Concero Reports Third Quarter Financial Results.Business Editors & High-Tech Writers AUSTIN, Texas--(BUSINESS WIRE)--Oct. 23, 2000 Concero Inc. (Nasdaq:CERO), a leading e-business services firm, today reported financial results for the third quarter ended Sept. 30, 2000. Revenue for the third quarter was $14.2 million, up 22% from $11.6 million for the third quarter of 1999, but down 17% sequentially from the $17.1 million posted for the second quarter of 2000. The Company reported a net loss for the third quarter of 2000 of $2.2 million, or $0.22 per share, compared to net income of $514,000 or $0.05 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the third quarter of 1999. Net loss for the third quarter of 2000 was affected by several events, including the addition of bad debt reserves of $1.1 million, the recognition of $750,000 of deferred expenses related to a cancelled secondary offering and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of a $125,000 investment in a start-up company start-up company A new business. . These items were partially offset by the reversal of an accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. bonus pool of $590,000. Collectively, these items increased the net loss per share for the third quarter of 2000 by $0.09. For the first nine months of 2000, the Company reported $45.5 million in revenue, an increase of 38% from revenue of $33 million for the same period in 1999. Net loss was $549,000, compared with net income of $950,000 for the same period in 1999. Loss per share was $0.06 for the first nine months of 2000, compared with diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.09 for the first nine months of 1999. "A variety of factors contributed to this quarter's results. Revenues were less than expected mostly due to changing market dynamics that affected the demand for e-business services. Much of this is attributable to the reduced funding of, and spending by, dot-com (1) Refers to the period (dot) followed by the abbreviation of the commercial domain (.com) at the end of an Internet address. Since the .com domain is so widely used, the Internet became known as the "dot-com" world, and dot-com companies are those formed to offer services or and start-up Start-up The earliest stage of a new business venture. businesses. "In fact, 10% of our revenue this quarter was attributable to dot-coms -- down from 38% last quarter. Concurrently, sales cycles for more established companies are lengthening lengthening (lengkˑ·the·ning), n the use of various massage or muscle energy techniques to relax and stretch muscle and connective tissue. , often as the complexity of projects increase," said Tim Webb, 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 Concero. "While our financial performance this quarter is unacceptable, we believe that our focus on broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). e-business will lead to increased demand for our services in 2001. Current market trends confirm our belief that there are significant market opportunities for companies such as Concero that deliver broadband solutions which provide a seamless customer experience across multiple channels. "Concero is especially well positioned to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. these multi-channel opportunities because of our strong technical expertise; our extensive Web, wireless and interactive TV experience; and our ability to deliver complex e-business solutions that create value for our clients," added Webb. During the third quarter Concero added 11 new customers and initiated 21 new projects. New customers include Acadio, DigitalThink and Greenwich Associates. Concero's continued ability to deliver high quality e-business solutions led to repeat engagements with existing clients such as Commerce.TV, Coremetrics, Dell, Texas Utilities, The Cobalt Group and UBS UBS Union Bank of Switzerland UBS United Bible Societies UBS United Blood Services UBS United Buying Service UBS Used Bookstore UBS University Business Services UBS Universal Building Society (UK) UBS Ulaanbaatar Broadcasting System Warburg War·burg , Otto Heinrich 1883-1970. German biochemist. He won a 1931 Nobel Prize for research on the respiration of cells. . About Concero Concero Inc. (Nasdaq:CERO) is an e-business services firm committed to transforming business through the creative application of new technologies. Concero builds and deploys broadband e-business solutions. Concero gains early in-depth knowledge of technology products by assisting leading information technology vendors in their product development. Concero then leverages this deep technical expertise when engaged in the enterprise-wide deployment of e-business solutions. Concero is a national consulting firm Noun 1. consulting firm - a firm of experts providing professional advice to an organization for a fee consulting company business firm, firm, house - the members of a business organization that owns or operates one or more establishments; "he worked for a headquartered in Austin, Texas. More information about Concero is available on the Web at www.concero.com. Conference Call Concero will host a conference call on Monday, Oct. 23, at 10:00 a.m. (Eastern). The conference call will be broadcast live 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 and available for a period of time thereafter through Investors Broadcast Network at www.vcall.com. New Vcall service users should arrive at least 15 minutes before the live call to allow time to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. 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. Disclosure "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 under 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: This press release contains forward-looking statements that involve risks and uncertainties, including the Company's ability to continue to market and sell its services to achieve anticipated results or to address emerging markets successfully. Forward-looking statements are based on current information and assumptions that by their nature are dynamic and subject to change. Among important factors which could affect Concero's financial results and cause actual results to differ materially from those in forward-looking statements are (i.) our refocused business strategy which emphasizes expansion into new and largely untested areas such as eTV and broadband services See broadband and broadband service provider. ; (ii.) our shift from longer-term development and maintenance arrangements to shorter term e-business project engagements; (iii.) our ability to identify emerging technologies that will gain widespread acceptance and have long-term viability; (iv.) the ability of our existing emerging company clients to pay our fees; (v.) the ability of emerging companies in our targeted markets to afford our services; and (vi.) intense competition to attract and retain customers. For further discussion of these and other factors, please refer to our recent filings with the SEC, particularly the 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. filed March 14, 2000, and Form 10-Q Form 10-Q See 10-Q. filed Aug. 14, 2000.
Concero Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
-------------------- --------------------
(unaudited) (unaudited)
Revenue $ 14,224 $ 11,632 $ 45,517 $ 33,033
Operating expenses:
Technical staff 9,160 6,392 25,242 18,497
Selling and
administrative staff 2,320 2,208 8,067 6,741
Other expenses 6,421 2,457 13,770 6,992
-------- -------- -------- --------
Total operating
expenses 17,901 11,057 47,079 32,230
-------- -------- -------- --------
Income (loss)
from operations (3,677) 575 (1,562) 803
Interest income
(expense), net 226 259 698 747
-------- -------- -------- --------
Income (loss)
before provision
for income taxes (3,451) 834 (864) 1,550
-------- -------- -------- --------
Income taxes (1,225) 320 (315) 600
Net income (loss) $ (2,226) $ 514 $ (549) $ 950
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Diluted earnings
(loss) per share $ (0.22) $ 0.05 $ (0.06) $ 0.09
======== ======== ======== ========
Shares used in
diluted earnings
(loss) per share
calculation 10,018 10,549 9,940 10,327
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Concero Inc.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2000 1999
------------- ------------
Assets (unaudited)
Current assets:
Cash $ 441 $ 2,108
Short-term investments 14,836 18,149
Accounts receivable, net 14,329 10,840
Unbilled revenue under
customer contracts 408 1,150
Income tax receivable 825 --
Net deferred taxes 2,180 447
Prepaid expenses and
other current assets 1,430 445
------- -------
Total current assets 34,449 33,139
Property and equipment, net 6,378 4,677
------- -------
Total assets $40,827 $37,816
======= =======
Liabilities and stockholders' equity
Current liabilities:
Trade payables $ 1,080 $ 925
Accrued expenses and other
current liabilities 3,318 2,954
------- -------
Total current liabilities 4,398 3,879
Net deferred taxes 515 515
Stockholders' equity 35,914 33,422
------- -------
Total liabilities and
stockholders' equity $40,827 $37,816
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