Open Text Corporation Reports First-Quarter 1997 Results: Revenues and Momentum Building
as Company Focuses on Core Intranet Software Business
WATERLOO, ONTARIO, CANADA (Nov. 6) BUSINESS WIRE -Nov. 6, 1996--Open
Text Corporation (NASDAQ: OTEXF), a leading provider of intranet
application software, tools and services, today announced its financial
results for the first quarter ended September 30, 1996. Record Revenues
The company's results, reported under U.S. Generally Accepted Accounting
Principles (GAAP), included total revenues of US$4.0 million, a record
for any quarter in the company's history. First-quarter revenues were up
548 percent from $600,000 for the prior-year period, and up 8 percent
sequentially from $3.7 million for the fourth quarter of fiscal 1996.
Revenue growth was driven by the company's core intranet software
business, which contributed $3.7 million in sales, up 28 percent
sequentially from $2.9 million for the fourth quarter. Restructuring
Completed
On September 12, 1996, Open Text announced a restructuring of operations,
in order to focus its core business on the intranet software market,
with products such as Livelink Intranet. The company finalized the
consolidation of its operations, recording a charge of $650,000 for
termination costs during the quarter, as previously announced. The net
loss for the first quarter, including this charge, was $3.6 million, or
$0.22 per share, compared with a net loss of $2.6 million, or $0.40 per
share, for the year-earlier quarter, and with a net loss of $15.5
million, or $0.96 per share after non-recurring charges of $9.9 million,
or $0.61 per share, for the fourth quarter of fiscal 1996. At September
30, 1996, Open Text's cash, cash equivalents and short-term investments
totaled $43.5 million. Momentum Building
"We have laid the foundation to achieve success in the emerging intranet
software market," said Tom Jenkins, Open Text's president and chief
executive officer. "With a clearly defined core business focus,
stronger operating and financial controls in place, and a streamlined
organization, we turned our attention during the quarter to generating
positive momentum in the marketplace. For example, we simplified the
installation process for our products, increased the functionality of
Livelink Intranet and improved product reliability, thus enabling our
customers to move from pilot to full deployment more quickly.
"At the same time, we increased the total number of Livelink Intranet
customers by 160 percent, and enhanced our relationships with key
existing customers, several of which significantly added to their
installed base," Jenkins added. "With this level of revenue, we have
clearly demonstrated our leadership position in intranet-based
application software for advanced business processes. Equally important,
we added major new reference accounts, including Bell Canada, BellSouth,
Medical Economics and the U.S. Government Printing Office. We believe
this momentum will continue to build as we ramp up our sales and
marketing activities and broaden our distribution channels." Business
Mix
For the first quarter of fiscal 1997, license revenue was $2.1 million,
up 826 percent from $200,000 for the same period last year. While
license revenue was down 15 percent from $2.5 million for the fourth
quarter due to the phase-out of an unprofitable retail Internet software
product, revenue from the company's core intranet business increased to
$2.1 million, up 24 percent sequentially from $1.7 million for the
quarter ended June 30, 1996. Service revenue for the first quarter
increased to $1.9 million, up 383 percent from $400,000 for the
prior-year period, and up 55 percent from $1.2 million for the fourth
quarter. The sequential increase reflected expanded service business
associated with growth in the company's installed product base.
Gross margin for the first quarter was 59 percent of total revenues,
compared with 74 percent for the prior-year period, and 42 percent for
the fourth quarter of fiscal 1996. The year-over-year decline occurred
primarily in the service business, reflecting an increased investment in
professional services, training and other post-sales customer-support
needed to facilitate Open Text's growth. The 17-point sequential
improvement from the fourth quarter to the first quarter reflected a
shift in the product mix from the company's retail Internet offering to
its Livelink Intranet suite. Gross margin for the company's core
intranet software license business, including Livelink Intranet, was
over 90 percent of total license revenues. The Company
Open Text Corporation is a leading provider of intranet application
software, tools and services that enable organizations to leverage the
global reach and openness of Internet technologies within a powerful,
collaborative environment for communicating, managing and working
together. Specifically, Open Text's solutions are used by Global 2000
companies to find and manage information and documents, empower teams
and drive critical business processes. Open Text: "We put the Web to
work."
This news release contains certain forward-looking statements relating
to the future performance of Open Text Corporation. These
forward-looking statements are subject to a number of risks and
uncertainties, such as the timing of the development or future release
of products, revenue growth, the ability to secure or retain accounts,
the expansion of distribution channels and sales and marketing efforts,
the continued success of the company's current product offerings, and
the effects of competition; and actual results may differ materially
from those anticipated by the company.
Certain of these risks and uncertainties are described under the heading
"Risk Factors" and elsewhere in the company's final prospectus dated
January 23, 1996, and in the company's periodic reports filed with the
Securities and Exchange Commission (SEC) from time to time, including
the reports on Form 10-Q for the quarters ended December 31, 1995 and
March 31, 1996 and Form 10-K for the year ended June 30, 1996. -0-
Open Text Corporation
Unaudited Consolidated Condensed Statements of Operations
(US GAAP, US dollars, in thousands, except per share data)
Three months ended
Sept. 30, Sept. 30,
1996 1995
Revenues:
License $ 2,148 $ 232
Service 1,894 392
Total revenues 4,042 624
Cost of revenues:
License 202 11
Service 1,443 150
Total cost of revenues 1,645 161
Gross Profit 2,397 463
Operating expenses:
Research and
development 1,484 378
Sales and marketing 2,721 1,061
General and
administrative 1,248 402
Depreciation and
amortization, including acquired
research and development costs 406 1,331
Restructuring reserve 650 --
Total operating
expenses 6,509 3,172
Loss from operations (4,112) (2,708)
Other income 558 61
Loss for the period $(3,554) $(2,647)
Loss per share $ (0.22) $ (0.40)
Weighted average number
of common shares outstanding 16,346 6,645
Open Text Corporation
Unaudited Consolidated Condensed Balance Sheet
(US GAAP, US dollars, in thousands, except per share data)
Sept. 30, June 30,
1996 1996
Assets:
Current assets:
Cash $ 2,580 $ 2,813
Short-term investments 40,914 48,326
Accounts receivable -- trade 6,350 5,416
Other current assets 1,828 2,070
------- -------
Total current assets 51,672 58,625
Furniture and equipment 4,097 3,535
Other investments 3,332 2,227
Other assets 2,552 1,772
------- -------
$61,653 $66,159
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable -- trade and other
liabilities $ 6,798 $ 6,900
Provision for restructuring 2,112 2,339
Current portion of obligations under
capital lease 625 626
------- -------
Total current liabilities 9,535 9,865
Obligations under capital leases 506 743
Shareholders' equity:
Share capital 102,681 102,680
Other shareholders' equity (51,069) (47,129)
Total shareholders' equity 51,612 55,551
------- -------
$61,653 $66,159
|
