Active Software Announces Record Third Quarter Results; Revenue Up 243% Year-over-Year.SANTA CLARA, Calif.--(BUSINESS WIRE)--Oct. 26, 1999-- Active Software, Inc. (Nasdaq:ASWX), a leading provider of eBusiness integration software products, today announced record financial results for the third quarter and nine months ended September 30, 1999. Revenue for the quarter was a record $7.2 million, an increase of 40% over the $5.1 million reported for the previous quarter and an increase of 243% over the $2.1 million reported for the same period last year. Revenue for the first nine months of fiscal 1999 was $15.8 million, an increase of 254% over the same period last year. Net loss for the quarter was $2.8 million, or $.13 per share on a pro forma basis, as compared to a net loss of $2.6 million, or $.14 per share pro forma, for the previous quarter and $2.9 million, or $.17 per share pro forma, for the same period last year. Excluding the amortization of stock-based compensation, net loss for the quarter was $2.5 million, or $.12 per share pro forma, as compared to a net loss of $2.3 million and $2.8 million, or $.13 and $.16 per share pro forma, for the previous quarter and corresponding quarter last year, respectively. Net loss for the nine months ended September 30, 1999 was $8.1 million, or $.43 per share pro forma, as compared to a net loss of $7.4 million, or $.48 per share pro forma, for the same period last year. Excluding the amortization of stock-based compensation, net loss for the nine months was $7.3 million, or $.38 per share pro forma, as compared to a net loss of $7.2 million, or $.46 per share pro forma, for the corresponding period last year. For comparative purposes, net loss per share on a pro forma basis takes into consideration the weighted average number of common share equivalents resulting from the inclusion of convertible preferred stock for the quarter in connection with the Company's initial public offering completed on August 18, 1999. "Our record results reflect the increasing confidence that our customers and partners have in Active Software products on a worldwide basis," said Jim Green, Chairman and CEO of Active Software. "We've experienced strong customer growth, completed a very successful IPO and are setting the agenda for eBusiness integration by rapidly expanding our capability to integrate applications within and across the extended enterprise. Additionally, we're continuing our aggressive investments in sales, marketing and research and development and we expect to roll out a new B2B strategy and announce our 4th generation integration product line during the fourth quarter." Quarterly Highlights Active Software completed its initial public offering in August 1999, offering 4.025 million shares at $11 per share, which included the exercise of a 525,000 overallotment option. Net proceeds to the Company from the offering were approximately $41 million. Strong Customer Growth Market acceptance of the ActiveWorks In the Middle! The ActiveWorks system, incorporated into webMethods' Integration Platform, sits between a wide range of applications in the enterprise and brokers messages between them and adds processing where required. (Image courtesy of webMethods, Inc.)(TM) Integration System has allowed Active Software to significantly add to its growing customer base in the third quarter of 1999, bringing the total number of customers to more than 130. A representative list of recent customers includes Acxiom Corp., Citibank, E3G, Mannesmann Arcor, Motorola, Prudential Insurance, Redback Networks, Renaissance Worldwide, Telenordia, Virginia Community College System, Warburg Dillon Reed and others. Active Software's technology appeals to a broad range of customers from nearly all key markets, including financial services, telecommunications, manufacturing, energy, government, education and high technology. As with the previous three quarters, existing customers have accounted for over 50% of the total revenue for the third quarter of 1999, which the Company believes signifies the loyalty and satisfaction customers are experiencing with Active Software solutions. Leveraging Active Software and Partner Strengths Partners play a key role in Active Software's business model, participating in over 66% of all opportunities. Again, significant strides continue to be made in building relationships with industry-leading systems integrators and technology partners, which now number over 75. In the third quarter alone, Active Software expanded relationships with Perot Time0, Art Technology Group, Ernst & Young, EnterWorks, Hewlett-Packard Company, NTT, and many others. Active Software reached reseller agreements with both Hewlett-Packard, to integrate Active Software's ActiveWorks Integration System with HP Changengine, a business-process management system, and Vantive Corporation, now part of PeopleSoft, to embed ActiveWorks in Vantive QuickConnect for PeopleSoft, a pre-built integration solution that links the Vantive Enterprise and PeopleSoft Applications. The result is a broader reach for Active Software solutions, thereby helping customers better automate and manage their day-to-day eBusiness operations. Additionally, Active Software delivered on new services in the third quarter, with the exclusive ActiveWorks Integration Methodology (AIM) which ensures the fast deployment of successful integration solutions, accelerating the time to market for Active Software customers. Active Partners are also employing the AIM approach, further enhancing the speed at which customers and partners can deliver complete integration solutions. A Solution Approach Active Software's solution-oriented approach to the market is evidenced by its complete suite of integration products, its proven Professional Services Organization and its breadth of partners that deliver successful integration solutions for customers around the world. Advancements continued on all three fronts in the third quarter, with broader connectivity to applications, an extensive and growing partner list, and proven methodologies that resulted in a growing list of satisfied customers. About Active Software Founded in 1995, Active Software, Inc. (Nasdaq:ASWX) is a leading provider of eBusiness integration software products that enable the integration of enterprise software applications within and across the extended enterprise. Active Software has more than 130 customers in industries such as telecommunications, financial services, government, technology, utilities, distribution, manufacturing and transportation. Active Software's headquarters are in Santa Clara. For more information, visit the company Web site at www.activesw.com Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Potential risks and uncertainties include, without limitation, Active Software's limited operating history; potential fluctuations in operating results; delays in development or shipment of the Company's products; the Company's substantial dependence on its ActiveWorks software products; the uncertain market acceptance of eBusiness integration software products; the Company's need to expand its sales and distribution channels; the Company's reliance on system integrators and other strategic relationships, as well as applications made by third parties; the introduction of new products or services by major competitors; and uncertainties regarding the impact of the Year 2000 issue. These and other risk factors are described in detail in the Company's prospectus dated August 12, 1999 and in its other filings with the Securities and Exchange Commission. Note to Editors: The Active Software logo, Active Software and ActiveWorks, are trademarks or registered trademarks of Active Software Inc. All other trademarks mentioned herein are the property of their respective owners. -0-
ACTIVE SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30 Sept. 30 Sept. 30
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
Revenue:
License $ 5,075 $ 1,642 $ 10,997 $ 3,597
Service 2,091 427 4,837 881
-------- -------- -------- --------
Total revenue 7,166 2,069 15,834 4,478
-------- -------- -------- --------
Cost of revenue:
License 403 157 868 204
Service 1,785 629 4,589 1,135
-------- -------- -------- --------
Total cost of revenue 2,188 786 5,457 1,339
-------- -------- -------- --------
Gross profit 4,978 1,283 10,377 3,139
Operating expenses:
Research and development 2,113 1,208 4,389 2,821
Sales and marketing 4,741 2,392 11,697 6,187
General and administrative 849 603 1,842 1,492
Amortization of deferred
stock compensation 303 95 868 179
-------- -------- -------- --------
Total operating expenses 8,006 4,298 18,796 10,679
-------- -------- -------- --------
Loss from operations (3,028) (3,015) (8,419) (7,540)
Interest income (expense):
Interest income 283 94 379 224
Interest expense (55) -- (102) (38)
-------- -------- -------- --------
Total interest income
(expense) 228 94 277 186
-------- -------- -------- --------
Net loss $ (2,800) $ (2,921) $ (8,142) $ (7,354)
======== ======== ======== ========
Basic and diluted net
loss per share $ (0.19) $ (0.77) $ (1.01) $ (2.31)
======== ======== ======== ========
Shares used in calculating
basic and diluted net loss
per share 14,591 3,817 8,032 3,185
======== ======== ======== ========
Pro forma basic and diluted
net loss per share $ (0.13) $ (0.17) $ (0.43) $ (0.48)
======== ======== ======== ========
Shares used in calculating
pro forma basic and diluted
net loss per share 20,925 17,222 19,080 15,435
======== ======== ======== ========
ACTIVE SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1999 1998
------------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 34,705 $ 7,461
Short-term investments 9,239 --
Accounts receivable (net of allowances of
$236 and $200, respectively) 3,742 3,362
Prepaid expenses and other current assets 1,168 495
-------- --------
Total current assets 48,854 11,318
Property and equipment, net 1,797 796
Other assets 302 180
======== ========
Total assets $ 50,953 $ 12,294
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable $ 2,202 $ 739
Accrued compensation and related benefits 1,905 1,115
Deferred revenue 3,858 1,154
Accrued royalties 378 375
Other accrued liabilities 306 335
Current portion of notes payable 137 107
-------- --------
Total current liabilities 8,786 3,825
-------- --------
Notes payable, less current portion -- 108
-------- --------
Convertible redeemable preferred stock -- 25,117
Stockholders' equity (deficiency):
Common Stock 71,897 3,934
Deferred stock compensation (3,832) (2,939)
Notes receivable from stockholders (9) (9)
Accumulated deficit (25,889) (17,742)
-------- --------
Total stockholders' equity (deficiency) 42,167 (16,756)
======== ========
Total liabilities and stockholders'
equity (deficiency) $ 50,953 $ 12,294
======== ========
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