------- --------
Total assets $520,198 $231,654
-------- --------
-------- --------
Liabilities & Stockholders' Equity
Current liabilities:
Accounts payable $ 4,476 $ 4,764
Accrued acquisition costs 4,713 --
Other current liabilities 11,871 3,458
Current portion of long-term debt 1,844 1,500
-------- --------
Total current liabilities 22,904 9,722
Long-term debt 3,150 3,278
-------- --------
Total liabilities 26,054 13,000
Total stockholders' equity 494,144 218,654
-------- --------
Total liabilities & stockholders' equity $520,198 $231,654
-------- --------
-------- --------
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Contact:
FreeMarkets
Corporate Communications: Karen Kovatch, 412/297-8767
kkovatch@freemarkets.com
or
FreeMarkets
Investor Relations: Gary Doyle, 412/297-8849
gdoyle@freemarkets.com |
