AppNet Accelerates Strong Growth in the Third Quarter; Improving Margins and Operational Metrics Highlight Continued Execution.BETHESDA Bethesda, city, United States Bethesda, uninc. city (1990 pop. 62,936), Montgomery co., W central Md., an affluent residential and commercial suburb of Washington, D.C. The area was settled in the late 17th cent. , Md.--(BUSINESS WIRE)--Oct. 26, 1999-- Third Quarter, 1999 Highlights -- Revenue - $30.1 million, up 68% over the same pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma quarter last year and up 20% sequentially -- Gross Profit - $13.6 million, up 88% over the same pro forma quarter last year and up 25% sequentially -- Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become margins improved to 6.3% from 5.2% in the second quarter -- First quarter of positive cash EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. , 5 cents versus a loss of 1 cent in the second quarter AppNet, Inc. (Nasdaq:APNT APNT Association of Physical and Natural Therapists ), the premier provider of end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. solutions, today announced third quarter 1999 financial results that demonstrate accelerating growth as the leader in the e-business marketplace. For the three months ended September 30, 1999, revenues were $30.1 million, a 68% increase over pro forma revenue of $18.0 million for the third quarter of 1998. Gross margins were 45.1% compared to 40.1% for the third quarter of 1998 on a pro forma basis. Earnings before interest, taxes, depreciation, amortization and stock based and acquisition related compensation (adjusted EBITDA) were $1.9 million or 6.3% of revenue this quarter. Cash EPS was 5 cents compared to a loss of 1 cent last year. These results exceeded the consensus of analysts' expectations. "This quarter's results continue to demonstrate the power of our comprehensive e-business service offering," said Ken Bajaj, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of AppNet. "We are increasing the size, scope, and complexity of our engagements, as we help our customers move to the next stage of e-business, which is a fully integrated end-to-end solution (jargon) end-to-end solution - (E2ES) A term that suggests that the supplier of an application program or system will provide all the hardware and/or software components and resouces to meet the customer's requirement and no other supplier need be involved. Compare: turn-key solution. ." On a sequential basis, AppNet posted accelerating growth in revenue and profitability measures. Compared to the second quarter of 1999, revenue increased 20% while gross margins expanded from 43.3% to 45.1%. Adjusted EBITDA grew 46% sequentially with improvement in the adjusted EBITDA margin from 5.2% to 6.3%. "I am very pleased with our first quarter of positive cash EPS and the improving metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. across the business," said Jack Pearlstein, chief financial officer of AppNet. "AppNet continues to deliver strong growth while investing for the future." Operational Highlights -- During the quarter AppNet won more than 15 engagements worth $1 million or more - triple the number in the second quarter. -- During the third quarter, AppNet added many new customers to its outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. service, including online pharmacies  This article or section may deal primarily with the U.S. and may not present a worldwide view. , upscale
retailers, and global telecommunications companies See telecom company. . -- Strong hiring trends exceeded internal targets, resulting in 63 net new billable employees in the last 90 days to reach 715 billable employees. Recent Announcements -- Sprint selected AppNet as its interactive marketing agency of record (AOR AOR The ISO 4217 currency code for Angolan Reajustado Kwanza. ), on the heels of AppNet being ranked the fourth largest Interactive Marketing Agency by Advertising Age magazine. AppNet will create aggressive interactive marketing campaigns and utilize its own AdMaximize (SM) tool to help Sprint acquire new customers for its consumer long distance division. -- The National Library of Medicine (NLM Software that runs in a NetWare server. Although NetWare servers store DOS and Windows applications, they do not execute them. All programs that run in a NetWare server must be compiled into the NLM format. They are typically written in C and use Novell's libraries. ) selected AppNet to build a comprehensive Medical Information Portal for the medical community and healthcare consumers. AppNet will redesign re·de·sign tr.v. re·de·signed, re·de·sign·ing, re·de·signs To make a revision in the appearance or function of. re the user interface and integrate NLM's systems with the Web so medical information, reports, and research are readily available to the public twenty-four hours a day. -- Hewlett Packard chose AppNet to integrate their supply chain processes to improve relationships with their suppliers and boost customer satisfaction. "Our excellent third quarter results demonstrate that our customers understand what makes AppNet different from our competitors," concluded Mr. Bajaj. "We present our clients with more options, whether they want the whole solution or just one component. We understand the importance of integrating e-business systems into legacy environments, and have the skills to do so. And we have a 360 degree view of e-Commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. and the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the - we understand all the angles: B2B (Business to Business) Refers to one business communicating with or selling to another. See B2B e-commerce, B2C and B2G. B2B - business to business , B2C (Business to Consumer) Refers to a business communicating with or selling to an individual rather than a company. See B2B. , and B2Enterprise." AppNet (Nasdaq:APNT) is the premier provider of end-to-end e-business solutions, from interactive marketing to back-office integration. For companies transforming themselves for the new Internet See Web 2.0 and Internet2. economy, the firm offers a unique mix of Internet strategy, marketing, and technology services. AppNet is the fourth largest interactive marketing agency according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Ad Age and one of the 50 largest pure Internet companies, according to Internet World. AppNet works with both Fortune 1000 and dot.com companies. Customers include Sprint, Baxter Healthcare, Dial, Ford, Ralston Purina, Hyundai, multex.com, Value America Value America or VA (valueamerica.com, va.com) was a dot-com company founded in Nevada in 1996[1] by Craig Winn and Rex Scatena, and relocated to Charlottesville, Virginia in February of 1998[1]. , UNICEF UNICEF (y  `nĭsĕf'), the United Nations Children's Fund, an affiliated agency of the United Nations. , Ko B Toys, NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98).NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. , and Unilever. Find more information about AppNet at http://www.appnet.com. This press release may include "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " for purposes of the Securities Exchange Act of 1934. All statements herein, other than those of historical fact, including statements regarding future contractual arrangements or performance, competitive strengths, and business strategy, are forward-looking. Actual results or events may differ materially from those projected in such forward-looking statements. Information regarding the factors that could cause such differences are contained in the Company's Prospectus dated June 17, 1999 contained in the Registration Statement on Form S-1 filed in connection with the Company's initial public offering and on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 1999 dated August 16, 1999. -0-
AppNet, Inc.
Consolidated statements of operations
(Amounts in thousands, except per share data)
---------------------- -------------------------
Three months Nine months
ended ended
Sept 30, Sept 30, Sept 30, Sept 30,
1998 1999 1998 1999
---------------------- -------------------------
Pro Forma(a) Actual Pro Forma(a) Pro Forma(a)
---------------------- -------------------------
(Unaudited) (Unaudited)
Revenues $ 17,955 $ 30,096 $ 47,356 $ 77,430
Cost of revenues 10,749 16,528 28,398 43,880
---------------------- -------------------------
Gross profit 7,206 13,568 18,958 33,550
---------------------- -------------------------
Selling and marketing 887 3,048 2,259 5,995
General and
administrative 4,804 8,636 12,217 23,995
---------------------- -------------------------
Adjusted ebitda (b) 1,515 1,884 4,482 3,560
---------------------- -------------------------
Stock-based and other
acquisition-related
compensation 5,326 7,779 15,978 10,852
Depreciation and
amortization 15,132 15,018 45,150 38,168
---------------------- -------------------------
Loss from operations (18,943) (20,913) (56,646) (45,460)
---------------------- -------------------------
Interest expense 1,478 303 4,454 4,261
Other expense, net 312 (96) 376 460
---------------------- -------------------------
Loss before income
taxes (20,733) (21,120) (61,476) (50,181)
---------------------- -------------------------
Income taxes (25) 178 (75) 328
---------------------- -------------------------
Net loss $ (20,708) $ (21,298) $ (61,401) $ (50,509)
====================== =========================
Dividends on and
accretion of
preferred stock (855) - (2,565) (2,232)
---------------------- -------------------------
Net loss
attributable to
common
stockholders $ (21,563) $ (21,298) $ (63,966) $ (52,741)
====================== =========================
Basic and diluted
net loss per common
share $ (1.09) $ (0.68) $ (3.56) $ (2.16)
====================== =========================
Weighted average
common shares
outstanding 19,740 31,124 17,973 24,369
====================== =========================
Cash net income
(loss) $ (250) $ 1,499 $ (273) $ (1,489)
====================== =========================
Cash net income
(loss) per share $ (0.01) $ 0.05 $ (0.02) $ (0.06)
====================== =========================
(a) Pro forma results of operations give effect to the acquisitions we
made in 1998 and 1999 as if these transactions had occurred on January
1, 1998. The stock-based and other acquisition-related compensation
resulting from certain acquisition are computed based on the closing
stock price on September 30, 1999 of $27.375.
(b) Adjusted ebitda is defined as earnings before interest, taxes
depreciation and amortization and stock-based and other
acquisition-related compensation.
AppNet, Inc.
Consolidated balance sheets
(Amounts in thousands)
-------------- --------------
12/31/98 09/30/99
-------------- --------------
(Unaudited) (Unaudited)
Current assets
Cash and cash equivalents $ 2,447 $ 3,236
Accounts receivable, net 11,238 27,010
Other current assets 1,118 1,428
-------------- --------------
Total current assets 14,803 31,674
-------------- --------------
Property and equipment, net 3,012 7,359
Intangible assets, net 99,380 102,028
Other assets 1,175 1,867
============== ==============
Total assets $ 118,370 $ 142,928
============== ==============
Total current liabilities $ 12,074 $ 36,200
Long term debt and other
liabilities 44,764 17,041
-------------- --------------
Total liabilities 56,838 53,241
-------------- --------------
Class A Preferred Stock 37,646 -
Common stock subject to
put rights 278 -
Stockholders' equity 23,608 89,687
-------------- --------------
Total liabilities, redeemable
stock and stockholders' equity $ 118,370 $ 142,928
============== ==============
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