VeriSign Reports First Quarter Results
PR Newswire - April 22, 1999 16:31
Continued Momentum in Website, Enterprise and Affiliate Services Fuel Strong Revenue Growth
MOUNTAIN VIEW, Calif., April 22 /PRNewswire/ -- VeriSign, Inc. (Nasdaq: VRSN) today announced revenue of $15.6 million for the first quarter ended March 31, 1999, a 134% increase over revenue of $6.7 million reported in the quarter ended March 31, 1998. First quarter revenue increased 18% over the $13.2 million of revenue reported in the previous quarter ended December 31, 1998. In addition, deferred revenue, which consists predominantly of unamortized subscriber fees, increased to $16.0 million as of March 31, 1999, a 127% increase over the prior fiscal year period and a 22% increase from the quarter ended December 31, 1998.
VeriSign reported a net loss for the first quarter ended March 31, 1999 of $2.0 million, or $0.08 per share compared to a net loss in the quarter ended March 31, 1998 of $4.7 million, or $0.27 per share. Net loss for the prior quarter ended December 31, 1998 was $2.5 million or $0.11 per share.
"We have built our company on the belief that the Internet needs a ubiquitous trust infrastructure in order to make e-commerce flourish," said Stratton Sclavos, president and CEO of VeriSign. "Our strong first quarter results were driven by the continued adoption of our digital certificate services as the foundation of trust for business-to-consumer and business-to-business transactions and communications."
VeriSign also announced that new customer acquisition reached record levels in each of its lines of business in the first quarter. In its website certificate business, VeriSign continued to see its demand generation activities succeed as over 23,000 certificates were sold in the quarter, representing a 100% increase in unit volumes from the year ago period and an 18% increase over the prior quarter. Over 125,000 website certificates have now been sold on a cumulative basis to protect the websites of online merchants, financial institutions and other organizations. The Internet's top 40 electronic commerce sites and almost all of the Fortune 500 companies with a web presence now use VeriSign website certificates to safeguard their on-line transactions and communications.
In addition, VeriSign continued its strong penetration into the enterprise market with the addition of over 100 new customers for its VeriSign OnSite(SM) service. Well over 400 businesses, government agencies and educational institutions now use the company's managed PKI and digital certificate services to secure their extranets, virtual private networks and electronic commerce applications.
VeriSign also added three new international service providers to its affiliate program. Roccade, of the Netherlands, Comparex in Germany and CertiSur in Argentina have joined the rapidly growing VeriSign Trust Network(SM). VeriSign affiliates utilize the company's scalable technology platform to provide a common set of digital certificate and trust services under a co-branding and marketing relationship with VeriSign. Each affiliate covers a specific geographic region or vertical market.
Other Highlights in Q1
Momentum in VeriSign's website certificate business continued to build during the first quarter with the signing of several key marketing and distribution agreements. These included a new strategic agreement with Netscape, naming VeriSign as the premier provider of digital certificate services for Netscape customers and a joint development partner of a new Security-related channel on the Netcenter portal which was launched in April.
In addition, VeriSign was granted approval from the Department of Commerce to issue very strong 128-bit digital certificates to an expanded group of customers including online merchants. VeriSign is the only digital certificate provider to currently be granted this authority by the U.S. government. VeriSign also introduced the Secure Site and Global Site family of enhanced services during the quarter. The Secure Site and Global Site offerings provide a range of new services for website customers, including 40 bit or 128 bit certificates, website insurance, premium service guarantees, security training, and website performance measurement (through a recently announced relationship with Keynote Systems). VeriSign also announced that it has now signed reseller agreements with over 1400 ISPs and web hosting companies to offer website certificates to their business customers.
In the enterprise business, VeriSign continued its pursuit for ubiquitous and seamless integration of its OnSite service with the leading applications and network devices driving intranets, extranets and virtual private networks. To this end, VeriSign announced new partnerships with Network Associates, Security Dynamics and Checkpoint Technologies. There are now well over 150 applications shipping or in development that work with VeriSign OnSite's managed services.
VeriSign also successfully completed a follow-on offering during the first quarter issuing 1.6 million shares of its common stock for net proceeds, after offering costs, of approximately $121.4 million. On March 31, 1999, VeriSign also announced that its board of directors had approved a two-for-one split of its common stock to be effective on May 28, 1999, after its Annual Meeting of Stockholders. Stockholders will receive one additional share for every share held on the record date of May 14, 1999.
VeriSign, Inc.
VeriSign, Inc. is the leading provider of Internet trust services and digital certificate solutions needed by websites, enterprises, electronic commerce service providers and individuals to conduct trusted and secure electronic commerce and communications over IP networks. VeriSign's Digital Certificate services for websites and consumers are available through the Company's website. The Company's Digital Certificate services for enterprises and electronic commerce service providers are available through regional account representatives, resellers, and global affiliates.
This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the Company's limited operating history, which makes the prediction of future operating results difficult; continued growth in the use of Internet commerce; market acceptance of digital certificates and the Company's products and services in particular; competition; interruptions or security breaches in the Company's systems; the ability of the Company's current, as well as any future, international affiliates to increase brand awareness and revenues; and the Company's ability to manage its growth and expansion. More information about potential factors which could affect the Company's financial results is included in the registration statement on Form S-1 originally filed with the SEC on January 5, 1999 and the Annual Report on Form 10-K as originally filed with the SEC on February 22, 1999. VeriSign assumes no obligation to update the forward-looking information contained in this press release.
VERISIGN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended March 31,
1999 1998
(Unaudited)
Revenues $15,582 $6,662
Costs and expenses:
Cost of revenues 6,601 4,020
Sales and marketing 7,515 4,720
Research and development 2,988 1,671
General and administrative 1,907 1,735
Total costs and expenses 19,011 12,146
Operating loss (3,429) (5,484)
Other income 1,186 392
Loss before minority interest (2,243) (5,092)
Minority interest in net loss of subsidiary 250 389
Net loss $(1,993) $(4,703)
Basic and diluted net loss per share $(.08) $(.27)
Shares used in per share computation 23,938 17,253
VERISIGN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, December 31,
1999 1998
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $108,949 $22,786
Short-term investments 48,334 18,959
Accounts receivable 13,217 9,769
Prepaid expenses and other current assets 4,422 2,174
Total current assets 174,922 53,688
Property and equipment, net 10,467 9,234
Other assets, net 3,577 1,373
$188,966 $64,295
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $6,094 $5,472
Accrued liabilities 3,915 4,035
Deferred revenue 15,997 13,096
Total current liabilities 26,006 22,603
Minority interest in subsidiary 714 964
Commitments
Stockholders' equity:
Preferred stock, $.001 par value;
5,000,000 shares authorized; none issued -- --
Common stock, $.001 par value;
Authorized: 50,000,000 shares;
Issued and outstanding:
24,999,328 shares in 1999 and
23,086,692 shares in 1998 25 23
Additional paid-in capital 215,980 92,797
Notes receivable from stockholders (109) (409)
Deferred compensation (250) (276)
Accumulated deficit (53,400) (51,407)
Total stockholders' equity 162,246 40,728
$188,966 $64,295
NOTE: VeriSign is a registered trademark exclusively licensed to
VeriSign, Inc. OnSite and VeriSign Trust Network are a service marks of
VeriSign, Inc.All other trademarks are properties of their respective
owners.
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