STOR has an EBITDA positive quarter:
biz.yahoo.com
Thursday April 18, 7:22 am Eastern Time
Press Release
SOURCE: StorageNetworks
StorageNetworks Announces First-Quarter Results Revenues Grew 17% Over The Same Period In The Prior Year Company
Signs STORfusion Partnership With WorldCom StorageNetworks Turns EBITDA Positive and Continues Cost Reductions
WALTHAM, Mass.--(BUSINESS WIRE)--April 18, 2002- StorageNetworks, Inc. (NASDAQ: STOR - news), a leading
provider of data storage management software and services, today announced revenues for the first quarter ended March
31, 2002 of $31.6 million, a 17% increase over revenues of $27.1 million in the first quarter of 2001 and equal to
revenues for the fourth quarter of 2001. Managed services revenues for the quarter were $30.6 million, as compared to
$23.0 million in the first quarter of 2001 and $30.8 million in the fourth quarter of 2001.
For the first quarter ended March 31, 2001, the company reported its first EBITDA (earnings before interest, taxes,
depreciation, amortization, and non-cash stock compensation) positive quarter of $3.8 million, as compared
with an EBITDA loss of $22.1 million in the first quarter of 2001 and a pro forma EBITDA loss of $1.2 million in the
fourth quarter of 2001. The company also reported a net loss of $5.4 million, or $0.05 per share, compared with a
loss of $32.9 million, or $0.34 per share, for the first quarter of 2001, and a pro forma net loss of $18.5 million,
or $0.19 per share, for the fourth quarter of 2001. The pro forma results for the fourth quarter of 2001 exclude an
asset impairment charge and other related costs of $114.4 million, recorded on December 31, 2001. Including this
charge the company reported an EBITDA loss of $115.7 million and a net loss of $132.9 million, or $1.36 per
share, for the quarter ended December 31, 2001.
``During the quarter, we faced a challenging environment as enterprise organizations continued to critically evaluate
all technology spending. We posted our strongest results to date in terms of gross margins, operating margins, EBITDA
and net loss per share -- all of which exceeded expectations,'' stated Peter Bell, Chairman and Chief
Executive Officer of StorageNetworks.
``Our software-based STORfusion(SM) services continued to gain traction. During the quarter, we signed another new,
major STORfusion partner - WorldCom. We also continued the successful implementation of our software and processes at
existing STORfusion partners, including EDS and BellSouth. The success of our STORfusion services are evidence that
our storage management software is rapidly becoming the industry standard platform to deliver storage as a
service,'' continued Bell.
In the first quarter, StorageNetworks also signed a number of high-quality storage consulting and architecture
engagements with industry-leading companies including British Telecom, Freddie Mac, and the Chicago Board of
Options Exchange, as well as follow on engagements with existing customers, such as Salomon Smith Barney and State
Farm Insurance.
``During the quarter, we made significant progress in our storage management software business. Our first stand-alone
software product, which is on target for shipment in the beginning of the second half of the year, combined with our
proven process methodologies and related services enables customers to build an enterprise storage utility that
improves utilization, availability and recoverability within their environments. STORos(TM) version 5.0 is our
software platform that supports both storage and data management applications. Our first application release will
be a storage management application that provides robust storage resource management reporting and management with
integrated backup reporting and administration. We know our software solves customer challenges around controlling
cost, ease of management and service levels because we use it everyday to deliver our managed services. We currently
have leading companies across multiple industries who are beta testing our productized software. As a result, we
believe we are uniquely positioned to capitalize on the significant opportunities in the storage management
software market,'' continued Bell.
``I am pleased with the continued strength of our balance sheet. Our days sales outstanding on accounts receivable
remains very strong at 45 days and we ended the quarter with $273.5 million in cash and marketable investments,''
stated Paul Flanagan, Executive Vice President, Chief Operating Officer and Chief Financial Officer. ``Total cash
used declined in the first quarter to $15.4 million from $37.1 million in the fourth quarter of 2001. Total cash
usage declined because we used $27.1 million in the fourth quarter to repay high interest lease financing, while we
used only $3.6 million for such purposes during the first quarter. Excluding cash used for the early extinguishment
of lease obligations, cash used to operate the business increased slightly to $11.8 million in the first quarter of
2002 from $10 million in the fourth quarter as a result of year-end employee bonuses and a one-time payment to a
strategic vendor. Our balance sheet remains strong and we continue to believe that we are funded to profitability.''
The company also generated 82% of its revenues from enterprise customers compared with 76% in the fourth
quarter of 2001. Additionally, the company generated 54% of its revenues from onsite services delivered in customers
data centers versus 46% in the fourth quarter of 2001.
``As we continue to focus on developing and enhancing our storage management software, we are also making a number of
organizational changes to more closely align our employee base and operational expenses with our strategic direction.
We are streamlining all of our functional organizations, reducing headcount by approximately 90 employees and
bringing total headcount to approximately 300. These reductions will result in a charge for severance and other
associated costs of $400,000, which will be taken in the second quarter in the normal course. We also expect that
these reductions will reduce cash burn and operating expenses by $600,000 on a monthly basis when completed,''
continued Flanagan.
``We are focused on the continued development of our software platform, delivering superior customer
satisfaction, and increasing our revenues from high-margin software and related services. While the economic
environment remains difficult, I believe that the decisions we have made lay the foundation for StorageNetworks' long-
term success as a software company. We believe that our strategy to focus on the development and productization of
our software is in the long-term best interests of the company and our shareholders,'' concluded Bell.
The company will hold a conference call today at 8:00 a.m. Eastern Time to provide additional detail regarding its
results and its business outlook. The call may be joined via telephone by dialing (800) 399-0087 domestically and
(706) 634-6523 internationally at least 5 minutes prior to the start of the call. The conference ID code is: 3701865.
In addition, an audio replay will be available on the company's web site. You may access the replay by dialing
(800) 642-1687 domestically and (706) 645-9291 internationally. The conference ID code is: 3701865. The
replay will be available through April 25, 2002.
About StorageNetworks, Inc.
StorageNetworks, Inc. (NASDAQ: STOR - news) is delivering the future of data storage today. We are a leading provider
of data storage management software and services. Our unique software and services enable enterprises, network
service providers, and system integrators to deliver cost-effective solutions to store, manage, and protect
information on a global basis. We simplify data storage management and empower our customers and partners with
increased control and optimal utilization of their complex storage environments. StorageNetworks, headquartered in
Waltham, Massachusetts, has offices worldwide. For more information, visit our Web site at www.storagenetworks.com,
email info@storagenetworks.com, or call 1.800.463.7105.
Safe Harbor
Except for the historical information contained in this announcement, the statements in this announcement,
including those relating to future financial performance, are ``forward-looking statements'' (as that term is used in
the Private Securities Litigation Reform Act of 1995) that are subject to risks and uncertainties including the risks
relating to the attractiveness of our software and services to our current and potential customers, the ability to
productize and sell our software, likely variations in our financial results, demand for our software and services,
the ability to attract and retain customers, competition, the ability to build successful sales channels, the ability
to deliver our software and services reliably, the ability to expand our software and service offerings, the ability
to upgrade our software offerings and the ability to achieve overall profitability, as detailed from time to
time in our filings with the Securities and Exchange Commission (``SEC''). We draw the reader's attention to the
to the factors described in our Annual Report on Form 10-K for the year ended December 31, 2001 under the heading,
``Certain Factors That May Affect Future Operating Results.''
StorageNetworks is a registered servicemark and STORfusion and STORos are servicemarks or trademarks of
StorageNetworks, Inc. All other brand and product names contained in this release may be trademarks or registered
trademarks of their respective holders.
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StorageNetworks, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
December 31, March 31,
2001 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 185,834 $ 164,579
Short-term investments 42,978 53,264
Accounts receivable, net 13,735 9,699
Prepaid expenses and other current assets 9,407 8,354
Total current assets 251,954 235,896
Property and equipment, net 67,074 62,118
Non-current investments 29,937 26,139
Restricted cash equivalents 30,158 29,558
Other assets 5,618 4,652
Total assets $ 384,741 $ 358,363
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,821 $ 5,885
Accrued expenses 50,259 42,208
Deferred revenue 5,868 2,274
Capital lease obligations 44,063 43,693
Total current liabilities 104,011 94,060
Capital lease obligations,
less current portion 60,512 47,638
STOCKHOLDERS' EQUITY:
Common stock 978 985
Treasury stock (200) (200)
Additional paid-in capital 597,938 597,595
Deferred stock compensation (4,638) (2,522)
Accumulated other comprehensive income 428 489
Accumulated deficit (374,288) (379,682)
Total stockholders' equity 220,218 216,665
Total liabilities and
stockholders' equity $ 384,741 $ 358,363
StorageNetworks, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
Three Months Ended
March 31,
2001 2002
REVENUES:
Managed storage services revenues $ 23,049 $ 30,639
Professional services revenues 4,056 987
Total revenues 27,105 31,626
COSTS AND EXPENSES:
Cost of managed storage services
revenues, excluding deferred stock
compensation amortization amounts 30,110 20,597
Cost of professional services
revenues, excluding deferred stock
compensation amortization amounts 2,783 645
Sales and marketing, excluding
deferred stock compensation
amortization amounts 18,400 6,051
General and administrative, excluding
deferred stock compensation
amortization amounts 5,503 3,002
Research and development, excluding
deferred stock compensation
amortization amounts 4,356 4,466
Amortization of deferred stock
compensation(1) 1,194 462
Total costs and expenses 62,346 35,223
Loss from operations (35,241) (3,597)
Interest income 5,433 1,520
Interest expense (3,055) (3,317)
Net loss $(32,863) $ (5,394)
Net loss per share--basic and diluted $ (0.34) $ (0.05)
Weighted average common shares outstanding 95,842 98,099
EBITDA (2) $(22,131) $ 3,767
(1)Amortization of deferred stock compensation
Cost of managed storage services revenues $ 205 $ 80
Cost of professional services revenues 52 39
Sales and marketing 405 165
General and administrative 101 95
Research and development 431 83
$ 1,194 $ 462
(2) Net loss before interest, taxes, depreciation, amortization and
non-cash stock compensation
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Contact:
StorageNetworks
Erica Smith
781/622-6373
erica.smith@storagenetworks.com
or
Warner Communications
Carin Warner
978-526-1960
carin@warnerpr.com |
