Revenue up 91% over last quarter to $11.7 million. Net loss .07.
Wednesday October 25, 4:02 am Eastern Time
Press Release
Floware Announces Third Quarter Results
OR YEHUDA, Israel--(BUSINESS WIRE)--Oct. 25, 2000--Floware Wireless Systems Ltd. (NASDAQ:FLRE - news), a leading provider of broadband wireless access (BWA) communication systems, today announced results for the third quarter ended September 30, 2000.
Highlights
- Revenues for the quarter reached a record $11,703,000, up 91% from 2Q00
- Gross margins for the quarter increased to 16% of revenues, up from 11% in 2Q00
- Overallotment option relating to our recent IPO was exercised in full by our underwriters, raising additional gross proceeds of approximately $8.8 million
- Selection by new major carriers during the quarter included ArcTel in Germany, StarOne in Germany and CRA in the Czech Republic
- Distribution agreement with NEC expanded into OEM agreement
Strengthened management team by naming new President and COO, and new VP of Business Development
Revenues for the third quarter of 2000 increased to $11,703,000 from $958,000 in the third quarter of 1999. Revenues rose by 91% in the third quarter from $6,135,000 in the second quarter of 2000. Gross profit for the third quarter 2000 was $1,856,000 or 16% of revenues, compared to a gross loss of $208,000 in the third quarter of 1999. Gross profit in the second quarter of 2000 was $657,000 or 11% of revenues.
Revenues for the first nine months of the year increased to $20,921,000 from $1,479,000 in the first nine months of 1999. Gross profit for the first nine months was $2,548,000, or 12% of revenues, compared to a gross loss of $499,000 in the first nine months of 1999.
On a pro forma basis, which excludes $1,079,000 in amortization of deferred stock compensation, net loss for the quarter was $2,267,000, or a loss of $0.07 per share. This compares to a pro forma net loss for the third quarter of 1999 of $2,123,000 or $0.11 loss per share and a pro forma net loss in the second quarter of 2000 of $2,927,000 or a $0.11 loss per share. Pro forma weighted average number of shares used in computing pro forma net loss per share for the three months ended September 30, 2000, September 30, 1999, and June 30, 2000, were 30,471,200 shares, 19,979,200 shares, and 26,916,700 shares respectively. Pro forma number of shares assumes a full conversion of the preferred shares into ordinary shares for the period prior to the initial public offering, in which preferred shares were outstanding.
On a pro forma basis, which excludes amortization of deferred stock compensation, the deferred shares deemed dividend, and the stock compensation included in marketing expenses, net loss for the first nine months of 2000 was $8,254,000 or $0.30 loss per share. This compares to a pro forma net loss for the first nine months of 1999 of $5,977,000 or $0.31 per share. Pro forma weighted average number of shares used in computing pro forma net loss per share for the nine months ended September 30, 2000 and September 30, 1999 were 27,572,367 shares and 19,265,867 shares, respectively. Pro forma number of shares assumes a full conversion of the preferred shares into ordinary shares for the period prior to the initial public offering, in which preferred shares were outstanding.
``Once again, Floware had an impressive quarter as a result of being selected by carriers in key markets, and continuing to expand and strengthen our relationships with market leaders,'' said Amnon Yacoby, CEO of Floware. ``It also validates our strategy of becoming a leader in the BWA market, which we believe will be the dominant broadband solution worldwide, with analysts predicting compounded annual growth rate of the market of more than 100% through 2003. Many markets have yet to select carriers, and our strong relationships with leading integrators, top quality products and a growing sales force positions us to take advantage of these new opportunities.''
Research and development costs rose to $2,901,000 for the quarter, versus $1,346,000 for the third quarter in 1999 and $2,439,000 for the second quarter in 2000. In addition to continuing to develop the WALKair 3000 system and feature enhancements on the WALKair 1000 product, Floware's R&D efforts focused on reducing expenses associated with the WALKair 1000. To reduce the production cost of the WALKair 1000, Floware will introduce FPGA masked chips by first quarter 2001 to replace the programmable chips used now. Floware also introduced a new version of the WALKair outdoor unit with a new and improved radio unit. In addition, the WALKair system completed rigorous performance testing for Siemens, meeting their stringent criteria.
Sales and marketing expenses were $1,542,000 for the third quarter, compared to $494,000 for the same period in 1999 and $1,199,000 for the second quarter in 2000. The increase in expenses reflects an increase in sales and marketing personnel and the expansion of customer service, which includes increasing the support and training for integrators and carriers.
As of September 30, 2000, Floware's systems were deployed in 52 different installations - in 31 commercial deployments in 19 countries and 21 additional field trials.
Major wins in the quarter included both ArcTel and STAR ONE in Germany, making Floware the only provider to be chosen by three of Germany's multi-regional broadband wireless carriers (including FirstMark Germany, previously announced).
ArcTel, Germany's second largest telecommunications service provider, will implement Floware's WALKair system to offer a broad range of access services including ISDN, Internet, Frame Relay and IP services, as part of a project with Siemens. ArcTel is a joint venture of Mannesmann Arcor, Frankfurt, and Teligent, a global leader in broadband communications headquartered in North America.
STAR ONE, one of Germany's leading broadband service providers, will use Floware's WALKair at the 3.5GHz spectrum, and plans to target its broadband data and voice services at the small and medium enterprise (SME) community. Nortel Networks (NYSE: NT - news), a global Internet and communications leader, supplies turnkey infrastructure and applications solutions for broadband services to STAR ONE.
In addition, the Company was also awarded a project from Ceske Radiokomunikace, or CRA, the second largest telecommunications company in the Czech Republic. It has a nationwide license at the 3.5 GHz frequency, and is building a broadband network targeted at small and medium enterprises initially in 15 cities in the Czech Republic.
Floware also expanded its existing global distribution agreement with NEC Corporation into an Original Equipment Manufacturer (OEM) agreement. Under this new arrangement, Floware's products will be integrated into NEC's own product line, branding the Floware products as NEC products.
Major deliveries in the third quarter included First Mark and StarOne in Germany, FirstMark in Spain, Novis and Teleweb in Portugal, Telefonica in Argentina, and Gateway in India.
Other developments in the quarter include:
The overallotment option relating to Floware's recent initial public offering was exercised in full by the Company's underwriters at the end of August. The overallotment option comprised 675,000 ordinary shares, and raised additional gross proceeds of approximately $8.8, bringing total gross proceeds from the IPO to approximately $67 million.
Named new President and COO, Tzvika Friedman, who will be responsible for the day-to-day activities of the Company, including research and development, operations, sales, marketing and customer service. Also appointed a new Vice President of Business Development, Rudy Lesser.
For the third consecutive quarter, production practically doubled, achieved by both external subcontractors and by Floware's internal integration, calibration and testing capacity.
Total number of employees grew to 190 at September 30, 2000, compared to 150 at June 30, 2000. Largest growth was in R&D, which added 26 employees to total 96 at the end of the third quarter, and sales and marketing, which added six employees for a total of 37 employees at the end of the third quarter.
``While we are pleased with our strong results, we realize that we must be focused on the future if we are to maintain our leading position,'' said Yacoby. ``This forward-looking approach led us to appoint a new president and COO, which will allow me to devote more time to Floware's strategy and business development. It can also be seen in our research and development efforts - improving upon existing products and adding new products will allow us to serve the needs of additional markets and to expand our business.''
CEO Amnon Yacoby and CFO Tali Idan will host a conference call today, October 25, at 9 a.m. (Eastern) to discuss the results. To participate in the call, please dial (719) 457-2625. A replay of the call will be available from 12 p.m. (EDT) on October 25 until midnight on November 2. To access the replay, please dial (719) 457-0820 and enter code 780598.
Floware Wireless Systems Ltd. is a provider of broadband point-to-multipoint fixed wireless local access communication systems. These systems are used by telecommunications service providers, mainly competitive local exchange carriers or new operators that serve primarily small and medium-sized businesses. Floware's WALKair system enables these carriers to provide high-speed Internet access, other data services and voice services on the 3.5, 10.5 and 26 GHz radio frequency bands. Floware, headquartered in Israel, had its initial public offering of shares on August 2, 2000 and trades on the NASDAQ National Market under the ticker ``FLRE.''
This press release and statements by Floware in shareholder reports and public filings, as well as in oral public statements by Floware's representatives may contain forward looking statements. Such statements are subjected to certain facts, risks and uncertainties that may cause actual results, events and performance to differ materially from those referred to in such statements. The risks are identified in Floware's registration statement on Form F-1 (Registration Statement No. 333-12290) filed with the Securities and Exchange Commission.
CONDENSED STATEMENTS OF OPERATIONS
U.S. dollars in thousands
Contact:
Floware Wireless Systems, Or Yehuda
Tali Idan, +972 3 538 2320
tidan@floware.com
or
Citigate Dewe Rogerson, New York
Jennifer Hurson, 212/419-8303
jennifer.hurson@citigatedr-ny.com
Kevin Mannix, 212/419-4261
kevin.mannix@citigatedr-ny.com |
