ORINDA, Calif., Jan. 9, 2002 (PRIMEZONE) -- Intraware, Inc. (Nasdaq:ITRA), a leading provider of electronic software management and information technology (IT) management solutions, today announced financial results for the third quarter of fiscal year (FY) 2002 ended November 30, 2001.
For the first time since its initial public offering in February 1999, Intraware, Inc. achieved positive income on an EBITDA basis. The company realized an EBITDA gain of $0.4 million, a significant increase from the preceding quarter's EBITDA loss of $1.1 million. Intraware's EBITDA gain excludes restructuring charges, interest, taxes, depreciation, stock-based compensation, amortization, warrant charges, and charges related to preferred stock and promissory notes financings.
"We have been building momentum toward positive EBITDA since we reorganized Intraware in December 2000," said Peter Jackson, chief executive officer of Intraware. "This achievement is the result of executing the plan we laid out several quarters ago, which includes focusing on our strongest products, building channels, and controlling our costs. We are pleased to have achieved this goal in the midst of a very difficult economic environment. I am very proud of each of our employees for the hard work and dedication they exhibited to get us to this point."
Quarterly Highlights:
-- Intraware achieved a record level of software license revenue for
its Argis(r) IT Asset Management and its ContractDirector
products. Additionally, in the third quarter Intraware received
its first orders through the channel alliances signed in its
second quarter with both Computer Associates International, Inc.
and Corporate Software.
-- Intraware completed technical integrations with both the CA
Unicenter suite and Corporate Software's Software Asset
Management solution suite. These integrations will support future
sales through these channel alliances.
-- Four new customers were added to Intraware's SubscribeNet(r)
electronic software and delivery management service, bringing the
total number to twenty. New customers signed in the third quarter
include Macromedia, Inc., Liberate Technologies, CommNav, Inc.,
and Asera, Inc. In addition, Intraware received contract renewals
for its SubscribeNet service from companies including Business
Objects, Interwoven, Vignette, and Accelio.
-- Intraware launched SubscribeNet 5.0, an enhanced version of
the service that provides new caching architecture and
substantially raises the bar on scalability and performance for
Electronic Software Delivery and Management(ESDM).
"We are encouraged by the strength that we see in both our IT Asset Management and ESDM businesses," stated Frost Prioleau, President of Intraware. "We are well positioned with leading products in growing markets, strong partners, and timely value propositions."
Total revenues for the third quarter of FY 2002 were $9.4 million, compared to $26.2 million in the corresponding quarter last year and $13.6 million in the immediately preceding quarter ended August 31, 2001. The decline in total revenues was primarily the result of Intraware's exiting businesses such as reselling third party software products and various on-line services. Online services and technology revenues continued to increase as a percentage of overall revenues, representing 36% of total revenues in the third quarter of FY 2002, compared to 26% in the same period last year and 30% in the second quarter of FY 2002.
Gross margins for the third quarter increased to 47% compared to 40% in the previous quarter ended August 31, 2001. The increase reflects Intraware's shift in product mix toward proprietary product offerings. Intraware incurred a non-cash warrant charge to revenue of approximately $255,000 in the third quarter of FY 2002 and $198,000 in the previous quarter ended August 31, 2001.(See Note)
As mentioned above, the EBITDA gain was $0.4 million or $0.01 per share for the quarter ended November 30, 2001. In comparison, the EBITDA loss for the same quarter a year earlier was $6.9 million or $0.25 per share and $1.1 million or $0.04 per share for the quarter ended August 31, 2001.
Net loss attributable to common stockholders decreased to $5.0 million or $0.16 per share in the quarter ended November 30, 2001, compared to a net loss attributable to common stockholders of $17.1 million or $0.63 per share in the prior year's third quarter. The net loss attributable to common stockholders includes charges of $880,000 related to the beneficial conversion features of the preferred stock issued by Intraware in April 2001, as well as a restructuring charge and loss on abandonment of assets of $478,000, comprised primarily of costs associated with exiting lease obligations. The restructuring charge taken in the third quarter of FY 2002 relates to the transition away from reselling third-party software and the resulting reorganization undertaken in the second quarter of FY 2002. Net loss attributable to common stockholders for the immediately preceding quarter ended August 31, 2001 was $20.1 million or $0.71 per share.
NOTE: The issuance of warrants to Corporate Software in the first
quarter of FY 2002 results in a non-cash offset to future
proprietary Asset Management revenue generated by Corporate
Software. An amount not to exceed approximately $1.6 million
is being recognized over the lesser of the 24-month term of the
arrangement or the period of time it takes for Corporate
Software to generate these revenues for Intraware.
Business Outlook: Fourth Quarter of FY 2002
The following statements are forward looking and based on current expectations, which are subject to adjustment in the future. Actual results may differ materially and are subject to risks and uncertainties.
-- Revenue for the fourth quarter of FY 2002 is expected to be in
the range of $13 to $14 million, reflecting a one-time
recognition of approximately $6.7 million in deferred license
revenue and related gross profit of approximately $133,000 from a
third-party software sale, as well as increases in sales of the
company's proprietary online services and technologies. Projected
revenues for the fourth quarter include estimated non-cash
warrant charges of $600,000.
-- Gross profit for the fourth quarter of FY 2002 is expected to be
in the range of $4.2 to $4.6 million, reflecting an increase in
gross profit from proprietary online services and technologies,
but offset by a decrease in gross profit from third party
software. Despite the expected increase in third-party software
revenues, related gross margins are expected to decrease because
a substantial portion of that revenue is expected to be from
deferred license sales with relatively low gross margins.
Included in the total gross profit forecast is the effect of the
non-cash warrant charges mentioned above.
-- EBITDA per share is expected to range between $0.01 and $0.02
cents per share for the fourth quarter based on a weighted
average of approximately 40 million shares outstanding. EBITDA
excludes non-recurring charges and certain cash and non-cash
charges such as expenses and amortization related to
acquisitions, restructuring, depreciation, interest expense,
interest income, the stock based compensation charge, and charges
related to our preferred stock, promissory notes, and warrants.
-- Including non-recurring charges and the previously mentioned cash
and non-cash charges, Intraware expects a per share loss
attributable to common stockholders of between $0.14 and $0.15
for the fourth quarter.
Intraware expects to release guidance for FY03 on or before the next scheduled earnings release in March 2002.
About Intraware
Intraware, Inc. (Nasdaq:ITRA) is a leading provider of electronic software management and information technology (IT) management solutions that enable corporations to optimize their IT investments. Intraware's unique spectrum of innovative IT management solutions has attracted strategic relationships with industry-leading vendors such as Computer Associates International, Inc., Corporate Software, iPlanet E-Commerce Solutions, PeopleSoft, Inc., and Lockheed Martin. Intraware is headquartered in Orinda, California, and can be reached by phone at 888/446-8729, 925/253-4500 or http://www.intraware.com.
Conference Call and Web Cast Information
There will be a conference call accessible by telephone and via a simultaneous Web cast over the Internet at http://www.intraware.com/company/investors/conference_calls.html beginning at 2 p.m. Pacific Time on January 9, 2002. The live conference call dial in number is 913/981-5510 and the confirmation code is 733602. A replay of the call will be available for two weeks following the live call by dialing 719/457-0820 and entering confirmation code 733602.
Forward-Looking Statements
The statements in this news release referring to Intraware's being well positioned with leading products in growing markets, strong partners, and timely value propositions; to Intraware's expectation of continued growth in its businesses over the next several quarters; and to Intraware's expected revenues, gross profit, EBITDA, and loss per share attributable to common stockholders in its fiscal quarter ending February 28, 2002; and other statements in this release which are not historical facts, may be deemed to be forward-looking statements involving a number of risk factors and uncertainties. Factors that could cause actual results to differ materially from those anticipated in this news release include unexpected weakness in demand for Intraware's software products and online services due to concerns about general economic conditions; failure of recently signed agreements between Intraware and Corporate Software and between the company and Computer Associates International, Inc. to generate expected cash flows or revenue; loss or delay of sales of Intraware's products and services due to concerns by prospective customers about Intraware's financial strength; a failure by Intraware to sustain the listing requirements of the Nasdaq National Market, including the minimum net tangible assets or shareholders' equity requirement and the minimum bid price requirement; a failure by Intraware to maintain, generate or procure sufficient cash or liquidity to finance its operations or repay the $7 million principal amount of promissory notes that become due in August 2002; unanticipated delays in the release of product and service enhancements currently in development by Intraware; unanticipated technical or operational problems in customers' implementation of Intraware's products and services; the introduction of competitive services and products by other companies or the in-house development of alternative electronic software delivery solutions by software vendors that are potential customers; the susceptibility of the market in which Intraware operates to rapid shifts; reluctance by potential customers to procure software online due to security and other concerns; and interruptions in Intraware's online services due to unanticipated technical problems. Further information on potential factors that could affect Intraware's financial results is included in Intraware's Form 10-K for the 2001 fiscal year filed with the Securities and Exchange Commission (SEC) on June 13, 2001, and Intraware's Form 10-Q for its second fiscal quarter of the 2002 fiscal year filed with SEC on October 15, 2001. Copies of this and other Intraware filings with the SEC are available from Intraware without charge or online at http://www.intraware.com.
"Intraware" is a registered trademark of Intraware, Inc. All other company, product and service names mentioned herein may be trademarks of their respective owners.
INTRAWARE. INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
------------------- -------------------
November 30, November 30,
2001 2000 2001 2000
-------- -------- -------- --------
(unaudited) (unaudited)
Net loss attributable to
common stockholders $ (4,966) $(17,131) $(32,879) $(40,933)
Items excluded from pro
forma net income (loss):
Revenue offset (a) 255 -- 453 --
Depreciation
and amortization 3,062 4,395 11,021 9,510
Stock based compensation 613 838 1,964 2,403
Restructuring and loss
on abandonment of assets 478 -- 9,091 --
Interest and other
(income) expense (a) 46 138 5,095 (152)
Deemed dividend due to
beneficial conversion
feature of preferred stock,
mandatorily redeemable
convertible preferred
stock accrued dividend
and accretion to
liquidation value 880 4,894 2,696 5,287
-------- -------- -------- --------
Pro forma
net income (loss) $ 368 $ (6,866) $ (2,559) $(23,885)
======== ======== ======== ========
Basic pro forma earnings
(loss) per share $ 0.01 $ (0.25) $ (0.09) $ (0.91)
======== ======== ======== ========
Weighted average
shares - basic 30,517 27,121 29,164 26,283
======== ======== ======== ========
(a) Three and nine months ended November 30, 2001 include a non-cash
revenue offset to proprietary asset management revenue related to
Corporate Software warrant issuance.
(b) Three months ended November 30, 2001 includes $1.0 million in
other income related to the warrants issued in connection with
notes payable financings. The nine months ended November 30, 2001
includes $3.6 million in charges related to the warrants issued
in connection with notes payable financings.
INTRAWARE. INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
------------------- -------------------
November 30, November 30,
2001 2000 2001 2000
-------- -------- -------- --------
(unaudited) (unaudited)
Revenues:
Software product sales $ 5,989 $ 19,366 $ 26,465 $ 81,843
Online services
and technology 3,384 6,815 11,818 18,403
-------- -------- -------- --------
Total revenues 9,373 26,181 38,283 100,246
-------- -------- -------- --------
Cost of revenues:
Software product sales 4,053 14,144 20,147 66,368
Online services
and technology 947 1,373 2,979 3,594
-------- -------- -------- --------
Total cost of revenues 5,000 15,517 23,126 69,962
-------- -------- -------- --------
Gross profit 4,373 10,664 15,157 30,284
-------- -------- -------- --------
Operating expenses:
Sales and marketing 2,682 9,051 10,733 31,859
Product development 2,249 6,254 7,809 15,097
General and
administrative 1,217 4,751 5,728 13,249
Restructuring and
other charges 150 -- 2,356 --
Loss on abandonement
of assets 328 -- 6,735 --
Amortization of
intangibles 1,751 2,707 6,772 5,877
-------- -------- -------- --------
Total operating
expenses 8,377 22,763 40,133 66,082
-------- -------- -------- --------
Loss from operations (4,004) (12,099) (24,976) (35,798)
Interest expense (1,144) (305) (1,619) (416)
Interest income and
other income
and expenses 1,062 167 (3,588) 568
-------- -------- -------- --------
Net loss (4,086) (12,237) (30,183) (35,646)
Deemed dividend due to
beneficial conversion
feature of preferred
stock, mandatorily
redeemable convertible
preferred stock accrued
dividend and accretion
to liquidation value (880) (4,894) (2,696) (5,287)
-------- -------- -------- --------
Net loss attributable
to common stockholders $(4,966) $(17,131) $(32,879) $(40,933)
======== ======== ======== ========
Basic and diluted net
loss per share
attributable to
common stockholders $ (0.16) $ (0.63) $ (1.13) $ (1.56)
======== ======== ======== ========
Weighted average shares
- basic and diluted 30,517 27,121 29,164 26,283
======== ======== ======== ========
INTRAWARE. INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
Nov. 30, Feb. 28,
2001 2001
--------- ---------
(unaudited)
Current assets:
Cash and cash equivalents $ 4,056 $ 7,046
Restricted cash 1,260 1,739
Accounts receivable, net 2,182 9,700
Prepaid licenses, services
and cost of deferred revenue 13,419 22,412
Other current assets 2,491 2,584
--------- ---------
Total current assets 23,408 43,481
Cost of deferred revenue 472 1,780
Property and equipment, net 7,202 14,003
Intangible assets, net 10,313 20,825
Other assets 211 138
--------- ---------
Total assets $ 41,606 $ 80,227
========= =========
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED
STOCK & STOCKHOLDERS' EQUITY
Current liabilities:
Bank borrowings $ -- $ 3,261
Notes payable 4,220 --
Warrants 279 --
Accounts payable 6,886 15,360
Accrued expenses 2,775 3,939
Deferred revenue 16,048 26,046
Capital lease and other obligations 1,724 2,363
--------- ---------
Total current liabilities 31,932 50,969
Deferred revenue 1,092 2,825
Capital lease and other obligations 2,776 3,339
--------- ---------
Total liabilities 35,800 57,133
--------- ---------
Commitments and contingencies
Redeemable convertible preferred stock,
10,000 shares authorized, $.0001 par value;
1,891 and 2,873 shares issued and outstanding
at November 30 and February 28, 2001,
respectively (aggregate liquidation preference
of $5,962 and $5,100 at November 30, 2001
and February 28, 2001 respectively) 4,929 4,666
--------- ---------
Stockholders' equity:
Common stock; $0.0001 par value; 250,000
shares authorized, 37,776 and 28,375 issued
shares issued and outstanding at November 30
and February 28, 2001, respectively 3 3
Additional paid-in-capital 141,027 130,625
Unearned compensation (2,232) (4,462)
Accumulated deficit (137,921) (107,738)
--------- ---------
Total stockholders' equity 877 18,428
--------- ---------
Total liabilities, redeemable
convertible preferred stock
and stockholders' equity $ 41,606 $ 80,227
========= =========