EXPECTED LOSS WAS 17 cent ; came in at loss of 11 cents .
Certicom Reports Fiscal 2002 Third Quarter Results Q3 Revenue of $3.2 Million and Pro Forma Net Loss of $0.11 Per Share Better than Guided Expectations and Consensus Estimates
HAYWARD, Calif., Feb 28, 2002 /PRNewswire-FirstCall via COMTEX/ -- Certicom Corp. (Nasdaq: CERT; TSE: CIC), a leading provider of mobile e-business security, today announced revenue of $3.2 million for the third quarter of fiscal 2002 ended January 31, 2002 (all figures in US currency). The Company had previously stated that it expected revenues of approximately $3.0 million in fiscal Q3. Revenue results reflect a change in the Company's licensing model implemented during the first quarter of fiscal 2002. Under the Company's new subscription licensing model, revenue is recognized ratably over the term of the license agreement rather than upon shipment.
Certicom reported a pro forma net loss (excluding non-operating and restructuring charges) of $3.6 million, or $(0.11) per share, for the third quarter of fiscal 2002. The Company had previously stated that it expected the pro forma net loss to be approximately $5.3 million, or $(0.17) per share, in fiscal Q3. The net loss was smaller than expected due to higher revenue and lower costs. Total pro forma costs and operating expenses were $6.7 million compared with guided expectations of $8.0 million.
On an as-reported basis, including non-operating charges of $2.9 million in depreciation and amortization, $0.7 million for deferred compensation, and restructuring charges of $0.7 million, Certicom reported a net loss of $7.9 million, or $(0.25) per share, for the third quarter of fiscal 2002.
"Q3 marked the third quarter in which we have reported results under our new subscription licenses model. For the third quarter in a row, we have exceeded all of our stated financial goals," said Greg Capitolo, Certicom's Chief Financial Officer. "We generated more revenue, controlled costs better and ended the quarter with more cash on hand than our guidance. Also, for the third quarter in a row, our bookings exceeded revenue, so we built backlog and increased deferred revenue. With these results, we have increased confidence in our ability to manage our operations and to continue to improve productivity and efficiency in 2002 and beyond," Capitolo continued.
Cash and cash equivalents, restricted cash, and short-term investments ("Cash") totaled $20.5 million at the end of fiscal Q3 compared with guided expectations of approximately $17 million. Cash balances were higher than guided expectations due to higher revenue, lower costs and expenses, strong collections efforts, and cash outlays for restructuring initiatives that were less than the Company's conservative internal estimates.
For the first nine months of fiscal 2002, Certicom reported revenue of $8.5 million. Certicom reported a pro forma net loss (excluding non-operating and restructuring charges) of $20.2 million, or $(0.65) per share, for the first nine months of fiscal 2002.
On an as-reported basis, including restructuring charges of $22.3 million and non-operating charges of $9.7 million in depreciation and amortization, $9.4 million for goodwill impairment, $1.6 million for deferred compensation, and $0.5 million for inventory write-downs, Certicom reported a net loss of $63.7 million, or $(2.04) per share, for the first nine months of fiscal 2002.
"Once again, we have exceeded our revenue growth expectations, even with 75% of our software license bookings coming from subscription licenses. When combined with the cost controls Certicom has put in place, we continue to believe that the Company is moving towards profitability," said Robert Williams, Senior Vice President of Operations. "In addition, we continue to garner significant endorsements from major customers and government agencies, confirming our position as an important leader in the security arena. When the integrity of communications cannot be compromised, customers turn to Certicom for world-class technology and proven market-leading products," Williams concluded.
Q3 FY 2002 Highlights
Certicom announced that wireless innovators and industry leaders including Cysive, Funk Software, HiddenMind, Honeywell, Infowave, Iomega, Kasten Chase, PatientKeeper and XM Satellite Radio are using its market- leading security technologies and solutions. The Company registered key wins in growing markets such as Healthcare and Government including Canada's Communications Security Establishment (CSE). The CSE licensed Certicom's intellectual property to support the development of IT security products. Certicom's award-winning movian(TM) product line continued to gain ground and now has over 600 customers, including more than 50 Global 500 customers and major government entities. Certicom and Funk Software announced their development of a new standard for WLAN security.
In addition, Certicom expanded relationships with key partners Palm and Motorola. Certicom now provides Palm with security for the i705, its new wireless handheld. Certicom has already provided Palm with security for the Palm VII, the Palm Mobile Internet Kit and is working closely with Palm's Solutions Group to provide application and VPN security for an array of products for Palm Powered devices. Certicom also extended its license agreement with Motorola to provide its Elliptic Curve Cryptography (ECC) for a broad range of Motorola's renowned semiconductor products. Both companies announced their joint collaboration of the industry's first network security processor designed to process large volumes of ECC transactions.
Q4 FY 2002 Outlook
The following statements are forward looking, and actual results may differ materially. Please consult the Company's recent disclosures (including its most recent Forms 10-K and 10-Q) on file with the Securities and Exchange Commission (SEC) and the Ontario Securities Commission (OSC) for a further discussion of risks.
- Revenue in Q4 FY 2002 is expected to be approximately $3.7 million.
- Pro forma costs of revenue and operating expenses (excluding
restructuring, non-operating, and any other non-recurring charges) are
expected to total $6.5 million.
- The pro forma net loss (including an estimated interest expense of
$0.3 million, and excluding restructuring, non-operating, and any
other non-recurring charges) is expected to decline from $3.6 million
in fiscal Q3 to approximately $3.1 million in fiscal Q4, or
approximately ($0.10) per share.
- Cash and cash equivalents, short-term investments and restricted cash
are expected to total at least $13 million at the end of fiscal Q4.
- The Company expects to achieve profitability by the end of Q2 FY 2003
(Oct. 2002).
The targets set forth above represent the Company's expectations only as of the date of this release and should not be viewed as a statement about the Company's expectations after this date. Although this release may remain available on the Company's website, its continued availability does not indicate that the Company is reaffirming or confirming its continued validity. The Company does not intend to report on its progress during the quarter or comment to analysts or investors on, or otherwise update, such targets until it releases its quarterly results.
Conference Call
Certicom will host a conference call to discuss these results. All parties are invited to listen to the call.
Topic: Q3 FY 2002 Earnings Release
Date: February 28, 2002
Time: 2:00 PM Pacific (5:00 PM Eastern)
Dial-in: 1-800-360-9865 (U.S. and Canada)
1-973-694-6836 (International)
Password "Certicom"
(please dial in at least ten minutes prior to the
scheduled start time)
Webcast: certicom.com
Replay: (Available February 28 7:00 PM Pacific to
March 1 11:00 PM Pacific)
1-800-428-6051 (U.S. and Canada)
1-973-709-2089 (International)
Password "231616"
Archive: certicom.com
About Certicom
Certicom is a leading provider of information security software and services, specializing in solutions for mobile e-business. The company's products and services are specifically designed to address the challenges imposed by a wireless data environment. Certicom's solutions incorporate its efficient encryption technology and are based on industry standards for information security that utilize public-key cryptography. Certicom's products are currently licensed to more than 300 customers including Cisco Systems, Inc., Handspring Inc., Motorola, Inc., Nortel Networks, Openwave Systems, Inc., Palm, Inc., QUALCOMM, Inc., Research In Motion Ltd., Sony International (Europe) GmbH, and Verizon Communications Inc. Certicom's headquarters and worldwide sales and marketing operations are based in the Silicon Valley in Hayward. For more information, visit Certicom's Web site at certicom.com.
Certicom and movian are trademarks of Certicom Corp. All other companies and products listed herein are trademarks or registered trademarks of their respective holders.
Except for historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, those relating to the acceptance of mobile and wireless devices and the continued growth of e-commerce and m-commerce, the continued acceptance by our customers of our subscription license model, our ability to implement our restructuring initiatives and our ability to realize resulting cost savings, the increase of the demand for mutual authentication in m-commerce transactions, the acceptance of Elliptic Curve Cryptography (ECC) technology as an industry standard, the market acceptance of our principal products and sales of our customer's products, the impact of competitive products and technologies, the possibility of our products infringing patents and other intellectual property of fourth parties, and costs of product development. Certicom will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect Certicom's financial results is included in the documents Certicom files from time to time with the Securities and Exchange Commission and Canadian securities regulatory authorities.
CERTICOM CORP.
Condensed Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share data)
(unaudited)
-------------------------------------------------------------------------
Three months ended Three months ended
January 31, 2002 January 31, 2001
Pro Forma Adjustments GAAP Pro Forma Adjustments GAAP
----------------------------- ------------------------------
Revenues:
Products $ 1,701 $ 1,701 $ 5,395 $ 5,395
Services 1,499 1,499 2,232 2,232
----------------------------- ------------------------------
Total
revenues 3,200 3,200 7,627 7,627
Cost of
revenues:
Products 22 22 240 240
Services(1) 1,213 551 1,764 2,550 1,290 3,840
----------------------------- ------------------------------
Total
cost of
revenues 1,235 551 1,786 2,790 1,290 4,080
Gross Margin 1,965 (551) 1,414 4,837 (1,290) 3,547
Operating
expenses:
Selling and
marketing(2) 2,545 32 2,577 4,709 4,709
Product
development
and engi-
neering(2) 1,505 53 1,558 3,558 3,558
General and
adminis-
trative(2) 1,421 15 1,436 2,970 (6) 2,964
Depreciation
and
amortization - 2,917 2,917 - 3,146 3,146
Goodwill
impairment - - - -
One-time
secondary
offering costs - - - 1,693 1,693
Restructuring
costs - 729 729 - -
----------------------------- ------------------------------
Total
operating
expenses 5,471 3,746 9,217 11,237 4,833 16,070
----------------------------- ------------------------------
Loss from
operations (3,506) (4,297) (7,803) (6,400) (6,123) (12,523)
Interest
income,
expense & other (184) (184) 481 481
----------------------------- ------------------------------
Loss before
provision for
income taxes (3,690) (4,297) (7,987) (5,919) (6,123) (12,042)
Provision for
income taxes (70) (70) - -
----------------------------- ------------------------------
Net loss $ (3,620) $ (4,297) $ (7,917) $ (5,919) $ (6,123) $(12,042)
----------------------------- ------------------------------
----------------------------- ------------------------------
----------------------------- ------------------------------
Basic and
diluted
net loss per
common share $ (0.11) $ (0.14) $ (0.25) $ (0.23) $ (0.23) $ (0.46)
----------------------------- ------------------------------
----------------------------- ------------------------------
Weighted
average
shares
outstanding
(thousands) 31,479 31,479 26,239 26,239
---------------------------------------
1. The above pro forma cost of services excludes deferred compensation
expense of $0.6 million and $1.3 million for the quarters ended
January 31, 2002 and January 31, 2001, respectively.
2. The above pro forma operating expenses for selling and marketing,
product development and engineering, and general and administrative
exclude deferred compensation expenses totaling $100,000 for the
quarter ended January 31, 2002, and a credit of $6,000 for the
quarter ended January 31, 2001.
CERTICOM CORP.
Condensed Consolidated Statements of Operations
(In thousands of U.S. dollars, except per share data)
(unaudited)
-------------------------------------------------------------------------
Nine months ended Nine months ended
January 31, 2002 January 31, 2001
Pro Forma Adjustments GAAP Pro Forma Adjustments GAAP
----------------------------- ------------------------------
Revenues:
Products $ 3,703 $ 3,703 $ 14,410 $ 14,410
Services 4,749 4,749 4,571 4,571
----------------------------- ------------------------------
Total
revenues 8,452 8,452 18,981 18,981
Cost of
revenues:
Products(1) 169 486 655 695 695
Services(2) 4,426 1,842 6,268 5,265 2,150 7,415
----------------------------- ------------------------------
Total
cost of
revenues 4,595 2,328 6,923 5,960 2,150 8,110
Gross Margin 3,857 (2,328) 1,529 13,021 (2,150) 10,871
Operating
expenses:
Selling and
marketing(3) 11,701 32 11,733 11,973 11,973
Product
development
and engi-
neering(3) 5,919 53 5,972 9,006 9,006
General and
adminis-
trative(3) 7,071 (296) 6,775 8,200 604 8,804
Depreciation
and
amortization - 9,696 9,696 - 8,881 8,881
Goodwill
impairment - 9,352 9,352 - -
One-time
secondary
offering costs - - - 1,693 1,693
Restructuring
costs - 22,309 22,309 - -
----------------------------- ------------------------------
Total
operating
expenses 24,691 41,146 65,837 29,179 11,178 40,357
----------------------------- ------------------------------
Loss from
operations (20,834) (43,474) (64,308) (16,158) (13,328) (29,486)
Interest
income,
expense &
other(4) 572 572 2,266 (423) 1,843
----------------------------- ------------------------------
Loss before
provision for
income taxes (20,262) (43,474) (63,736) (13,892) (13,751) (27,643)
Provision for
income taxes (25) (25) 135 135
----------------------------- ------------------------------
Net loss $(20,237) $(43,474) $(63,711) $(14,027) $(13,751) $(27,778)
----------------------------- ------------------------------
----------------------------- ------------------------------
----------------------------- ------------------------------
Basic and
diluted net
loss per
common share $ (0.65) $ (1.39) $ (2.04) $ (0.54) $ (0.53) $ (1.07)
----------------------------- ------------------------------
----------------------------- ------------------------------
Weighted
average
shares
outstanding
(thousands) 31,199 31,199 25,926 25,926
---------------------------------------
1. The above pro forma cost of products excludes an inventory write-down
of $0.5 million for the nine months ended January 31, 2002.
2. The above pro forma cost of services excludes deferred compensation
expenses of $1.8 million and $2.2 for the nine months ended January
31, 2002 and January 31, 2001, respectively.
3. The above pro forma operating expenses for selling and marketing,
product development and engineering, and general and administrative
exclude deferred compensation credits totaling $0.2 million for the
nine months ended January 31, 2002, and an expense of $0.6 million
for the nine months ended January 31, 2001.
4. The above pro forma interest income, expense & other excludes a non-
cash interest expense of $0.4 million for the nine months ended
January 31, 2001.
CERTICOM CORP.
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars)
-------------------------------------------------------------------------
January 31, April 30,
2002 2001
(unaudited)
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 1,203 $ 1,942
Marketable securities, available for sale 17,574 50,310
Accounts receivable, net 4,258 7,149
Prepaid expenses and deposits 2,414 3,428
--------------------------
Total current assets 25,449 62,829
Property and equipment, net 16,431 18,288
Intangibles, net 12,360 26,348
Other assets, net 742 -
Restricted cash 1,765 2,009
--------------------------
Total assets $ 56,747 $ 109,474
--------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,292 $ 9,240
Accrued liabilities 2,198 3,106
Accrued restructuring charges 1,686 -
Deferred revenue 3,469 2,168
--------------------------
Total current liabilities 10,645 14,514
Other payables 510 510
Accrued restructuring charges 810 -
Lease inducements 727 1,093
Notes payable 8,277 -
--------------------------
Total liabilities 20,969 16,117
--------------------------
Shareholders' equity:
Common stock 184,896 175,151
Additional paid-in capital 12,533 19,945
Deferred compensation expense (255) (4,314)
Accumulated other comprehensive loss (2,720) (2,460)
Retained deficit (158,676) (94,965)
--------------------------
Total shareholders' equity 35,778 93,357
--------------------------
Total liabilities and shareholders' equity $ 56,747 $ 109,474
--------------------------
SOURCE Certicom Corp.
CONTACT: Investors and Financial Analysts: Gregory M. Capitolo, Chief
Financial Officer, Certicom Corp., (510) 780-5084, gcapitolo@certicom.com;
Media: Lorraine Kauffman, Corporate Communications, Certicom Corp.,
(510) 780-5417, lkauffman@certicom.com
(CIC. CERT) |
