KEYNOTE ANNOUNCES RECORD THIRD QUATER FINANCIAL RESULTS; ACHIEVES FIRST PROFITABLE QUARTER AFTER ONLY THREE QUATERS AS A PUBLIC COMPANY BUSINES EDITORS
SAN MATEO, Calif.--(BUSINESS WIRE)--July 13, 2000--Keynote Systems
(Nasdaq:KEYN.O), The Internet Performance Authority(R), today announced
financial results for the quarter ended June 30, 2000.
Revenues for the third quarter of fiscal 2000 were $9.7 million,
which represented an increase of 406% over the corresponding quarter
in fiscal 1999 and a 35% increase over the previous quarter. Pro forma
basic net income (loss) for the quarter was $2.9 million, or $0.11 per
share, compared to a net loss of $1.7 million, or $0.34 per share, for
the corresponding quarter a year ago and a net loss of $356,000, or
$0.02 per share, for the preceding quarter.
Reported net income for the quarter was $1.7 million, or $0.06 per
share, compared to a net loss of $1.8 million, or $0.36 per share, for
the corresponding quarter a year ago and a net loss of $441,000, or
$0.02 per share, for the preceding quarter.
"This quarter we reached a milestone in the history of Keynote -
profitability. Additionally, we added a record number of new customers
in the quarter, and still maintained a 99% monthly customer retention
rate," said Umang Gupta, Chairman and CEO of Keynote. "During the
quarter we successfully completed the acquisition of Velogic, adding
E-commerce load testing to our service offerings while we continued to
announce new services and features such as Streaming Perspective(TM)
and Diagnostic Perspective(TM). We also strengthened our already
impressive list of partners, adding IBM and Jupiter Communications and
enhanced our existing relationships with Hewlett-Packard and Digital
Island."
During the quarter Keynote continued to invest in the expansion of
its global infrastructure to include 550 measurement computers,
connected to major Internet backbones from over 120 statistically
selected locations across 50 metropolitan areas worldwide. As of June
30, 2000, the company measured over 12,000 Web-site addresses (URLs),
and captured over 24 million measurements per day.
Keynote added 350 new customers, during the quarter. New customers
included companies such as American Greetings.com (NYSE:AM.N), Chase
Manhattan Bank (NYSE:CMB.N), General Electric Power (NYSE:GE.N), Go2Net
(Nasdaq:GNET.O), Network Appliance (Nasdaq:NTAP.O), Network Associates
(Nasdaq:NETA), Pitney Bowes (NYSE:PBI.N), the United States Postal
Service, and Wal-Mart Stores (NYSE:WMT.N). As of June 30, 2000, Keynote
had a total of 1,353 customers, and over 3,000 subscribers.
Subscribers include all Keynote customers in addition to those whom
Keynote serves indirectly through Web-hosting companies and now
include 80% of the current Media Metrix Top 50 Web Sites and 52% of
the Media Metrix Top 500 Web Sites in the U.S.
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Highlights for the quarter:
-- Keynote was named the fastest growing publicly held company in the
Bay Area by the San Francisco Business Times.
-- Keynote was added to the Russell 2000 Index in July 2000.
-- On July 11, 2000, Keynote obtained a 188,000 square foot building
located in San Mateo, CA. in a synthetic lease financing
transaction with Industrial Bank of Japan.
-- Digital Island (Nasdaq:ISLD.O) announced the first content delivery
performance Service Level Agreement supported by Keynote
measurements.
-- Keynote announced an expansion of its alliance with
Hewlett-Packard Company (NYSE:HWP.N) to allow HP OpenView Express
customers the ability to view Keynote Perspective(TM) measurement
data in a single integrated environment.
-- IBM (NYSE:IBM.O) will offer Keynote's Web-site performance
measurement services to its web-hosting and e-business customers.
-- Keynote acquired Velogic, Inc., and will now offer e-commerce load
testing and site assurance services in addition to Internet
performance measurements.
-- Keynote announced the Streaming Perspective(TM) service, which
will allow the streaming industry the ability to measure the
performance and define the quality ofstreaming audio and video on
the Internet.
-- Keynote launched its Streaming Partner Program, which includes
industry leaders, such as Adero, Akamai (Nasdaq:AKAM.O), Digital
Island (Nasdaq:ISLD), Enron (NYSE:ENE.N), iBeam (Nasdaq:IBEM.O), Intel
(Nasdaq:INTC.O), Microsoft (Nasdaq:MSFT.O), The MTVi Group and Real
Networks (Nasdaq:RNWK.O).
-- Keynote announced the Keynote Service Center, an online service
portal that enables strategic partners to make all their Keynote
Perspective(TM) changes directly, quickly and easily on a
self-service basis.
-- Keynote announced that it would provide proprietary Web site
performance measurements to select clients of Jupiter
Communications (Nasdaq:JPTR.O) and attendees of Jupiter's
conferences.
-- Keynote launched a new brand awareness campaign and redesigned Web
site.
-- Keynote announced the new Keynote Diagnostic Perspective(TM)
service that will deliver the first comprehensive Internet
Diagnostics for network engineers and Web managers to quickly
diagnose and improve peering, server and content problems that
affect performance.
-- Keynote unveiled the Internet Pulse, a new service, that for the
first time measures the performance of the peering connections
between the major Internet backbones across the United States and
is made available free of charge at internetpulse.keynote.com.
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Forward-Looking Statements
This press release contains forward-looking statements that are
not purely historical regarding the company or management's
intentions, hopes, beliefs, expectations and strategies for the
future. Because such statements deal with future events, they are
subject to various risks and uncertainties, and actual results could
differ materially from the company's current expectations.
Forward-looking statements in this release include, but are not
limited to, statements regarding the growth of Keynote's business, the
expansionof the scope of certain of Keynote's strategic relationships
and the impact of Keynote's new Streaming Perspective (TM), Diagnostic
Perspective (TM) and Internet Pulse services. It is important to note
that actual outcomes and Keynote's actual results could differ
materially from those in such forward-looking statements. Factors that
could cause actual results to differ materially include risks and
uncertainties such as Keynote's short operating history with an
unproven business model, which makes it difficult to evaluate its
current business and future prospects, Keynote's reliance on customers
renewing their subscriptions and purchasing additional services,
Keynote's future quarterly operating results could fluctuate, which
may cause volatility or a decline in the price of its stock, the
adoption of a competitors' Internet performance measurement service as
the industry standard for measuring the speed and reliability of
websites, widespread acceptance and use of the Internet as a means for
commerce, Keynote's ability to keep pace with technological changes
and Keynote's ability to establish international operations. Readers
should also refer to the risk disclosures outlined in Keynote's
reports filed with the Securities and Exchange Commission.
All forward-looking statements and reasons why results might
differ included in this release are made as of the date hereof, based
on information available to Keynote as of the date hereof, and Keynote
assumes no obligation to update any such forward-looking statement or
reasons why results might differ.
About Keynote
Keynote is the largest provider of Internet performance
measurement, diagnostic, load testing and consulting services to
companies that operate e-commerce Web sites. The company markets
Keynote Perspective(TM), Consumer Perspective(TM), Transaction
Perspective(TM) and Keynote Lifeline(TM), global real-time services
that measure, assure and improve the Quality of Service of e-commerce
Web sites around the world. The company captures over 24 million
performance measurements daily using Keynote's global infrastructure
of more than 500 measurement computers connected to the major Internet
backbones in over 120 statistically selected locations across 50
metropolitan areas worldwide. Internet performance and availability
data are collected at Keynote's sophisticated operations center and
are instantly available to customers through any Web browser.
Keynote customers include over 1,000 leading e-commerce Web sites
and hosting companies including Adforce, Akamai (Nasdaq:AKAM.O),
Blockbuster (NYSE:BBI.N) Compaq Computer (NYSE:CPQ), Cisco Systems
(Nasdaq:CSCO), Dell Computer (Nasdaq:DELL), Digex (Nasdaq:DIGX),
Digital Island (Nasdaq:ISLD), DoubleClick (Nasdaq:DCLK), Global Center
(Nasdaq:GBLX), Microsoft (Nasdaq:MSFT), National Semiconductor
(NYSE:NSM), SABRE Holdings (NYSE:TSG), United Parcel Service
(NYSE:UPS), and WorldCom/UUNET (Nasdaq:WCOM).
Keynote is a member of the nationally known Stanford University
Statistics Department's Industrial Affiliates Program. Keynote works
with Stanford statistics experts within the program to help define its
methodology for measuring Web site performance and ensure the accuracy
of its data.
For further information about Keynote, visit the Keynote Web site
at keynote.com or contact the company at Keynote Systems,
Inc., 2855 Campus Drive, San Mateo, California 94403, telephone
650/522-1000, fax 650/522-1099, email info@keynote.com. To request an
interview, press should call the Keynote media-relations hotline at
650/522-1234. To submit an inquiry or to be added to Keynote's press
release distribution list, send an email to press@keynote.com.
Keynote, Perspective, Consumer Perspective, Diagnostic
Perspective, Streaming Perspective, MyKeynote, Lifeline and The
Internet Performance Authority are trademarks of Keynote Systems, Inc.
Other trademarks are the property of their respective owners.
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Keynote Systems, Inc.
PRO FORMA STATEMENTS OF OPERATIONS, CONSOLIDATED
(In thousands, except per share data)
Three months Nine months
ended June 30, ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenue:
Subscription services $ 9,283 $ 1,862 $ 20,733 $ 4,026
Consulting services 432 57 956 83
-------- -------- -------- --------
Total revenues 9,715 1,919 21,689 4,109
Expenses
Cost of
subscription services 2,622 522 6,870 975
Cost of
consulting services 533 167 1,086 254
Research and development 1,463 634 3,405 1,297
Sales and Marketing 4,808 1,426 11,617 2,989
Operations 1,418 475 3,256 1,024
General and administrative 1,346 406 3,503 849
------ -------- --------
Total expenses 12,190 3,630 29,737 7,388
-------- -------- -------- --------
Loss from operations (2,475) (1,711) (8,048) (3,279)
Interest income
(expense), net 5,408 3 8,675 (146)
-------- -------- -------- --------
Pro forma net
income (loss) $ 2,933 $ (1,708) $ 627 $(3,425)
======== ======== ======== ========
Pro forma income
(loss) per share
Basic $ 0.11 $ (0.34) $ 0.03 $ (0.85)
Fully diluted $ 0.10 $ (0.34) $ 0.02 $ (0.85)
Weighted average common
shares outstanding used:
Basic 26,623 4,965 24,566 4,009
Fully diluted 28,569 4,965 26,820 4,009
The pro forma statements of operations shown for the quarter and
the nine months ended June 30, 2000 and June 30, 1999 are presented
for informational purposes only. These results present the net income
(loss) for Keynote excluding the amortization of goodwill and stock
based compensation for the quarter and nine months ended June 30,
2000, and June 30, 1999.
Keynote Systems, Inc.
STATEMENTS OF OPERATIONS, CONSOLIDATED
(In thousands, except per share data)
Three months ended Nine months ended
June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenue:
Subscription services $ 9,283 $ 1,862 $ 20,733 $ 4,026
Consulting services 432 57 956 83
-------- -------- -------- --------
Total revenues 9,715 1,919 21,689 4,109
Expenses
Cost of
subscription services 2,622 522 6,870 975
Cost of
consulting services 533 167 1,086 254
Research and development 1,463 634 3,405 1,297
Sales and Marketing 4,808 1,426 11,617 2,989
Operations 1,418 475 3,256 1,024
General and
administrative 1,346 406 3,503 849
Amortization
of goodwill
stock based
compensation 1,210 88 1,381 234
-------- -------- -------- --------
Total expenses 13,400 3,718 31,118 7,622
-------- -------- -------- --------
Loss from operations (3,685) (1,799) (9,429) (3,513)
Interest income
(expense), net 5,408 3 8,675 (146)
-------- -------- -------- --------
Net income (loss) $ 1,723 $ (1,796) $ (754) $ (3,659)
======== ======== ======== ========
Income (loss) per share
Basic $ 0.06 $ (0.36) $ (0.03) $ (0.91)
Fully diluted $ 0.06 $ (0.36) $ (0.03) $ (0.91)
Weighted average common
shares outstanding used:
Basic 26,623 4,965 24,566 4,009
Fully diluted 28,569 4,965 24,566 4,009
Keynote Systems, Inc.
BALANCE SHEETS, CONSOLIDATED
(In thousands)
June 30, September 30,
2000 1999
---- ----
(Unaudited)
Assets
Current assets:
Cash and short-term investments $ 356,402 $ 64,647
Accounts Receivable, net 6,633 2,295
Current portion of
loans to related parties 8 -
Prepaid and other current assets 1,684 333
--------- ---------
Total current assets 364,727 67,275
Property and equipment, net 6,764 3,277
Loans to related
parties, less current portion 6 451
Intangibles and other assets 40,101 68
--------- ---------
Total assets $ 411,598 $ 71,071
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of notes payable $ 1,176 $ 1,189
Current portion of
capital lease obligation 140 133
Accounts payable
and accrued expenses 6,447 2,578
Deferred revenue 5,652 1,087
--------- ---------
Total current liabilities 13,415 4,987
Notes Payable, less current portion 1,021 2,591
Capital lease obligation,
less current portion 113 251
--------- ---------
Total liabilities 14,549 7,829
Shareholders' equity:
Common stock 27 23
Additional paid-in capital 411,343 77,430
Deferred stock-based compensation (879) (1,135)
Shareholder notes receivable - (388)
Accumulated deficit (13,442) (12,688)
--------- ---------
Total shareholders' equity 397,049 63,242
--------- ---------
Total liabilities
and shareholders' equity $ 411,598 $ 71,071
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CONTACT: Keynote Systems, Inc.
Dan Berkowitz, 650/522-1168 (Public Relations)
dberkowitz@keynote.com
Jenniffer Siemaszko, 650/522-1026 (Investor Relations)
jsiemaszko@keynote.com
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS E-COMMERCE INTERNET
SOFTWARE EARNINGS
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