Official earnings report.Company reports Record Revenue Growth.
Wit Capital Group, Inc. Announces 2Q99 Results - Company Reports Record Revenue and Growth -
NEW YORK, July 20 /PRNewswire/ -- Wit Capital Group, Inc. (Nasdaq: WITC - news), parent company of leading online investment banking and brokerage firm Wit Capital Corporation, today announced operating results for the second quarter ended June 30, 1999, its first reporting period as a public company. Revenues for the second quarter totaled $11.3 million, compared to $0.3 million for the same period of 1998, and an increase of 189% over first quarter 1999 revenues of $3.9 million.
Wit Capital reported a net loss of $2.8 million for the second quarter of this year versus $1.8 million for the same quarter last year. Basic and diluted net loss per share was $(0.11) in the second quarter, compared to $(0.26) for the second quarter a year ago. The Company's net loss in the second quarter improved from $4.9 million, or $(0.67) per basic and diluted share, from the first quarter of 1999.
For the six months ended June 30, 1999, the Company reported revenues of $15.2 million, an increase compared to revenues of $.4 million in the same period last year. For the six months ended June 30, 1999, the Company reported a net loss of $7.7 million, or $(0.48) per share, compared to a $3.2 million net loss for the comparable period last year, or $(0.46) per share.
SUMMARY FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
6/30/99 6/30/98 6/30/99 6/30/98
Revenues
Investment Banking $8,246,614 $180,330 $11,369,034 $214,198
Brokerage 1,567,584 76,880 2,001,791 99,381
Interest 1,176,599 25,780 1,368,269 45,467
Other 289,507 -- 444,331 --
Total Revenues 11,280,304 282,990 15,183,425 359,046
Total Expenses 14,078,171 2,122,653 22,881,458 3,596,797
Net Loss $(2,797,867) $(1,839,663) $(7,698,033) $(3,237,751)
Basic and Diluted
Net Loss per share $(0.11) $(0.26) $(0.48) $(0.46)
Weighted Average Shares
Outstanding 24,486,238 7,109,972 15,923,484 7,083,182
''Our business model is issuer driven. These results reflect the continued acceptance for Wit Capital by issuers raising capital to transform their businesses to the digital economy,'' said Ronald Readmond, Wit Capital's president and co-chief executive officer. ''Wit Capital provides a full range of investment banking services from strategic advisory to public and private equity. In addition, we continue to see growth in our account base as individual investors better understand the unique proposition that Wit Capital provides in terms of access to public securities offerings. We also continue to expand our efforts in affinity marketing programs for issuing clients. As a result, we continue to see revenue growth both in our investment banking and brokerage businesses.''
Wit Capital more than doubled the number of securities offerings it made available to its customers from the first quarter 1999 to a total of 42 in the second quarter 1999. The Company acted as co-manager in half of these offerings and participated as a syndicate member in the other 21 offerings. The increase in Internet distributed securities offerings and increased strategic advisory business and resulting retainers during the quarter contributed to total investment banking revenues of $8.2 million.
For the second quarter, total shares underwritten by Wit Capital were 6.48 million, of which 5.97 million were retained by the Company for sale to its customers. Retained shares grew 301% from 1.49 million shares in the first quarter. These figures do not include 2.28 million Wit Capital shares distributed to customers during the Company's initial public offering in June.
During the second quarter, the Company executed 86,743 total trades, compared to 24,696 trades in the first quarter of 1999. The average number of daily trades rose more than three-fold, from 405 trades in the first quarter to 1,377 trades in the second quarter. Wit Capital added 40,697 new accounts this quarter for a total of approximately 66,800, compared to 15,231 new accounts added in the first quarter. As of June 30, 1999, total active accounts numbered 27,060.
''Wit Capital continues to shift the paradigm for capital formation by creating a more efficient system for the marketing and distribution of securities and leveling the playing field for individual investors,'' said Ronald Readmond. ''It is important to note that our customer growth is attributable to the increasing number of deals in which we participate and shares that we distribute as well as the affinity marketing which is done on behalf of our issuing clients and not through significant expenditures in advertising.''
Page impressions increased from 18.3 million in the first quarter to 140.4 million in the second quarter of this year. The Company recently modified its first come, first served allocation process in the interest of creating a fairer opportunity for individual investors to place conditional offers for securities. Wit Capital expects that this will result in a decreased number of page impressions for the overall site going forward.
Total expenses for the second quarter were $14.1 million, compared to $8.8 million for the first quarter of 1999. Specifically, compensation and benefits increased to $8.6 million versus $6.6 million quarter to quarter. The primary reason for the increased compensation costs was due to the hiring of 58 new personnel over the past three months, primarily representing key members of Wit Capital's investment banking, research, technology and customer care teams. Brokerage and clearance expense rose from $0.3 million in the first quarter to $1.1 million in the second quarter as a result of increased retail trading volume and an increase in IPO participation and share retention.
The Company made significant improvements to its customer care services during the quarter through an investment of approximately $525,000, which was used to increase the number of call center representatives, improve response time to customer inquiries, and upgrade its processing software and telecommunications equipment. We are currently upgrading and expanding the capabilities of our systems infrastructure which at times has been strained by our rapid growth. Wit Capital expects infrastructure expenditures to continue as it improves and enhances its online brokerage systems, expands its affinity programs, and continues development of its Digital Trading Facility.
SIGNIFICANT EVENTS
On June 4, 1999, Wit Capital completed its initial public offering. The Company offered 8.74 million shares at $9 per share for total net proceeds of $72.8 million. The co-lead managers were Bear Stearns & Co., Inc. and Wit Capital Corporation. Thomas Weisel Partners LLC acted as co-manager.
In April 1999, The Goldman Sachs Group, L.P. purchased 11.7 million shares of Class B common stock and 5.6 million warrants. Upon exercise, the warrants would result in an additional $31.4 million in proceeds to Wit Capital. After the completion of Wit Capital's public offering on June 4, 1999, Goldman Sachs owned 13.2% of the Company on a fully diluted basis excluding warrants, or 20% inclusive of warrants.
ABOUT WIT CAPITAL
Wit Capital Group, Inc. was founded in 1996 as the first online investment banking firm. With offices in New York and San Francisco, Wit Capital is an issuer-driven, Internet-centric company that offers a rapidly expanding array of investment banking services, including underwriting for public offerings, private equity services, strategic advisory, and institutional quality research. Wit Capital also offers individual investors online brokerage services which include access to IPOs and other securities offerings which, in the past, have only been available to retail and institutional clients.
Wit Capital is a registered broker-dealer and a member of NASD and SIPC. It is a publicly traded company listed on NASDAQ under the symbol ''WITC.'' For more information, please visit the Company's website at witcapital.com.
Certain statements in this news release constitute ''forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or those of the industry in which we operate, to be materially different from any expected future results, performance or achievements expressed or implied in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the Registration Statement of our initial public offering of common stock and periodic reports filed from time to time with the Securities & Exchange Commission.
WIT CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
REVENUES:
Investment banking $8,246,614 $180,330 $11,369,034 $214,198
Brokerage 1,567,584 76,880 2,001,791 99,381
Interest 1,176,599 25,780 1,368,269 45,467
Other 289,507 -- 444,331 --
Total revenues 11,280,304 282,990 15,183,425 359,046
EXPENSES:
Compensation and
benefits 8,588,459 689,950 15,146,585 1,239,085
Brokerage and
clearance 1,114,507 41,165 1,375,135 55,319
Professional
services 1,085,302 171,069 1,766,811 264,642
Data processing
and communications 884,043 120,472 1,183,654 270,775
Technology development526,088 232,454 861,883 283,354
Marketing 421,736 307,109 472,742 537,989
Depreciation
and amortization 278,558 269,459 499,053 427,489
Occupancy 213,496 46,282 303,503 88,682
Other 965,982 244,693 1,272,092 429,462
Total expenses 14,078,171 2,122,653 22,881,458 3,596,797
Net loss $(2,797,867) $(1,839,663) $(7,698,033) $(3,237,751)
BASIC AND DILUTED NET LOSS
PER SHARE: $(.11) $(.26) $(.48) $(.46)
WEIGHTED AVERAGE SHARES
USED IN THE COMPUTATION
OF BASIC AND DILUTED
NET LOSS PER SHARE: 24,486,238 7,109,972 15,923,484 7,083,182
WIT CAPITAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, December 31,
ASSETS 1999 1998
(Unaudited)
CASH AND CASH EQUIVALENTS $137,292,797 $18,110,146
RECEIVABLE FROM CLEARING BROKER 729,475 119,312
SECURITIES OWNED, at market or fair value 1,207,785 758,293
PREPAID EXPENSES 1,054,669 144,430
INVESTMENT BANKING FEES RECEIVABLE 3,989,510 512,952
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net of accumulated
depreciation and amortization 2,559,670 615,181
COMPUTER SOFTWARE, net of accumulated amortization 1,903,848
1,614,735
OTHER ASSETS 2,770,249 421,357
Total assets $151,508,003 $22,296,406
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable and accrued expenses $7,094,794 $1,032,463
Deferred advisory fees 383,528 595,486
Other liabilities 44,278 60,203
Total liabilities 7,522,600 1,688,152
COMMITMENTS
STOCKHOLDERS' EQUITY:
Series A Preferred Stock,
$.01 par value, 9,000,000 shares
authorized, 8,997,952 shares
issued and outstanding at
December 31, 1998 -- 89,980
Series B Preferred Stock,
$.01 par value, 3,000,000 shares
authorized, 2,304,982 shares
issued and outstanding at December 31, 1998 -- 23,050
Series C Preferred Stock,
$.01 par value, 7,445,000 shares
authorized, 5,902,750 shares issued
and outstanding at December 31, 1998 -- 59,028
Series D Preferred Stock,
$.01 par value, 10,000,000 shares
authorized, 9,933,334 shares issued
and outstanding at December 31, 1998 -- 99,333
Common Stock, $.01 par value,
60,000,000 shares authorized,
16,092,286 shares issued and
outstanding at December 31, 1998 -- 112,647
Common Stock, $.01 par value,
500,000,000 shares
authorized, 8,740,000 shares
issued and outstanding at
June 30, 1999 87,400 --
Common Stock, Class B,
$.01 par value, 75,000,000 shares
authorized, 11,666,667 shares issued
and outstanding at June 30, 1999 116,667 --
Common Stock, Class C, $.01
par value, 159,000,000 shares
authorized, 51,544,989 shares
issued and outstanding at June 30, 1999 515,450 --
Additional paid-in capital 179,857,430 39,534,657
Notes receivable from stockholders (15,333,070) (5,750,000)
Accumulated deficit (21,258,474) (13,560,441)
Total stockholders' equity 143,985,403 20,608,254
Total liabilities and stockholders'
equity $151,508,003 $22,296,406
SOURCE: Wit Capital Group, Inc. |
