Beyond.com Q4 eStores Sales Grow 76% From Prior Year; EBITDA Loss Down to $0.14 Per Share On the Lowest Cash Burn Rate Since 1998.Business Editors, Technology Writers SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--Jan. 23, 2001 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. services provider Beyond.com (Nasdaq:BYND) today announced its fourth quarter and full year 2000 financial results, which show continued progress in lowering the company's operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and net loss. Net revenues for the quarter ending Dec. 31, 2000 were $29.7M, as compared to $29.5M for Q3 2000. Revenues for Beyond.com's eStores Group were $14.8M in Q4 2000, up 27% from revenues of $11.7M in Q3 2000 and up 76% from Q4 a year ago. Gross margin dollars for the company's eStores were $2.3M in Q4 2000, up 29% from $1.8M in Q3 2000 and up 71% from Q4 a year ago. The strong eStores performance and continued cost reductions combined to more than offset a soft quarter in margin performance for the Government Systems Group. Government revenue for Q4 2000 was up 28% over Q4 1999 and 11% lower than Q3 2000, while and margins related to the Government Systems Group revenues were down 35% from Q4 1999 and 46% from the Q3 2000 sales. The fourth quarter is historically a softer period in the government sector, and this year's election eccentricities in the fourth quarter brought much of the higher margin sales activity to a halt. It is anticipated that these orders were delayed rather than lost, and will be recouped in the coming quarter with the new federal administration fully in place. Net revenues for fiscal 2000 were $122.3M compared with $120.2M for 1999. Revenues for Beyond.com's core eStores and Government Systems Groups were $98.4M for fiscal 2000, up 77% from $55.5M for fiscal 1999. "We are very pleased with the strong sales performance of our eStores Group through both the holiday season and the fourth quarter in general," said Ronald S. Smith, president 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 Beyond.com. "These results validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data our strategy to focus our resources on a select number of partners that have high eCommerce See e-commerce. potential, and to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. the natural growth potential inherent in those partnerships." Smith added, "While the delayed election results slowed our fourth quarter government sales, we are encouraged by the fact that government sales have grown 74% to $51.8M for the year, compared with $29.7M in fiscal 1999. That is a growth rate similar to our eStores business and we are seeing many new opportunities arise in the government sector for the coming quarters." Total operating expenses, excluding goodwill, amortization and deferred compensation, for Q4 2000 were $10.7M, an improvement of 14% from $12.5M in the immediately preceding quarter, and a 61% improvement from Q4 1999. The company also recorded asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges of $2.2M that are included in other expenses in the fourth quarter. These are primarily comprised of non-recurring charges due to the impairment of the Company's investment in SoftGallery. The company's cash and cash equivalents ("cash") at Dec. 31, 2000 were $5.5M. Cash burn from operations dropped to less than $6M dollars during the fourth quarter of 2000, as measured by comparing cash and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying less account payable and accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. at the end of Q4 2000 to the same balances at Q3 2000. "In driving costs out of the organization, the company has been able to conserve cash and slow our burn rate," Smith said. "This is significant because it means that our need for outside financing is likely to be significantly less than we had originally anticipated. We are however continuing to work on completing other types of financing in order to have a more flexible capital structure, and to complement the financing now in place." 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 (which is defined by the company as earnings or loss before interest, taxes, depreciation, amortization, restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , impairment charges and extraordinary items) for Q4 2000 was a loss of $5.9M million dollars, a 16% decrease from $7.0M in Q3 2000 and a 72% percent improvement from a loss of $21.2M in Q4 a year ago. EBITDA per share in Q4 2000 was a loss of $0.14 per share as compared to an $0.18 loss in Q3 2000 and a $0.58 loss in Q4 a year ago. EBITDA per share for fiscal 2000 was a loss of $1.05 compared with an EBITDA loss of $2.50 per share for fiscal 1999. Additional fourth quarter highlights included: -- The expansion of the eCommerce services agreement with McAfee.com to include the launch of a series of international store campaigns, including the United Kingdom, Germany and France. The agreement also produced an integrated marketing campaign that was launched in the fourth quarter. The marketing campaign has been met with measurable success, as the McAfee domestic store had the highest growth of any of Beyond's managed stores for Q4 2000, and since November of the same quarter, the single largest store as measured by number of units delivered. The Company launched McAfee's United Kingdom store in December 2000, the French store in January 2001 and has scheduled the launch of the German store later in the first quarter of 2001. -- The company received a commitment to receive up to $40 million in private equity funding over a one-year period, extendable to two years at Beyond.com's option. Pricing will be based upon the volume weighted average price of the company's stock during the investment period. Beyond.com's use of the funds will be for capital expenditures and working capital needs. -- The announcement of new government contracts with bureaus of the Department of Treasury worth an estimated $3.2 million in revenue dollars to Beyond.com. These are part of several contracts with terms of three to five years each, held within various bureaus within the Department of Treasury, including the IRS, that Beyond.com handles in partnership with Planet.Gov, Inc. that are collectively worth $130 million in revenues to Beyond.com. Smith characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. the quarter as pivotal in establishing the viability of the company's business plan. "In Q4 all of us at Beyond came together as an aligned and revitalized re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. team. We are now much more focused on customer satisfaction, productivity and process improvement, as well as gross margin generation. The result was three new store signings, a measurable increase in the number of prospects who are talking with us, and significant reductions in operating expenses and cash burn. The continuing trend of the last three quarters validates that we have a viable business model, one that, as planned, will be capable of generating sustainable profits by the end of Q1 of 2002," Smith concluded. Beyond.com will host a conference call to discuss its Q4 earnings today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). A live broadcast of the conference call may be heard by dialing 913/981-5581 or via webcast at: http://www.beyond.com. A replay of the call will be available for two weeks starting at 8:30 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT and can be accessed by dialing 719/457-0820. The confirmation code required for the live conference call, live webcast or the replay of the call is 433859. About Beyond.com Beyond.com(TM) is an e-commerce services provider that builds, manages and markets online stores for businesses. The company also sells software and computer-related products to consumers and U.S. Government agencies. The company's BuyDirect Group provides eStores by Beyond.com(TM), a suite of services that enables software developers, systems OEMs and hardware manufacturers to market and sell over 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 . Beyond.com's Government Systems Group provides digital distribution of software and related services to a growing list of U.S. Government agencies. Beyond.com Corporation trades on the Nasdaq National Market under the symbol ("BYND"). More information on the company can be found in the company's filings with the Securities and Exchange Commission ("SEC"). Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Certain statements in this press release are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. These include statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc (i) recouping Government sales in the coming quarter; (ii) maximizing max·i·mize tr.v. max·i·mized, max·i·miz·ing, max·i·miz·es 1. To increase or make as great as possible: the natural growth potential in our partnerships; (iii) new opportunities arising in the Government sector; (iv) the need for outside financing being significantly less than originally anticipated; (v) the ultimate worth of the contracts being held within various bureaus of the Department of Treasury (vi) the completion of other types of financing; and (vii) whether the company has a viable business model capable of generating sustainable profits by the end of Q1 of 2002. Such statements are subject to substantial risks and uncertainties. Actual results for the year 2001 and subsequent quarters could differ materially from any future performance suggested above. Factors that might cause such a difference include, but are not limited to, the company's ability to raise sufficient capital on satisfactory terms, or at all; the company's ability to attract new customers and retain existing customers; the company's ability to attract and retain a qualified employee base; and risks inherent in transitioning a corporation's business from a consumer focus to an e-commerce services focus successfully, and competitive responses to the transition. The service offerings for eStores may differ materially from Beyond.com's current expectations. Beyond.com's Government Systems Group is subject to risks inherent in government sales, including long sales and collections cycles. Beyond.com's business is subject to other risks, including the company's ability to ramp its eStores and Government Systems Groups and infrastructure, and market acceptance of the company's new initiatives. Additional risks include reductions in or cancellations of customer orders, changes in relationships with eStores clients and software suppliers, changes in relationships with strategic partners, competition from other e-commerce services providers, and other factors described in the company's filings with the SEC. Beyond.com news and product/service information is available at the company's World Wide website located at http://www.beyond.com.
Beyond.com
Statement of Operations
(In thousands, except per share amounts)
Three Months Ending, Twelve Months Ending,
--------------------- ---------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 2000 1999
(unaudited) (audited)
---------- ---------- ---------- ----------
eStores revenues $14,830 8,445 $46,670 $25,746
Government Systems
revenues 12,858 10,056 $51,757 $29,731
Web Site revenues 1,995 17,791 $23,825 $64,687
---------- ---------- ---------- ----------
Total net revenues(1) $29,683 $36,292 $122,252 $120,164
Cost of revenues (1) 26,344 31,511 106,577 104,172
---------- ---------- ---------- ----------
Gross profit 3,339 4,781 15,675 15,992
Operating expenses:
Research and development 1,314 3,282 8,059 10,385
Sales and marketing 6,701 19,989 42,030 81,349
General and administrative 2,637 3,929 11,958 12,319
Goodwill and deferred
compensation amortization 9,124 11,641 38,965 36,745
Restructuring - - 13,707 -
---------- ---------- ---------- ----------
Total operating expenses 19,776 38,841 114,719 140,798
---------- ---------- ---------- ----------
Loss from operations (16,437) (34,060) (99,044) (124,806)
Other income (expense), net (4,364) 51 (6,864) 41
---------- ---------- ---------- ----------
Loss from continuing
operations ($20,801) ($34,009) ($105,908) ($124,765)
Extraordinary gain on
debt retirement - - 45,176 -
NET LOSS ($20,801) ($34,009) ($60,732) ($124,765)
========== ========== ========== ==========
Basic and diluted net loss
per share ($0.49) ($0.94) ($1.56) ($3.67)
Basic and diluted net loss
per share, excluding
amortization of goodwill,
deferred compensation,
note accretion, asset
impairments, restructuring
and extraordinary gain ($0.19) ($0.62) ($1.26) ($2.59)
EBITDA per share on a basic
and diluted basis ($0.14) ($0.58) ($1.05) ($2.50)
Weighted average shares
outstanding used in
calculating net loss per
share 42,510 36,314 38,970 34,039
(1) Prior period balances for net revenues and cost of revenues have
been conformed to reflect the adoption of EITF 00-10 "Accounting
for Shipping and Handling Fees and Costs"
Beyond.com
Consolidated Balance Sheets
(In thousands)
Dec. 31, Dec. 31,
2000 1999(1)
-------- --------
Current assets:
Cash, cash equivalents and
short-term investments (2) $5,513 $66,313
Accounts receivable, net 31,474 13,843
Prepaid partnership agreements - 5,151
Other prepaid expenses and current assets 2,454 3,002
Cost of deferred revenue 20,570 9,388
-------- --------
Total current assets 60,011 97,697
======== ========
Non-current assets:
Property and equipment, net 13,327 13,077
Deposits and other long term assets 3,988 7,373
Intangible assets 62,408 102,229
-------- --------
Total assets $139,734 $220,376
======== ========
Current liabilities:
Accounts payable $ 23,974 $ 12,579
Accrued employee expenses 1,284 2,046
Other accrued liabilities 2,748 5,468
Current obligations under capital leases - 118
Deferred revenue 22,025 9,393
-------- --------
Total current liabilities 50,031 29,604
Non-current obligations under capital leases - 10
Convertible notes payable 12,373 63,250
Stockholders' equity:
Common stock 305,332 295,814
Deferred compensation (143) (1,444)
Accumulated deficit (227,859) (167,127)
Other comprehensive income - 269
-------- --------
Total stockholders' equity 77,330 127,512
-------- --------
Total liabilities and stockholders' equity $139,734 $220,376
======== ========
(1) Amounts derived from the Company's audited balance sheet at
December 31, 1999.
(2) As of December 31, 2000, cash and cash equivalents include
$2 million in restricted cash
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