BSQUARE Reports Third Quarter Cash Based Earnings Per Share of $0.06
Product Revenue Rises 173%
Service Revenue Up 52%
BELLEVUE, Wash.--(BUSINESS WIRE)--Oct. 26, 2000--BSQUARE Corporation (Nasdaq:BSQR - news), a leading provider of software, tools and technology to power intelligent devices, today reported strong increases in both product and service revenue for the third quarter ended September 30, 2000.
Total revenue for the quarter increased 59% to $16.6 million, from $10.4 million in the third quarter of 1999. Excluding one-time acquisition charges, and amortization of goodwill, BSQUARE reported cash-based pro forma net earnings for the quarter of $2.3 million, or $0.06 per diluted share, compared to $471,000, or $0.01 per diluted share for the third quarter of 1999.
For the nine-month period ended September 30, 2000, revenue was $45.6 million, an increase of 54% from $29.7 million for the comparable period in 1999. Cash-based pro forma net earnings for the nine-month period ended September 30, 2000, were $6.0 million, or $0.16 per diluted share, compared to $1.5 million, or $0.05 per share for the same period in 1999. Including in-process research and development, intangible amortization and acquisition related charges, net income was $1.3 million or $0.03 per diluted share for the quarter, and a loss of $228,000, or ($0.01) per share, for the nine-month period ended September 30, 2000.
Product revenue for the quarter grew 173% to $1.7 million, or 10% of total revenue, compared to 6% of total revenue the year ago quarter. BSQUARE continues to bring new products to market to aid developers in the rapid deployment of intelligent computing devices (ICDs) such as web pads, set-top boxes, handheld computers, and point-of-sale devices.
``During the third quarter BSQUARE brought 12 new and important products to the market expanding our breadth of offerings. While several of these products are development tools that will speed the time to market for devices we also introduced products that will enhance the functionality of devices. Some of our newest product introductions allow us to target new market segments such as Internet service providers and corporate IT departments,'' said William Baxter, president and CEO of BSQUARE. ``BSQUARE's solutions continue to gain market share through design wins and are being reinforced by our customers as their devices are introduced into the market. Our engineering service activity continues to broaden as more OEMs utilize BSQUARE to assist with the development of automotive PCs and handheld data collection devices.''
An example of an exciting new product released in September, is the Remote Device Administrator (RDA), a powerful new software technology for the remote management of web pads, Windows based terminals, set-top boxes, web phones and other ICDs over the Internet. RDA enables original equipment manufacturers, network operators and Internet service providers to manage and update intelligent devices, over the Internet, after deployment into homes and businesses. This product is fulfilling BSQUARE's efforts to provide solutions to all levels of the device development process. ``Manufacturers and developers do not want their devices to be stagnant or outdated, and through RDA they can provide their customers with new capabilities and software updates with greater ease. RDA is helping us reach new market segments, such as network service providers and corporate IT departments. We anticipate demand for this product will be robust given that it serves home Internet appliances and the enterprise,'' said Baxter.
``BSQUARE intends to lead the way in innovative productivity software for mobile and wireless computers. We recently announced the release of a family of applications that can be integrated into Windows CE-based devices, adding important technology that enhances messaging, data transfers, faxing, backup, scripting, file compression and encryption and e-mail. Our new bInTouch software enables two-way real time voice communications by simply using a Pocket PC or other Windows powered device and a corporate LAN or Internet connection,'' said Jeff McLeman, Vice President of Product Development.
Other recent product releases include the SmartBuild Product Design Packages to provide a complete foundation of hardware design and software for OEMs to build and begin to manufacture devices in as little as twelve weeks, rather than the customary twelve months. The SmartBuild line enables rapid development of portable data terminals, Pocket PCs, data collection tablets, and cordless Internet appliances. In addition, BSQUARE can bundle in software development tools for customization and engineering services.
BSQUARE had 143 design wins in the third quarter compared to 36 design wins in the like quarter a year ago. Of the 143 design wins, 125 included BSQUARE product offerings, while the remaining 18 were for large custom service offerings. We continue to see strong demand and expect this trend to accelerate as consumers and industries demand for intelligent computing devices grows. Service contracts signed by BSQUARE during the quarter include a multi-year contract with Infineon Technologies under which BSQUARE will port Windows CE and the Windows CE Tools, including a new compiler, to Infineon's TriCore microprocessor architecture used namely for industrial automation and automotive. This is one of our largest multi-year contracts to date.
Additionally, during the quarter BSQUARE made two small-scale acquisitions of companies that were existing BSQUARE partners. These acquisitions were made to eliminate channel conflict and to add engineering headcount for service contracts. We used approximately $3.8 million in cash and 79,000 shares of stock to make these acquisitions. With these acquisitions BSQUARE added 38 engineers and secured sales and distribution relationships. Neither of these companies generated significant non-BSQUARE revenue, and both acquisitions will be accounted for as purchases.
For the first nine months of 2000, operating expenses, including acquisitions, rose 79% to $24.9 million versus $13.9 million for the same period in 1999. Included in operating expenses for nine months ended September 30, 2000 are non-cash charges for in-process R&D of $4.1 million and amortization of intangible assets of 1.5 million.
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