NewsEdge Corporation Announces Fourth Quarter 1998 Results,
Structures Company Around Internet Opportunity
Users Grow 60% to 1.5 Million; 90% Employing NewsEdge Through Internet Technology
BURLINGTON, Mass., Feb. 24 /PRNewswire/ -- NewsEdge Corporation (Nasdaq: NEWZ) announced
financial results for the fourth quarter and the year ended December 31, 1998. Revenue from Enterprise and
NewsPage customers was $19.8 million for the three months ended December 31, 1998, an increase of
18% over the $16.8 million for the same quarter in 1997, extending the Company's record of continuing
revenue growth to thirty-six consecutive quarters, a nine year period. The Company's Other revenue, which
consists of business lines that are being terminated or harvested, represented 5% of fourth quarter 1998
total revenue. These terminated or harvested business lines declined 66% from fourth quarter revenue last
year. Included in the prior year results were revenues from the Clarinet business unit which was spun off
effective March 31, 1998. Total revenue for the three months ended December 31, 1998 was $20.8 million
compared to total revenue of $19.7 million during the same period a year earlier.
The Company's net loss for the quarter ended December 31, 1998 was $914,000, or a loss of $.05 per
share, compared to a net loss of $3.7 million, or a loss of $0.22 per share, during the fourth quarter of 1997.
On December 31, 1998 the Company had cash and investments of $41.6 million, or approximately $2.42 per
share.
For the full year 1998, revenue from Enterprise and NewsPage customers was $73.7 million, an increase of
14% over the $64.7 million for the previous year. Total revenues in 1998 were $79.5 million compared to
$77.5 million in 1997. The Company's net loss for the full year 1998 was $17.2 million, or a loss of $1.00 per
share, compared to a net loss of $15.9 million, or a loss of $0.95 per share, for the full year 1997. The
results for 1998 include first quarter merger, disposition and other charges of $11.1 million compared to
merger, disposition and other charges of $5.1 million incurred in 1997. Without merger, disposition and other
charges, the net loss would have been $6.1 million in 1998 versus $10.8 million in 1997.
Reporting on three business segments
In order to provide more visibility into the NewsEdge Corporation strategies and results for its business units,
the Company has established business line reporting on revenue and operating results by three segments,
Enterprise, NewsPage and Other. Included in "Other" are the results of product lines which are being
harvested or discontinued.
Following is a comparative table of fourth quarter and year-to-date revenues and loss before merger,
disposition and other charges, by Company operating segment, for 1998 and 1997:
(in thousands) Three Months Ended Twelve Months Ended December 31, % December 31, %
Revenue: 1998 1997 Change 1998 1997 Change
Enterprise $17,970 $15,225 18% $67,374 $58,938 14%
NewsPage 1,821 1,613 13% 6,351 5,802 9% Total continuing 19,791 16,838 18% 73,725 64,740 14%
Other 989 2,890 (66%) 5,807 12,731 (54%) Total revenues $20,780 $19,728 5% $79,532 $77,471 3%
Loss before merger, disposition and other charges:
Enterprise $ (782) $357 $(5,195) $(1,805)
NewsPage (493) (3,735) (2,935) (9,089)
Total continuing (1,275) (3,378) (8,130) (10,894)
Other (57) (656) (145) (1,569)
Total loss before
merger, $(1,332) $(4,034) $ (8,275) $(12,463)
disposition and other
charges
As of December 31, 1998, more than 1.5 million users had paid, registered or been authorized for
NewsEdge services, an increase of approximately 60% in new user growth in the last twelve months. The
Company counted approximately 1,300 enterprise customers, up 29% over the previous year-end total, with
approximately 600,000 users. In addition, there were approximately 900,000 NewsPage single worker
business news users.
"Our Company has completed a year of merging three separate companies' products, services and
organizations to form NewsEdge Corporation, Internet enabling all of our news services and Internet enabling
90% of our users. We have accomplished a great deal. Now we are structuring the Company's Enterprise
and NewsPage business units to more readily pursue the business Internet opportunity that we see, " said
Don McLagan, Chairman of NewsEdge Corporation. "All of our services for both enterprise users and single
workers are available via browsers on the Internet. Our user growth of 60% in the last year has brought the
Company to a level where one market research firm now ranks NewsEdge at the top of subscriber share in
the online business news market space. Revenue from our continuing business units grew each quarter in
1998, with the rate of growth accelerating in the two most recent quarters."
"According to another analyst, fifty million business people worldwide use the Internet at work, including
more than half the white collar workers in the United States. The analyst projects the number of business
people who use the Internet worldwide to double in three years. NewsEdge Corporation has substantial
assets in this well defined and rapidly growing market."
"In some cases single workers make their own Internet news decisions for free, ad and e-commerce
supported services. Our NewsPage business unit addresses the news value needs of the single worker
segment through both its own business news services and through partnerships with Netscape, Yahoo! and
others."
"In other cases, the purchase decisions for Internet and Intranet news solutions are made centrally by
organizations for their employees. NewsEdge added nearly three hundred new subscription fee relationships
with enterprise customers in 1998, including announced relationships with Chase Manhattan Bank, Het
Financieele Dagblad, IBM and Bank of Montreal. Our Enterprise business unit now services 81 of Business
Week's 100 largest global companies."
"NewsEdge Corporation will service news value needs across both segments of the business Internet
market _- selling top down to enterprises and bottom up to workers who make their own choices. Our
Enterprise business unit will be managed to achieve the profitability and the predictable growth and
enterprise market segment gains that make NewsEdge a desirable and accountable subscription fee partner
for organizations and their decision makers. Our priorities for the Enterprise business unit are for it to
achieve profitability, to accelerate revenue from last year's 14% growth rate to a growth rate in the upper
teens, to strengthen its renewal rate through the 85% range and to improve sales person productivity from
last year's levels. In 1998 we constrained the level of investment in the NewsPage business in order to
stabilize the finances of the Company following the merger in February. Now, confident with the progress we
have made in 1998 throughout the Company, we will begin to make a substantial investment in our
NewsPage business. We have created NewsPage.com, Inc., a wholly owned NewsEdge subsidiary to
concentrate and focus this effort and investment. Our priority for the NewsPage unit is to accelerate both
revenue and user growth into the 30% range in 1999 and then to the rates experienced by other Internet
companies. We want to take advantage of the growth of the segment of single workers who choose free, ad
and e-commerce supported Internet news services for themselves."
"We will continue to invest and lever the NewsEdge Refinery(TM), our unique proprietary combination of
technology and human review of news, to clearly differentiate the services we provide and to add value to
news stories for our users. We are reviewing all of our news provider relationships. NewsEdge corporation
spent nearly $21 million on news royalties in 1998 and services delivered via NewsEdge generated an
estimated additional $40 million in revenue for our information partners for which we do not bill directly. We
are in discussions to select news partner relationships where we can grow together rapidly and profitably in
the exciting business Internet news market."
"We are convinced that NewsEdge is in a strong position as single workers and their employers grow
frustrated with information overload and concerned about the time required to find the information they need
to do their jobs. Our unique and valuable combination of the NewsEdge Refinery, our NewsEdge Review(TM)
topics and our real-time news services provide the authoritative and concise detail to make business people
who use the Internet smarter and more productive. It does not matter if a businessperson chooses
NewsPage for themselves or their organization chooses a NewsEdge service for them. Our mission is the
same -- use the Internet to make news valuable for busy people at work."
About NewsEdge Corporation
NewsEdge Corporation (Nasdaq: NEWZ) is a leader in global news and current awareness solutions for
business. The Company's mission is to make news valuable for busy people at work. NewsEdge provides
clients at approximately 1,300 organizations _- including 81 of Business Week's 100 largest global
companies (based on market capitalization) -- with a powerful combination of customized, authoritative
content; cutting-edge technology; editorial, value- added capabilities; and unparalleled client support and
consulting services. NewsEdge helps business people find the most important, relevant stories from an
overwhelming volume of daily news and enables them to act on the most current information possible.
NewsEdge is headquartered in Burlington, Massachusetts with sales offices throughout North America,
Europe and Japan. For more information about NewsEdge Corporation, visit the company's Web site at (
newsedge.com ).
Certain of the above statements on the Company's future revenue and financial performance, are forward
looking statements that involve risks and uncertainties. Actual results could differ materially as a results of a
variety of factors, including risks associated with acquisitions, the timely development and acceptance of
new products, the potential impact of any Year 2000 problems, competitive and market developments, the
success of relationships with third parties, and other risk factors described from time to time in the
Company's SEC reports.
NEWSEDGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
December 31, December 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $37,808 $45,854
Short-term investments 3,782 12,685
Accounts receivable 13,112 17,903
Prepaid expenses and deposits 5,037 5,718
Total current assets 59,739 82,160
Property and equipment, net 9,138 9,497
Other assets 277 589
Total assets $69,154 $92,246
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,864 $5,639
Accrued expenses 17,853 13,319
Deferred revenue, current 27,837 32,374
Current portion of long-term
obligations 891 1,298
Total current liabilities 49,445 52,630
Long-term obligations, less
current portion 303 1,132
Deferred revenue, noncurrent 157 39
Stockholders' equity:
Common stock 175 169
Additional paid-in capital 124,891 124,853
Cumulative translation adjustment 63 24
Accumulated deficit (103,829) (86,601)
21,300 38,445
Less: Treasury stock, at cost
(345,000 shares) 2,051 --
Total stockholders' equity 19,249 38,445
Total liabilities &
stockholders' equity $69,154 $92,246
NEWSEDGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
1998 1997 1998 1997
Total revenues $20,780 $19,728 $79,532 $77,471
Costs and expenses:
Cost of revenues 8,261 7,489 32,394 30,245
Customer support expenses 1,218 1,480 5,679 5,275
Development expenses 3,020 3,211 12,073 12,477
Sales and marketing expenses 8,814 10,394 33,217 36,402
General and administrative
expenses 800 1,188 4,445 5,535
Loss before merger, disposition
and other charges (1,333) (4,034) (8,276) (12,463)
Merger, disposition and other
charges -- 68 11,094 5,084
Loss from operations (1,333) (4,102) (19,370) (17,547)
Interest income and other,
net 472 588 2,308 2,983
Net loss before provision for
income taxes (861) (3,514) (17,062) (14,564)
Provision for income taxes 53 190 166 1,297
Net loss $(914) $(3,704) $(17,228) $(15,861)
Basic and diluted net loss
per common share $(0.05) $(0.22) $(1.00) $(0.95)
Weighted average common
shares outstanding 17,178 16,875 17,194 16,729
SOURCE NewsEdge Corporation |
