Headline: AppNet Delivers Strong Growth in First Quarter 2000; End-to-End Service Model Generates More than 100% Revenue Growth
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BETHESDA, Md.--(BUSINESS WIRE)--April 24, 2000--
First Quarter 2000 Highlights
-- Revenue of $44.7 million, up more than 100% over pro forma
first quarter 1999 and up 28% sequentially, representing
significant acceleration over fourth quarter 1999 growth and
exceeding analysts' estimates
-- Billable employees up 11% sequentially to 890 at the end of
the quarter
-- Annualized revenue per billable employee jumped 40% from last
year and 16% sequentially to $211,000
-- Adjusted EBITDA up over 800% from pro forma first quarter 1999
to $3.5 million, excluding non-recurring charges,
-- 8 cents positive cash EPS, fully-taxed and excluding
non-recurring charges, versus a fully-taxed pro forma loss of
3 cents in the first quarter of 1999
AppNet, Inc. (NASDAQ:APNT), a premier provider of end-to-end
e-business solutions, today announced strong first quarter financial
results that demonstrate industry leading, accelerating growth and
increases in large B2B engagements.
For the three months ended March 31, 2000, revenues were $44.7
million, over 100% higher than pro forma revenue of $22.3 million for
the first quarter of 1999. Earnings before interest, taxes,
depreciation, amortization and stock based and acquisition related
compensation (adjusted EBITDA) were $0.1 million. Excluding a
non-recurring bad debt charge associated with a significant customer
(announced previously on April 13, 2000), adjusted EBITDA was $3.5
million or 7.8 percent of revenue, up more than 800% from $0.4 million
in pro forma first quarter 1999. Cash EPS was 2 cents in the quarter,
compared to a loss of 6 cents in the first quarter of 1999. Excluding
the non-recurring bad debt charge, fully-taxed (35% effective tax
rate) cash EPS was 8 cents, which exceeded consensus expectations.
"In the first quarter of the new millennium we have seen our
end-to-end e-business model deliver outstanding growth and
scalability," said Ken Bajaj, chairman and CEO of AppNet. "We have
extended our first mover advantage in the B2B space with exciting new
work for premier Global 1000 clients and nine eMarketplace
engagements."
Operational Highlights
-- The MCIWorldCom partnership announced in January 2000 has
already resulted in four new customers.
-- AppNet was named a global alliance partner for Commerce One,
and has already begun the process of training 125 Internet
technologists to work on Commerce One engagements.
-- Average engagement size increased 30% sequentially to nearly
$1 million.
-- Strong hiring trends resulted in 90 net billable employee adds
during the quarter. AppNet now has 890 billable employees, 45%
higher than 12 months ago.
-- Continued improvements in average hourly bill rates, up 9%
sequentially to $134, due to increased mix of revenue from
strategic consulting and strong demand from the market.
"Accelerating sequential growth in our key financial measures
shows that our business model is working, the market for our services
is robust, and our management team is executing," said Jack
Pearlstein, chief financial officer of AppNet. "Given the visibility
in our business and strength of the pipeline, we do not see a slow
down in sight."
Recent Customer Wins
With its full service capabilities and depth of expertise, the
Company is seizing exciting opportunities that are increasing in size
and complexity. In the eMarketplace area, AppNet is currently working
on eight projects to establish Internet-based trading hubs across a
number of diverse vertical industries.
AppNet also announced exciting portal and B2B engagements in the
first quarter, including VEBA Electronics, the third largest
electronics distributor in the world; Great Plains, a leading global
e-business applications company; BET.com, the leading online portal
for the African American community; and UCCnet, the largest
eMarketplace on the Internet.
"Demand for our services has never been stronger, and our pipeline
has never been so full. We believe this is just the beginning of the
market growth curve - our B2B engagements and our customers' Internet
initiatives continue to multiply in size and complexity," concluded
Mr. Bajaj.
About AppNet, Inc.
AppNet, Inc. (NASDAQ:APNT), is a premier provider of end-to-end
e-business solutions, from interactive marketing to back-office
integration. For companies transforming themselves for the new
Internet economy, the firm offers a unique mix of Internet strategy,
marketing, and technology services. AppNet is the fourth largest
interactive marketing agency according to Ad Age and one of the 50
largest pure Internet companies, according to Internet World. AppNet
works with Global 1000 and dot.com companies. Customers include
UCCnet, Baxter Healthcare, Dial, Ford, Sprint, Hyundai, BET.com,
UNICEF, KB Toys, NEC, Hewlett Packard, NASA, and Unilever.
This press release may include "forward-looking statements" for
purposes of the Securities Exchange Act of 1934. All statements
herein, other than those of historical fact, including statements
regarding future contractual arrangements or performance, competitive
strengths, and business strategy, are forward-looking. Actual results
or events may differ materially from those projected in such
forward-looking statements. Information regarding the factors that
could cause such differences is contained in AppNet's filings with the
Securities and Exchange Commission.
*T
AppNet, Inc.
Condensed consolidated statements of operations
(as adjusted for non-recurring, non-cash items and taxes)
(Amounts in thousands, except per share data)
Three months ended
Mar 31, 1999 Mar 31, 2000
-----------------------------
Pro Forma (a)
-----------------------------
(as adjusted)
(Unaudited)
Revenues $ 22,271 $ 44,731
Cost of revenues 13,132 24,762
-------- --------
Gross profit 9,139 19,969
-------- --------
Selling and marketing 1,353 3,536
General and administrative (b) 7,402 12,897
-------- --------
Adjusted EBITDA (c) 384 3,536
-------- --------
Interest income - (873)
Interest expense 1,473 167
Other expense, net - -
-------- --------
Loss before income taxes (1,089) 4,242
-------- --------
Fully-taxed income tax (benefit) expense (d) (381) 1,485
-------- --------
Fully-taxed cash net income (loss) $ (708) $ 2,757
======== ========
-------- --------
Fully-taxed cash net income (loss) per share $ (0.03) $ 0.08
======== ========
-------- --------
Weighted average common shares outstanding 20,285 33,842
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(a) Pro forma results of operations give effect to the acquisitions we
made in 1999 as if these transactions had occurred on January 1, 1999.
The pro forma results of operations are not adjusted to reflect
certain financing transactions related to our public offerings in June
and November 1999.
(b) General and administrative expenses for the three months ended
March 31, 2000 does not include a non-recurring bad debt charge.
(c) Adjusted EBITDA is defined as earnings before interest, taxes,
depreciation and amortization, stock-based and other
acquisition-related compensation and non-recurring bad debt charge.
(d) In order to demonstrate the future impact of taxes when the
Company has utilized its tax net operating losses, the fully-taxed
income tax (benefit) expense has been calculated using an effective
tax rate of 35%.
AppNet, Inc.
Consolidated statements of operations
(Amounts in thousands, except per share data)
Three months ended
Mar 31, 1999 Mar 31, 2000
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Actual Actual
------------------------------
(Unaudited)
Revenues $ 19,643 $ 44,731
Cost of revenues 11,457 24,762
-------- --------
Gross profit 8,186 19,969
-------- --------
Selling and marketing 1,190 3,536
General and administrative 6,754 16,297
-------- --------
Adjusted EBITDA (a) 242 136
-------- --------
Stock-based and other
acquisition-related compensation 2,487 5,115
Depreciation and amortization 12,735 14,847
-------- --------
Loss from operations (14,980) (19,826)
-------- --------
Interest income (4) (873)
Interest expense 1,266 167
Other expense, net - -
-------- --------
Loss before income taxes (16,246) (19,120)
-------- --------
Income taxes 100 270
-------- --------
Net loss $(16,346) $(19,390)
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Dividends on and accretion of
preferred stock (1,039) -
-------- --------
Net loss attributable to common
stockholders $(17,385) $(19,390)
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-------- --------
Basic and diluted net loss per common
share $ (0.88) $ (0.57)
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-------- --------
Weighted average common shares
outstanding 19,723 33,842
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-------- --------
Cash net income (loss) (b) $ (1,124) $ 572
======== ========
-------- --------
Cash net income (loss) per share $ (0.06) $ 0.02
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(a) Adjusted EBITDA is defined as earnings before interest, taxes
depreciation and amortization and stock-based and other
acquisition-related compensation.
(b) Cash net income (loss) is defined as net income (loss) before
depreciation and amortization and stock-based and other
acquisition-related compensation.
AppNet, Inc.
Condensed consolidated balance sheets
(Amounts in thousands)
12/31/99 3/31/00
-------- -------
(Unaudited)
Current assets
Cash and cash equivalents $ 66,549 $ 55,105
Accounts receivable, net 31,661 36,010
Other current assets 1,300 3,255
-------- --------
Total current assets 99,510 94,370
-------- --------
Property and equipment, net 8,958 10,585
Intangible assets, net 97,247 83,517
Other assets 2,111 2,636
-------- --------
Total assets $ 207,826 $ 191,108
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Total current liabilities $ 38,204 $ 36,109
Long term debt and other liabilities 4,780 4,922
-------- --------
Total liabilities 42,984 41,031
-------- --------
Stockholders' equity 164,842 150,077
Total liabilities, redeemable stock and
stockholders' equity $ 207,826 $ 191,108
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*T
CONTACT: AppNet
Alla Iaquinto, Media, 301/581-2489
press@appnet.com
or
AppNet
Kevin Taback, Investors, 877/551-2323
ir@appnet.com
KEYWORD: MARYLAND
INDUSTRY KEYWORD: INTERNET E-COMMERCE BANKING SOFTWARE HARDWARE
EARNINGS
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