Centra Reports 2004 Third Quarter Results.LEXINGTON, Mass. -- Revenues Increased 5% Sequentially; 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. Decreased 21% Sequentially; Signed First Customers Under Enterprise Advantage Subscription Pricing Model 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. solutions delivering software and services for online business collaboration, today announced financial results for the third quarter ended September 30, 2004. Third Quarter 2004 Results Revenues for the third quarter were $9.7 million, up 5 percent from $9.3 million in the second quarter of 2004. Revenues increased sequentially for all three revenue types. Software license revenue for the third quarter was $2.8 million, or 29 percent of total revenues, representing an 8 percent increase over the previous quarter. Software services revenues were $2.7 million for the third quarter, or 28 percent of total revenues, representing a 2 percent increase over the previous period. Maintenance and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. revenues were $4.2 million in the third quarter, or 43 percent of total revenues, representing a 5 percent increase over the second quarter of 2004. Net loss for the third quarter of 2004 was $1.8 million, or $0.07 per share. This compared with a net loss of $4.8 million, or $0.18 per share, for the second quarter of this year. Gross margin percentage increased by 30 basis points sequentially to 81.2 percent for the third quarter of 2004, compared with 80.9 percent in the second quarter of 2004. Centra's cash, cash equivalents, and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments totaled $26.6 million as of September 30, 2004. 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 53 days at the end of 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 are pleased with both the financial and business results that we achieved during the third quarter," said Paul R. Gudonis, president and CEO of Centra. "Total revenues, which increased five percent from the second quarter, were better than our previous guidance that revenues would be flat to slightly down sequentially based on the software industry's historically slower sales during the calendar third quarter. In addition, we lowered our operating expenses by 21 percent sequentially and improved our net loss per share by $0.11 compared with the second quarter. We also continued to make solid progress in repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. Centra as a provider of value-added specialized applications to Global 5000 enterprises, large education institutions and government agencies. During the quarter, approximately 80 percent of our orders were derived from new or existing customers in these target markets. "We are also beginning to have early success with our Enterprise Advantage Subscription (EAS (Electronic Article Surveillance) A security system for preventing theft in retail stores that uses disposable label tags or reusable hard tags attached to the merchandise. ) pricing model. We announced this new pricing option during the third quarter and have already signed five customers to three-year contracts worth a total of approximately $2.4 million. The revenue associated with these new EAS contracts will be recorded over the life of the contract, thereby increasing revenue visibility and backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. so that we can enter future quarters with more predictable revenues," said Gudonis. "Our customers use our specialized applications for online collaboration to solve major business problems, which enables us to differentiate Centra in the marketplace. We continue to make progress toward designing the next version of our Enterprise Application Rollout and Sales Effectiveness solutions and in forming partnerships to integrate new technologies into these specialized applications. Our recent agreement with EMC/Documentum to integrate our online collaboration solutions with the Documentum Enterprise Content Management platform is the first of such partnerships," said Gudonis. "Looking forward, we expect fourth-quarter revenues to increase again sequentially, and expect our loss per share to continue to improve. The positive results we have seen in the past few months reinforces our commitment to sell specialized applications to our target markets. By successfully executing on our strategy and continuing to sign up customers under our EAS pricing model, we believe we will be able to generate more of our revenues on a 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. basis, resulting in more predictable revenue growth and leading to profitability and consistent positive cash flow," concluded Gudonis. Third Quarter Highlights --Centra added 32 new customers in the third quarter, including major accounts such as BiSys, Hughes Supply Hughes Supply Incorporated is a very large wholesaler of construction supplies operating in 40 of the United States and two Canadian Provinces. Its major operation is in the Southeast and Southwest of the United States. , Mitsubishi Trust, NationsRent and Rockwell Automation Rockwell Automation NYSE: ROK is an industrial automation company. Its products include Allen-Bradley controls and engineered services and Rockwell Software factory management software. The company headquarters are located in Milwaukee, Wisconsin. . The Company also expanded sales to its installed base, including additional contracts with customers such as Liberty Mutual, Osram Sylvania  It has been suggested that and be merged into this article or section. ()OSRAM SYLVANIA INC. and Trinity Health Trinity Health is an American healthcare provider headquartered in Minot, North Dakota. Trinity is a non-profit organization. Trinity has a 150+ physician medical group. . --Centra formally introduced its Enterprise Advantage Subscription (EAS) pricing model in the third quarter and signed five new EAS customers during the quarter. The Enterprise Advantage Subscription pricing model is a multi-year, flat fee, volume licensing program designed to enable large organizations to deploy Centra's online collaboration solutions across the enterprise. --Centra forged new joint marketing and reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. agreements with conferencing See teleconferencing. product, services and solution providers including Webinar Resources, a leading professional services company offering Web-enabled demand generation solutions; The Maxwell Group, a leading provider of online meeting administration and event management support; and Didasko Limited, an Australian business focused on the high growth education services market. --Centra announced a key addition to its executive leadership team. Martin Deise joined the Company as senior vice president of Professional Services. Centra also announced that Leon Navickas, founder and chief strategy officer would leave his senior management role at Centra in order to pursue new opportunities. He will remain chairman of the board. --Centra hosted the industry's first online conference focusing on the issues around managing change. Several hundred Centra customers and prospective customers attended the event to learn how to effectively use Centra's specialized applications within their organizations. --Centra received an HR Technology Excellence award in the category of Best HR Technology Solution in eLearning from the International Quality & Productivity Center. Third Quarter Conference Call Centra will host a conference call on Thursday, October 28, 2004 at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy to discuss these results in more detail. 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 asp, popular name for several species of viper, one of which, the European asp (Vipera aspis), is native to S Europe. It is also a name for the Egyptian cobra (Naja haja). 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, the effect of the Company's cost-cutting measures on its operations, acceptance by customers of the Company's Enterprise Advantage Subscription pricing model, 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, the effect of changes in the senior management team, 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 and its Form 10-Q Form 10-Q See 10-Q. for the three months ended June 30, 2004, which are 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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, September 30,
2003 2004
Assets
Current assets
Cash, cash equivalents and short-term
investments $28,888 $26,646
Restricted cash - 233
Accounts receivable, net 7,832 5,714
Prepaid expenses and other current
assets 979 1,285
------------- --------------
Total current assets 37,699 33,878
Long-term investments 5,888 -
Property and equipment, net 1,664 1,558
Restricted cash 433 400
Other assets 111 31
Intangible assets, net 233 -
------------- --------------
Total assets $46,028 $35,867
============= ==============
Liabilities and stockholders' equity
Current liabilities
Current maturities of long-term debt $1,711 $1,068
Accounts payable 904 649
Accrued expenses 6,195 5,623
Deferred revenue 12,340 12,297
------------- --------------
Total current liabilities 21,150 19,637
Long-term debt, net of current maturities 553 1,017
Total stockholders' equity 24,325 15,213
------------- --------------
Total liabilities and stockholders' equity $46,028 $35,867
============= ==============
CENTRA SOFTWARE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2003 and 2004
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Nine Months
ended September 30, ended September 30,
2003 2004 2003 2004
Revenues
License $5,447 $2,829 $14,424 $7,973
Software services 2,113 2,670 6,049 7,671
Maintenance and
professional services 3,549 4,202 10,711 11,950
---------- --------- ---------- ---------
Total revenues 11,109 9,701 31,184 27,594
---------- --------- ---------- ---------
Cost of revenues
License 153 63 426 194
Amortization of acquired
developed technology 175 - 525 233
Software services 590 555 1,731 1,783
Maintenance and
professional services 1,055 1,208 3,171 3,244
---------- --------- ---------- ---------
Total cost of revenues 1,973 1,826 5,853 5,454
---------- --------- ---------- ---------
Gross profit 9,136 7,875 25,331 22,140
---------- --------- ---------- ---------
Operating expenses
Sales and marketing 5,213 4,763 16,158 16,820
Product development 2,811 2,313 8,763 7,888
General and
administrative 2,911 2,443 7,493 6,580
Restructuring charges - 241 - 788
---------- --------- ---------- ---------
Total operating
expenses 10,935 9,760 32,414 32,076
---------- --------- ---------- ---------
Operating loss (1,799) (1,885) (7,083) (9,936)
Other income (loss), net 53 78 211 152
---------- --------- ---------- ---------
Net loss $(1,746) $(1,807) $(6,872) $(9,784)
========== ========= ========== =========
Basic and diluted net loss
per share $(0.07) $(0.07) $(0.26) $(0.36)
Weighted average shares
outstanding
Basic and diluted 26,619 27,410 26,371 27,299
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