OTG Software Reports Record Revenues and Record EPS, 83% Revenue Growth Over Prior Year and Recent Launch of SAN Product For Data Storage and Data Access:
Q3 Highlights: * Achieves record revenues for 11th consecutive quarter - $12.1 million, up 83% year over year, 26% sequentially * Posts EPS of $0.10 for the quarter, excluding purchase accounting adjustments * Launches SANXtender(TM) to extend core technology to storage area networks and make SAN data accessible to applications and users * Inks distribution agreement with JVC to boost EmailXtender(TM) distribution
BETHESDA, Md., Oct 19, 2000 /PRNewswire via COMTEX/ -- OTG Software, Inc. (Nasdaq: OTGS chart, msgs), a leading software provider of online storage, data access and email management solutions, today announced record revenues and improved net income for the quarter ended September 30, 2000.
"This was our strongest quarter ever," said Richard Kay, chairman and CEO of OTG. "We've continued to achieve our goal of profitable growth and have boosted revenues substantially. Equally important, we delivered our new SANXtender product on schedule and continue to leverage our core technologies to grow into new areas. The growth of enterprise data -- and the increasing need to have access to that data -- continues to fuel our growth.
"In addition," Kay continued, "we have a blue-chip list of partners and an expanding domestic and international sales channel. With our recent introductions of EmailXtender, OnlineStor.com, and now SANXtender, OTG is even better positioned to capitalize on the market opportunities ahead of us."
Revenues for the third quarter of 2000 rose to $12.1 million, representing an 83% increase from revenues of $6.6 million in the third quarter of 1999. Sequentially, third quarter of 2000 revenues increased 26% from the second quarter of 2000. Software license revenues for the third quarter of 2000 advanced to $9.3 million, up approximately 82% from the year-ago quarter and 33% sequentially. Revenues from services increased to $2.8 million in the most recent quarter, up 87% from the year-ago quarter and 8% sequentially.
Fueled by this growth, year-to-date revenues were up 70% compared with the same period last year, with product license revenues up 80% and service revenues up 45% for the comparable periods.
Excluding $208,000 in purchasing accounting adjustments related to the acquisition of xVault, Inc. earlier this year, OTG's operating income for the third quarter of 2000 was $2.1 million, more than $1 million greater than any previous quarter in the company's history. At 17% of quarterly revenues, this marked increase in operating income was attributable primarily to strong revenue increases in the quarter. While operating expenses increased, the company better leveraged its operating expense base in the quarter.
Net income in the third quarter of 2000 totaled $2.8 million, or $0.10 per share on a diluted basis, excluding purchase accounting adjustments. This compares with net income of $183,000, or earnings of $0.01 per share on a diluted basis during the same period in 1999. Including the acquisition- related charges, OTG reported $0.09 per share on a diluted basis in 2000's third quarter.
In the third quarter of 2000, OTG recorded a tax provision for the first time. The provision reflects an effective income tax rate of 11.6%, which is lower than the full, effective tax rate the company expects to record in future years. The lower rate this quarter is due to a reduction in the company's valuation allowance against its deferred tax assets.
Operating Highlights
* OTG released SANXtender, its new storage software that enables bi-directional management and access of data by bridging applications in local area networks (LANs) with storage area networks (SANs). This product addresses the needs of the SAN market. International Data Corporation, an independent information technology research firm,
estimates that the total worldwide storage area network market will grow from $3.4 billion in 1999 to $13.8 billion in 2003 (including hardware). SANXtender provides transparent application access to data on the LAN and SAN through its tight integration with OTG's core storage software, DiskXtender. It helps to lower the total cost of
ownership of data stored on the SAN and the LAN, through its ability to store data on a variety of media (RAID, tape, optical, CD, DVD-RAM and NAS), and leverage existing storage systems. SANXtender helps to maximize SAN sources through server-less data movement, improving performance by offloading data traffic from the LAN.
* OTG and JVC announced a strategic partnership to serve the growing marketplace of corporate and industrial customers seeking a comprehensive, one-stop solution for mass email storage and filing.
Using JVC's award-winning DVD storage system and OTG's EmailXtender(TM) software, customers can realize a reliable solution that is both economical and scaleable for future technology. JVC's DVD-RAM and CD-R jukeboxes will be bundled with OTG's EmailXtender software, resulting in a complete end-to-end solution.
* Michael J. Del Rosso joined OTG as chief technology officer (CTO). As CTO, Del Rosso is responsible for developing the integrated technology vision for the company. He heads OTG's product management, software development and technical support operations.
* OTG opened its European headquarters near Cambridge, U.K., to better support the company's partners and customers across the region. |
