VeriSign Reports Fourth Quarter and Fiscal 1999 Results
Strong B2B and B2C Momentum Fuel Revenue Growth of Over 100%
Mountain View, CA, January 20, 2000 - VeriSign, Inc. (Nasdaq:VRSN) today announced revenue of $27.7 million for the fourth quarter ended December 31, 1999, a 109% increase over revenue of $13.2 million reported in the quarter ended December 31, 1998. Fourth quarter revenue increased 21% over the $22.8 million of revenue reported in the previous quarter ended September 30, 1999. For the 1999 fiscal year, VeriSign posted revenue of $84.8 million, a 118% increase over revenue of $38.9 million for the 1998 fiscal year. In addition, deferred revenue, which consists predominantly of unamortized subscriber fees, increased to $31.8 million as of December 31, 1999, a 143% increase over the prior fiscal year period and a 26% increase from the quarter ended September 30, 1999.
Net income for the quarter ended December 31, 1999 was $4.5 million, or $0.04 per share compared to a net loss in the quarter ended December 31, 1998 of $2.5 million, or ($0.03) per share. Net income for the prior quarter ended September 30, 1999 was $1.6 million, or $0.01 per share. For fiscal year 1999, net income was $4.0 million, or $0.03 per share, compared to a net loss, excluding special charges, of $16.2 million or ($0.19) per share, in the 1998 fiscal year.
"We are very pleased with our fourth quarter and fiscal year results as we leveraged the unique scalability and utility of our business to consistently deliver better-than-expected results throughout the year," said Stratton Sclavos, president and CEO of VeriSign. "We believe that we are well positioned to extend our leadership in 2000 as we execute on our strategy of providing a comprehensive set of Internet trust services, including authentication, payment and validation, to both the business-to-business and business-to-consumer markets."
VeriSign closed out fiscal 1999 with another strong quarter in the website services business. VeriSign sold over 36,200 certificates in the fourth quarter, representing an 86% increase in unit volumes from the year ago period and a 15% increase over the prior quarter. Over 215,000 website certificates have now been sold to online merchants, financial institutions and other organizations since the inception of the service in July 1995 with more than 118,000 being delivered in 1999 alone. The company is experiencing strong demand in the website business and expects its aggressive lead generation, distribution channel and international branding programs to further its leadership in this important segment of the market.
In the enterprise line of business, VeriSign continued to see strong demand for its VeriSign OnSiteSM managed service, adding over 100 new customers in the fourth quarter, and over 500 customers in fiscal 1999. Since the introduction of OnSite in November of 1997, VeriSign has contracted with over 800 businesses, government agencies and educational institutions to use the Company's managed digital certificate and public key infrastructure (PKI) services. Industry-leading companies such as Ford, Texas Instruments, Hewlett Packard and Bank of America use these services to secure online commerce and communications for a variety of applications including supply chain management, online customer support, virtual private networking, and business-to-business exchanges.
VeriSign also continued to extend its global reach, announcing the addition of two new international service providers to the VeriSign Trust NetworkTM. With these two new partners, Telia in Sweden and Intersat in Greece, VeriSign now has over 20 international service providers in its Affiliate Program. Each Affiliate utilizes common technology, operating practices and infrastructure to deliver interoperable trust services on a co-branded basis for a specific geographic region or vertical market.
Other Highlights in Q4
In the website business, VeriSign continued to expand its distribution channels, broaden product integration and develop and launch new technology and services to further penetrate the market. VeriSign ended the year with more than 3,400 members in its Secure Site Reseller Program, adding over 500 ISPs, ASPs and Web Hosting companies in the fourth quarter, and over 3,000 for the year as a whole. VeriSign also recently announced the availability of VeriSign Global Server IDs for Covalent's RavenT SSL product enabling Apache Web Servers to establish 128-bit Secure Sockets Layer (SSL) sessions with export versions of Web browsers. In addition, VeriSign extended its website certificate business to the emerging wireless arena by launching a new service to issue certificates for Wireless Application Protocol (WAP) servers, supporting products from Motorola, Nokia, Phone.com, and others.
In the enterprise business, momentum continued to build with several key announcements including a strategic alliance with eccelerate.com, Dun & Bradstreet's new e-commerce company, to enable business-to-business communities to enhance the security, reliability and trustworthiness of online transactions.
VeriSign also expanded the Go Secure! family of rapid application deployment services with the introduction of Go Secure! SM for Check Point, which plugs directly into Check Point's VPN-1? SecuRemote or VPN-1 SecureClient architecture to make remote access VPNs easy to deploy, administer, and use. VeriSign also added to its range of VPN services this week with the introduction of Go Secure! Services for Nortel Networks, designed to speed the deployment of VPNs based on Nortel Network's Contivity 2.6 VPN switches and desktop clients.
On December 20, 1999, VeriSign announced that it had signed definitive agreements to acquire both Thawte Consulting and Signio, Inc. Thawte Consulting provides digital certificate services for websites and enterprises while Signio provides general-purpose payment services for a wide variety of B2C and B2B applications. The addition of payment connectivity to VeriSign's portfolio of managed services significantly enhances the Company's ability to provide merchants, enterprises and B2B exchanges with the critical Internet trust components they need on a global basis. The acquisitions are expected to close in the first or second quarter of this year and will be treated as purchase transactions.
Earlier this week, VeriSign also announced a revolutionary suite of new technologies, services, and key industry alliances to accelerate the deployment of next-generation e-commerce applications over the wireless Internet. Industry leaders in wireless-including Motorola, BellSouth, InfoSpace.com Research In Motion, RSA Security, Saraide and Sonera SmartTrust, have teamed up with VeriSign and its network of over 20 global affiliates to deliver a broad range of solutions for wireless e-commerce. The first offerings in VeriSign's suite of wireless trust services will be available by the end of the first quarter.
VeriSign, Inc.
VeriSign, Inc. (NASDAQ:VRSN) is the leading provider of Internet trust services - including authentication, validation and payment - needed by Web sites, enterprises and e-commerce service providers to conduct trusted and secure electronic commerce and communications over IP networks. VeriSign's trust services for Web sites, developers and individuals are available through www.verisign.com and through a growing number of ISPs and Web hosting companies. 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. These statements include statements as to the growth rate for the electronic commerce market and the demand for the Company's trust services. Factors that could cause or contribute to such differences include, but are not limited to, the extent of any continued growth in the use of electronic commerce by businesses, consumers and government entities; 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 develop and introduce new services which achieve market acceptance. More information about potential factors which could affect the Company's financial results is included in the Company's Annual Report on Form 10-K as originally filed with the SEC on February 22, 1999, as well as other reports that the Company files with the SEC. VeriSign assumes no obligation to update the forward-looking information contained in this press release.
VERISIGN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31,
____1999____ December 31,
____1998____
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 70,382 $ 22,786
Short-term investments. . . . . . . . . . . . . . . . . . . . 85,947 18,959
Accounts receivable, net. . . . . . . . . . . . . . . . . . . . 22,727 9,769
Prepaid expenses and other current assets. . . . . . . 3,635 2,174
Total current assets . . . . . . . . . . . . . . . . . . . . . . 182,691 53,688
Property and equipment, net. . . . . . . . . . . . . . . . . . 10,194 9,234
Long-term investments. . . . . . . . . . . . . . . . . . . . . . 144,902 436
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 46,653 -
Other assets, net. . . . . . . . . . . . . . . . . . . . . . . . . . 3,379 937
$ 387,819 $ 64,295
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . $ 4,665 $ 5,472
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 6,237 4,035
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . 31,777 13,096
Total current liabilities. . . . . . . . . . . . . . . . . . . . . 42,679 22,603
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . 46,653 -
Minority interest in subsidiary. . . . . . . . . . . . . . . . . . 128 964
Commitments
Stockholders' equity:
Preferred stock, $.001 par value;
5,000,000 shares authorized; none issued. . . . . . - -
Common stock, $.001 par value;
Authorized: 200,000,000 shares;
Issued and outstanding: 103,482,841 shares in
1999 and 92,346,768 shares in 1998 . . . . . . . . . 103 92
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . 258,239 92,728
Notes receivable from stockholders . . . . . . . . . . . . - (409)
Deferred compensation . . . . . . . . . . . . . . . . . . . . . (172) (276)
Accumulated other comprehensive income . . . . . . . 87,641 -
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . (47,452) (51,407)
Total stockholders' equity . . . . . . . . . . . . . . . . . 298,359 40,728
$ 387,819 $ 64,295
VERISIGN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Dec 31, Year Ended Dec 31,
1999 1998 1999 1998
Revenues . . . . . . . . . . . . . . . . . $ 27,676 $ 13,211 $ 84,776 $ 38,930
Costs and expenses:
Cost of revenues. . . . . . . . . . . . 9,519 5,986 31,898 19,454
Sales and marketing . . . . . . . . . 9,653 6,494 34,145 22,943
Research and development . . . . 3,825 2,194 13,303 8,435
General and administrative. . . . . 2,618 1,846 8,740 7,688
Special charges . . . . . . . . . . . . . - - - 3,555
Total costs and expenses . . . . 25,615 16,520 88,086 62,075
Operating income (loss) . . . . . . 2,061 (3,309) (3,310) (23,145)
Other income . . . . . . . . . . . . . . . 2,358 443 6,429 2,120
Income (loss) before minority
interest . . . . . . . . . . . . . . . . .
4,419 (2,866) 3,119 (21,025)
Minority interest in net loss
of subsidiary . . . . . . . . . . . . . 114 332 836 1,282
Net income (loss) . . . . . . . . . . . $ 4,533 $ (2,534) $ 3,955 $ (19,743)
Basic net income (loss) per share . $ 0.04 $ (0.03) $ 0.04 $ (0.24)
Shares used in basic net income
(loss) per share computation . . . 102,930 89,572 100,531 83,492
Diluted net income (loss) per share $ 0.04 $ (0.03) $ 0.03 $ (0.24)
Shares used in diluted net income
(loss) per share computation . . . 118,212 89,572 114,610 83,492
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Copyright 2000 VeriSign, Inc., 1350 Charleston Road, Mountain View, CA 94043-1331. All rights reserved. VeriSign is a registered trademark exclusively licensed to VeriSign, Inc. OnSite, VeriSign Trust Network and Go Secure! are service marks of VeriSign, Inc. All other trademarks are properties of their respective owners.
CONTACT:
Kathleen Ochsner, Manager of Investor Relations,
650-429-3512, or kochsner@verisign.com.
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