VeriSign expects to grow along with e-commerce
February 2, 1999 08:49 PM
SAN FRANCISCO,, Feb 2 (Reuters) - VeriSign Inc., an e-commerce software company that sells digital certificates to ensure secure transactions on the Internet, said it was on track to become profitable by the third quarter of this year and "cash positive" even sooner.
Chief Financial Officer Dana Evans said "cash flow should be positive a quarter or so before profitability." The company last month said it expected to break even in the third quarter.
VeriSign's software is used by companies as a way of verifying secure transactions over the Internet, and its digital certificates system has been installed by the top 25 e-commerce sites. The growth of Internet commerce is expanding its business because VeriSign receives a licensing fee of $300 for most computer servers used by major commercial Web sites.
The company figures its growth will come partly from this core business, considering it has only licensed 1 percent of the potential 10 million Internet servers, Chief Executive Stratton Sclavos said at a presentation at the NationsBanc Montgomery Securities technology conference. The company's digital certificates have become a "de facto" standard for Web sites, where its market share is 90 percent, Sclavos said.
But Sclavos said VeriSign's strong market share in the Web site security business was creating a springboard into related services and enterprise software in company-wide intranet security systems.
In recent months VerSign's business of co-branding its digital certificates with other Internet-related companies has shown rapid growth. The company has signed up 200 service providers in the past two to three weeks, Sclavos said.
VeriSign reported recently that fourth-quarter revenue jumped 160 percent to $13.2 million from the same period a year earlier. The net loss was $2.5 million.
CFO Evans said revenue reports have used "conservative accounting," and VeriSign had about $13 million in deferred income to recognize over the next year.
She also said gross profit margins would strengthen in the quarters ahead because the company had already made significant investment in technology of about $40 million. "We continue to see margin improvement," Evans said. She noted that there will be "more and more leverage as we see economies of scale going forward." VRSN
((Los Angeles newsdesk, 213 380-2014)) REUTERS
|
