Net2Phone Reports Record Results For Fourth Quarter And Fiscal Year 2000.
NEWARK Newark, cities, United States
1 City (1990 pop. 37,861), Alameda co., W Calif., on the east side of San Francisco Bay; inc. 1955. , N.J.--(BUSINESS WIRE)--Oct. 5, 2000
Continued Strong Margins In Retail, Enterprise And Carrier
Quarterly Revenues of $24.9 million, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of ($0.29) excluding
charges, 167 million minutes routed
Net2Phone A VoIP telephone service from Net2Phone, Inc., Newark, NJ (www.net2phone.com) that uses software in the user's PC to call another PC, regular phone or fax. When introduced in 1996, it used ads to supplement its low rates and did not support calls to the PSTN. 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 :NTOP NTOP Nt Option Pack ) today announced record results for the fourth quarter and fiscal year ended July July: see month. 31, 2000, reflecting strong revenue increases, significant customer growth and continued high margins in its retail, enterprise and carrier voice-over-IP product offerings.
The successful year further solidifies Net2Phone's position as the definitive platform for voice traffic on 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 over all IP networks. The company has a strong foundation for continued growth of its voice-over-IP businesses and is now positioned to leverage its proprietary technology by securing lucrative high-margin agreements to license its proprietary software to traditional telephone companies through the formation of ADIR ADIR Asociación para el Desarollo Integral Rural (Association for Rural Integral Improvement, Guatemala)
ADIR Aircraft Data Insertion Retrieval Technologies.
Net2Phone's fiscal year 2000 highlights include the following year-over-year growth:
-- 118% increase in total revenues to $72.4 million from $33.3 million -- 108% increase in minutes of use to 476 million from 229 million -- 269% increase in users to 1.2 million from 325,000 -- $450 million in investments from AT&T and Yahoo! -- Launch of Net2Phone's integration in Microsoft's MSN Messenger -- Widened distribution through initiatives in broadband, enterprise, Yap, and carrier
Revenues for the quarter were $24.9 million, an increase of 125 percent over revenues of $11.1 million in the same quarter last year and an increase of 32 percent over revenues of $18.9 million in the prior quarter. Revenues for the quarter exceeded analyst average expectations by 9 percent.
For the full fiscal year, revenues were $72.4 million, a 118 percent increase over revenues of $33.3 million last year.
Building the IP Telephony The two-way transmission of voice over a packet-switched IP network, which is part of the TCP/IP protocol suite. The terms "IP telephony" and "voice over IP" (VoIP) are synonymous. Company of the Future
Howard Howard, English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk. Balter Bal´ter
v. t. 1. To stick together. , Chief Executive Officer of Net2Phone, said: "Our core expertise in voice-over-IP service and technology delivered strong progress over the last year and excellent fourth quarter results. Those results reflect a fast-moving company that is well-positioned for the continued growth of our major retail, enterprise and carrier businesses, as well as our rapid expansion into related and highly profitable areas, including voice recognition, voice messaging Using voice mail as an alternative to electronic mail, in which voice messages are intentionally recorded, not because the recipient was not available. , and other services. Our powerful alliances with leading companies like Cisco, Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. , and AT&T demonstrate that we have successfully created the definitive services platform for Voice over IP."
Net loss for the quarter, excluding an acquisition and a one-time one-time
1. or one·time
a. Occurring or undertaken only once: a one-time winner in 1995.
b. non-recurring charge of $27.8 million was ($15.9) million, or ($0.29) per share. Analysts had expected Net2Phone to post net losses per common share of ($0.30). The acquisition charge was related to the acquisition of Aplio, a leading technology integrator (1) In electronics, a device that combines an input with a variable, such as time, and provides an analog output; for example, a watt-hour meter.
(2) See systems integrator. for Voice over IP completed in July. The one-time charge was associated with the termination by Net2Phone of certain marketing agreements with smaller web properties, which had been important in the company's initial stage of development as a way of promoting brand awareness and consumer acceptance of Net2Phone's retail services, but have since been rendered superfluous su·per·flu·ous
Being beyond what is required or sufficient.
[Middle English, from Old French superflueux, from Latin superfluus, from superfluere, to overflow : to Net2Phone's marketing plan.
Net2Phone's robust distribution channels, brand exposure and integration with leading mainstream Internet companies like Microsoft, America Online See AOL. , and Yahoo! has allowed the company to move beyond these earlier agreements. The charge represents significantly lower financial and resource costs than would have been required to maintain them on a go-forward basis.
Net2Phone minutes of use grew to 167 million, a 117% increase over 77 million minutes in the same quarter year ago and a 38% increase over last quarter. Net2Phone's retail active customer base, a key driver of the company's success today and in the future, reached 1.2 million by the close of the quarter and fiscal year, a 45% increase from last quarter, which does not include any customers that signed up through the Microsoft relationship.
Throughout its development, Net2Phone has proven its ability to scale to demand, as an increasing number of individuals and businesses have recognized the real benefits of voice-over-IP technology. A year ago, the company served 325,000 customers and routed 750,000 minutes per day. Now, Net2Phone serves more than 1,000,000 customers, and successfully routes more than 5,000,000 minutes per day.
Key Alliance With Microsoft Generates 100+ Million Minutes Since Inception in Late July
During the quarter, Net2Phone forged forge 1
1. A furnace or hearth where metals are heated or wrought; a smithy.
2. A workshop where pig iron is transformed into wrought iron.
v. a key alliance with Microsoft to enable MSN Messenger Microsoft's instant messaging (IM) service, which provides text messaging and voice calling. Part of the MSN Network, MSN Messenger clients are available for non-XP versions of Windows, Mac, Pocket PC and MSN TV. For Windows XP, the IM client is Windows Messenger. users to make free domestic calls from a PC to a telephone. In just the first two months of this agreement, Net2Phone has routed more than 100 million minutes - already half the number of minutes the company routed throughout the entire fiscal year 1999 and more than the number of minutes routed just two quarters ago.
By offering MSN's users free U.S. PC to Phone, Net2Phone:
-- Drives customer volume to support the up-sell and cross-sell
of higher margin, advanced communications services
-- Creates new revenue streams for the company
-- Lowers customer acquisition costs, while offering the
potential to dramatically increase the company's customer base
"We are thrilled thrill
v. thrilled, thrill·ing, thrills
1. To cause to feel a sudden intense sensation; excite greatly.
2. To give great pleasure to; delight. See Synonyms at enrapture. with the consumer response to MSN Messenger 3.0," said Yusuf Mehdi, vice president of MSN (1) (MicroSoft Network) A family of Internet-based services from Microsoft, which includes a search engine, e-mail (Hotmail), instant messaging (Windows Live Messaging) and a general-purpose portal with news, information and shopping (MSN Directory). at Microsoft Corp. "By working with Net2Phone, MSN Messenger 3.0 has made making free PC-to-phone calls to the U.S. and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of easy and fun for millions of people. MSN Messenger 3.0 continues to provide the ultimate way to communicate with others by putting users in control of their communications, and Net2Phone is one of the key reasons MSN is having so much consumer success."
"We have demonstrated our ability to secure powerful relationships with established innovators innovators
people who will try new things.
important figures in the farming or client community because they are the leaders in the introduction of new techniques and management systems. like Microsoft and to be highly scalable," Mr. Balter commented. "While the voice-over-IP calls provisioned through our Microsoft partnership are free to the consumer, they establish Net2Phone's presence on a major Internet platform, giving us access to an entirely new population of tech-savvy consumers. We will certainly take advantage of this opportunity by offering these customers additional valuable services."
Devices, 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). , and Enterprie
Net2Phone continually con·tin·u·al
1. Recurring regularly or frequently: the continual need to pay the mortgage.
2. diversifies its channels of delivering voice services to IP networks worldwide. To that end, this quarter, Net2Phone rolled out its Yap (Your Alternative Phone) product line in the U.S. with distribution channels throughout computer and electronics retailers around the country, including CompUSA, Office Max, and Micro Center. The devices are designed to make Internet calling See Internet telephony. even easier than before as well as drive Internet telephony Another term for IP telephony and VoIP. In the late 1990s, some people made a distinction between Internet Telephony and VoIP: Internet telephony referred to voice over the public Internet, while VoIP referred to voice over private IP networks. minutes over Net2Phone's network. By using off-line distribution channels, Yap drives greater usage of Internet telephony by enticing the consumers at the point of PC purchase. In addition to Yap, many equipment vendors, including U.S. Robotics (U.S. Robotics, Inc., Schaumburg, IL, www.usr.com) A modem manufacturer highly regarded for its quality products. The company manufactures its own chipsets (data pumps) and often leads with innovations. Its HST protocol was a high-speed, reliable protocol before V. , Panasonic, and Samsung, have integrated Net2Phone's technology into their products, further driving Voice over IP minutes over Net2Phone's network.
Capitalizing on the opportunities in broadband, Net2Phone has taken the lead in offering second-line services to broadband providers and manufacturers using VoIP technology. This quarter, Net2Phone signed agreements with Scientific-Atlanta, Rhythms NetConnections Rhythms NetConnections Inc. (Former NASDAQ: RTHM) was in the business of providing broadband local-access communication services to large enterprises, telecommunications carriers and their internet service provider (ISP) affiliates and other ISPs. , Polycom, and Flashcom, allowing end-user customers to enjoy a fully functional voice line over existing broadband connections See broadband and wireless broadband. at reduced costs with value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. .
Net2Phone has also started an enterprise division, focused on offering a complete Voice over IP solution for large businesses around the globe. In its first three months of operation, Net2Phone has signed up 25 Fortune 500 companies to migrate traffic to Net2Phone's voice-optimized IP network from circuit-switched legacy networks, further validating val·i·date
tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates
1. To declare or make legally valid.
2. To mark with an indication of official sanction.
3. Net2Phone's ability to offer high-quality scalable voice services to IP networks.
In the fourth quarter, Net2Phone continued to achieve healthy gross margins of more than 41% for its retail, enterprise and carrier voice-over-IP services. The company believes its current business initiatives will continue to generate strong growth and margins over the long term. These initiatives include Net2Phone's international expansion effort and the move to broaden its valued-added offerings to encompass new high-margin voice and video services, as well as software licensing agreements with major telecommunications companies See telecom company. through ADIR Technologies. Although the company expects some short-term Short-term
Any investments with a maturity of one year or less.
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. pressure on margins as it rapidly expands the size of its retail business through strategic marketing agreements with companies like Microsoft and AOL/ICQ, this expansion will give Net2Phone access to several million new customers and enhance its role as an essential player in IP services worldwide.
Last month, Net2Phone created ADIR Technologies, a separate company funded by both Net2Phone and Cisco Systems “Cisco” redirects here. For other uses, see Cisco (disambiguation).
Cisco System,Inc. (NASDAQ: CSCO, HKSE: 4333 ) is an American multinational corporation with 54,000 employees and annual revenue of US $28.48 billion as of 2006. to focus on IP network management software. By creating ADIR, Net2Phone will commercialize its existing network management software it has exclusively had in place since 1995. ADIR gives Net2Phone a new high-margin line of business with minimal capital expenditure and without cannibalizing its existing services business. ADIR will market its products to service providers, telecommunications companies, as well as equipment manufacturers looking to migrate voice traffic to IP networks.
This relationship with Cisco Systems offers Net2Phone unparalleled access to companies who can best utilize ADIR's software offerings. Through the formation of ADIR, Net2Phone can continue to focus on its business of delivering IP voice services. Concurrently, it can create standards for Voice over IP by delivering the software that has led to Net2Phone's success in this space and applying it to IP networks worldwide. Net2Phone will consolidate ADIR earnings.
Net2Phone, Inc. is a leading provider of voice-enhanced Internet communications services to individuals and businesses worldwide. Net2Phone enables people to place low-cost high quality calls from their computer, telephone, or fax machine to any telephone or fax machine in the world. Net2Phone develops and markets technology and services for IP voice and 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. solutions for the web and other IP networks. Net2Phone's strategic investors include Softbank, America Online, GE/NBC, and Yahoo!. Additionally, AT&T has acquired a 39 percent voting stake in Net2Phone. For more information about Net2Phone's products and services, please visit www.net2phone.com.
This press release contains 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. within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, among other things, Net2Phone's expected operating performance for the three months ending October 31, 2000 and thereafter. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others, the inherent uncertainty of financial estimates and projections, the competitive environment for Internet telephony, changes of rates of all related telco rates and services, legislation that may affect the Internet telephony industry, and Net2Phone's ability to operate the services described on a large scale commercial level. The forward-looking statements are made as of the date of this press release, and Net2Phone assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth herein and the other information set forth from time to time in Net2Phone's reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934.
Note: Net2Phone 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. Howie Balter will host a conference call at 4:30 p.m. EST P.M. also p.m. or p.m.
Usage Note: By definition, 12 a.m. today. The call can be accessed at www.net2phone.com/corporate/ir/. A replay of the conference call will be available beginning at 6:00 PM EST EST electroshock therapy.
electroshock therapy today at (888) 843-8996, passcode 2933164.
Net2Phone, Inc. Comparative Statement of Operations For The Three Months Ended April 30, 1999, July 31, 2000 & 1999, and Fiscal Years 2000 & 1999 FYE FYE --- --- Jul-00 Jul-99 Total Revenue 72,401,190 33,256,457 Total Direct Cost Of Revenue 40,986,791 17,818,010 Gross Profit 31,414,399 15,438,447 Operating Expenses: Sales & Marketing (1) (1) 68,677,169 8,828,167 General & Administrative 36,321,175 10,836,072 Depreciation And Amortization 6,804,413 2,316,545 Total Costs And Expenses (excluding non-cash compensation expense) 152,789,549 39,798,794 Interest & Other Income -Net 10,178,688 (243,314) Net Loss Before Non Cash Comp Expense Including One Time Charges and Goodwill Amortization From Aplio Acquisition (70,209,671) (6,785,651) One Time, Non-recurring Charges 27,760,605 0 Goodwill Amortization From Acquisition of Aplio 941,019 0 Net Loss Before Noncash Comp Expense For Issuance Of Options, Acquisition Charges, And One-Time Non-recurring Charges (41,508,047) (6,785,651) Weighted Average Shares Outstanding 51,738,918 33,172,031 EPS (excluding compensation charge for issuance of options, acquisition charges, and one-time non-recurring charges) ($ 0.80) ($ 0.20) Compensation Expense - Stock Options 48,124,333 17,919,541 Q4 2000 Q4 1999 ------- ------- Jul-00 Jul-99 Total Revenue 24,922,660 11,053,200 Total Direct Cost Of Revenue 14,817,513 5,969,921 Gross Profit 10,105,146 5,083,279 Operating Expenses: Sales & Marketing (1) (1) 42,048,275 4,081,851 General & Administrative 12,823,199 3,537,966 Depreciation And Amortization 3,268,052 1,099,833 Total Costs And Expenses (excluding non-cash compensation expense) 72,957,040 14,689,571 Interest & Other Income -Net 3,388,108 (243,314) Net Loss Before Non Cash Comp Expense Including One Time Charges and Goodwill Amortization From Aplio Acquisition (44,646,272) (3,879,685) One Time, Non-recurring Charges 27,760,605 0 Goodwill Amortization From Acquisition of Aplio 941,019 0 Net Loss Before Noncash Comp Expense For Issuance Of Options, Acquisition Charges, And One-Time Non-recurring Charges (15,944,648) (3,879,685) Weighted Average Shares Outstanding 55,459,070 39,931,000 EPS (excluding compensation charge for issuance of options, acquisition charges, and one-time non-recurring charges) ($ 0.29) ($ 0.10) Compensation Expense - Stock Options 36,414,015 17,919,541 Q4 2000 Q3 2000 ------- ------- Jul-00 Apr-00 Total Revenue $ 24,922,660 18,869,801 Total Direct Cost Of Revenue 14,817,513 10,943,112 Gross Profit 10,105,146 7,926,689 Operating Expenses: Sales & Marketing(1) (1) 42,048,275 11,133,197 General & Administrative 12,823,199 9,779,478 Depreciation And Amortization 3,268,052 1,559,995 Total Costs And Expenses (excluding non-cash compensation expense) 72,957,040 33,415,782 Interest & Other Income -Net 3,388,108 3,148,803 Net Loss Before Non Cash Comp Expense Including One Time Charges and Goodwill Amortization From Aplio Acquisition (44,646,272) (11,397,178) One Time, Non-recurring Charges 27,760,605 0 Goodwill Amortization From Acquisition of Aplio 941,019 0 Net Loss Before Noncash Comp Expense For Issuance Of Options, Acquisition Charges, And One-Time Non-recurring Charges (15,944,648) (11,397,178) Weighted Average Shares Outstanding 55,459,070 53,208,004 EPS (excluding compensation charge for issuance of options, acquisition charges, and one-time non-recurring charges) ($ 0.29) ($ 0.21) Compensation Expense - Stock Options 36,414,015 4,368,886 Balance Sheet Data FYE FYE Proforma ATT --- --- ------------ Jul-00 Jul-99 Jul-00 Cash, cash equivalents and marketable securities $236,463,038 $ 20,379,048 $536,463,038 Fixed Assets (net) $ 58,910,544 $ 17,844,901 $ 58,910,544 Total Assets $402,556,967 $ 50,816,891 $702,556,967 Total Stockholders' Equity $348,161,526 $ (4,062,867) $648,161,526 (1) Note: Includes One Time, Non-recurring charge of $27,760,605 expensed in 4Q00