Centra Reports 2004 First Quarter Results.Business Editors/High-Tech Writers LEXINGTON, Mass.--(BUSINESS WIRE)--April 28, 2004 Centra Software, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CTRA CTRA Canadian Therapeutic Recreation Association CTRA College Terrace Residents' Association CTRA Canadian Telecommunications Resellers Alliance CTRA Committee To Restore America ), a leading provider of specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. application software and services for online business collaboration, today announced financial results for the first quarter ending March 31, 2004. First Quarter 2004 Results Revenues for the first quarter were $8.6 million, compared with $9.7 million in the first quarter of 2003. Software license revenue for the first quarter was $2.5 million, representing 29 percent of total revenues. This compares with software license revenue of $4.4 million in the first quarter of 2003, representing 45 percent of total revenues. Both software services and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. revenues grew in the first quarter, compared with the first quarter of 2003. Software services revenues were $2.4 million for the first quarter, or 28 percent of total revenues, representing a 29 percent increase over the same period last year. Maintenance and professional services revenues were $3.7 million in the first quarter, or 43 percent of total revenues, representing a 7 percent increase over the first quarter of 2003. Deferred revenue grew by approximately $695,000 in the first quarter of 2004 to a new high of $13.0 million. Net loss for the first quarter of 2004 was $3.1 million, or $0.12 per share, compared with a net loss of $2.9 million, or $0.11 per share, for the first quarter a year ago. Gross margin percentage decreased by 180 basis points to 78.4 percent for the first quarter of 2004, compared with 80.2 percent in the first quarter of 2003. Centra's cash, cash equivalents, and short- and long-term investments totaled $34.9 million as of March 31, 2004, an increase of $122,000 compared with the end of the previous quarter in 2003 of $34.8 million. The Company's days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). (DSO See CSO. ) was 48 days at the end of the quarter, compared to 59 days at the end of the previous quarter in 2003, reflecting strong collections on account receivables account receivable Any amount owed to a business as the result of a purchase of goods or services from it on a credit basis. Although the firm making the sale receives no written promise of payment, it enters the amount due as a current asset in its books. during the quarter. 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. Comments "We expected first-quarter revenues to follow the software industry's historical seasonal patterns and be sequentially flat to slightly down; however, the quality of our pipeline was not as strong as we thought, and the strategy and organizational changes we began to implement during the quarter had a more disruptive impact than we expected on our ability to achieve our plan for the quarter. A portion of the miss was attributed to some sales orders The sales order, sometimes abbreviated as SO, is an order received by a business from a customer. A sales order may be for products and/or services. Given the wide variety of businesses, this means that the orders can be fulfilled in several ways. slipping at the end of March, several of which have already been closed in April," said Paul R. Gudonis, Centra's President and CEO. "At the end of 2003, we conducted a thorough and critical evaluation of the collaboration marketplace and how Centra was positioned among its competitors. As a result, we began to implement a new business strategy that we believe will enable us to become a leader in our target markets, significantly grow our annual revenues and achieve profitability. In the past quarter, we restructured the sales organization to improve execution and sales consistency, began to reposition Centra as a provider of value-added specialized applications, and developed and started to implement marketing strategies that would help us differentiate Centra from the rest of the online collaboration market. We believe these changes are essential for us to successfully execute on our long-term goals Long-term goals Financial goals expected to be accomplished in five years or longer. ," continued Mr. Gudonis. "Although Centra's transition is well underway, we now anticipate that it will take longer than we previously thought before we begin to see significant annual revenue growth as a result of our efforts. Feedback from our customers and industry analysts indicate that our new focus on providing specialized applications is the right strategy. We believe that by increasing the size of our customer base in our target markets, broadening our relationships with existing strategic customers and transitioning to a sales model that focuses on selling solutions and emphasizes term licenses and 'software as a service,' we will be able to build a more stable foundation for long-term growth. Through the successful execution of these goals, we expect to exit 2004 in a better position - with momentum behind our specialized applications, a larger enterprise customer base and better revenue visibility due to a higher percentage of our business being based on recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue. We expect revenues for the second quarter of 2004 to be in the range of $9.5 million to $10.0 million, and loss per share to be in the range of $0.13 to $0.16. Since it will take more time for our investments to bear results, we no longer expect to grow revenues in the 25 to 30 percent range for the year. As we continue to transition toward our new strategy, we will provide updates on our progress. I realize that this represents a change in our short-term outlook, but we believe this is the right strategy for our long-term success," said Mr. Gudonis. First Quarter Highlights -- Centra added new customers in the first quarter, including Royal Bank of Canada Bank of Canada Canada's central bank, established under the Bank of Canada Act (1934). It was founded during the Great Depression to regulate credit and currency. The Bank acts as the Canadian government's fiscal agent and has the sole right to issue paper money. , TES TES Times Educational Supplement (publication) TES The Elder Scrolls (series of computer games) TES Thermal Emission Spectrometer TES Teaching Every Student TES Thermal Energy Storage Franchising and the University of California Medical School. The Company also expanded sales to its installed customer base with additional contracts at InfoGenesis, Sysco, Cendant and Iron Mountain as customers continue to expand their Centra deployments to more people within their companies. -- Centra closed additional contracts with customers in international markets with the help of our reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. channel. In the first quarter, Centra signed new add-on business with Novartis in China, Tierturi in Finland, Formez in Italy and Ecole Veterinaire in France. -- Centra forged new joint marketing and reseller agreements with conferencing See teleconferencing. product, services and solution providers, including AZ Technology, which specializes in information technology and Internet collaboration software See collaborative software. ; BrainSell, a leading provider of CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. applications; Corporate TeleLink Network (CTN ctn abbr. cotangent ), the premier distance education and production services network for the energy industry; and Internet University, which offers Internet-based distance learning and Web conferencing A videoconferencing session via the Internet. In order to interact with other participants, attendees use either a Web application or an application downloaded into their client machines. products and services. Centra announced an integration agreement with SAP AG (company) SAP AG - (Systeme, Anwendungen, Produkte in der Datenverarbeitung - German for "Systems, Applications and Products in Data Processing") A company from Germany that sells the leading suite of client-server business software. The US branch is called SAP America. to integrate Centra's real-time collaboration application with the SAP(R) Learning Solution, a component of the mySAP(TM) Human Resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. software suite. -- Centra announced two key additions to its executive leadership team to help the company drive its international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. and third-party relationships. Charles Zaiontz joined as managing director of Centra for Europe, Middle East and Africa, and Alan May Alan Randy May (born January 14, 1965 in Barrhead, Alberta) is a retired Canadian ice hockey player. May began his NHL career when he was signed as a free agent by the Boston Bruins, although he would spend most of his time in the minors. returned to Centra as vice president of business development. First Quarter Conference Call In conjunction with this release, Centra will host a conference call on Thursday, April 29, 2004 at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . The call will be simultaneously Webcast over the Internet. To access the Webcast, go to the Company's Web site at www.centra.com/investorrelations. About Centra Online business collaboration solutions from Centra create workforce efficiencies and enable organizations to share and exchange business-critical information with geographically distributed customers, partners, prospects and employees. Centra's solutions integrate real-time collaboration and departmental business processes with specialized applications that increase sales effectiveness, improve collaborative learning Collaborative learning is an umbrella term for a variety of approaches in education that involve joint intellectual effort by students or students and teachers. Collaborative learning refers to methodologies and environments in which learners engage in a common task in which each and accelerate enterprise application rollouts and customer acquisition initiatives. Currently available in 12 languages, Centra solutions can be deployed as on-site software or through its ASP service and are supported by an active ecosystem of value-added partners, including Siebel, PeopleSoft, SAP and Deloitte Consulting. Organizations across every major industry and market sector choose Centra, including Wyndham International, Weyerhaeuser, Underwriters Laboratories Underwriters Laboratories Inc. is a U.S. not-for-profit, privately owned and operated product safety testing and certification organization. Based in Northbrook, Illinois, UL develops standards and test procedures for products, materials, components, assemblies, tools and , BMW BMW in full Bayerische Motoren Werke AG German automaker. Founded as an aircraft engine manufacturer in 1916, the company assumed the name Bayerische Motoren Werke and became known for its high-speed motorcycles in the 1920s. and Stanford University Stanford University, at Stanford, Calif.; coeducational; chartered 1885, opened 1891 as Leland Stanford Junior Univ. (still the legal name). The original campus was designed by Frederick Law Olmsted. David Starr Jordan was its first president. . Headquartered in Lexington, Massachusetts Lexington is a town in Middlesex County, Massachusetts, United States. The population was 30,355 at the 2000 census. The town is famous for being the site of the opening shots of the Battles of Lexington and Concord, the first engagement of the American Revolution. , Centra serves a worldwide customer base throughout the Americas, Europe, Asia and Australia. For more information, visit www.centra.com. 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 Regarding 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. With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including but not limited to, statements about the beliefs and expectations of management regarding the Company's future performance, the Company's strategic initiatives, its ability to achieve and maintain a leadership position in real-time conferencing and collaboration, demand for the Company's software services and management's goals and objectives regarding future results of operations. These statements reflect management's beliefs and expectations as of the date of this statement, and involve risk and uncertainties that may cause actual results, events and performance to differ materially. These risk factors include, but are not limited to, risks associated with the Company's ability to successfully execute its strategic plan, uncertainty of market reaction to the Company's sales and marketing efforts, product demand for and market acceptance of the Centra 7 collaboration platform An emerging category of computer software, collaboration platforms are unified electronic platforms that support synchronous and asynchronous communication through a variety of devices and channels. and the Company's other current and future products, the effect of economic conditions generally on the market for IT spending and for the Company's products, the results of future research and development activities, the impact of competitive products and pricing, technological difficulties and/or other factors outside the control of the Company. There is no assurance that the Company will be able to implement its growth and operating plans as anticipated, or achieve its revenue and earnings goals. For a description of additional risks, and uncertainties, please refer to the Company's filings with the SEC, including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2003, which is available at http://www.centra.com/investorrelations. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Centra is a registered trademark of Centra Software, Inc. All other trademarks referenced herein are the property of their respective owners.
CENTRA SOFTWARE, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
December 31, March 31,
2003 2004
Assets
Current assets
Cash, cash equivalents and short-term
investments $28,888 $34,898
Accounts receivable, net 7,832 4,622
Prepaid expenses and other current assets 979 839
------------ ----------
Total current assets 37,699 40,359
Long Term Investments 5,888 -
Property and equipment, net 1,664 2,022
Restricted cash 433 433
Other assets 111 66
Intangible assets, net 233 58
------------ ----------
Total assets $46,028 $42,938
============ ==========
Liabilities and stockholders' equity
Current liabilities
Current maturities of long-term debt $1,711 $1,343
Accounts payable 904 1,332
Accrued expenses 6,195 5,347
Deferred revenue 12,340 13,035
------------ ----------
Total current liabilities 21,150 21,057
Long-term debt, net of current maturities 553 402
Total stockholders' equity 24,325 21,479
------------ ----------
Total liabilities and stockholders' equity $46,028 $42,938
============ ==========
CENTRA SOFTWARE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2003 and 2004
(Unaudited)
Three Months Three Months
ended March 31, ended March 31,
2003 2004
Revenues
License $4,365 $2,531
Software services 1,843 2,371
Maintenance and professional
services 3,475 3,734
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Total revenues 9,683 8,636
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Cost of revenues
License 140 77
Amortization of acquired developed
technology 175 175
Software services 572 636
Maintenance and professional
services 1,031 975
------------- -------------
Total cost of revenues 1,918 1,863
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Gross profit 7,765 6,773
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Operating expenses
Sales and marketing 5,396 5,145
Product development 2,938 2,758
General and administrative 2,325 1,975
Stock compensation charges 107 15
------------- -------------
Total operating expenses 10,766 9,893
------------- -------------
Operating loss (3,001) (3,120)
Other income (loss), net 82 (18)
------------- -------------
Net loss $(2,919) $(3,138)
============= =============
Basic and diluted net loss per share $(0.11) $(0.12)
Weighted average shares outstanding
Basic and diluted 26,075 27,151
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