Convera Reports Second Quarter Financial Results; Revenue Up 54% Driven By Federal Group.VIENNA Vienna, city and province, Austria Vienna (vēĕn`ə), Ger. Wien, city and province (1991 pop. 1,539,848), 160 sq mi (414 sq km), capital and largest city of Austria and administrative seat of Lower Austria, NE Austria, on , Va. -- Convera Corporation Convera was formed in December 2000 by the merger of Intel's Interactive Services division and Excalibur Technologies Corporation. Until 2007, Convera's primary focus was the enterprise search market through its flagship product, RetrievalWare, which is widely used within the secure (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 :CNVR CNVR Conveyor ), a leading provider of search and categorization software for enterprises and government agencies, today announced financial results for the three-month period ended July July: see month. 31, 2005. Revenue for the second quarter of fiscal 2006 totaled $7.8 million, a 54% increase when compared to the year-ago quarter. The Company's federal business segment drove the increased top-line performance as two transactions each exceeded 10% of total reported revenue for the period. Gross profit for the three-month period ended July 31, 2005 totaled $6.7 million, resulting in a gross margin of 86% as compared to a gross margin of 66% for the prior-year period. The net loss for the three-month period ended July 31, 2005 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $25,000 or less than $0.01 per share, compared to a net loss of $7.0 million, or $0.21 per share, for the comparable year-ago quarter. During the second quarter approximately $2.4 million of research and development costs related to the Company's Web indexing Web indexing (or "Internet indexing") includes back-of-book-style indexes to individual websites or an intranet, and the creation of keyword metadata to provide a more useful vocabulary for Internet or onsite search engines. initiative (e.g., Excalibur Excalibur (ĕkskăl`ĭbər), in Arthurian legend, sword given to King Arthur by the Lady of the Lake. At Arthur's death Sir Bedivere threw Excalibur into the lake; a hand rose from the water, caught the sword, and disappeared. ) were capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. per FAS 86. The Company adopted FAS 86, as discussed further below, during the first quarter of fiscal 2006. Cash and investments as of July 31, 2005 totaled $45.0 million, inclusive of inclusive of prep. Taking into consideration or account; including. $28.8 million of net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). realized from the July 2005 Private Placement as previously announced. "Our second quarter results clearly demonstrate the value of the expense and strategic actions we effected nearly a year ago," stated Patrick C. Condo, Convera's President and Chief Executive Officer. "Our software products group (e.g., RetrievalWare) produced strong top-line growth led by our continuing commitment to the federal sector. Additionally, we advanced our Web index to two billion pages and our balance sheet was significantly improved through a private placement with marquee investors. We now look forward to the launch of Excalibur later this year, while also maintaining net income neutrality for our software products group," Condo concluded. With respect to Excalibur, the Company's emerging Web indexing initiative (which focuses on applying portions of the Company's existing technology to searching and indexing contextually relevant information from the World Wide Web), the Company continues to realize advances in its development efforts, including increases to its Web index that currently exceeds two billion pages. The Company is currently accepting "beta" customers and the Company remains focused on launching a service offering later this fiscal year. Capital outlays capital outlay See capital expenditure. to date, in connection with the Web indexing initiative, remain limited to equipment, personnel and general operating costs operating costs npl → gastos mpl operacionales , which are expected to increase as the indexing initiative progresses. The Company will continue to assess future capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. for this Web indexing initiative and may elect to seek additional funding sources over the coming quarters. FAS 86 FAS 86 governs the practice by which newly developed technology (e.g., software in this case), is accounted for once "technological feasibility fea·si·ble adj. 1. Capable of being accomplished or brought about; possible: a feasible plan. See Synonyms at possible. 2. " has been determined. Convera's Web indexing initiative (e.g., Excalibur) was determined to have reached technological feasibility during the first quarter of fiscal 2006 with the attainment of a one billion page Web index. Once technological feasibility was achieved, the Company began capitalizing software development costs and will continue to do so until such time, as "commercial availability" is determined. At the time of commercial availability, capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of the Web indexing related research and development costs will cease and amortization of the capitalized costs will commence over a yet to be determined timeframe. The attached financial information compares the results of operations for the three-month period ended July 31, 2005 to the same period in 2004 and the balance sheet as of July 31, 2005 to the balance sheet as of January January: see month. 31, 2005. About Convera Convera is a leading provider of mission-critical enterprise search and categorization solutions. Convera's RetrievalWare solutions maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. return on investment in vast stores of unstructured information by providing highly scalable, fast, accurate and secure search across more than 200 forms of text, video, image and audio information, in more than 50 languages. More than 900 customers in 33 countries rely on Convera's search solutions to power a broad range of applications including enterprise portals See corporate portal. , knowledge management, intelligence gathering, profiling, corporate policy compliance, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. compliance, customer service and more. For more information, contact Convera at 800-788-7758, via e-mail at info@convera.com or on the Web at www.convera.com This release, including any statements from Convera personnel, contains statements about Convera's future expectations, performance, plans, and prospects, as well as assumptions about future events. The reader is cautioned not to put undue reliance on these 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. , as these statements are subject to numerous factors and uncertainties, including without limitation, business and economic conditions and trends; continued success in technological advances and development including the Web initiative (e.g., Excalibur); possible disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. in commercial activities caused by terrorist activity and armed conflict, such as changes in logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. and security arrangements; reduced customer demand relative to expectations; competitive factors; and other risk factors listed from time to time in the company's SEC reports. Actual results may differ materially from our expectations as the result of these and other important factors relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Convera's business and product development efforts, which are further described in Convera's filings with the Securities and Exchange Commission. These filings can be obtained from the SEC's website located at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Any forward-looking statements are based on information available to Convera on the date of this release, and Convera assumes no obligation to update such statements. The Convera design logo and the following are worldwide trademarks of Convera: Convera(TM), RetrievalWare(R), and Screening Room(R). The names of actual companies and products mentioned herein may be the trademarks of their respective owners.
The condensed, consolidated statements of operations for the Company
appear below and are presented in accordance with accounting
principles generally accepted in the United States. All amounts,
except per share amounts, are expressed in thousands of U.S. dollars.
Three Months Ended Six Months Ended
July 31, July 31,
2005 2004 2005 2004
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
License $ 5,230 $ 2,197 $ 7,417 $ 8,053
Services 590 1,041 1,431 1,624
Maintenance 1,984 1,829 4,035 3,560
----------------------- -----------------------
Total revenues 7,804 5,067 12,882 13,237
----------------------- -----------------------
Cost of Revenues:
License (23) 468 407 1,127
Services 809 802 1,637 1,517
Maintenance 293 436 515 958
----------------------- -----------------------
Total cost of
revenues 1,079 1,706 2,558 3,602
----------------------- -----------------------
Gross Margin 6,725 3,361 10,324 9,635
----------------------- -----------------------
Operating Expenses:
Sales and marketing 2,360 4,302 4,556 9,316
Research and product
development, gross 3,788 3,632 7,728 7,272
Capitalized research
and development
costs (2,367) - (4,654) -
General and
administrative 3,045 2,506 5,345 4,922
Restructuring - - (56) -
----------------------- -----------------------
Total operating
expenses 6,825 10,440 12,919 21,511
----------------------- -----------------------
Operating Loss (100) (7,079) (2,594) (11,876)
Other Income, net 74 30 100 68
----------------------- -----------------------
Net Loss $ (25) $ (7,049) $ (2,494) $ (11,808)
======================= =======================
Net loss per common
share - basic &
diluted $ (0.00) $ (0.21) $ (0.06) $ (0.35)
======================= =======================
Weighted-average
number of common
shares outstanding -
basic & diluted 40,803 34,040 39,597 33,989
The condensed, consolidated balance sheets for the Company appear
below and are presented in accordance with accounting principles
generally accepted in the United States. All amounts are expressed in
thousands of U.S. dollars.
ASSETS July 31, 2005 January 31, 2005
------------- ----------------
(unaudited)
Current Assets
Cash and cash equivalents $ 44,889 $ 17,766
Short term investments 71 71
Accounts receivable, net 10,093 6,530
Prepaid expenses and other 1,938 2,390
------------------------------
Total current assets 56,991 26,757
Other assets, net 5,314 6,696
Goodwill & Other intangible assets 2,706 2,841
Capitalized research and development
costs 4,678 -
------------------------------
Total Assets $ 69,689 $ 36,294
==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,703 $ 1,967
Accrued expenses 3,693 4,055
Deferred revenues 3,528 4,288
Restructuring reserve - current 13 835
------------------------------
Total current liabilities 8,937 11,145
Other long-term liabilities 5,000 -
------------------------------
Total long-term liabilities 5,000 -
------------------------------
Total Liabilities 13,937 11,145
------------------------------
Shareholders' Equity 55,752 25,149
Total Liabilities & Shareholders'
Equity $ 69,689 $ 36,294
==============================
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