Full Year 2000 Revenues Increase 175 Percent to a Record $30.4 Million
Full Year 2000 Subscriber Base Increased by 3.6 Million,
An Increase Of 241 Percent
NEW YORK, Feb. 14 /PRNewswire/ -- deltathree (Nasdaq: DDDC), the IP
communications network and provider of a Hosted Communications Solution for
service providers worldwide, today announced results for the fourth quarter
and full year 2000.
deltathree recorded fourth quarter 2000 revenues of $7.4 million,
representing a gain of $2.8 million or a 60 percent increase over the
corresponding $4.6 million in revenue recorded in the fourth quarter of 1999.
Revenues for the full year 2000 totaled a record $30.4 million compared to
$11.1 million for all of 1999, an increase of $19.3 million or 175 percent.
Non-affiliate revenues during the fourth quarter accounted for
$5.8 million or 78 percent of total revenues compared to $1.3 million or
27 percent of total revenue in the fourth quarter of 1999. Affiliate revenues
accounted for $1.6 million or 22 percent of revenues in the fourth quarter of
2000 compared with $3.4 million or 73 percent of total revenue in the fourth
quarter of 1999. deltathree remains focused on continuing this trend of
increasing its non-affiliate revenues and broadening its revenue mix.
Highlights of the Fourth Quarter 2000 Include:
* Revenues increased 60 percent to $7.4 million compared to Q4
1999, bringing F/Y 2000 revenues to $30.4 million.
* Delivered positive gross profits of $1.4 million, bringing F/Y
2000 gross profits to $5.4 million and gross margins of 18
percent in both Q4 2000 and F/Y 2000.
* Operational cash burn rate drops $3 million or 30 percent to
approximately $7.0 million a quarter.
* Earnings Per Share target exceeded by $0.07
* deltathree reaches debt-free status in Q4 2000 with the elimination of
$13 million debt to RSL.
* Total subscriber base increased by over 1,000,000 to over 5.1 million,
up 26 percent in Q4 2000.
* The number HCS customers rose from six to nine during Q4 2000.
* HCS minutes across the deltathree network surge 68 percent in Q4 2000.
* Commenced testing of broadband Hosted Communication Solution.
Excluding the effects of non-cash compensation costs and a one time
non-cash charge for the impairment of goodwill of $8.9 million related to
Yourday.com, deltathree's fourth quarter 2000 net loss was $8.6 million or
($0.30) per diluted share compared to a net loss of $6.1 million or ($0.21)
per diluted share for the fourth quarter ended 1999. On an annual basis,
excluding the effects of non-cash compensation costs and the impairment loss
on goodwill, deltathree posted a net loss of $33.0 million or ($1.15) per
diluted share during 2000 compared with a net loss of $14.7 million or ($0.72)
per diluted share in fiscal 1999.
Including non-cash compensation and the impairment of goodwill related to
Yourday.com, net loss for the fourth quarter 2000 was $18.3 million or a net
loss of ($0.63) per diluted share compared to a loss of $16.3 million or
($0.57) per diluted share in the fourth quarter of 1999. For the full year
2000, deltathree posted a net loss of $48.3 million or ($1.67) per diluted
share compared to a loss of $33.8 million or ($1.65) per diluted share for the
full year 1999.
deltathree Operational Overview
Noam Bardin, president and CEO of deltathree, stated, "As we look back on
the year 2000 and ahead into 2001, deltathree has never been better positioned
in the global telecommunications marketplace than we are today. deltathree
executed a fundamental shift in our business model during the year 2000 from a
primarily retail oriented VOIP provider to an end-to-end hosted
telecommunications infrastructure provider. This hosted solution has been the
key underlying driver of our growth and the valuable relationships we have
announced in early 2001. I believe we are now uniquely positioned in the
marketplace with significant opportunities ahead."
Equally as important as deltathree's fundamental positioning in the
telecommunications space is the company's execution on its financial goals.
deltathree was very successful in achieving financial objectives during the
quarter. The company reported better than expected earnings per share for the
fourth quarter and full year 2000 and delivered revenues inline with the
company's quarterly and full year guidance. deltathree made significant
progress in diversifying overall revenue streams and replaced low margin
revenues with more strategically important revenues from Hosted Communications
initiatives. With the elimination or deltathree's free VOIP call promotion
and the growth in Hosted Communications Solution revenues, the company
produced higher margins and began to diversify its revenue base through the
generation of monthly recurring charges from customer care, billing, hosting,
fraud protection and e-commerce services. While improving the overall quality
of revenue, deltathree generated $5.4 million in positive gross margins for
the year and reduced the quarterly operational cash burn rate by over 30
percent, providing clear progress on the company's path to profitability.
deltathree Business Metrics
Subscriber growth in the fourth quarter of 2000 increased by more than one
million to over 5.1 million subscribers worldwide, an increase of 26 percent.
This marks the second consecutive quarter in which deltathree added over one
million subscribers. Of those new subscribers, roughly 320,000 resulted from
new hosted customer bases bringing the total number of Hosted Communications
Solution subscribers to 973,000, an increase of 49 percent from the third
quarter of 2000. In the fourth quarter of 2000, deltathree signed 2 additional
Hosted Communications Solution customers bringing the total number of signed
customers to 9 with 5 online with live implementations.
deltathree Early 2001 Highlights
Noam Bardin, stated, "As we enter 2001, deltathree has made significant
progress in expanding the reach of our Hosted Communications Solution as well
as laying the foundation for future growth with the roll out of our Hosted
Communications Solution for Broadband Service Providers. Our announcement
earlier today regarding Shell Europe Oil Products Limited's selection of
deltathree's turnkey telecommunications offering as part of their overall
brand strategy reflects the value proposition deltathree can offer well
branded companies looking to leverage their combined 'click and mortar' assets
more effectively."
On January 9th, deltathree announced that nine leading edge broadband
service providers began evaluating deltathree's latest Hosted Communications
Solution. As of today the broadband customer evaluation group has grown by
five and there are now 14 leading edge broadband service providers testing the
Hosted Communications Solution Broadband offering. deltathree provides a new
phone number and allows end users to plug their regular telephone into their
broadband connection and make or receive a standard phone call. Each broadband
phone call is placed over deltathree's award winning network with all the
functionality offered by the traditional public switched telephone network.
Broadband customers also receive the benefits and cost savings that can only
be offered through a VOIP enabled broadband pipe.
Yourday.com Goodwill
As deltathree has successfully transitioned away from a pure end-user VOIP
business model to the Hosted Communications Suite of business solutions the
Yourday.com assets no longer provided a strategic fit for the Company.
Yourday.com was originally acquired through an all stock transaction in
February of 2000 to provide enhanced functionality to our free consumer VOIP
site, to increase site stickiness and support a free retail and advertising
based businessmodel. Through our regular review of deltathree's strategic
and financial assets it was determined that the time was appropriate to shut
down the remaining Yourday.com activities which had already been significantly
paired back in terms of people and overhead. In conjunction with conservative
accounting practices, deltathree took a one-time non-cash charge of
$8.9 million to write down the remaining goodwill associated with the
discontinued Yourday.com operations. This one-time non-cash item appears on
the income statement as an impairment loss on goodwill.
Conference Call Details
deltathree fourth quarter earnings conference call will be Webcast live at
5:00 p.m. EST [2:00 p.m. PST] today February 14, 2001. Investors are invited
to listen via deltathree's Web site, corp.deltathree.com. Please go to
the Web site at least 15 minutes early to register, download, and install any
necessary audio software. A replay of the call will also be available through
the deltathree corporate Web site. Those that cannot listen via the Webcast,
are invited to listen to the telephone replay of the conference call by
dialing 800-475-6701 and entering reservation number 568058, beginning at
8:00 p.m. EST [5:00 p.m. PST].
About deltathree:
Founded in 1996, deltathree, Inc. (Nasdaq: DDDC), the IP communications
network and provider of Hosted Communications Solutions for service providers
worldwide, enables customers to strengthen their brands and improve
shareholder value by hosting services and providing them with the means to
support them. The Company offers back-end VoIP support services which include
operations management, billing, provisioning and marketing support. deltathree
routes IP telephony traffic to over 160 countries and for 18 international
telecommunications carriers. deltathree received the Built Public Network
Award for excellence in IP services and applications at SUPERCOMM 2000, and
was named the best IP telephony service by SmartMoneymagazine and PC World
Magazine. For more information about deltathree, please visit
corp.deltathree.com.
Except for historical matters contained herein, the matters discussed in
this press release are forward-looking and are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that these forward-looking statements reflect
numerous assumptions and involve risks and uncertainties that may affect
deltathree's business and prospects and cause actual results to differ
materially from these forward-looking statements.
Among the factors that could cause actual results to differ are the
inherent uncertainty of financial estimates and projections, the competitive
environment for Internet telephony, deltathree's limited operating history,
changes of rates of all related telecommunications services, the level and
rate of customer acceptance of new products and services, legislation that may
affect the Internet telephony industry, rapid technological changes, and other
risk factors contained in deltathree's periodic reports on Form 10-K and Form
10-Q on file with the SEC and available through sec.gov.
All such forward-looking statements are current only as of the date on
which such statements were made. deltathree does not undertake any obligation
to publicly update any forward-looking statement to reflect events or
circumstances after the date on which any such statement is made or to reflect
the occurrence of unanticipated events.
DELTATHREE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Ire data)
Quarter Ended Year Ended
December 31, December 31, December 31, December 31,
2 0 0 0 1 9 9 9 2 0 0 0 1 9 9 9
Revenues:
Affiliates $1,621 $3,354 $13,977 $7,431
Non-affiliates 5,784 1,266 16,399 3,621
Total revenues 7,405 4,620 30,376 11,052
Costs and operating expenses:
Cost of revenues 6,078 4,138 24,932 9,723
Research and development
expenses 1,899 512 6,625 1,233
Selling and marketing
expenses 4,222 4,316 20,548 7,403
General and administrative
expenses (exclusive of
non-cash compensation
expense shown below) 2,122 740 6,694 2,754
Non-cash compensation
expense 801 10,190 6,331 19,116
Depreciation and
amortization 2,512 1,079 7,919 3,721
Impairment loss on
goodwill 8,905 -- 8,905 --
Total costs and
operating expenses 26,539 20,975 81,954 43,950
Loss from operations $(19,134) $(16,355) $(51,578) $(32,898)
Income taxes (311) -- (311) --
Interest income
(expense), net 1,123 42 3,632 (873)
Net loss $(18,322) $(16,313) $(48,257) $(33,771)
Net loss per share -
basic and diluted $(0.63) $(0.57) $(1.67) $(1.65)
Weighted average shares
outstanding - basic
and diluted 29,029,061 28,490,000 28,832,708 20,418,45
Net loss per share -
basic and diluted
(excluding non-cash
compensation and
impairment loss on
goodwill) $(0.30) $(0.21) $(1.15) $(0.72)
DELTATHREE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
December 31, December 31,
2 0 0 0 1 9 9 9
ASSETS
Current assets:
Cash and cash equivalents $20,857 $89,957
Short-term investments 30,542 11,276
Accounts receivable, net 3,245 903
Due from affiliates 331 1,760
Prepaid expenses and other current assets 2,084 3,090
Total current assets 57,059 106,986
Investments -- 90
Property and equipment:
Telecommunications equipment 14,686 9,844
Furniture, fixtures and other 2,169 721
Leasehold Improvements 4,927 --
Computer Hardware and Software 4,579 --
Less accumulated depreciation (4,091) (1,066)
Property and equipment, net 22,270 9,499
Goodwill, net 6,425 9,457
Deposits 415 800
Total assets $86,169 $126,832
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Short-term debt due to affiliates $ -- $14,752
Accounts payable 5,236 2,580
Due to affiliates 2,721 626
Deferred revenues 251 538
Other current liabilities 5,313 5,548
Total current liabilities $13,521 $24,044
Long-term liabilities:
Long-term debt-- --
Other liabilities 169 208
Total long-term liabilities 169 208
Total liabilities $13,690 $24,252
Stockholders' equity:
Class A Common stock, par value $0.001 9 9
Class B Common stock, par value $0.001 20 20
Additional paid-in capital 166,733 157,891
Receivable for capital stock -- (1,232)
Deferred compensation (2,588) (10,670)
Accumulated deficit (91,695) (43,438)
Total stockholder's equity 72,479 102,580
Total liabilities and stockholder's equity $86,169 $126,832
SOURCE deltathree, Inc.
-0- 02/14/2001
/CONTACT: Media - David Cheung of Camares Communications, 201-493-0855,
ext. 40, dcheung@camares.com, for deltathree; Beverly Dempsey, 212-500-4873,
beverlyd@deltathree.com; Paul White, Chief Financial Officer, 212-500-7718,
paulw@deltathree.com, both of deltathree, Inc.; Investor Relations - Erik
Knettel of Thomson Financial-Carson, 212-701-1963, erik.knettel@tfn.com, for
deltathree, Inc./
/Web site: corp.deltathree.com
(DDDC)
CO: deltathree
ST: New York
IN: TLS MLM CPR
SU: ERN
SL
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