VocalTec Reports Record Second Quarter Revenues Driven by Orders From Several Major Carriers
Includes Agreement for Pilot with Large International PTT
HERZLIYA, Israel--(BUSINESS WIRE)--July 22, 1998-- VocalTec Communications Ltd. (Nasdaq:VOCLF - news), the IP (Internet protocol) Communications Company, today announced revenues of $6.0 million for the second quarter ended June 30, 1998, an increase of 75 percent over the year-ago period and 21 percent over the first quarter of 1998. The strength in sales reflected orders for the VocalTec Ensemble Architecture(tm) products from six major telcos in various countries around the world.
The net loss for the second quarter of 1998 was $2.9 million, or $0.25 per share, before a one-time charge of $9.7 million related to the write-off of in process research and development in connection with the acquisition of RADLINX, compared to a net loss of $2.1 million, or $0.24 per share, for the year-ago period. Including the one-time charge, the net loss for the second quarter was $12.5 million, or $1.10 per share. The net loss in the first quarter of 1998 was $2.4 million, or $0.23 per share.
For the six months ended June 30, 1998, VocalTec reported revenues of $10.9 million, an increase of 68% over the first half of 1997. The net loss for the period was $5,303 million, or $0.49 per share, before a one-time charge of $9.7 million related to the write-off of in-process research and development in connection with the RADLINX acquisition in the second quarter. Including the one-time charge, the net loss for the first six months was $15.0 million, or $1.38 per share. The Company reported a net loss of $4.4 million, or $0.51 per share, in the first six months of 1997.
Commenting on the results, Dr. Elon Ganor, chairman and chief executive officer of VocalTec Communications, said, ''We are gratified that our conviction in the importance of VocalTec's Ensemble Architecture has been proven by several major carriers selecting VocalTec as its provider. In the first quarter, when we announced the VocalTec Gatekeeper(tm) and Network Manager(tm) as key components of a total solution, we said that the introduction of the Ensemble Architecture signaled the beginning of a new phase in the market. Our experience during the second quarter indicates that we were right. The market is recognizing the need for an open platform gatekeeper in providing a total solution that is sufficiently scalable, reliable and secure to assure quality global service, particularly in larger service provider applications. In fact, the Gatekeeper is proving to be a necessary component for carrier deployments.''
Major Telcos Recognize Importance of Gatekeeper
An international telco, one of the top long distance carriers in the world, selected the VocalTec Ensemble Architecture products for the launch of a worldwide pilot. In addition, four major telecom companies in North America, Asia and the Middle East purchased ''test beds'' for evaluation purposes.
''We are pleased with the initial reception for our Ensemble Architecture, driven by our leadership in developing open platform gatekeeper functionality,'' Dr. Ganor continued. ''Interest in IP communications is very strong and, as we have noted before, the leaders are likely to move into initial deployments early next year, while other, players may be in the evaluation and pilot phase for several more quarters. This is a very dynamic and competitive market and we must continue our aggressive posture to prepare for the next phase of growth.''
Additional Initiatives and Alliances
During the second quarter, VocalTec announced a worldwide strategic integration alliance with Digital Equipment Corporation to market end-to-end, carrier-grade, IP communications solutions. Digital is a VocalTec preferred systems integrator and has been granted distribution rights for VocalTec software products. Digital Worldwide Service's Communications Industry Solutions (CIS) practice will provide and deliver systems integration services and support to promote business growth first in the U.S. and Europe and later in other regions. Teams will include solution architects and service delivery consultants skilled in telecommunications technology and the Internet.
Also, in a move that market analysts say will advance the IP telephony industry a giant leap forward, VocalTec and Lucent Technologies announced plans to develop full interoperability between their IP telephony platforms. This initiative reflects both companies' conviction that, moving beyond trials and pilots, interoperability between leading vendors' products is vital to achieving maturity in the IP market.
After the end of the second quarter, VocalTec announced that it has selected AudioCodes as an additional DSP card vendor for the VocalTec Telephony Gateway 120 series.
VocalTec software enables audio, video, data, text and collaborative communications between personal computers and other devices over IP networks. The Company is a leader in developing innovative, open standards products that bridge IP networks and the traditional public switched telephone network (PSTN) and drive the convergence of computing and telephone technologies. For the latest company information, visit VocalTec on the World Wide Web at vocaltec.com.
NOTE: VocalTec(R), Internet Phone(R), Internet Phone Company(tm), Community Browser(tm), Atrium(tm), VocalTec Ensemble Architecture(tm), VocalTec Telephony Gateway(tm), Surf&Call(tm), VocalTec Gatekeeper(tm) and VocalTec Network Manager(tm) are trademarks or registered trademarks of VocalTec Communications Ltd. Other trademarks are the property of their respective holders.
Certain statements contained in this release may contain forward-looking information with respect to plans, projections or the future performance of VocalTec Communications, the occurrence of which involves certain risks and uncertainties, including, but not limited to, product and market acceptance risks, the impact of competitive pricing, competitive products, product development, commercialization and technological difficulties and other risks detailed in the Company's reports filed from time to time with the Securities and Exchange Commission.
VOCALTEC COMMUNICATIONS LTD.
RESULTS OF OPERATIONS
All data in thousands except per-share and share data
Three months Three months Six months Six months
ended ended ended ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
U.S. $ U.S. $ U.S. $ U.S. $
Net Sales 5,962 3,403 10,875 6,461
Cost of Sales 1,572 559 2,639 952
Gross Profit 4,390 2,844 8,236 5,509
Operating Expenses
Research and
Development costs,
net 2,814 1,385 4,872 2,760
Marketing and selling
expenses, net 4,169 2,958 8,012 6,191
General and
Administrative 1,139 860 2,058 1,595
Total Operating
Expenses 8,122 5,203 14,942 10,546
Operating Loss (3,732) (2,359) (6,706) (5,037)
Finance income, net 867 274 1,403 608
(2,865) (2,085) (5,303) (4,429)
One time charge in
respect of acquired
in-process research
and development 9,656 -- 9,656 --
Net loss (12,521) (2,085) (14,959) (4,429)
Net loss per share
(in US$) (1.10) (0.24) (1.38) (0.51)
Weighted average
number of shares
outstanding 11,333,000 8,613,000 10,869,000 8,613,000
VOCALTEC COMMUNICATIONS LTD.
CONSOLIDATED BALANCE SHEET
(In thousands of U.S. dollars)
June 30, December 31,
1998 1997
Current Assets
Cash and cash equivalents 20,346 6,842
Short term investments 27,194 5,602
Trade receivables 8,051 5,780
Other receivables 3,122 1,754
Inventories 1,032 435
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59,745 20,413
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Deposit with Insurance Companies 871 569
------ ------
Investment in Other Company 2,070 430
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Equipment
Cost 6,805 4,444
Less accumulated depreciation 1,837 1,099
------ ------
4,968 3,345
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Other Assets 154 0
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Total Assets 67,808 24,757
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Consolidated Balance Sheet Continued (In thousands of U.S. dollars)
June 30, December 31,
1998 1997
Current Liabilities
Accounts payable and accrued expenses 7,773 4,320
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Long Term Liabilities
Accrued severance pay 1,117 726
------- -------
Total Liabilities 8,890 5,046
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Shareholders' Equity
Share capital
Ordinary shares of NIS 0.01 par value
Authorized - 30,000,000 shares; Issued
and outstanding - 11,377,520 shares
as of June 30,1998 and 8,627,490
shares as of December 31, 1997 35 28
Share premium 92,672 38,429
Deferred compensation (442) (358)
Accumulated deficit (33,347) (18,388)
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Total Shareholders' Equity 58,918 19,711
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Total Liabilities and Shareholders'
Equity 67,808 24,757
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