DataMirror third quarter results
DataMirror Corp DMC
Shares issued 10,208,073 Nov 23 close $9.00
Wed 24 Nov 99 News Release
Mr. Nigel Stokes reports
DataMirror, a leading provider of business data integration software, has
released its results for the quarter ended Oct. 31, 1999.
Revenue for the quarter was $11,358,000, the highest quarterly revenue in
the company's history. The net income for the quarter, including a dilution
gain and the pro rata share of losses resulting from the company's
investment in PointBase Inc., was $2,209,000 or 22 cents per share, as
compared with net income of $18,000 or less than one cent per share for the
quarter ended Oct. 31, 1998. Cash generated from operating activities
improved by $2,905,000 from the same period last year. The weighted average
number of common shares outstanding for the quarter was 10,168,000, as
compared with 10,352,000 for the same period last year.
Without the dilution gain and the pro rata share of losses from PointBase,
the company would have reported net income for the quarter of $769,000 or
eight cents per share, as compared with net income of $18,000 or less than
one cent per share for the quarter ended Oct. 31, 1998. The dilution gain
and the pro rata share of losses from PointBase are not taxable or
deductible for income tax purposes and do not involve an outlay of cash
resources.
Revenue for the nine months ended Oct. 31, 1999, was $29,588,000, compared
with $23,547,000 for the same period last year, an increase of 26 per cent,
and up from $14,064,000 for the same period in the 1998 fiscal year, an
increase of 110 per cent.
"Providing the underlying infrastructure to allow organizations to
integrate their data with e-business environments will continue as a main
business driver into the future," said Nigel Stokes, chairman, president
and chief executive officer of DataMirror. "In fact during the quarter,
sales of our business data integration product, Transformation Server,
increased by 49 per cent over the previous quarter. This increase was
fuelled by customer purchases for e-business applications or for
integration of data to and from their corporate intranets or extranets.
"Customers have been telling us over the quarter, and at our user
conference in Orlando, that infrastructure for dot-com applications is now
at the forefront of IT budgets," continued Mr. Stokes. "At last week's
Oracle OpenWorld, e-commerce was the dominant theme. IT dollars are focused
on leveraging the Internet for revenue growth rather than Y2K readiness and
operational efficiencies. Businesses want to improve their competitive
positioning. Successful companies in the Internet era will differentiate
themselves in two important ways: expanding sales through e-business, and
gaining better insights into their operations through the integration and
analysis of data.
"Production business systems generate large volumes of data. The explosion
of e-business transactions has dramatically increased the amount of data
that must be processed and available for analysis. For businesses to grow,
data must be integrated and immediately available to decision-makers,
employees and partners. Data integration is difficult because data is
usually stored on multiple computing platforms and in multiple applications
and databases. Time to solution is critical. Packaged solutions are
preferable to custom programming which takes time, is costly, and may not
be sufficiently scalable given the rapid velocity of business expansion,"
added Mr. Stokes.
"Customers need to leverage the value of their data from all operational
systems. To accomplish this, real time data integration is necessary on an
enterprise-wide basis, from e-business servers to more traditional
computing environments. DataMirror's packaged solutions provide the answer.
"Our packaged software is unique in how easily it can solve complex
integration issues. We offer comprehensive software solutions that fully
integrate Web servers and Internet applications with other operational
systems, even across a broad range of different hardware platforms and
databases. Using a push transformation and replication engine, data from
operational sources can be integrated to provide real time updates to feed
analysis and e-business applications. No programming or changes to existing
systems or databases is required to install and administer our software.
"Our software is really the only solution that can scale to accommodate
high volumes of transaction processing. For example, one of our customers
processes over 10 million transactions daily using our technology. Scalable
systems also require resiliency and load balancing. DataMirror High
Availability Suite provides reliable backup and recovery for objects and
data residing on IBM AS/400s used for 7/24 e-business and production
processing. For other platforms such as UNIX and Microsoft Windows NT,
Transformation Server provides data resiliency. Transformation Server has
also been widely used by customers to provide real time, bidirectional data
movement for load balancing and distributed data applications.
"The era of ubiquitous computing is here. The device market is exploding --
Internet appliances, set-top boxes, wireless communications, smart phones,
PDAs, palm-tops and so on. Industry leaders such as Microsoft, Sun and
Oracle now acknowledge that there will be no single computing platform for
these devices. DataMirror realized this early. Our founding stage
investment in PointBase, a developer of a pure Java database that will run
on any device, supports this strategic view. Transformation Server will be
expanded to provide business data integration and synchronization for these
devices. Going forward, the boundaries of business data integration will
expand as new data communication devices are adopted by our customers.
"We believe that the strengths of our products and market positioning will
lead to continued growth of DataMirror through the remainder of this year
and into the new millennium."Highlights for the quarter
The company added 79 new customers, which represented 74 per cent of
licence revenue for the quarter. New customers include Abbey National
Treasury International, Amylum, Atlanta AG, Bell Atlantic, Bergendahls,
Carglass, CNA Insurance Companies, Fisher Rosemount, Groupe Despointes, HJ
Heinz, Health Alliance Medical Plans, A. Lassonde, Matav Israel, McCann
Erickson, Medisense, Nextlink, PC Connection, Physician Sales and Service,
Salvesen Logistica, Schenker-BTL, Toronto Dominion Bank, Uline and
Winkhaus.
Channel contribution was 36 per cent of licence revenue, accounting for
over half of the new customers. North American channels were expanded with
the addition of Avnet Computer, one of North America's leading technology
solutions integrators, deploying hardware, software and services across the
enterprise as a DataMirror remarketer. In conjunction with Avnet's
ERPerformance services, DataMirror's software solutions will assist Avnet's
customers with maintaining their J.D. Edwards OneWorld systems and other
ERP packages at peak performance levels.
Resiliency and recovery software continues to be in high demand, accounting
for 36 per cent of licence revenues. Since the release of High Availability
Suite in the fall of 1998, DataMirror has sold 370 licences to over 140
customers. More than 80 per cent of these were new customers to DataMirror
and approximately 20 per cent were a direct result of the company's
competitive replacement program. In conjunction with IBM's AS/400 solutions
rebate promotion, DataMirror recently announced its own incentive program
for the fourth quarter, involving discounts on the company's resiliency
software when purchased with certain IBM processors. Customers are
investing in the DataMirror resiliency solution because it is easier to
use, well-supported, fast, flexible and cost-effective. In committing to
DataMirror as a High Availability vendor, customers are recognizing our
technological lead, growth and staying power.
During the quarter, the company extended its own e-commerce functionality.
Customers have been downloading fully functional software from the
company's Web site, www.datamirror.com, for trial and evaluation since
February of this year. Now, full product demo capabilities are available
over the Web using AS/400, S/390, UNIX, Linux and Microsoft Windows NT
processors located at the company's head office. All of the company's
products were interactively demonstrated over the Web at its Transcend '99
user conference held earlier this month in Orlando. This capability is an
important sales advantage. Customers are able to rapidly appreciate the
power and performance of DataMirror software, either through teleconference
tutorials or on-site demos by sales staff at customer locations.
Despite the revenue growth, operating expenses have remained relatively
constant for the third consecutive quarter. Operating expenses are up only
9 per cent from the same quarter last year despite a 19-per-cent increase
in the average number of employees for the quarter. Of a total staff
complement of 215 at Oct, 31, 1999, 118 were in sales, marketing and
support, 64 in research and development, and 33 in general and
administration roles.
Cost management together with increased sales has resulted in the
improvement of operating income by $1,233,000 from the same quarter lastyear.
The company maintained its focus on further enhancing the features and
functionality of its two major product lines, Transformation Server and
High Availability Suite. In addition, Transformation Server was extended to
give customers access to flat files or non-relational data. This new
capability was engineered primarily to integrate UNIX and Microsoft Windows
NT data stores with e-commerce and business intelligence applications.
CONSOLIDATED STATEMENT OF INCOME Three months ended Oct. 31
(in thousands of dollars) 1999 1998Revenue
Licence $ 7,931 $ 6,485Maintenance 2,422 1,435
Consulting 1,005 1,595 ------ ------
11,358 9,515Direct costs 158 535
------ ------Gross margin 11,200 8,980
------ ------Operating expenses
Selling and marketing 6,071 5,947Research and
development 1,588 884General and
administration 2,220 2,081Amortization of
intangibles 296 276 ------ ------
10,175 9,188 ------ ------
Operating income (loss) 1,025 (208)
Interest income 69 132 ------ ------
Income (loss) beforeincome taxes 1,094 (76)Income tax expense
(recovery) 325 (94)
------ ------Income (loss) before
the undernoted 769 18Gains (losses) frominvestment in
Pointbase, Inc.Dilution gain 2,327 -
Equity loss (887) - ------ ------
Net income $ 2,209 $ 18 ====== ======
Basic earningsper share 22 cents 0
CONSOLIDATED STATEMENT OF INCOME Nine months ended Oct. 31
(in thousands of dollars) 1999 1998Revenue
Licence $20,050 $17,250Maintenance 6,061 3,059
Consulting 3,477 3,238 ------ ------
29,588 23,547Direct costs 674 765
------ ------Gross margin 28,914 22,782
------ ------Operating expenses
Selling and marketing 18,267 13,881Research and
development 4,364 2,611General and
administration 6,798 5,306Amortization of
intangibles 868 689 ------ ------
30,297 22,487 ------ ------
Operating income(loss) (1,383) 295
Interest income 232 494 ------ ------
Income (loss) beforeincome taxes (1,151) 789Income tax expense
(recovery) 153 255 ------ ------
Income (loss) beforethe undernoted (1,304) 534Gains (losses) from
investment inPointbase, Inc.Dilution gain 2,327 -
Equity loss (2,561) - ------ ------
Net income (loss) $(1,538) $ 534 ====== ======
Basic earnings(loss) per share (15 cents) 5 cents |
