Monday April 23, 5:04 pm Eastern Time
Press Release
Precise Software Solutions Reports 153% Increase in First-Quarter Revenues
14th Consecutive Quarter of Record Revenue; Positive Net Income; Raising Revenue Guidance
WESTWOOD, Mass.--(BUSINESS WIRE)--April 23, 2001-- Precise Software Solutions (Nasdaq: PRSE - news; www.precise.com), a leader in providing performance management solutions for companies' IT infrastructure, today reported its financial results for the first quarter ended March 31, 2001.
Revenues for the first quarter of 2001 grew 153 percent to a record $11.5 million, compared with $4.5 million for the first quarter of 2000. First-quarter revenues increased 20 percent sequentially from the $9.6 million posted for the fourth quarter of 2000. The Company reported a pro-forma operating loss of $726,000, or $0.03 per share, for the first quarter of 2001, compared with a pro-forma operating loss of $1.3 million, or $0.09 per share, in the same period last year. These pro-forma calculations exclude stock-based compensation expense, intangible assets amortization, and interest income, and reflect the conversion of the outstanding preferred shares which automatically converted at the completion of the Initial Public Offering in June 2000. Counting all non-cash items and interest income, the Company reported its first ever positive net income of $29,000 for the first quarter 2001.
``We are very pleased to report that the first quarter of 2001 was our best quarter ever,'' said Chief Executive Officer Shimon Alon. ``Our financial results reflect the combined effects of market demand for performance management solutions, our unique solutions and the return on investment they provide, together with the sales momentum generated by our growing roster of satisfied customers.''
Market Demand
``With the prevailing uncertainty of the economy, there is growing demand in our market as companies are facing increasing pressure to cut costs and improve the quality and speed of their applications,'' said Alon. ``Companies have already spent billions of dollars on their IT infrastructure and they need to make these investments work. Optimizing IT performance is not an option for these companies; it is a vital necessity, and performance is what Precise is all about.''
Three key factors enabled Precise to capitalize on this opportunity during the first quarter. The first factor is that Precise products generate a large and rapid return on investment for customers. ``Many of our customers are seeing seven to 10 times faster response times, more throughput, and better utilization of their people, all while delivering improved services to their customers,'' Alon said. Second, Precise is not dependent on new IT infrastructure sales. ``We are selling into a huge existing installed base of companies who have previously invested in building their distributed IT infrastructure, and we believe our penetration of this large market opportunity is still in its infancy,'' commented Alon. Third, Precise sells its products at a price point that can be approved by the user or middle-management level. ``As a result, Precise's sales cycles tend to be shorter than those associated with higher-priced products and with small client companies,'' Alon said.
Precise Solutions
The Precise suite of products offers a unique advantage to customers: it allows them not only to detect but also helps to correct the root causes of performance bottlenecks across their entire production IT infrastructure. During the first quarter, Precise extended its competitive advantage by launching its newest product, Precise/Foresight, which began selling immediately after its introduction. ``We believe Precise/Foresight is the only solution in the market that communicates performance trends, exceptions and built-in expert analysis,'' said Alon. ``This enables our customers to understand their performance needs and deploy their valuable resources more effectively.''
As with all of the Company's products, Precise/Foresight seamlessly integrates with other Precise offerings to provide a complete IT performance management solution. Users of one Precise product can leverage their investment by purchasing additional modules. ``Our offering of a comprehensive suite of solutions makes sense for customers because they can efficiently leverage today's investment to provide broader benefits in the future. For Precise it's much easier to sell additional modules than an entirely new system, and we continue to fuel our repeat sales business and expand the size of our target market,'' said Alon. In addition, with the recent launch of Precise/Indepth for BEA WebLogic Server, Precise believes it will penetrate new markets, customers and users.
Precise Customers
The Precise solutions target a large and growing installed base of nearly 1,300 companies who have already seen significant benefits from the Precise products - generating very strong repeat business. Precise's first-quarter revenue growth included a strong flow of 60 new customer wins. The Company also enjoyed an influx of 77 repeat customers, representing 52% of non-OEM license revenue. These customers represented a diverse group of corporations and organizations across a wide range of geographic locations and industries. Among them were a large number of recognized names such as AT&T, Cingular, Mannesmann, Sprint PCS, and Vodafone in the telecommunications industry; Capital One, GE Card Services, Great-West Life & Annuity Insurance Company and Washington Mutual in the financial services industry; Qualcomm, Samsung and Unisys in the electronics industry; Cox Communications, Doubleclick, and the Hertz Group in the services industry.
Business Outlook
``While we are prudent about the market conditions, we believe the same approach of focused execution that led to our success in Q1 will continue to drive our results in Q2 and the rest of the year. Therefore, we are raising our revenue guidance for 2001 to the top of the range that we provided on our fourth-quarter conference call, $53 million. For the second quarter, we expect year over year revenue growth of 110% or $12.1 million in revenue. These results exclude stock based compensation, intangible assets amortization, in-process R&D, and interest income. For the full year, we anticipate a pro forma operating loss in the range of ($1.2 million) to ($1.5 million) or roughly ($0.04) to ($0.06) per basic share outstanding. For the second quarter, we anticipate a pro forma operating loss of ($600,000) or ($0.03) per basic share outstanding. These results exclude stock based compensation, intangible assets amortization, in-process R&D, and interest income. We continue to anticipate reaching break-even on an operating basis by the fourth quarter of 2001,'' concluded Alon.
First-quarter Conference Call
Precise Software Solutions will conduct its quarterly conference call for investors today at 5:00 p.m. (ET). The call will address the Company's recent financial performance and business outlook. Investors who want to hear the call via Webcast should log onto www.precise.com at least 15 minutes prior to the broadcast.
About Precise Software Solutions - ``Performance Is Our Business''
Precise Software Solutions (NASDAQ: PRSE - news) headquartered in Westwood, MA, helps businesses perform -- by managing the performance of their IT infrastructures. By monitoring and analyzing overall performance - ``from URL to SQL and Beyond(TM)'' - Precise's comprehensive performance management software solutions proactively pinpoint the root causes of service degradation and determine their impact on the entire infrastructure - before they affect end-users. By identifying trends and deviations from the norm, the Precise solutions bridge the gap between technology and business to facilitate performance optimization and strategic planning. Nearly 1,300 leading enterprises worldwide, including Fortune 500 and Global 2000 companies, are using the Precise solutions to help maximize their technology investments and meet their business goals.
Precise has offices in the United States, Canada, the United Kingdom, Germany, France, the Benelux countries, Israel and Australia, as well as a global network of resellers and distributors. More information on Precise is available at www.precise.com.
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties, which include those relating to the Company's product release plans, and acceptance of new products, the continuing growth of repeat sales, the success of its partnership agreements, its expected investments in distribution channels and infrastructure, market demand, and growth of its direct sales organization,. Precise's actual experience may differ materially from those discussed in the forward-looking statements. Factors that might cause such a difference include the prevailing uncertainty of the economy; the size, timing and recognition of revenue from major customers; the status of Precise's continuing relationship with Oracle; the status of Precise's continuing relationships with EMC, Amdocs and other sellers of Precise products; timing and acceptance of Precise/Indepth in the market place; Precise's limited experience with Java applications and customers; the continued relationship between Precise and BEA Systems; the future growth and acceptance of BEA WebLogic Server in the market place; Precise's ability to establish and effectively manage indirect distribution channels; the continued development of the market for Oracle databases and related applications software; the Company's ability to find suitable complementary technologies; the ability of the Company to meet its schedule for planned product releases; market acceptance of new product offerings and Precise's ability to predict and respond to market developments; the failure to keep pace with the rapidly changing requirements of its customers; Precise's ability to attract and retain key personnel; the development and expansion of Precise's direct sales force; risks associated with management of growth; Precise being held liable for defects or errors in its products; political, economic and business fluctuations in Israel and Precise's international markets; as well as risks of downturns in economic conditions generally, and in the information technology and software industries specifically, and risks associated with competition, and competitive pricing pressures. For a more detailed description of the risk factors associated with Precise, please refer to Precise's Form, 10-K Annual Report on file with the Securities and Exchange Commission.
BEA WebLogic is a registered trademark and BEA WebLogic E-Business Platform is a trademark of BEA Systems. Precise/Indepth, Precise/Foresight and ``from URL to SQL and Beyond'' are trademarks of Precise Software Solution, Ltd.
The Consolidated Statements of Operations and Consolidated Balance Sheets follow.
Precise Software Solutions, Ltd.
Condensed Consolidated Statement of Operations
(In thousands, except share and per share data)
Three months ended March 31,
2001 2000
(Unaudited)
Revenues:
Licenses $ 9,446 $ 3,588
Services 2,064 954
Total Revenues 11,510 4,542
Cost of Revenues:
Licenses 70 116
Services 745 356
Total Cost of Revenues 815 472
Gross Profit 10,695 4,070
Operating Expenses:
Research & development, net 2,236 1,019
Sales & marketing, net 7,633 3,754
General & administrative 1,552 609
Amortization of intangible assets 638 -
Amortization of deferred
stock compensation 713 780
Total Operating Expenses 12,772 6,162
Operating loss (2,077) (2,092)
Interest income, net 2,106 37
Net income (loss) $ 29 $ (2,055)
Basic net income (loss) per share $ 0.00 $ (0.62)
Weighted average number of shares 25,822,023 3,298,749
used in computing basic net income
(loss) per share
Diluted net income (loss) per share $ 0.00 $ (0.62)
Weighted average number of shares
used in computing 29,412,954 3,298,749
Diluted net income (loss) per share
Pro forma net income/(loss), $ 1,380 $ (1,275)
excluding amortization of
deferred stock compensation,
and amortization of intangible assets
Pro forma BASIC net income/(loss) $ 0.05 $ (0.39)
per share to reflect:
excluding amortization of deferred
stock compensation, and
amortization of intangible assets
Weighted average number of shares used
in computing 25,822,023 3,298,749
Pro forma basic net income
(loss) per share
Pro forma DILUTED net income/(loss), $ 1,380 $ (1,275)
excluding amortization of deferred
stock compensation, IPR&D amortization
and intangible assets amortization
Pro forma DILUTED net income/(loss) $ 0.05 $ (0.39)
per share to reflect:
excluding amortization of deferred
stock compensation, IPR&D
amortization and intangible assets
amortization
Weighted average number of shares used 29,412,954 3,298,749
in computing
Pro forma diluted net loss per share
Pro forma operating loss $ (726) $ (1,312)
excluding amortization of
deferred stock compensation,
intangible assets amortization
and interest income/expense
Pro forma operating loss per share $(0.03) $ (0.40)
(basic and diluted)
excluding amortization of deferred
stock compensation, intangible
assets amortization and interest
income/expense
Weighted average number of shares
used in computing 25,822,023 3,298,749
Pro forma diluted net loss per share
Pro forma operating loss per share
(basic and diluted) to reflect: $ (0.03) $ (0.09)
1) the conversion of the outstanding
preferred shares which automatically
converted at the completion of the
initial public offering
2) excluding amortization of
deferred stock compensation
intangible assets amortization and
interest income/expense
Weighted average number of shares 25,822,023 15,293,488
used in computing
Pro forma basic and diluted
operating loss per share
Precise Software Solutions, Ltd.
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited) (Audited)
March 31, December 31,
2001 2000
ASSETS
Current Assets
Cash and cash equivalents $ 77,695 $ 82,218
Marketable securities 43,999 39,261
Trade receivables, net 6,323 5,834
Other account receivable
and prepaid expenses 3,510 3,688
Total Current Assets 131,527 131,001
Marketable securities, non-current 27,240 27,931
Severance pay fund 544 540
Property and equipment, net 3,044 2,696
Other assets, net of
accumulated amortization 15,265 16,513
Total Assets 177,620 178,681
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities
Trade payables 909 1,452
Deferred revenues 3,828 3,351
Employees and payroll accruals 2,713 3,903
Accrued expenses 914 1,342
Other current liabilities 436 806
Total Current Liabilities 8,800 10,854
Long Term Liabilities
Obligation under capital lease - LT 111 120
Accrued severance pay 932 831
Total Long Term Liabilities 1,043 951
Shareholders' Equity
Preferred shares, common shares
and additional paid-in capital 195,371 195,610
Deferred compensation (2,004) (2,717)
Accumulated other comprehensive income 728 330
Accumulated deficit (26,318) (26,347)
Total Shareholders' Equity 167,777 166,876
Total Liabilities and
Shareholders' Equity $ 177,620 $ 178,681 |
