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Netegrity Reports Second Quarter Results.



WALTHAM Waltham (wôl`thăm, –thəm), city (1990 pop. 57,878), Middlesex co., E Mass., a suburb of Boston, on the Charles River; settled c.1634, set off from Watertown 1738, inc. as a city 1884. , Mass. -- Netegrity See SiteMinder. , Inc. (Nasdaq: NETE Nete may mean:
  • Nete River
  • Nete language
):

--Total Revenues of $24.3 million; increase of 29% versus Q2 2003

--License Revenues of $13.6 million; increase of 27% versus Q2 2003

--Earnings Per Share: $0.05 GAAP GAAP

See: Generally Accepted Accounting Principles


GAAP

See generally accepted accounting principles (GAAP).
; $0.06 Non-GAAP

Netegrity, Inc. (Nasdaq: NETE), a leading provider of identity and access management solutions, today reported results for the second quarter ended June June: see month.  30, 2004.
Q2 2004 Financial Highlights

--  Revenues

    --  Total revenues for the second quarter of 2004 were $24.3
        million, an increase of 29% compared to $18.9 million for the
        second quarter of 2003. License revenues for the second
        quarter of 2004 were $13.6 million, an increase of 27% over
        the same period a year ago.

    --  For the six months ended June 30, 2004, total revenues were
        $47.4 million, and license revenues were $26.4 million,
        compared to total revenues of $35.5 million, and license
        revenues of $19.1 million for the six months ended June 30,
        2003.

--  Net Income

    GAAP Results

    --  Net income for the second quarter of 2004 was $1.9 million, or
        $0.05 per diluted share, compared to a net loss of $(2.5)
        million, or $(0.07) per share, for the same period a year ago.

    --  For the six months ended June 30, 2004, net income was $3.2
        million, or $0.08 per diluted share, compared to a net loss of
        $(7.4) million, or $(0.22) per share, for the first six months
        of 2003.

    Non-GAAP Results

    --  Non-GAAP net income is defined as GAAP net income excluding
        the non-cash amortization of capitalized software. For the
        second quarter of 2004, non-GAAP net income was $2.4 million,
        or $0.06 per diluted share, compared to $167,000, or $0.00 per
        diluted share, for the same period a year ago.

    --  For the six months ended June 30, 2004, non-GAAP net income
        was $4.2 million, or $0.10 per diluted share, compared to a
        net loss of $(2.0) million, or $(0.06) per diluted share, for
        the first six months of 2003.

    --  Non-cash amortization of capitalized software was $0.5 million
        for each of the first and second quarters of 2004 and $2.7
        million for the second quarter of 2003 and $5.4 million for
        the first six months of 2003, respectively.

--  Cash

    --  Net cash provided by operating activities for the second
        quarter of 2004 was $4.8 million. As of June 30, 2004,
        Netegrity had $90.3 million in cash and marketable securities.


"We performed very well this quarter, once again exceeding guidance for both revenue and profitability, and delivering significant year-over-year growth. As our results show, we are benefiting from our leadership in a strategic, high-growth market fueled by multiple demand drivers," said Barry Barry, Welsh Barri, town (1991 pop. 45,053) and port, Vale of Glamorgan, S Wales, on the Bristol Channel. Once a major coal-exporting port, its more diversified export products include cement, flour, and steel products.  Bycoff, Netegrity Chairman, 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. . "In Q2, we saw strong interest in all our products, as customers recognize the impact that a shared security infrastructure has on their total cost of ownership and ability to secure their information assets. Looking forward, we believe our integrated identity and access management platform will continue to be a powerful competitive differentiator for Netegrity."

Q2 2004 Operational Highlights

--Completed 100 transactions with new and existing customers, ending the quarter with approximately 870 customers. From a vertical standpoint The Standpoint is a newspaper published in the British Virgin Islands. It was originally published under the name Pennysaver, largely as a shopping-coupon promotional newspaper, but since emerged as one of the most influential sources of journalism in the , Netegrity saw increased interest from the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications.  industry and continued strength in the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page.
 industry.

--Shipped IdentityMinder(R) eProvision 4.0, Netegrity's provisioning solution that automates the process of managing access to valuable enterprise resources for employees, contractors, and partners. The new features in eProvision 4.0, including enhanced workflow The automatic routing of documents to the users responsible for working on them. Workflow is concerned with providing the information required to support each step of the business cycle.  and simplified administration, make it easier to manage the regulatory compliance process, mitigate mit·i·gate
v.
To moderate in force or intensity.



miti·gation n.
 risk, and reduce costs. IdentityMinder eProvision is a component of the Netegrity identity and access management product line which enables companies to manage external and internal users and their access to both enterprise and Web applications.

--Extended technology leadership in identity federation with the Universal Federation Architecture(TM) (UFA Ufa (fä`), city (1989 pop. 1,082,000), capital of Bashkortostan, E European Russia, at the confluence of the Belaya and Ufa rivers. ) which is designed to standardize stan·dard·ize
v.
1. To cause to conform to a standard.

2. To evaluate by comparing with a standard.
 the sharing of identity information across applications within the enterprise as well as to partner companies outside of the enterprise.

--Successfully passed the Liberty Alliance conformance con·for·mance  
n.
Conformity.

Noun 1. conformance - correspondence in form or appearance
conformity

agreement, correspondence - compatibility of observations; "there was no agreement between theory and
 test and earned the 'Liberty Alliance Interoperable' logo. In addition, Netegrity demonstrated federation technology interoperability The capability of two or more hardware devices or two or more software routines to work harmoniously together. For example, in an Ethernet network, display adapters, hubs, switches and routers from different vendors must conform to the Ethernet standard and interoperate with each other.  with Microsoft utilizing WS-Security and SAML (Security Assertion Markup Language) An XML-based format from OASIS for exchanging security information for single sign-on. The "assertions" are statements from a SAML authority that authenticate a user, confirm some attribute about the individual and grant or  standards.

--Gartner, Inc. has placed Netegrity in the Leader Quadrant quadrant, in analytic geometry
quadrant.

1 In analytic geometry, one of the four regions of the plane determined by two lines, the x-axis and the y-axis.
 of the 2004 Extranet Access Management Magic Quadrant The Gartner Magic Quadrant is a proprietary research tool developed by Gartner Inc., a US based research and advisory firm. It is designed to provide an unbiased qualitative analysis of a “markets’ direction, maturity, and participants.  report(1). The Extranet Access Management Magic Quadrant acknowledges those software vendors who have developed strong identity administration, integration with user provisioning The ability for customers to change voice and data services from their carriers online without having to place the order with a human representative. Web-based user provisioning lets you add and delete services and features from your browser. See automated provisioning. , and federated identity In information technology, federated identity has two general meanings:
  • The virtual reunion, or assembled identity, of a person's user information (or ), stored across multiple distinct identity management systems.
 and Web services (1) Loosely, any online service delivered over the Web. Such usage appears in articles from non-technical sources, but not in IT-oriented publications, because definition #2 below describes the correct use of the term.  capabilities.

Q3 2004 Financial Outlook

The following financial outlook is based on information as of July 29, 2004. Management provides the following guidance for the quarter ending September 30, 2004:

--Total revenue and license revenue are expected to be approximately flat with Q2 2004.

--GAAP net income is expected to be approximately $0.04 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.

--Non-GAAP net income (which excludes $0.5 million of non-cash amortization of 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.
 software) is expected to be approximately $0.05 per diluted share.

--These per share earnings estimates are based on approximately 42 million diluted shares.

Quarterly Conference Call

Netegrity will host a conference call today to discuss second quarter results at 5:00 p.m. ET. Netegrity will broadcast the conference call live via 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
 at the Investor Relations Investor relations

The process by which the corporation communicates with its investors.
 section of www.netegrity.com. This Webcast will also be archived for later listening in the Investor Relations section of www.netegrity.com. An audio replay of the call will be available until midnight on Monday, August 2nd. To access the replay, dial (800) 475-6701, or internationally dial (320) 365-3844, and enter access code 738028.

About Netegrity, Inc.

Netegrity, Inc. is a leading provider of security software solutions that securely manage identities and their access to enterprise information assets, letting business in while keeping risk out. Netegrity provides a comprehensive identity and access management product line for continuously evolving computing computing - computer  environments, including legacy, Web, and service-oriented architectures See SOA. . Netegrity's flexible, standards-based offerings are designed to increase security, reduce administrative costs administrative costs,
n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided.
, and enable revenue enhancement revenue enhancement

An increase in revenues, especially by way of increased taxes. Revenue enhancement includes reducing taxpayer deductions and eliminating tax credits.
. Supported by a network of over 1200 trained integration consultants and over 200 technology partners, Netegrity solutions are licensed for more than 350 million users at over 850 organizations worldwide, including more than half of the Fortune 100. For more information, visit http://www.netegrity.com.

Netegrity, IdentityMinder, SiteMinder, TransactionMinder, and Universal Federation Architecture are trademarks or registered trademarks of Netegrity, Inc. All other product names, service marks, and trademarks mentioned herein are trademarks of their respective owners.

Various statements in this release concerning Netegrity's future expectations, plans, and prospects constitute 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.
 for the purposes of the 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.
 provisions 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. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors such as, but not limited to, general economic conditions, weakness in the global economy, increased 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.
, our ability to develop and enhance our products and services or remain competitive in product pricing, competition in the marketplace, including competitors' sales strategies, development and performance of our direct and indirect sales channels, our ability to integrate the operations of acquired companies, delays in product development, changes in customer and market requirements and standards, market acceptance of new products and technologies, and technological changes in the computer industry, as well as those risks more fully discussed in the Company's reports on file with the Securities and Exchange Commission including the Company's latest 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.
, Form 10-Q Form 10-Q

See 10-Q.
 and any subsequent filings. In addition, any forward-looking statements represent the Company's views only as of today and should not be relied upon as representing its views as of any subsequent date. While we may elect to update forward looking statements at some point in the future, we specifically disclaim dis·claim  
v. dis·claimed, dis·claim·ing, dis·claims

v.tr.
1. To deny or renounce any claim to or connection with; disown.

2. To deny the validity of; repudiate.

3.
 any obligation to do so, even if our estimates change and, therefore, you should not rely on any of these forward-looking statements as representing the Company's views as of any date subsequent to today.

(1)Magic Quadrant for Extranet Access Management, 1H04, Ray Wagner, June 29, 2004
NETEGRITY, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                              (UNAUDITED)
           (Amounts in thousands, except per share amounts)

                                Three months ended Six months ended
                                      June 30            June 30
                                   2004      2003     2004      2003
                                -------- --------- -------- ---------
Revenues:
Software licenses               $13,585   $10,714  $26,442   $19,132
Services                         10,344     7,500   19,868    15,129
Other                               392       650    1,046     1,281
                                -------- --------- -------- ---------
Total revenues                   24,321    18,864   47,356    35,542

Cost of revenues                  4,060     3,526    7,923     7,367
Non-cash cost of revenues           510     2,699    1,020     5,398
                                -------- --------- -------- ---------
Total cost of revenues            4,570     6,225    8,943    12,765

Gross profit                     19,751    12,639   38,413    22,777

Selling, general, and
 administrative expenses         12,118    10,493   23,655    20,989
Research and development costs    5,862     5,036   11,848     9,910
                                -------- --------- -------- ---------

Operating income (loss)           1,771    (2,890)   2,910    (8,122)

Other income, net                   287       417      609       791
                                -------- --------- -------- ---------

Net income (loss) before income
 taxes                            2,058    (2,473)   3,519    (7,331)

Provision for income taxes          153        59      328        59
                                -------- --------- -------- ---------

Net income (loss)                $1,905   $(2,532)  $3,191   $(7,390)
                                ======== ========= ======== =========

Net income (loss) per share
 attributable to common
 stockholders
          Basic and diluted      $ 0.05   $ (0.07)  $ 0.08   $ (0.22)
                                ======== ========= ======== =========

Weighted average common shares
 outstanding
          Basic                  37,985    34,416   37,798    34,367
                                ======== ========= ======== =========
          Diluted                40,789    34,416   40,841    34,367
                                ======== ========= ======== =========



                            NETEGRITY, INC.
         RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURE
                              (UNAUDITED)
           (Amounts in thousands, except per share amounts)

    The first and second quarters of 2004 and 2003 include charges for
non-cash amortization of capitalized software. We have presented
non-GAAP financial measures as part of this earnings release since
such information excludes certain non-cash items and management
believes it is a more accurate measurement of our overall operating
performance. Management believes that presenting financial measures
exclusive of certain non-cash items helps identify trends in the
company's business and the company uses these measures to establish
budgets and operational goals, to manage its business and to evaluate
the performance of the company.
    Below is a table that reconciles GAAP net income (loss) to
non-GAAP net income (loss) for the three and six months ended June 30,
2004 and 2003. The presentation of this additional information is not
meant to be considered in isolation or as a substitute for results
prepared in accordance with accounting principles generally accepted
in the United States.
                                      Three months       Six months
                                     ended June 30     ended June 30
                                      2004     2003    2004     2003
                                   -------- -------- ------- --------

GAAP net income (loss)              $1,905  $(2,532) $3,191  $(7,390)
Adjustments:
Non-cash amortization of
 capitalized software                  510    2,699   1,020    5,398
                                   -------- -------- ------- --------
Non-GAAP net income (loss)          $2,415     $167  $4,211  $(1,992)
                                   ======== ======== ======= ========

GAAP net income (loss) per share -
 basic and diluted                   $0.05   $(0.07)  $0.08   $(0.22)
Adjustments:
Non-cash amortization of
 capitalized software per share
      Basic                          $0.01    $0.07   $0.03    $0.16
                                   ======== ======== ======= ========
      Diluted                        $0.01    $0.07   $0.02    $0.16
                                   ======== ======== ======= ========

Non-GAAP net income (loss) per share
      Basic                          $0.06    $0.00   $0.11   $(0.06)
                                   ======== ======== ======= ========
      Diluted                        $0.06    $0.00   $0.10   $(0.06)
                                   ======== ======== ======= ========

Weighted average common shares
 outstanding
  Basic                             37,985   34,416  37,798   34,367
                                   ======== ======== ======= ========
  Diluted                           40,789   36,159  40,841   34,367
                                   ======== ======== ======= ========



                            NETEGRITY, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                              (UNAUDITED)
                        (Amounts in thousands)

                                                June 30,  December 31,
                                                   2004          2003
                                            ------------  ------------
ASSETS

Current assets
Cash and cash equivalents                       $22,961       $20,123
Available-for-sale securities                    44,244        51,557
Accounts receivable, net                         20,584        14,340
Prepaid and other current assets (including
 restricted cash)                                 3,555         3,051
                                            ------------  ------------
Total current assets                             91,344        89,071

Property and equipment, net                       4,639         4,848
Available-for-sale securities                    21,805        19,401
Goodwill                                         34,503        34,503
Other intangible assets, net                      6,480         7,500
Other assets (including restricted cash)          2,431         1,901
                                            ------------  ------------

Total assets                                   $161,202      $157,224
                                            ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable trade                           $3,100        $1,415
Accrued compensation and benefits                 5,558         5,947
Other accrued expenses                            7,786        16,273
Deferred revenue                                 23,632        18,503
                                            ------------  ------------
Total current liabilities                        40,076        42,138

Stockholders' equity                            121,126       115,086
                                            ------------  ------------

Total liabilities and stockholders' equity     $161,202      $157,224
                                            ============  ============
COPYRIGHT 2004 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2004, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Business Wire
Geographic Code:1USA
Date:Jul 29, 2004
Words:2039
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