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CrossKeys Second Quarter Revenue Grows 46% Over Previous Quarter: Expanded Sales Force And U.S. Wins Fuel Second Consecutive Quarter of Over 45% Sequential Quarterly Growth
KANATA, Ontario--(BUSINESS WIRE)--Dec. 15, 1999-- CROSSKEYS(NASDAQ:CKEY - news; TSE:CKY. - news)
CrossKeys Systems Corporation (Nasdaq:CKEY - news; TSE:CKY - news) today announced strong sequential growth during the second quarter of its fiscal year 2000.
Revenues for the quarter ended November 28, 1999 grew 46% to $11.0 million compared to $7.6 million in the first quarter of 2000. This compares with revenues of $13.0 million in the second quarter of fiscal year 1999. Orders for software in the quarter exceeded shipments, resulting in an increased backlog. Product-based revenue of $10.1 million, or 92% of total revenue, was the highest in company history.
CrossKeys reported a net loss of $1.5 million for the second quarter of fiscal 2000, or a fully diluted loss per share of $(0.08) Cdn versus a loss of $(0.07) Cdn per share in the first quarter of fiscal 2000, and earnings per share of $0.11 Cdn in the second quarter a year ago. In U.S. dollars, fully diluted loss per share for the second quarter was $(0.05), translated at the average exchange rate for the quarter of $0.6798 as reported by the Federal Reserve Bank of New York.
``This is the second quarter of greater than 45% growth for CrossKeys, which underscores the excitement and momentum we all feel building in our company,' said Ian McLaren, President and CEO, CrossKeys. ``Even more significantly, this is CrossKeys single highest quarter revenue. We have turned the corner from a reliance on project-based revenues, moving towards a business model of higher margin and repeatable product sales. We are building our momentum by bolstering our sales team worldwide and I am pleased to announce the establishment of a new and larger U.S. office and the appointment of Frank Pfeilmeier as VP of Sales. We see our continued growth fueled by focusing our products on Internet applications and the fast-growing CLEC market in the U.S. We are selling more multi-vendor, multi-technology products through a more diversified set of channels than ever before.'
``I am also pleased that we have taken our first step to diversify our Board of Director with the recently announced addition of Greg Jacobsen, a prominent U.S. telecom executive,' Mr. McLaren said. ``Greg's extensive industry knowledge and reputation will be of tremendous value to CrossKeys as we move forward,' added Mr. McLaren.
Significant highlights in the quarter included:
Tivoli Systems selected CrossKeys as a strategic partner in its Net Generation initiative.
Quarterly product bookings were the third highest in the company's history, driven principally by CrossKeys Resolve(r) business in the competitive local exchange carriers (CLEC) market place.
Revenue from core products was up 70% over previous quarter, driven largely by the CrossKeys Resolve product suite.
Increased bookings from direct sales and other channels, up 97% over previous quarter.
Signed 12 new customers this quarter, the highest quarterly increase in two years.
Improvement in days sales outstanding to 41.
About CrossKeys
CrossKeys Systems Corporation (www.crosskeys.com) develops and supports carrier-scale software that enables the world's largest and most demanding service providers to manage the equipment and traffic on their telecom networks. CrossKeys has demonstrated experience with multi-vendor and multi-technology networks, including IP, ATM, Frame Relay and TDM. This expertise enables service providers to offer business applications, such as eCommerce and VPNs, with the minimum of infrastructure investment and the competitive guarantees that enterprise end-customers require.
CrossKeys Systems Corporation is a public company whose common shares are listed for trading on NASDAQ (CKEY) in the United States and on The Toronto Stock Exchange (CKY) in Canada.
CrossKeys and logo are registered trademarks of CrossKeys Systems Corporation. All other trademarks are the property of their respective holders and are acknowledged by CrossKeys Systems Corporation.
This announcement may contain forward-looking statements as defined by the US Private Securities Litigation Reform Act of 1995, such as statements related to the industry motivators, market and partnership opportunities. The Company cautions that these statements are based on current expectations that are subject to risks and uncertainties. Actual results may differ due to factors such as customer demand, product shipping schedules, product mix, competitive products and pricing pressures, and changes in the service, network and element management software applications market specifically. Additional information identifying risks and uncertainties is contained in the Company's filings with the Ontario Securities Commission and the Securities and Exchange Commission. Summary of financials follows:
CROSSKEYS SYSTEMS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Canadian dollars, amounts in thousands, except per share data,
US GAAP)
Fiscal quarter ended Two fiscal quarters
ended
November 28, November 1, November 28, November 1,
1999 1998 1999 1998
----------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Product revenue $ 10,094 $ 11,128 $ 16,059 $ 21,013
Service revenue 927 1,912 2,517 4,107
--------------------------------------------------
Total revenue 11,021 13,040 18,576 25,120
--------------------------------------------------
Product costs 1,665 2,656 3,051 5,084
Service costs 505 909 1,285 1,922
--------------------------------------------------
Total cost of sales 2,170 3,565 4,336 7,006
--------------------------------------------------
Gross margin 8,851 9,475 14,240 18,114
--------------------------------------------------
Expenses
Research and
development 4,301 2,274 6,918 4,270
Selling, general
and administration 7,264 4,930 11,973 9,587
--------------------------------------------------
Total expenses 11,565 7,204 18,891 13,857
--------------------------------------------------
Income (loss)
from operations (2,714) 2,271 (4,651) 4,257
Interest income 588 728 1,174 1,375
--------------------------------------------------
Income (loss)
before income taxes (2,126) 2,999 (3,477) 5,632
Income tax recovery
(provision) 638 (926) 638 (1,649)
--------------------------------------------------
Net income (loss) (1,488) 2,073 (2,839) 3,983
--------------------------------------------------
--------------------------------------------------
Earnings (loss)
per share
Basic $ (0.08) $ 0.11 $ (0.15) $ 0.22
Fully Diluted $ (0.08) $ 0.11 $ (0.15) $ 0.21
Weighted average
number of common
shares outstanding
Basic 18,491 18,341 18,516 18,323
Fully Diluted 18,491 18,978 18,516 19,061
CROSSKEYS SYSTEMS CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(Canadian dollars, amounts in thousands, except per share data,
US GAAP)
November 28, May 31,
1999 1999
------------------------------
(unaudited)
ASSETS
Cash and short-term investments $ 48,664 $ 53,426
Accounts receivable 4,995 5,463
Unbilled receivables 4,816 4,438
Fixed assets 5,495 5,693
Other assets 11,494 8,124
------------------------------
$ 75,464 $ 77,144
------------------------------
------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued
liabilities $ 7,402 $ 5,348
Deferred revenue 1,025 1,320
------------------------------
8,427 6,668
Shareholders' equity 67,037 70,476
------------------------------
$ 75,464 $ 77,144
------------------------------
------------------------------
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Contact:
CrossKeys Systems Corporation
John Blackmore, Media Contact, 613/599-2300 ext. 8936
E-mail: jblackmore@crosskeys.com
Web Site: www.crosskeys.com
or
CrossKeys Systems Corporation
Shelley Moorhead, Financial Analyst Contact,
613/599-2300 ext. 8336
Email: moorhead@crosskeys.com
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