Kana Reports Record Revenues of $40.6 Million for Third Quarter of 2000
A 975% Increase From Prior Year
REDWOOD CITY, Calif.--(BUSINESS WIRE)--Oct. 19, 2000--Kana Communications, Inc. (NASDAQ:KANA - news), a leading provider of enterprise relationship management (eRM) solutions, today announced record results for the quarter ended September 30, 2000.
Kana's revenues for the quarter ended September 30, 2000 were $40.6 million, a 975% increase over historical revenues of $3.8 million in the same period in the prior year and a sequential increase of 59% from the preceding quarter on a historical basis. Compared to pro forma revenue of $28.7 million in the preceding quarter, revenue increased 42%. Pro forma net loss decreased to $19.7 million, or $(0.22) per share, in the third quarter of 2000 compared to $20.3 million, or $(0.24) per share, during the second quarter of 2000.
The enterprise relationship management solution of choice for 8 of the 10 most trafficked sites on the Internet, and chosen by 4 of the top 5 Systems Integrators in the eCommerce market, Kana now has more than 800 customers among the global 2000 and leading Internet companies. New customers choosing Kana this quarter included such companies as Aetna, Brooks Brothers, BT Syncordia, Credit Suisse, David Jones, Forbes, The Hartford, Household Finance, KPN Telecom, and Renault.
Commenting on the results, Chief Executive Officer Michael McCloskey said, ``Our third quarter results and Kana's tremendous growth over the last year reflect Kana's emergence as a leader in the enterprise relationship management marketplace. Kana's record revenues are indicative of the continuing worldwide adoption of the Kana relationship management solutions, both by leading companies and systems integrators. During the quarter, Kana was chosen as the strategic eRM partner by a number of the industry's top e-business integrators and technology companies, including Andersen Consulting, IBM, KPMG Consulting and eLoyalty. We expect these relationships to provide substantial joint business over the term of the agreements.''
Continued McCloskey, ``As we enter the fourth quarter, Kana is reinforcing its position as a dominant player by continuing to develop leading-edge solutions for e-business. With the recent shipment of our Kana eBusiness Platform for UNIX along with the announcement of a range of new marketing, sales, service and communications applications, Kana has achieved a significant milestone in providing a comprehensive and integrated relationship management solution for even the most complex organization. Kana gives customers, partners and employees the means to effectively manage relationships and interactions across the enterprise through all communications channels, allowing companies to provide a higher quality of personalized service to more customers. Our newest product releases offer companies a scalable, Internet-architected solution that lowers the time to build, deploy and maintain e-business applications, and easily integrates with other systems.''
RECENT COMPANY ANNOUNCEMENTS
Kana Products Being Deployed in Broad Enterprise Applications
The Kana Solution is being deployed in a broad range of business environments including B2C, B2B, and Net Markets. During the quarter, Kana announced a number of customers including adidas, Bertelsmann, The Chase Manhattan Bank, Cisco, and Eastman Kodak demonstrating both the scalablity and broad applicability of the Kana eRM Suite.
Cisco faces the challenge of consistently providing high levels of service to its significant customer base. Cisco needed an eRM solution that could handle enormous volume and was flexible enough so that decisions and changes to the system could be made in real-time and appear seamless to customers and partners. The Kana eBusiness platform provides Cisco with the means to rapidly deliver relevant and consistent information to customers; decrease cost per contact; build strong loyalty and relationships and finally to reach beyond the traditional boundaries of the enterprise to include partners and employees. According to Cisco, ``Kana has proven to us its value as a technology partner for Cisco's customer contact software platform,'' said Pete Solvik, senior vice president and CIO, for Cisco Systems, Inc. ``Now by adding the application functionality of the Kana Service system to Cisco's own communications management solutions, we will be able to enrich our customer and partner interactions. This enables us to use all communications channels to have a positive effect on customer service and develop superior customer retention.'' According to KPMG Consulting, ``KPMG Consulting realized that Cisco's need for an internal enterprise relationship management application that complemented its customer contact software platform was perfectly matched with the strength of the Kana Service product,'' said Joseph Murray, Managing Director at KPMG Consulting. ``It was particularly rewarding to share a common implementation vision with Kana and Cisco and to deliver a comprehensive end-to-end communications management solution together.''
The Chase Manhattan Bank has selected Kana Response and Kana Classify to handle the bank's increasing online customer service demands. The Kana platform equips Chase's National Consumer Services Division with a comprehensive platform to easily manage and enhance its online customer interactions and relationships. Kana Response enables Chase Manhattan to respond quickly and efficiently to customer messages, and minimizes the cost of the response process. Chase also plans to roll out Kana Classify, a powerful, advanced and highly scalable automation solution.
Bertelsmann Marketing Service, a division of the German media and publishing group, has selected Kana as the backbone of its new Internet Contact Centre. The Kana solution was chosen to supply eRM applications to enable Bertelsmann to gather information, submit queries and order products. Following a successful pilot project and development phase of only three months, the Internet Contact Centre is up and running. According to Bertelsmann, ``More and more of our customers are using the Internet to gather information, submit queries and order products,'' stated Ralf Keller, Bertelsmann Marketing Service. ``We want to optimize our use of this fast, interactive medium in order to provide our customers with efficient, personal service that is as fast as possible. In addition, seamless integration with our existing IT infrastructure and fast implementation were two further powerful arguments for the Kana solution.''
Adidas selected Kana to increase its strong online presence, increase revenue and significantly improve customer service with rapid response. According to adidas, ``Choosing Kana was a logical strategic move,'' said John Knight, Director of Strategy of adidas America. ``The solutions address the complete customer life cycle, and we were able to get the entire package up and running almost immediately. We also could maintain excellent cost controls because all the Information Technology resides at Kana. In addition, the solutions are so simple to use that our marketing people can take full advantage without needing in-depth technical training. Kana delivered an industrial strength solution that will handle our growth well into the future.''
Eastman Kodak Company selected Kana to deliver enhanced capabilities for its online customer service center. Kodak's Service and Support business provides support for more than 10 million customer contacts a year and covers a wide array of digital and film-based imaging products. According to Kodak ``Rapidly growing demand required us to initiate substantial customer service improvements while still maintaining cost controls,'' said Tim Nichols, Call Center Systems Manager of Kodak Service and Support. At Kodak, each customer interaction as an opportunity to create, foster and strengthen their relationship with their customer. This relationship allows Kodak to have a greater understanding of customer needs, expectations, and knowledge of Kodak products. According to Kodak, ``Kana provided the ideal means to enhance our customer service. Kana enables us to interact with our customers in a personalized manner and within a short period of time, exceed customers' expectations. That's important because the quality of a company's customer service is a key driver in keeping and attracting customers.''
Existing Customers Commit More Deeply To Kana In Record Amounts
Kana expanded its sales into its established base of more than 800 customers, experiencing its best quarter ever for orders from its existing customer base. Follow-on, up-sell and cross-sell revenue and orders were received from such customers as Aetna, Ameritrade, Barnes & Noble, Bertelsmann, Capital One, Chase Manhattan Bank, Chase Asia, Cox Communications, CSAA, Dayton Hudson, DeltaAir Lines, Equitable Life Assurance, Ernst & Young, Franklin Mint, Hewlett-Packard, Icelandair, J. Crew, JC Penney, LL Bean, MCI, National Westminster, Pacific Bell, Providian, Telecom Italia, Telstra, Tiffany and Company, Wachovia Bank, World Savings, and Xerox.
New Customer Wins
Kana competed for and won a significant number of new order bookings from Global 2000 and leading Internet companies throughout the world. New customer wins during the quarter include such companies as 1st Web Bank, BB&T, Broadsystem, BT Syncordia, Brooks Brothers, BOL HollandCarsDirect, BSG Africa, College Board, Credit Suisse, David Jones, Dresdner Klienwort Benson, Forbes, The Hartford, High Circle, HP Nederland, Household Finance, HP Household, KPN Telecom, Lawsons Software, MCC, Morgan Guaranty, Paymap, Princeton Consulting, Renault, Rivus International, Universal Salvage, Upromise, US Search, and Verizon.
Kana Extends OEM Offerings To Address New Markets
As part of Kana's strategic initiative to enter new markets and expand solutions to address customer needs, Kana is licensing OEM solutions to be incorporated into a variety of product categories. This program will enable companies to resell Kana in conjunction with their own products. This past quarter, Kana signed a partnership agreement with ServiceWare Technologies under which ServiceWare agreed to integrate and resell Kana Response within ServiceWare's eService Suite(TM). The combined solution will give ServiceWare's customers the ability to offer end-users multiple touchpoints for eService to reduce costs, increase sales and deliver personalized service that builds customer loyalty. By employing the powerful workflow capabilities of Kana Response, the eService Suite will seamlessly and effectively receive and accommodate large volumes of Web- and e-mail-based inquiries. The integration will facilitate the immediate exchange of information with online customers through a combination of artificial intelligence and powerful workflow tools.
Kana Secures Global Strategic Alliances
Kana announced the formation of a number of substantial strategic global alliances with leading system integrators as part of its strategy to expand the ecosystem of solutions providers surrounding Kana's e-business solutions. Each of these premier alliances requires a significant commitment of manpower and resources from these partners in driving Kana solutions into the marketplace. A sampling of the more significant alliances includes:
In July, Andersen Consulting and Kana announced the formation of a multi-year strategic global alliance. According to IDC, Andersen Consulting is the top-ranked worldwide Internet and CRM Professional Services firm. Through this alliance, Andersen Consulting and Kana are delivering a comprehensive suite of customer-facing applications supporting marketing, sales, service and communications solutions through an Internet-architected e-business platform to Global 2000 and leading Internet companies. Under the alliance Andersen Consulting and Kana are marketing and delivering solutions that enable businesses to share global views of their customer interactions and business relationships with customers and partners across the extended enterprise. Joint successes include clients such as Replay TV and Washington Mutual. With over 200 global resources currently trained in delivering Kana solutions, Andersen Consulting plans to grow their practice by an additional 450 professionals. ``Our research has clearly shown that companies gain a significant bottom-line impact from effectively managing interactions with their customers,'' said Steve Lorack, an Andersen Consulting partner who leads the firm's global e-Commerce activities within the Electronics and High Tech Industry. ``Through our strategic alliance with Kana, we can provide our clients with leading-edge solutions for improving these interactions, regardless of how, where or when customers, partners and employees connect with the enterprise.''
In August, IBM and Kana formed a global strategic alliance to integrate Kana's Web-architected relationship management solutions with IBM's middleware, hardware and services e-business capabilities. Together, IBM and Kana will deliver comprehensive e-business solutions for managing online interactions and relationships among customers, business partners and the enterprise. Under the agreement the two organizations will jointly market and sell Kana eRM solutions, which will support IBM's Application Framework for e-business, including the Netfinity (NT) and RS/6000 (AIX). Dedicated engineering, product marketing and quality assurance teams will manage the integration and optimization of the entire, Web-architected integrated e-business solution. According to IBM, ``The solutions we're now able to provide with Kana will enable companies to manage customer interactions via the Web. This alliance is driven by client demand for assistance in developing e-business strategies and Web-architected solutions,'' said Stephanie Hahn, General Manager of IBM Customer Relationship Management Solutions. ``The Internet has shifted the balance of power to customers by empowering them to choose how, when, and where to conduct business. Our clients' companies are looking to implement these kinds of Web-based, customer, partner and employee-facing solutions,'' Hahn concluded.
In September, KPMG Consulting and Kana announced a strategic alliance to deliver relationship management solutions to leading Global 2000 and dot-com companies. The companies have entered into a formal alliance agreement to develop and market the entire range of Kana's eRM solution, including all communications and business applications and the Kana eBusiness platform. KPMG Consulting and Kana intend to build a 350-consultant practice and train over 150 business development and industry professionals through extensive internal and external education and marketing efforts. The two companies will focus initially on servicing joint clients in Financial Services, targeting the retail banking and brokerage industries, and high technology, focusing on electronics, software and dot-coms. The alliance will quickly expand to Communications, Public Services and other sectors ``This strategic alliance with Kana, one of the leading e-business vendors, enhances KPMG Consulting's position as a leading e-Services provider,'' said Michael Donahue, chief operating officer of KPMG Consulting. ``Kana's products fortify KPMG Consulting's offerings in the eBusiness marketplace with its support for robust, multi-channel, web-architected solutions.''
Aspect Communications Corporation and Kana announced a global strategic alliance that will integrate the award-winning Aspect Customer Relationship Portal and Web Interaction offering with Kana's industry-leading Internet-architected eRM solution. The Aspect/Kana partnership provides for the integration of the industry-leading Aspect Customer Relationship Portal application software with Kana's eRM suite. With the combined solution, organizations manage all interactions, across all touch points, on a fully scalable and modular Internet-architected platform. According to Aspect, ``The alliance enables us to deliver on the promise of the Internet -- ubiquitous access and cost-effectiveness -- with immediate benefits, such as rapid development, unparalleled scalability, reliability and ease of maintenance,'' said Beatriz Infante, president and CEO of Aspect. ``Aspect and Kana solutions were both created to manage customer communications over all channels. The alliance enables customers to fully reap the benefits of that goal and sees the completion of a truly comprehensive and Internet-architected customer relationship management solution.''
eLoyalty and Kana announced a worldwide partnership whereby eLoyalty will integrate Kana's e-business applications with eLoyalty's unique eCRM consultancy skills and technology to provide a complete multi-channel solution that enables clients to build lifetime relationships with their customers. The combined partnership will offer a comprehensive solution to e-businesses that build and maintain loyal customer relationships while reducing the cost of customer acquisition and retention, increasing customer `wallet share,' and ultimately providing a sustainable competitive advantage in the marketplace. According to eLoyalty, ``eLoyalty's mission is to deliver the tangible economic benefits of loyalty by providing a complete solution to our customers,'' said Kelly Conway, President and CEO, eLoyalty. ``We are excited to formalize this global relationship with Kana that leverages our joint customer successes in building and measuring multi-channel customer loyalty solutions. The combination of Kana's best-of-breed e-business solutions and eLovalty's LVA and Loyalty Suite will fulfill the promise of a completely customer-focused, loyalty-based e-business interaction solution.''
RECENT NEW PRODUCT ANNOUNCEMENTS
Kana Introduces Enterprise Java(TM) eBusiness Platform For UNIX
Kana announced the availability of the Kana eBusiness Platform for UNIX, an open and extensible Internet-architected platform for rapidly building and deploying world-class e-business applications with initial support for Sun's Solaris and IBM's AIX operating environments. The product combines the portability and flexibility of a Java implementation with Kana's open-architecture, enabling companies to create a flexible and mission-critical foundation to integrate all of their e-business applications. The cornerstone of any e-business is the platform, where applications and services are integrated through shared, object-oriented data structures, business rules and processes, enabling companies to easily manage relationships and interactions between customers, partners and the enterprise.
Kana Announces the Release of Kana 6
Kana announced the integration of it's suite of e-business and communications applications, and an Internet-architected platform that offer customers, partners and the enterprise a global view of their interactions and relationships. Kana 6 integrates multiple communications channels (phone, email, Web, wireless, in-store), with marketing, service and sales e-business applications. Kana 6's Internet-architecture is extremely flexible and can be implemented up to four times faster than a traditional CRM solution. Kana 6 allows companies to quickly make changes in the way they interact with their customers and partners, empowering e-businesses to create and nurture mission-critical relationships, enhance loyalty and decrease costs.
Commented Sheryl Kingstone, Yankee Group, ``With the capabilities in Kana 6, Kana is now leading the pack in delivering Internet-architected solutions that businesses need to synchronize interactions and relationships among customers, partners and the enterprise.''
Kana mBusiness Introduced for Wireless Enterprise Relationship
Management
Kana introduced Kana mBusiness, its wireless solution that has been integrated with Kana eBusiness Platform, the rapidly deployable, highly scalable e-Business platform available on NT and UNIX. Kana mBusiness can currently be found in a business-to-business roadside assistance application from M.A.N. Truck & Bus, a UK company.
Working with the platform Kana mBusiness' wireless capabilities integrate with all of a company's e-business communications and applications. The solution includes wireless access to customer and partner portals supporting sales and marketing inquiries, personalized responses, service resolution, and transaction confirmation and contact management. Kana's wireless solution uses standards such as WAP, WML and more to enable users to easily author content across wireless-able devices. Kana also allows for wireless portals to be customized, where users check and act on marketing, sales and service applications.
About Kana Communications, Inc.
Kana Communications, Inc. (NASDAQ:KANA - news), a leading provider of Internet-architected enterprise relationship management (eRM) solutions, delivers a broad range of world-class, integrated e-business and interaction applications with a modular and scalable platform for both Internet and Global 2000 companies. Kana solutions deliver personal portals that offer customers, partners and the enterprise a global view of their communications and relationships. This global view includes managing the full set of communications channels such as e-mail, Web, chat, instant message, VOIP, phone and person-to-person, as well as e-business and communications applications to integrate the marketing, sales and service functions. This full-service suite enables e-businesses to compete and succeed in today's customer-driven economy. For more information about the solutions found in more than 800 companies, including 8 of the 10 most trafficked Web sites, please visit Kana at kana.com.
Kana Communications, Kana and the Kana logo are trademarks of Kana Communications, Inc. All other company and product names may be trademarks of their respective owners.
Cautionary Note Regarding Forward-looking Statements Under the Private Securities Litigation Reform Act of 1995: Information in this release that involves Kana's projections, expectations, beliefs, hopes, plans, intentions or strategies regarding the future are forward-looking statements that involve risks and uncertainties. These statements include statements about Kana's strategies in the marketplace, its market position and its relationship with customers. All forward-looking statements included in this release are based upon information available to Kana as of the date of the release, and we assume no obligation to update any such forward-looking statement. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include, but are not limited to, competition, the successful integration of Silknet, increased competition due to Kana's expanded product offering, risks associated with the evolving and varying demand for eRM, eCRM, customer communication and similar software, our ability to expand our operations, acceptance of email and the Internet as a communications medium, litigation over property rights, and general economic factors. These and other factors are risks associated with our business that may affect our operating results are discussed in the Company's filings with the Securities and Exchange Commission (``SEC''), including our most recent annual report on Form 10-K and quarterly report on Form 10-Q.
KANA COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(1)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues:
License $ 23,730 $ 2,781 $ 46,633 $ 5,811
Service 16,913 998 30,183 1,795
Total revenues 40,643 3,779 76,816 7,606
Cost of revenues:
License 918 52 1,719 124
Service 16,354 2,191 31,158 3,540
Total cost of revenues 17,272 2,243 32,877 3,664
Gross profit 23,371 1,536 43,939 3,942
Operating expenses:
Sales and
marketing 25,749 5,482 58,297 12,141
Research and
development 12,993 3,384 29,291 8,445
General and
administrative 6,347 1,402 11,929 3,213
Total operating
expenses 45,089 10,268 99,517 23,799
Operating loss (21,718) (8,732) (55,578) (19,857)
Other income
(expense), net 2,039 (231) 3,930 (750)
Pro forma net loss $(19,679) $ (8,963) $(51,648) $(20,607)
Pro forma basic
and diluted
net loss
per share $ (0.22) $ (0.65) $ (0.62) $ (2.40)
Shares used in
computing basic
and diluted
net loss per
share (2) 88,388 13,893 83,949 8,593
(1) Excludes charges for the amortization of intangible assets and
stock-based compensation.
KANA COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2000 1999
ASSETS
Current assets:
Cash and short-term
investments $ 115,272 $ 53,217
Accounts receivable, net 37,653 4,655
Prepaid expenses and
other current assets 8,295 2,036
Total current assets 161,220 59,908
Property and
equipment, net 31,388 8,360
Intangible assets,
principally goodwill 3,196,152 --
Other assets 7,962 1,961
Total assets $3,396,722 $ 70,229
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,665 $ 4,636
Accounts payable 6,261 2,766
Accrued liabilities 36,158 8,074
Deferred revenue 24,552 6,253
Total current liabilities 68,636 21,729
Total stockholders' equity 3,328,086 48,500
Total liabilities and
stockholders' equity $3,396,722 $ 70,229
KANA COMMUNICATIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues:
License $ 23,730 $ 2,781 $ 46,633 $ 5,811
Service 16,913 998 30,183 1,795
Total revenues 40,643 3,779 76,816 7,606
Cost of revenues:
License 918 52 1,719 124
Service 16,354 2,191 31,158 3,540
Total cost of
revenues 17,272 2,243 32,877 3,664
Gross profit 23,371 1,536 43,939 3,942
Operating expenses:
Sales and
marketing 25,749 5,482 58,297 12,141
Research and
development 12,993 3,384 29,291 8,445
General and
administrative 6,347 1,402 11,929 3,213
Amortization
of intangible
assets and
stock-based
compensation 316,655 3,377 570,611 6,631
In process
research and
development -- -- 6,900 --
Acquisition
related costs -- 910 6,564 910
Total operating
expenses 361,744 14,555 683,592 31,340
Operating loss (338,373) (13,019) (639,653) (27,398)
Other income &
expense, net 2,039 (231) 3,930 (750)
Net loss $(336,334) $ (13,250) $(635,723) $ (28,148)
Basic and
diluted
net loss
per share $ (3.81) $ (0.95) $ (7.57) $ (3.28)
Shares used in
computing basic
and diluted
net loss per share 88,388 13,893 83,949 8,593 |
