VERISIGN REPORTS THIRD QUARTER FINANCIAL RESULTS
New Enterprise and Website Customers Fuel Increased Momentum
Mountain View, CA, October 22, 1998 - VeriSign, Inc. (Nasdaq:VRSN) today announced revenue of $10.5 million for the third quarter ended September 30, 1998, a 174% increase over revenue of $3.8 million reported in the quarter ended September 30, 1997. Third quarter revenue increased 23% over the $8.6 million of revenue reported in the previous quarter ended June 30, 1998. In addition, deferred revenue, which consists predominantly of unamortized subscriber fees, increased to $10.5 million as of September 30, 1998, a 214% increase over the year ago quarter and a 26% increase from the quarter ended June 30, 1998.
VeriSign reported a net loss, excluding nonrecurring charges related to the acquisition of SecureIT, for the third quarter ended September 30, 1998 of $4.2 million, or $.18 per share compared to a net loss, excluding nonrecurring charges, in the quarter ended September 30, 1997 of $3.2 million, or $.40 per share. Net loss for the prior quarter ended June 30, 1998 was $4.8 million or $.21 per share. Net loss, including $3.6 million of nonrecurring charges arising from the acquisition of SecureIT in July 1998, for the quarter ended September 30, 1998 was $.34 per share. Shares outstanding increased to 22.7 million at September 30, 1998.
VeriSign also announced that it signed agreements with more than 100 new enterprise customers for its VeriSign OnSite offering during the quarter including Morgan Stanley Dean Witter, First Union Bank, Ameritech and the Internal Revenue Service. In its website business, VeriSign posted a thirteenth consecutive record quarter for unit shipments with approximately 17,000 certificates shipped during the period, representing a 107% increase in unit volumes over the year ago quarter and a 21% increase from the quarter ended June 30, 1998.
"We are very pleased with our third quarter results and believe that the continued strength across our lines of business indicate a general acceleration of commerce activities on the Internet," said Stratton Sclavos, president and CEO of VeriSign, "We expect our recently announced OnSite 4.0 offering to speed our customers' deployment plans for supply chain extranets, virtual private networks, and electronic commerce applications."
VeriSign was the first company to begin issuing digital certificates for website authentication in June of 1995. Since that time, VeriSign has issued more than 82,000 website certificates to a broad range of merchants, financial service companies and other organizations conducting electronic transactions and secure communications over the World Wide Web. VeriSign maintains the leading market share in the website business and now provides authentication services to 98 of the Fortune 100 companies as well as the top ten ranked commerce sites on the World Wide Web. Notable website customers include Amazon.com, Charles Schwab, Cisco, Dell Computer, E-Trade, Fidelity, Microsoft, and Netscape.
In less than a year after the introduction of its enterprise PKI offering, VeriSign now has more than 220 enterprises, universities and government agencies utilizing its VeriSign OnSite service. VeriSign OnSite is the world's first integrated PKI platform combining PKI and digital certificate functionality with carrier class processing services to enable enterprises to quickly deploy secure extranet and electronic commerce solutions. New customers in the quarter included leading companies in the financial services, telecommunications, transportation, consumer packaged goods, and retail industries.
VeriSign recently introduced OnSite version 4.0. This new release adds substantial PKI functionality, enhanced administrative options, additional high availability services and integration with market leading products from vendors such as SAP, Cisco, Network Associates, and ICL. OnSite 4.0 availability is targeted for the fourth quarter of 1998.
In addition, VeriSign's Security Services division, formed through VeriSign's acquisition of SecureIT Inc. in July of this year, recently introduced several new implementation and training services focused on basic PKI and VeriSign OnSite usage and deployment within enterprise organizations.
VeriSign also increased its international presence in the third quarter through the announcement of its CertPlus joint venture in France in partnership with France Telecom, Matra Haute Technologies, and Gemplus. CertPlus is the latest member of the VeriSign Trust Network (VTN), a global network of VeriSign affiliates utilizing common technology, infrastructure and operating practices to offer co-branded certification services on a worldwide basis. Current members of the VTN include British Telecommunications in the U.K., AT&T in the U.S., Acer's HiTrust in Taiwan, CertPlus in France and VeriSign K.K. in Japan.
VeriSign, Inc. (NASDAQ: VRSN) is the leading provider of Public Key Infrastructure (PKI) and digital certificate solutions used by enterprises, Web sites and consumers to conduct secure communications and transactions over the Internet. VeriSign's enterprise PKI solutions are available through VeriSign regional account representatives, resellers, and global affiliates. The company's Digital IDs for consumers and websites are available through the company's Web site at www.verisign.com.
This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, the company's limited operating history, which makes the prediction of future operating results difficult; continued growth in the use of Internet and other IP networks for communications and commerce; market acceptance of digital certificates and the company's products and services in particular; competition; interruptions or security breaches in the company's systems; and the company's ability to manage its growth and risks related to the acquisition of SecureIT detailed in the Company's Form 8-K filed with the SEC on July 21, 1998. More information about potential factors which could affect the company's financial results is included in the final prospectus for VeriSign's initial public offering dated January 29, 1998 and the company's other reports filed with the SEC. VeriSign assumes no obligation to update the forward-looking information contained in this press release.
FINANCIALS
VERISIGN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
1998 1997(a) 1998(a) 1997(a)
Revenues . . . . . . . . . . . . . . . . . . . . $ 10,505 $ 3,839 $ 25,719 $ 8,360
Costs and expenses:
Cost of revenues . . . . . . . . . . . . 5,190 2,574 13,467 6,172
Sales and marketing . . . . . . . . . . 6,117 2,583 16,449 7,732
Research and development . . . . . 2,552 1,354 6,242 3,643
General and administrative . . . . . 1,673 1,185 5,842 3,147
Nonrecurring charges . . . . . . . . . 3,555 2,000 3,555 2,000
Total costs and expenses . . . . . 19,087 9,696 45,555 22,694
Operating loss . . . . . . . . . . . . . (8,582) (5,857) (19,836) (14,334)
Other income . . . . . . . . . . . . . . . . . 628 236 1,677 872
Loss before minority interest . . (7,954) (5,621) (18,159) (13,462)
Minority interest in net loss
of subsidiary . . . . . . . 237 407 950 1,194
Net loss . . . . . . . . . . . . . . . . . . $ (7,717) $ (5,214) $ (17,209) $ (12,268)
Basic and diluted net loss per share . $ (.34) $ (.64) $ (.82) $ (1.54)
Shares used in per share
computations . . . . . . . 22,616 8,106 21,042 7,988
Pro Forma Results Excluding Nonrecurring charges related to the acquisition of Secure IT on July 6, 1998. Note, Q397 pro forma results exclude non-recurring charges related to stock issued.
Pro forma operating loss,excluding nonrecurring charges . . . . . . . . . $ (5,027) $ (3,857) $ (16,281) $ (12,334)
Pro forma net loss, excluding nonrecurring charges . . . . . . . . . $ (4,162) $ (3,214) $ (13,654) $ (10,268)
Pro forma basic and diluted loss per share, excluding nonrecurring charges . . . . . . . . . $ (.18) $ (.40) $ (.65) $ (1.29)
Shares used in per share computations . . . . . . . . . 22,616 8,106 21,042 7,988
Note: Pro forma results for the quarter and nine months ended September 30, 1998, and September 30, 1997 are presented for informational purposes only. These results present the operating results for the Company excluding the nonrecurring charges related to the acquisition of SecureIT in July, 1998 and non-recurring charges related to the issuance of stock in Q397. Pro forma results are not presented in accordance with generally accepted accounting principles.
VERISIGN, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September 30,
1998 December 31,
19978(a)
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,102 $ 4,942
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,366 7,951
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,470 3,390
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 2,351 994
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,289 17,277
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,378 8,756
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 976 871
$ 63,643 $ 26,904
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,505 $ 3,504
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,024 2,346
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,461 5,267
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,990 11,117
Minority interest in subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,297 2,246
Commitments
Stockholders' equity:
Preferred stock, $.001 par value;
5,000,000 shares authorized; none issued . . . . . . . . . . . . . . . — —
Convertible preferred stock, $.001 par value;
10,282,883 shares authorized in 1997;
10,031,006 shares issued and outstanding in 1997 . . . . . . . . . . — 10
Common stock, $.001 par value;
50,000,000 shares authorized;
22,732,876 and 8,786,426 shares issued
and outstanding, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 7
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,496 45,419
Notes receivable from stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . (582) (644)
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (302) (380)
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48,279) (30,871)
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,356 13,541
$ 63,643 $ 26,904
(a)Reported financial results reflect the acquisition of SecureIT, Inc., which was accounted for as a pooling of interest transaction, and all prior period amounts have been restated.
# # #
Copyright 1998 VeriSign, Inc. 1390 Shorebird Way, Mountain View, CA 94043. All rights reserved. VeriSign is a registered trademark exclusively licensed to VeriSign, Inc. VeriSign OnSite, Digital ID and Digital ID Center are service marks of VeriSign, Inc. All other trademarks are properties of their respective owners.
CONTACT:
Dana Evan, Chief Financial Officer, 650-429-3410;
or Kris Bergmann, Director Investor Relations,
650-429-3416, or bergmann@verisign.com, both of VeriSign, Inc.
Media Contact:
Kelly Brieger, (650)429-3424 or ryan@verisign.com
|
