Tuesday May 23, 4:06 pm Eastern Time
Company Press Release
Crossroads Reports Solid Fiscal Second Quarter
Strong Revenue, Strategic Actions Fuel Continued Growth
AUSTIN, Texas--(BUSINESS WIRE)--May 23, 2000--Crossroads Systems Inc. (Nasdaq:CRDS - news), the leading developer and manufacturer of Fibre Channel storage routers, today reported financial results for the fiscal second quarter (Q2'00) ended April 30, 2000.
Total revenues for Q2'00 grew to $11.1 million, a 217 percent increase over $3.5 million for the comparable quarter in fiscal 1999 (Q2'99), and a 27 percent increase over $8.8 million reported for the fiscal first quarter (Q1'00) ended Jan. 31, 2000. This marks Crossroads' tenth consecutive quarter of revenue growth. Revenues were driven by continued demand for Crossroads' storage routers and solutions.
The company reported a pro forma net loss for Q2'00 of $639,000, or $0.02 per share. This compares with a pro forma net loss attributable to common stock of $904,000, or $0.14 per share, for Q2'99, and a pro forma net loss of $235,000, or $0.01 per share, for Q1'00. The pro forma results for Q2'00, Q2'99 and Q1'00 exclude stock-based compensation of $18.4 million, $98,000 and $688,000 respectively. In addition, the pro forma results for Q2'00 exclude amortization of intangibles of $1.6 million related to the acquisition of Polaris Communications and expenses totaling approximately $941,000 related to the transition of a president and new chief operating officer, the relocation of our corporate headquarters and legal costs associated with patent infringement lawsuits.
Actual net loss for Q2'00 was $21.6 million, or $0.83 per share. This compares with a net loss attributable to common stock of $1.0 million, or $0.15 per share, for Q2'99, and a net loss of $923,000, or $0.04 per share, for Q1'00.
``We moved quickly to accomplish a number of key objectives this quarter. This performance reflects our ability to execute our strategy while positioning ourselves for additional growth in new markets,'' said Brian R. Smith, Crossroads chairman and chief executive officer.
``We are expanding into the broader growth opportunities of I/O routing and extending our global reach. We named a new president and chief operating officer, Larry Sanders, who has strong operational and international experience; launched our European presence and broadened our distribution channel; and closed the acquisition of enterprise SAN player Polaris Communications,'' Smith said.
Highlights of Q2'00 include:
Solid Operational Performance. Crossroads grew revenues 217 percent over the comparable period last year, and 27 percent over Q1'00; expanded its gross margins from 47.3 percent in Q1'00 to 49.8 percent; and continued to invest in engineering, sales and marketing.
Enhanced Management Team. Crossroads named Larry Sanders president and chief operating officer with responsibility for day-to-day operations including worldwide sales, marketing, engineering and manufacturing. Before joining Crossroads, Sanders was the president and chief executive officer of Fujitsu Computer Products of America. Crossroads strengthened its board by adding two additional board members: Paul S. Zito, former chief operating officer of NetSpeed Inc. and former chief financial officer of NetWorth Inc.; and Morton L. Topfer, counselor to the chief executive officer and director of Dell Computer Corporation.
Advanced Technology Successes. Crossroads advanced its expansion into other I/O routing opportunities. As an example, Crossroads completed a successful test of its Fibre Channel to ATM, or SAN-to-WAN, routers spanning over 400 kilometers and had them installed and operational in one day. These routers will help companies protect their information by enabling remote storage options.
Crossroads also began shipping production units in the
fiscal second quarter of its blade win for the 4x50 line
of storage routers it announced in the first fiscal
quarter. Finally, the company continues to develop and
test its fourth and fifth generation multi-protocol I/O
routers and is on schedule to release them in mid-2000 and
early 2001, respectively.
Expanded Distribution, European Presence. Crossroads expanded its distribution base by opening offices in the United Kingdom and in Germany to serve its European customers. The broadening worldwide distribution base accounted for more than 10 percent of Crossroads' revenues in Q2'00.
During the quarter, Crossroads moved its corporate headquarters to 8300 North MoPac Expressway in Austin, Texas, to accommodate its rapid growth. In addition, the company initiated patent infringement lawsuits against both Chaparral Network Storage Inc. and Pathlight Technology Inc.
``We are evolving our leading edge technology, enhancing our world class management team and positioning ourselves to take advantage of new market place opportunities,'' Smith said.
About Crossroads Systems Inc.
Headquartered in Austin, Texas, Crossroads Systems (Nasdaq:CRDS - news) is the leading provider of enterprise data center routing solutions for open system Storage Area Networks including S/390 connections. Crossroads' solutions enable key Internet, Intranet and e-commerce applications. By using Crossroads, customers can more effectively and efficiently store, manage and ensure the integrity and availability of their data in the Internet economy. Crossroads' products are in solutions from ADIC, Compaq, Dell, Fujitsu-Siemens, Hewlett-Packard, Hitachi Data Systems, IBM, McDATA, StorageTek, Bell Micro, Cranel, Datalink and Tech Data. Employment opportunities and more information about Crossroads Systems are available at www.crossroads.com or by contacting us at 800/643-7148.
Forward-Looking Statements
This release may contain forward-looking statements that involve risks and uncertainties. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: Crossroads' limited operating history which makes it difficult to accurately predict revenues and budget for expenses for future periods; the extent of Crossroads' future operating losses and negative cash flow; the dependence of Crossroads' business on the storage area network market which is new and unpredictable; Crossroads' ability to develop new and enhanced products that achieve market acceptance; the continuation of Crossroads' successful relationships with its limited number of OEM customers; Crossroads' ability to retain and recruit key personnel to manage its business successfully; the quarterly fluctuations of Crossroads' operating results; Crossroads' ability to successfully achieve the benefits of the acquisition of Polaris Communications and any subsequent acquisition or strategic relationship; and that Crossroads' stock price could be volatile regardless of Crossroads' actual financial performance and other factors detailed in Crossroads' filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Report on 10-Q.
Crossroads Systems Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands)
January 31, April 30,
2000 2000
-------------- --------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 60,072 $ 63,650
Short-term investments 14,091 7,590
Accounts receivable, net 6,549 9,830
Inventories 2,779 3,228
Prepaids and other current assets 1,315 2,020
-------------- --------------
Total current assets 84,806 86,318
Notes receivable from related party,
net 150 100
Property and equipment, net 3,575 7,036
Intangibles, net - 42,843
Other assets 479 366
-------------- --------------
Total assets $ 89,010 $ 136,663
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,710 $ 5,735
Accrued liabilities 1,129 2,268
Accrued warranty costs 408 284
Deferred revenue 171 344
-------------- --------------
Total current liabilities 4,418 8,631
Stockholders' equity:
Common stock 27 27
Additional paid-in capital 102,409 179,181
Deferred stock-based compensation (3,030) (14,723)
Notes receivable from stockholders (469) (352)
Accumulated deficit (14,343) (35,974)
Treasury stock at cost (2) (127)
-------------- --------------
Total stockholders' equity 84,592 128,032
-------------- --------------
Total liabilities and stockholders'
equity $ 89,010 $ 136,663
============== ==============
Crossroads Systems Inc. and Subsidiaries
Consolidated Statement of Operations
(In Thousands, Except Share and Share Data)
Three Months Ended
April 30,
------------------------------
1999 2000
-------------- --------------
(unaudited)
Revenue:
Product revenue $ 3,503 $ 10,987
Other revenue 3 136
-------------- --------------
Total revenue 3,506 11,123
Cost of revenue 2,029 5,583
-------------- --------------
Gross profit 1,477 5,540
-------------- --------------
Operating expenses:
Sales and marketing 853 3,022
Research and development 990 2,837
General and administrative 476 2,320
Amortization of intangibles - 1,616
Stock-based compensation 98 18,435
-------------- --------------
Total operating expenses 2,417 28,230
-------------- --------------
Loss from operations (940) (22,690)
Other income (expense):
Interest and dividend income 32 1,138
Interest expense (23) (2)
Other income (expense) - (77)
-------------- --------------
Other income, net 9 1,059
-------------- --------------
Net loss (931) (21,631)
Accretion on redeemable convertible
preferred stock (71) -
-------------- --------------
Net loss attributable to common stock $ (1,002) $ (21,631)
============== ==============
Basic and diluted net loss per share $ (0.15) $ (0.83)
============== ==============
Shares used in computing basic and
diluted net loss per share 6,652,230 26,090,132
============== ==============
Seems ANCR/Q would have many or more of the same synergies;
Combine mutiple potocal I/O with switched fabric. I think bigger fish will need this intellectual capital someday. |
