MessageMedia's Second Quarter Beats Market Expectations; Quarterly Revenues of $8.5 million -- 551% Over Second Quarter 1999; Chief Financial Officer Tork Johnson Resigns
BOULDER, Colo.--(BUSINESS WIRE)--July 25, 2000--MessageMedia, Inc. (Nasdaq:MESG), the leading provider of strategic messaging solutions, today announced record financial results for the second quarter and six months ended June 30, 2000. During the quarter, the Company significantly grew its messaging and customer intelligence service revenues and reported a new high in ASP software sales. The quarter achievements included:
-- Signed a record number of new service contracts with a value
of $10.2 million, compared to $6.3 million in the first
quarter
-- Continued its regional and international sales expansion
efforts which now includes 45 domestic sales executives and 12
international
-- Enhanced its service offerings with MessageCenter 2.0, a new
web-based interface for messaging clients
-- Introduced Secure Message Delivery for innovative delivery of
confidential data
Record Financial Results
For the second quarter, MessageMedia reported revenue of $8.5 million, an increase of 551% from the $1.3 million reported in the second quarter of 1999 and up over 20% from $7.0 million in the first quarter of 2000. Excluding amortization of goodwill, the Company reported a second quarter 2000 net loss of $6.6 million, or $0.12 per share, based on 56.2 million weighted average shares outstanding compared to a net loss of $3.0 million or $ 0.07 per share on 44.0 million weighted average shares outstanding for the year ago period. For the second quarter of 2000, net loss was $19.6 million, or a loss per share of $0.35 compared to a net loss of $6.2 million or $0.14 per share for the second quarter of 1999. The current year results include MessageMedia Europe revenue of $103,000 and a loss after minority interest of $448,000 or $0.01 per weighted average share outstanding.
For the six months ended June 30, 2000, MessageMedia reported revenue of $15.5 million, an increase of over 655% from the $2.1 million reported for the same period in 1999. Excluding the amortization of goodwill, net loss for the first six months was $12.3 million, or $0.22 per share, based on 55.8 million weighted average shares outstanding, compared to a net loss before goodwill amortization in the first half of 1999 of $6.8 million or $0.16 per share based on 42.3 million weighted average shares outstanding. Net loss for the first half was $38.2 million or a loss per share of $0.69 compared to a loss of $13.2 million or $0.31 per share in the same period in 1999.
Through improved revenue growth and cost control management, the Company experienced operational leverage, evidenced by increased operating margins in the core messaging business. These efficiencies were offset by further investments in Customer Intelligence and International operations. Operating expense as a percentage of revenues declined from 146% in the first quarter to 129% in the second quarter. In addition, MessageMedia has U.S. cash reserves of $22 million -- sufficient to last until projected U.S. profitability in mid-2001.
"Our outstanding results reflect our overall strategy and broad product offerings that continue to add value to our clients' online communications and marketing programs," said Larry Jones, President and Chief Executive Officer of MessageMedia. "Supporting our performance is our exceptional sales and marketing team and their continuing success in building the business. The record number of new contracts signed demonstrates the ongoing demand for our comprehensive, strategic messaging solutions in the marketplace."
Continued Growth in U.S.
Messaging revenues for the second quarter grew 303% over the second quarter 1999 and 32% over the first quarter 2000. Messaging growth was driven by contracts from existing customers adding services, as well as by new customers signed. New customers in the quarter included Morningstar Inc., Wachovia Bank, Sabre, Inc. and Xdrive.
Customer Intelligence showed a particularly strong quarter with revenue growth of 37% over the first quarter 2000, reflecting the continued demand for customer and employee surveys, campaign marketing services and target database management. New clients added during the quarter included Columbia House, EDS and Financial Engines.
Software revenues were comparable with the first quarter when revenues were up 178% compared to the fourth quarter of 1999. Our ASP marketing program, which was launched in January 2000, added six new Application Service Providers, bringing the total to 18 clients.
The Company continues to expand and currently has a sales organization of 45 professionals in New York, San Francisco and Chicago. This team delivered $10.2 million in new service contracts versus $6.3 million in the first quarter.
International Growth Continues
MessageMedia Europe revenues for the quarter were $103,000, up 232% from first quarter 2000 revenues of $31,000. In the second quarter, the Company opened a production and development center in Gland, Switzerland that houses all database management, mail server and technical operations for MessageMedia Europe. MessageMedia Europe, headquartered in Paris, currently has over 46 employees. In addition, MessageMedia has signed letters of intent to enter into agreements for joint ventures in the United Kingdom and Australia, and exclusive ASP agreements in South Africa, New Zealand and India.
"MessageMedia now has over 400 employees working in 6 offices around the world," commented Jones. "Our early penetration into the European market and expansion into developing markets positions us for growth as these markets expand and begin to demand more strategic messaging solutions. We will continue to evaluate and seize opportunities to further extend our reach into developing messaging markets and establish MessageMedia as the global provider of a broad range of online strategic messaging communications solutions."
Broad and Value Based Offerings
To offer its clients the best solutions, MessageMedia continues to build upon its broad product offerings. The Company recently launched MessageCenter 2.0, a web-based client interface to its messaging platform. With MessageCenter 2.0 clients can easily control user access and permissions, create and edit messages, select target audiences, define response-tracking parameters, perform test mailings, schedule mailing events, and view activity reports from any Internet-connected computer. MessageCenter provides clients with more control over their online communications programs.
MessageMedia has also recently announced its Secure Message Delivery offering to its suite of high value messaging services. Secure messaging enables businesses to create a secure, interactive communications channel for the delivery of sensitive information. This service, anticipated to be available in the third quarter of 2000, will be powered by software recently licensed from Tumbleweed Communications. "This week we announced our Secure Delivery service marking a significant step towards the fulfillment of our strategy to provide clients with integrated, high value, secure messaging capabilities for the delivery of confidential information. This technology partnership reflects our commitment to providing our global clients with the latest and broadest suite of product offerings," added Larry Jones.
Organizational Changes
Effective immediately, MessageMedia's Chief Financial Officer, Martin "Tork" Johnson has resigned, citing personal reasons. Since joining the Company in the fall of 1999, Johnson was instrumental in supporting MessageMedia's successful international expansion efforts as well as implementing key business processes both domestically and internationally. Warren Morris Madison, executive recruiters, has been retained to begin the search for a replacement.
About MessageMedia Inc.
MessageMedia (Nasdaq:MESG) provides e-commerce services, permission-based direct marketing, ongoing customer communication and real-time customer feedback solutions using industry standard Internet protocols. MessageMedia's customer portfolio features Cisco, E*TRADE, AOL, Yahoo!, Microsoft, GeoCities, CMP Media, Barclays Bank, EDS, Universal Studios, Hoover's Online and Bertelsmann.
Investors in MessageMedia include SOFTBANK and its affiliates, which constitute the world's largest investors in the Internet and Pequot Capital Management, a Connecticut-based research-intensive investment firm.
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act. With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements that involve risk and uncertainties. These risk factors include, but are not limited to, the integration of a new senior management team, MessageMedia's limited operating history, the integration of recent acquisitions, risks associated with pending and future acquisitions, the anticipated fluctuations in operating results, the uncertain acceptance of new services being offered, and undeveloped and rapidly changing market and other factors detailed in MessageMedia's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 1999. All companies and product names are trademarks of their respective owners. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. MessageMedia undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
MessageMedia Inc.
6060 Spine Road, Boulder, Colo. 80301 Phone: 303/440-7550; Fax: 303/440-0303; www.messagemedia.com. Investor Relations inquiries should be sent to investor@messagemedia.com.
MessageMedia, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
3 Months ended 6 Months ended
June 30, June 30,
-------------------- --------------------
2000 1999 2000 1999
(unaudited) (unaudited) (unaudited) (unaudited)
-------- -------- -------- --------
Net revenues $ 8,476 $ 1,302 $ 15,519 $ 2,056
Cost of revenues 3,861 273 6,792 381
-------- -------- -------- --------
Gross profit 4,615 1,029 8,727 1,675
Operating expenses:
Marketing and sales 5,080 1,370 10,579 2,312
Research, development
& engineering 1,433 852 2,698 1,789
General &
administrative 4,380 1,638 7,873 2,985
Depreciation 991 205 1,730 422
Amortization of
goodwill 12,971 3,198 25,942 6,394
Restructuring charge -- -- -- 1,025
-------- -------- -------- --------
Total operating
expenses 24,855 7,263 48,822 14,927
Interest income, net 291 82 800 96
Other income /
(expense) (11) -- (15) --
Foreign currency
loss (55) -- (55) --
-------- -------- -------- --------
Net loss before minority
interest (20,015) (6,152) (39,365) (13,156)
Minority interest 430 -- 1,135 --
-------- -------- -------- --------
Net loss applicable to
common shares $(19,585) $ (6,152) $(38,230) $(13,156)
Net loss per share,
basic and diluted $ (0.35) $ (0.14) $ (0.69) $ (0.31)
Shares used in per
share computation,
basic and diluted 56,179 43,972 55,751 42,287
MessageMedia, Inc.
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2000 1999
----------- -----------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 34,405 $ 37,920
Accounts receivable, net 9,777 4,278
Prepaid expenses and other 2,517 749
-------- --------
Total current assets 46,699 42,947
Furniture equipment and software, net 10,745 4,728
Intangibles assets, net 49,221 75,162
Deposits and other 405 354
-------- --------
Total assets $107,070 $123,191
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,698 $ 2,482
Accrued compensation and related
liabilities 2,943 1,912
Deferred revenue 794 324
Current portion, debt obligations 43 25
Other accrued liabilities 1,606 1,022
Note payable to related party 8,892
-------- --------
Total current liabilities 16,976 5,765
Debt obligations 60 36
Minority interest 6,156 0
Total stockholders' equity 83,878 117,390
-------- --------
Total liabilities and stockholders'
equity $107,070 $123,191
======== ========
CONTACT:
MessageMedia Inc.
Mary Beth Loesch, 303/381-7500 (Investors)
Senior Vice President, Corporate Development
mbloesch@messagemedia.com
Beth Mayfield, 303/381-7500 (Investors)
Director of Corporate Affairs
investor@messagemedia.com
or
The Ruth Group, Inc.
Carol Ruth, 917/639-4110 (Investor Relations)
cruth@theruthgroup.com
KEYWORD: COLORADO
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