Liquid Audio Reports Second-Quarter 2000 Results: 364% Revenue Growth And Strong Cash Position
Continued Expansion of Global Music Distribution Network
REDWOOD CITY, Calif., July 31 /PRNewswire/ --
Liquid Audio, Inc. (Nasdaq: LQID), a leading provider of software and services
for the Internet delivery of music, today announced its financial results for
the second quarter ended June 30, 2000. During the quarter, the company
continued to expand its global music distribution network through the
formation of new business development affiliates in China and Europe; digital
distribution agreements with major record labels in Germany and Japan; digital
music kiosk deployments in Germany, Austria and Singapore; and its selection
by EMI Recorded Music to provide software and services for EMI's digital
download trial.
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Total net revenues for the second quarter were $3.5 million, compared with
$3.0 million for the first quarter of 2000 and with $745,000 for the second
quarter of 1999. Net loss was $7.7 million, or a loss of $0.35 per share
(basic and diluted), compared sequentially with a net loss of $6.5 million, or
a loss of $0.30 per share, and year-over-year with a net loss of $6.1 million,
or a pro forma loss of $0.29 per share(1). Cash, cash equivalents and
short-term investments were $144.0 million at June 30, compared with
$157.8 million at year-end.
"Throughout the first half of 2000, we continued to lay the pipeline and
build the infrastructure of a B2B e-commerce network for the digital
distribution of music on a truly global scale," said Gerry Kearby, president
and chief executive officer of Liquid Audio. "We measured our progress for
the second quarter in 364% year-over-year revenue growth and new cumulative
milestones in content, syndication and platform adoption. As our geographic
market reach expanded, so did our delivery channels, as kiosk downloads in
retail stores grew to complement online downloads from retail Web sites. We
look forward to the second half of the year, as our strategic partnerships
with major record labels such as BMG and EMI enter the next phases of
execution and our new international business development affiliates roll out
their programs."
Excluding strategic marketing and stock compensation expenses,
second-quarter 2000 net loss was $7.1 million, or a loss of $0.32 per share
(basic and diluted), compared with a net loss of $5.8 million, or a loss of
$0.26 per share, for the preceding quarter and a net loss of $4.3 million, or
a pro forma loss of $0.21 per share, for the year-ago quarter.
For the six months ended June 30, 2000, total net revenues were
$6.4 million, compared with $1.3 million for the same period a year earlier.
Net loss was $14.2 million, or a loss of $0.65 per share, compared with a net
loss of $10.2 million, or a pro forma loss of $0.50 per share, for the six
months of 1999. Excluding strategic marketing and stock compensation
expenses, first-half 2000 net loss was $12.9 million, or a loss of $0.59 per
share, compared with a net loss of $8.1 million, or a pro forma loss of
$0.39 per share, a year earlier.
Strategy Execution Milestones Support Continued Growth
By the end of second-quarter 2000, Liquid Audio's music distribution
network had reached the following milestones:
-- 9,800 recording artists, up 15% from 8,500 the prior quarter
-- 1,500 record labels, up 7% from 1,400
-- 80,000 songs, up 19% from 67,000
-- 900 music and retail Web sites, up 20% from 750.
Other recent business highlights, both during and beyond the second
quarter, included:
-- The company's selection by EMI Recorded Music, the third largest music
enterprise in the world, to provide encoding, hosting, security, distribution,
and digital rights management for EMI's digital download trial, which will be
Liquid Audio's first large-scale commercial deployment of secure music
distribution in both the Microsoft Windows Media and Liquid Audio formats
-- The establishment of two new international operations -- Liquid Audio
Europe, plc, and Liquid Audio Greater China, a wholly owned subsidiary -- to
join existing affiliates Liquid Audio Japan and Liquid Audio Korea in
accelerating the penetration of large new country markets for digital music
delivery and globalizing the Liquid Audio franchise
-- Strategic market wins in Germany and Japan, based on a digital
distribution agreement with edel music, a leading independent music company
based in Hamburg, and Liquid Audio Japan's selection by Avex, a major record
label in Japan, and Pia, which operates some 23 independent labels in Japan
-- The successful deployment of in-store digital music kiosks for the
preview and purchase of singles and the creation of custom-compilation CDs in
Germany, Austria and Singapore, building on earlier kiosk successes in Korea
and the United Kingdom.
The Company
Liquid Audio, Inc. is a leading provider of software and services for the
digital delivery of music over the Internet. The Liquid Audio solution gives
musicians, record labels, Web sites, and music retailers the ability to
publish, syndicate and securely sell recorded music online with copy
protection and copyright management. Using the Liquid Player software,
available for free download at www.liquidaudio.com, music fans can preview and
purchase downloadable music from the more than 900 affiliate Web sites in the
Liquid Music Network. Liquid Audio is located in Redwood City, California.
This news release contains forward-looking statements relating to future
performance, technology and product development that may impact future results
and the future viability of the company. Actual results could be affected or
differ materially from those anticipated in the forward-looking statements as
a result of new contracts or relationships that may not produce significant
revenue or net income. Other risk factors that could cause results to vary
include: future products and results; technological shifts; potential
technical difficulties that could delay new products; competition; reliance on
third-party partners to implement the company's technology; general economic
conditions in the markets in which the company operates; pricing pressures;
and the uncertainty of market acceptance of new products by OEM and end-user
customers, both domestically and internationally. Readers should refer to the
"Risk Factors" section of the company's public offering prospectus, dated
December 14, 1999, and Annual Report on Form 10-K, dated March 30, 2000, the
Quarterly Report on Form 10-Q, dated May 15, 2000, and other filings with the
Securities and Exchange Commission.
Editor's Note: Liquid; Liquid Audio; Liquid Audio, Inc.; the Liquid
Audio logo; Liquid Kiosk Network; Liquid Music; Liquid Music Distribution
Network; Liquid System; Liquid Player; and Liquid Music Network are trademarks
of Liquid Audio, Inc. All other trademarks are the property of their
respective owners. For more information about Liquid Audio software and
services, call 888-Liquid-0 or visit www.liquidaudio.com.
(1) The pro forma computations for the second quarter of 1999 are based on
20.7 million weighted average shares outstanding, reflecting the issuance of
common stock for the initial and follow-on public offerings and the conversion
of preferred stock to common stock prior to the IPO.
Liquid Audio, Inc.
Condensed Statements of Operations
(in thousands, except per-share amounts; unaudited)
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
Net revenues:
License revenue $ 612 $394 $ 843 $653
Service revenue 1,215 101 1,616 190
Business development revenue 1,627 250 3,990 433
Total net revenues 3,454 745 6,449 1,276
Cost of revenues:
Cost of license revenue 78 52 96 98
Cost of service revenue 849 172 1,370 325
Cost of business
development revenue 68 -- 68 2
Total cost of revenues 995 224 1,534 425
Gross profit 2,459 521 4,915 851
Operating expenses:
Sales and marketing 4,248 1,797 7,745 3,916
Research and development 5,842 2,701 10,762 4,261
General and
administrative 1,410 498 3,318 1,000
Strategic marketing
-- equity instruments 514 1,364 1,075 1,364
Stock compensation
expense 73 364 265 789
Total operating
expenses 12,087 6,724 23,165 11,330
Loss from operations (9,628) (6,203) (18,250) (10,479)
Interest and other
income, net 2,147 131 4,461 264
Minority interest
in loss of strategic
partner (237) -- (453) --
Net loss $(7,718) $(6,072) $(14,242) $(10,215)
Net loss per share:
Basic and diluted $(0.35) $(1.89) $(0.65) $(3.28)
Weighted average shares 22,013 3,213 21,806 3,114
Pro forma net loss per share:
Basic and diluted -- $(0.29) -- $(0.50)
Shares used in pro forma
per-share calculation -- 20,707 -- 20,608
Liquid Audio, Inc.
Condensed Balance Sheets
(in thousands)
June 30, December 31,
2000 1999
(unaudited)
Assets
Current assets:
Cash, cash equivalents and
short-term investments $144,019 $157,849
Accounts receivable, net 1,290 316
Receivables from related parties 1,616 435
Other current assets 770 638
Total current assets 147,695 159,238
Investment in strategic partner 1,506 1,959
Property and equipment, net 6,676 4,857
Other assets 224 220
Total assets $156,101 $166,274
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $3,722 $1,952
Accrued expenses and other current liabilities 3,071 2,901
Deferred revenue 1,706 1,572
Capital lease obligations, current portion 156 194
Equipment loan, current portion 589 589
Total current liabilities 9,244 7,208
Capital lease obligations, non-current portion 95 149
Equipment loan, non-current portion 437 731
Note payable to related party 428 441
Total liabilities 10,204 8,529
Stockholders' equity 145,897 157,745
Total liabilities and
stockholders' equity $156,101 $166,274
SOURCE Liquid Audio, Inc. |
