CPTH ( +10 @ $57) Revenue Of $45 Million And Increases Estimates For Fourth Quarter and 2001
Net Loss Cut in Half from Prior Quarter, Clearing Company's Path to Profitability
SAN FRANCISCO, Oct. 19 /PRNewswire/ -- Critical Path, Inc. (Nasdaq: CPTH - news) the dominant global provider of business-to-business Internet messaging infrastructure solutions, today announced record financial results for the quarter and nine months ended September 30, 2000.
Revenue for the quarter reached nearly $45.0 million, a 34 percent sequential increase over revenue of $33.5 million in the second quarter, and an 815 percent increase over revenue of $4.9 million in the same quarter of the prior year. The net loss for the quarter, excluding special charges, was $8.7 million, or $0.14 per share, compared with a net loss, excluding special charges, of $20.2 million, or $0.34 per share, in the second quarter of this year, and a net loss of $6.2 million, or $0.17 per share, in the same quarter a year ago. The Company also reported gross margin, excluding special charges, of $25.3 million, a 58 percent increase over gross margin of $16.0 million in the quarter ended June 30, 2000.
``All of our business areas contributed to the outstanding performance in the third quarter,'' said Doug Hickey, Critical Path's CEO. ``Rapidly growing revenue and stronger margins demonstrate the strength of our product and service offerings across several broad horizontal markets. At the same time, cutting the operating loss by more than half from the prior quarter reflects the leverage achieved in each operating expense category.''
``As a result of our acquisition of PeerLogic and the strength we see in our business going forward, we are increasing our estimates for revenue for the fourth quarter of this year, and revenue and earnings per share for the full year 2001,'' said Hickey. The Company expects revenue for the fourth quarter ending December 31, 2000 of between $54 million and $56 million, and fully diluted earnings per share, excluding special charges, for the period estimated at $0.01. For the year 2001, revenue is expected between $300 million and $310 million, with fully diluted earnings per share, excluding special charges, of $0.39 to $0.41.
Enterprise Customers
During the quarter, Critical Path signed long-term contracts with more than 240 customers and partners. According to Hickey, approximately 50 percent of those contracts were with corporate enterprises, including Circuit City, AFLAC, Honeywell, and Bechtel. ``A number of factors are driving more and more organizations to consider outsourcing their messaging requirements to Critical Path. These factors include the high reliability, scalability and security of our operations, the technical and engineering expertise needed to manage a vast messaging infrastructure, and the demonstrated high ROI of our solutions,'' he said.
Value-Added Services
The Company also reported that approximately 25 percent of the new customers in the third quarter purchased two or more of Critical Path's value-added products and services, such as directory, calendaring, IP fax, secure message delivery and collaborative messaging, in addition to basic email. Furthermore, approximately 32 percent of our customers in the third quarter were existing customers purchasing additional value-added products and services. ``Across all markets, organizations clearly want to develop relationships with a few key strategic vendors, and as the only provider of a complete end-to-end messaging solution, Critical Path contributes to that objective,'' said Hickey. ``Our ability to integrate a comprehensive service offering for our customers provides us with a significant competitive advantage in this market.''
eBusiness Infrastructure
Critical Path's directory and meta-directory products continued to increase their penetration of the enterprise and service provider markets. Directories and meta-directories play an important role in the security infrastructure that is required for eBusiness. ``Directories are the repository for the authentication and authorization profiles essential to creating a trusted online environment,'' said Hickey. ``With the acquisition of PeerLogic, which closed in late September, Critical Path offers directory products that allow the greatest interoperability and scalability in the marketplace today. We can now offer infrastructure solutions not just to large companies, but to entire countries through their postal systems and other trusted third party exchanges being established around the globe.''
Wireless Partners and Services
The Company's position in the wireless market was further strengthened during the quarter through two new strategic partnerships. Critical Path will provide the messaging infrastructure supporting an offering from NaviPath and Motient that seamlessly places Internet content on wireless devices. In addition, Cresenda Wireless chose Critical Path to provide the messaging infrastructure for all the products in its Wireless Professional Series.
International Business
Hickey also noted that approximately 43 percent of the revenue in the third quarter came from international customers. The company announced significant wins overseas, with the largest ISP in Brazil (ZipNet) and the largest online community in Korea (Netian) announcing they had migrated seamlessly to Critical Path's messaging infrastructure. Each of these customers service approximately 4 million end users, demonstrating Critical Path's dedication to addressing mega-scale markets.
In September, Critical Path also hosted over 400 industry and government leaders at its fourth annual international customer/partner conference in Kuala Lumpur.
Messaging Reach
At the close of the quarter, Critical Path powered a total of approximately 157 million mailboxes and wireless devices, including 107 million licensed boxes, 24 million outsourced email boxes, and approximately 26 million wireless devices worldwide. ``It is clear that Critical Path's messaging infrastructure performs effectively at a scale that has not been attained by any other provider in the marketplace,'' said Hickey.
The Company reported revenue for the nine months ended September 30, 2000, of $103.0 million, compared with revenue of $8.0 million in the same period of 1999. The net loss for the nine months, excluding special charges, was $45.7 million, or $0.80 per share, compared with a net loss of $18.4 million, or $0.71 per share, in the same period a year ago.
``Our balance sheet remains very strong and our financial resources provide a competitive advantage in the current market,'' said Hickey. The Company reported that as of September 30, 2000, its cash and cash equivalents totaled $242.5 million. During the third quarter, the Company used $48.9 million in cash, including $14.9 million to support ongoing operations, $11.5 million for one-time severance benefits and acquisition-related retention bonuses, $14.0 million in capital equipment, and $13.1 million for equity investments in four strategic partners.
About Critical Path, Inc.
Critical Path Inc. (Nasdaq: CPTH - news) ignites the power of information for eBusiness by providing the Internet messaging infrastructure upon which the new economy is built. The Company is a single resource that powers the flow of mission-critical information through an integrated portfolio of secure messaging, directory, data integration and collaboration solutions. Critical Path's technology strengthens all aspects of the eBusiness value chain by providing the messaging infrastructure that fuels customers' new and existing eBusiness initiatives. Critical Path is headquartered in San Francisco, with offices worldwide. More information on Critical Path can be found at www.cp.net .
This press release contains forward-looking statements regarding the Company and its expectations, which involve certain risks and uncertainties. Factors that could cause the Company's results to differ materially from its expectations include: failure to expand our sales and marketing activities; unplanned system interruptions and capacity constraints that could reduce our ability to provide messaging services and harm our business and our reputation; potential difficulties associated with strategic relationships; ability to respond to rapid technological change of the Internet messaging industry; competition; foreign currency fluctuations; failure to maintain or reduce operating expense levels; delays in customer orders; recognition of revenue from customers; problems related to managing the Company's expected growth, including the ability to maintain or improve upon cost efficiencies; and the failure to realize savings due to perceived synergies of acquired businesses, including PeerLogic. These and other risks and uncertainties are described in more detail in the company's Critical Path's Annual Report on Form 10-K/A filed March 29, 2000 and with subsequent filings with the Securities and Exchange Commission ( www.sec.gov ). |
