Tumbleweed Communications Corp. Reports Q3 2000 Financial Results Committed Message Traffic Reached 1.29 Billion Messages, Transaction Revenue Increased 53%, Total Third Quarter Revenue Reached $12.4 Million
REDWOOD CITY, Calif., Oct 18, 2000 (BUSINESS WIRE) --
Tumbleweed Communications Corp. (Nasdaq: TMWD chart, msgs), a leading provider of secure Internet communications services, today reported results for the third quarter ended September 30, 2000.
Total revenue for the quarter was $12.4 million, up from second quarter 2000 revenue of $10.1 million, and third quarter 1999 revenue from continuing product lines of $4.4 million. Revenue from continuing product lines for the nine months ended September 30, 2000 was $29.1 million, up from $10.7 million for the same period in 1999.
Transaction fee revenue grew to $2.3 million in the third quarter from $1.5 million in the second quarter of this year and $0.3 million in the third quarter of 1999. Revenue from transaction fees for the nine months ended September 30, 2000 was $4.6 million compared to $0.5 million in the same period a year ago. License revenue was $7.6 million in the third quarter compared to $6.8 million for the second quarter of 2000 and $3.1 million for the third quarter in 1999. License revenue for the nine months ended September 30, 2000 was $18.6 million versus $8.2 million for the same period in 1999. All amounts include one month of operations of Interface Systems, Inc., which the company acquired August 31, 2000.
Tumbleweed reported a net loss for the quarter ended September 30, 2000, excluding expenses related to stock compensation expense, amortization of goodwill and other intangibles and acquisition-related charges of $8.1 million, or $0.29 per basic and diluted share. The net loss for the third quarter, including these expenses, was $15.4 million, or $0.55 per basic and diluted share. For the nine months ended September 30, 2000, net loss was $22.9 million, or $0.87 per basic and diluted share, excluding merger-related expenses, stock compensation expense, amortization of goodwill and other intangibles. Net loss for the first nine months of 2000, including these expenses, was $43.5 million, or $1.66 per basic and diluted share.
"Tumbleweed has reached committed message traffic levels of 1.29 billion messages. We've become the communications channel for our customers doing business online in our target markets - including brokerage, banking, government, insurance, healthcare, manufacturing and telecommunications," said Jeffrey C. Smith, chairman, president and CEO of Tumbleweed Communications Corp. "With the growth in message traffic, we're seeing demand among our customers for new services - we have several new customers who signed combined licenses for both Integrated Messaging Exchange(TM) (IME(TM)) and Message Management System (MMS(TM)) during the quarter. We're working with Iron Mountain to offer solutions to electronically archive message traffic for our customers and theirs. We recently announced a strategic alliance with Software.com -- Tumbleweed will provide the secure communications and management solutions to integrate with Software.com's InterMail(TM) platform.
"We are achieving the goals we set for Tumbleweed's growth during 2000, including growth in market share in key target markets, growth in message traffic under management, new services for our customers, and progress towards profitability," said Smith.
Highlights of the quarter:
-- Committed message traffic at quarter end reached 1.29 billion
messages, compared to 161.3 million messages at the end of Q2.
-- 50 customers contributed to transaction-based revenue in Q3,
compared to 27 in Q2.
-- Tumbleweed closed 82 new contracts with new and existing
customers during the quarter, and average sales price for all
Tumbleweed products rose to $136,000, from $46,000 in Q2.
-- Gross margins for Q3 improved to 71% versus 68% in Q2 2000.
Operating loss as a percentage of sales, prior to compensation
expense, goodwill amortization and other intangible and
acquisition-related charges, improved to 65% in Q3 compared to
80% during Q2, and 102% in Q1. In Q3 1999, operating loss as a
percentage of sales was 131%.
-- Tumbleweed gained significant traction in the healthcare and
government verticals, as well as further penetrating the
brokerage, commercial banking, insurance and legal verticals.
-- Tumbleweed announced a comprehensive strategic alliance with
Iron Mountain Incorporated (NYSE: IRM chart, msgs), the global leader in
records and information management services, to jointly
develop, market and sell new products and services for
electronic data archiving.
-- Tumbleweed was allowed its fifth and sixth patents during Q3.
The new patents cover private URLs for secure document
delivery and authentication as well as server to server
encryption and data conversion.
-- Tumbleweed completed a successful secondary stock offering
during the quarter. The company had $89 million of cash and
cash equivalents as of September 30, 2000.
-- Tumbleweed successfully closed its acquisition of Interface
Systems, a leading provider of legacy to internet data
conversion technologies. Legacy data conversion is a critical
step in statement presentment.
-- Tumbleweed acquired a stronger controlling interest in its
Japanese subsidiary, Tumbleweed KK, which it co-owns with
Hikari Tsushin. Tumbleweed now owns 80% of Tumbleweed
Communications KK.
About Tumbleweed Communications Corp.
Tumbleweed Communications Corp. is a leading provider of advanced e-mail solutions for business communications. Our products and services enable businesses to create and manage secure online communication channels that leverage established e-mail networks and enterprise applications. Tumbleweed Integrated Messaging Exchange is a platform and set of applications for creating secure communications channels between a business and its customers, partners, and suppliers. Tumbleweed Messaging Management System is a comprehensive solution that extends internal e-mail systems to the Internet through centralized security, policy enforcement, filtering and archiving. Used together, Tumbleweed IME and Tumbleweed MMS automatically apply security policies and redirect sensitive e-mail for secure, trackable delivery. Companies that rely on Tumbleweed IME or MMS products include American Express, Chase Manhattan Bank, Datek Online, the European Union's Joint Research Council, the Food and Drug Administration, Northern Trust, UPS, Pitney Bowes, TD Waterhouse, and the United States Postal Service.
Except for the historical information contained herein, the matters discussed in this press release may constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected, particularly with respect to the growth of Tumbleweed's business. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions. For further cautions about the risks of investing in Tumbleweed, we refer you to the documents Tumbleweed files from time to time with the Securities and Exchange Commission, particularly Tumbleweed's Form S-1 filed July 26, 2000, Form S-4 filed August 3, 2000, Form 10-K filed March 30, 2000, and Form 10-Q filed August 14, 2000. Tumbleweed assumes no obligation to update information contained in this press release.
Note to Editors: Tumbleweed is a registered trademark and Integrated Messaging Exchange, IME, and Messaging Management System (MMS) are trademarks of Tumbleweed Communications Corp.
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TUMBLEWEED COMMUNICATIONS CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
2000 1999 2000 1999
-------- -------- --------- --------
Revenue:
License $ 7,607 $ 3,081 $ 18,596 $ 8,165
Services 2,499 999 5,961 2,054
Transaction fees 2,328 318 4,577 524
-------- -------- -------- --------
Revenue from continuing
product lines 12,434 4,398 29,134 10,743
Discontinued product line -- 273 -- 1,472
-------- -------- -------- --------
Total revenue 12,434 4,671 29,134 12,215
Cost of revenue:
License 514 248 1,085 490
Services 2,992 1,246 7,816 3,011
Transaction fees 53 24 97 44
-------- -------- -------- --------
Total cost of revenue 3,559 1,518 8,998 3,545
-------- -------- -------- --------
Gross profit 8,875 3,153 20,136 8,670
Operating expenses:
Research and development 4,205 2,296 10,220 6,167
Sales and marketing 10,777 5,428 27,712 12,749
General and administrative 2,911 2,006 6,899 3,921
Stock compensation 1,864 1,115 4,321 2,388
Amortization of goodwill,
intangibles and in-process
research and development 5,401 -- 5,491 --
Merger related expenses -- -- 10,803 --
-------- -------- -------- --------
Total operating expenses 25,158 10,845 65,446 25,225
-------- -------- -------- --------
Operating loss (16,283) (7,692) (45,310) (16,555)
Other income, net 991 956 2,061 1,251
-------- -------- -------- --------
Net loss before provision
for taxes (15,292) (6,736) (43,249) (15,304)
Provision for taxes 95 136 333 211
Minority interest (30) -- (76) --
-------- -------- -------- --------
Net loss $(15,357) $ (6,872) $(43,506) $(15,515)
-------- -------- -------- --------
Net loss per share-basic
and diluted $ (0.55) $ (0.37) $ (1.66) $ (1.41)
-------- -------- -------- --------
Weighted average
shares-basic and diluted 27,872 18,442 26,261 11,041
-------- -------- -------- --------
TUMBLEWEED COMMUNICATIONS CORP.
AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
September 30, December 31,
2000 1999
------------- -------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 89,472 $ 60,544
Accounts receivable 19,315 5,182
Prepaid expenses and other
current assets 2,970 3,574
----------- ----------
Total current assets 111,757 69,300
Property and equipment, net 12,068 3,485
Intangibles 5,763 --
Goodwill 71,471 135
Other assets 1,589 2,763
----------- ----------
Total assets $ 202,648 $ 75,683
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 4,409 $ 2,878
Current installments of
long-term debt 580 840
Accrued liabilities 16,375 6,398
Deferred revenue 2,872 2,579
---------- ----------
Total current liabilities 24,236 12,695
Long-term debt,
excluding current installments 574 1,017
Other long-term liabilities 1,005 258
----------- -----------
Total liabilities 25,815 13,970
Stockholders' equity:
Common stock 29 26
Additional paid-in capital 293,911 132,167
Deferred compensation expense (8,078) (5,283)
Accumulated other
comprehensive income (loss) (273) 53
Accumulated deficit (108,756) (65,250)
---------- ---------
Total stockholders' equity 176,833 61,713
---------- ---------
Total liabilities and
stockholders' equity $ 202,648 $ 75,683
Contact:
Tumbleweed Communications
Lisa Poulson, 650/216-2020 (Press)
lisa.poulson@tumbleweed.com
Jennifer Ruddock, 650/216-2129 (Investors)
jennifer.ruddock@tumbleweed.com |
