WATERLOO, Ontario--(BUSINESS WIRE)--Jan. 28, 1997--Open Text
Corporation (NASDAQ: OTEXF), a leading provider of intranet
application software, tools and services, today announced its
financial results for the second quarter of fiscal 1997.(1)
For the quarter ended December 31, 1996, Open Text reported the
highest quarterly total revenues and gross profit in the company's
history. Total revenues were US$5.2 million, a 128.8-percent
increase from the $2.3 million reported for the year-earlier quarter,
and a 29.0-percent increase from the $4.0 million reported for the
quarter ended September 30, 1996. Gross profit for the quarter was
$3.5 million, up 104.5 percent from the $1.7 million reported a year
ago, and up 44.6 percent from the $2.4 million reported for the first
quarter.
The net loss for the second quarter was $3.8 million, or $0.23
per share, compared with a net loss of $23.3 million, or $2.30 per
share, for the prior-year period, and a net loss of $3.6 million, or
$0.22 per share, for the first quarter of fiscal 1997. The net loss
for the second quarter of fiscal 1996 included a one-time charge of
$21.2 million for the write-off of purchased research and development
related to certain acquisitions, including that of Odesta
Corporation, the original developer of Livelink product technology,
in October 1995.
At December 31, 1996, Open Text's cash, cash equivalents and
short-term investments totaled $34.8 million.
"We continue to meet specific goals that we had identified six
months ago as key milestones to success in the emerging intranet
software market," said Tom Jenkins, Open Text's president and chief
executive officer. "In addition to expanding revenue and gross
profit, we have scored several major new customer wins, as well as
follow-on wins from existing customers, in targeted vertical markets.
Of particular note, we signed an agreement with Bell Sygma for a
13,000-seat deployment of Livelink Intranet for Bell Canada. This is
one of the largest applications of its kind in Internet/intranet
history. Of the approximately 70 Livelink Intranet installations
completed to date, five accounts have scaled up to software valued at
$350,000 to $800,000 per account.
"The initial momentum of our first major accounts -- combined
with the recent deployment of Livelink Intranet Suite 7, the most
powerful and comprehensive release yet -- clearly demonstrates our
potential for market leadership and continued growth," Jenkins
added. "As Interactive Week stated in its December 16, 1996 issue,
'While almost every software company is trying to carve out an
intranet niche, Open Text Corporation is well ahead and lengthening
its lead with a new release of its Livelink suite.'"
Expanding Intranet Business
For the second consecutive quarter since the company executed a
major restructuring of operations to focus on its core intranet
business, revenue growth was driven by increasing intranet software
sales. Total intranet software revenue for the second quarter of
1997 was $4.7 million, a 27.0-percent increase from the $3.7 million
reported for the first quarter of fiscal 1997.
In addition to Bell Sygma, major accounts during the second
quarter included BellSouth Corporation, Chiron Corporation, Conoco,
Derwent Information, Medical Economics Company, Microsoft
Corporation, Schien Pharmaceutical and the U.S. Government Printing
Office. The company also formed a strategic alliance with
Siemens-Nixdorf, in which this largest European information
technology company agreed to bundle Livelink Intranet with its
intranet-server platform, providing Open Text with potential access
to Siemens-Nixdorf's 1,400 sales people worldwide and installed base
of 130,000 UNIX servers. Recently, Open Text also formed strategic
relationships with iSTAR internet inc., the largest Internet service
provider in Canada, and Netsys Technology Group, the systems
integration subsidiary of the largest Internet service provider and
second largest telecommunications provider in Scandinavia, Netcom
Systems.
During the second quarter, Open Text hired two industry veterans
to strengthen its intranet software sales management, adding Stephen
Klann as vice president of U.S. Sales and Robert Logan as vice
president of Canadian Sales.
Business Mix
For the second quarter of fiscal 1997, license revenue was $3.1
million, up 97.8 percent from $1.6 million for the same period last
year, and up 42.6 percent from the $2.6 million reported for the
quarter ended September 30, 1996. Service revenue during the quarter
increased to $2.2 million, a 194.4-percent increase from $700,000 for
the prior-year period, and a 13.6-percent increase from the $1.9
million reported for the first quarter. The year-over-year and
sequential increases for both license and service revenue reflected
the initial market penetration of the Livelink Intranet suite of
products, as well as the addition of approximately 70 new accounts
deploying these products.
Gross margin for the second quarter was 66.4 percent of total
revenues, compared with 74.3 percent for the prior-year period, and
with 59.3 percent for the first quarter of fiscal 1997. The
year-over-year gross margin trend reflected increased staffing costs
associated with the company's growing service business, based on a
fundamental change from Internet search engine products to intranet
application software products and the corresponding increase in pre-
and post-sale consulting requirements.
Half-Year Results
For the six months ended December 31, 1996, total revenues were
$9.3 million, an increase of 218.8 percent from the $2.9 million
reported for the prior-year period. Gross profit for the first half
of fiscal 1997 was $5.9 million, up 171.7 percent from the $2.2
million reported for the same period in 1996. For the first six
months of 1997, the net loss was $7.4 million, or $0.44 per share,
compared with the $26.0 million, or $3.09 per share, reported for the
period ended December 31, 1995. The net loss for the first half of
fiscal 1996 included a one-time charge of $22.5 million for the
write-off of purchased research and development related to certain
acquisitions.
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."
(1) Reported under U.S. Generally Accepted Accounting Principles
(GAAP).
*T
Open Text Corporation
Consolidated Statement of Operations
(Unaudited)
(in thousands of United States dollars)
Three months ended Six months ended
December 31, December 31,
1996 1995 1996 1995
Revenues
License $3,064 $1,548 $5,212 $1,780
Service 2,152 731 4,046 1,124
Total revenues 5,216 2,279 9,258 2,904
Cost of revenues
License 145 164 347 175
Service 1,605 421 3,048 571
Total cost of revenues 1,750 585 3,395 746
Gross profit 3,466 1,694 5,863 2,158
Operating expenses:
Research and development 1,566 401 3,050 778
Sales and marketing 4,212 1,852 6,933 2,913
General and administrative 1,468 1,074 2,716 1,476
Depreciation and amortization,
including acquired research
and development costs 435 21,746 841 23,077
Restructuring reserve - - 650 -
Total operating expenses 7,681 25,073 14,190 28,244
Loss from operations (4,215) (23,379) (8,327) (26,086)
Other income 406 73 964 133
Loss for the period ($3,809) ($23,306) ($7,363) ($25,953)
Loss per share ($0.23) ($2.30) ($0.44) ($3.09)
Weighted average number of
Common Shares
outstanding 16,769 10,148 16,560 8,397
Open Text Corporation
Consolidated Balance Sheet
(Unaudited)
(in thousands of United States dollars)
December 31, June 30,
1996 1996
Assets
Current assets:
Cash $4,729 $2,813
Short term investments 30,022 48,326
Accounts receivable - trade 6,985 5,416
Other current assets 1,784 2,203
Total current assets 43,520 58,758
Furniture and equipment 4,375 3,536
Other investments 3,408 2,227
Other assets 5,685 1,637
$56,988 $66,158
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable - trade and other
liabilities $ 7,211 $ 6,900
Provision for restructuring 883 2,339
Current portion of obligations under
capital lease 425 627
Total current liabilities 8,519 9,866
Obligations under capital leases 540 742
Shareholders' equity:
Share capital 93,578 93,563
Other shareholders' equity (45,649) (38,013)
Total shareholders' equity 47,929 55,550
$56,988 $66,158 |
