NEWZ 2nd Quarter Results
Friday July 28, 8:00 am Eastern Time Company Press Release
NewsEdge Announces Second Quarter 2000 Results and Success of New Strategy, Including 100% Sequential Quarterly Increase in eTopic Customers
Increases cash balance to $20 million; Reduces operating loss from first quarter
BURLINGTON, Mass.--(BUSINESS WIRE)--July 28, 2000-- NewsEdge Corporation (Nasdaq:NEWZ - news), a leading syndicator of eContent and global news services, today reported financial results for the quarter ended June 30, 2000, the first full quarter since the Company's strategic realignment. NewsEdge also reported a 100% quarterly increase of eTopics customers to 125, and new eTopics orders worth more than $2 million. The operating loss of $1.8 million, excluding one-time items, has been reduced by almost $1.9 million compared to the first quarter of 2000. The Company finished the quarter with a cash balance of $20.0 million, up from $16.7 million reported as of March 31, 2000.
Financial Results for Second Quarter
For the quarter ended June 30, 2000, the Company reported a net loss of $1,281,000, or $0.08 per share, compared to a net loss of $2,611,000, or $0.15 per share, in the second quarter of 1999. The net loss for the second quarter of 2000 includes a $773,000 net gain relating to an adjustment to sale transaction expenses resulting from the February sale of its 80% equity interest in Individual.com, Inc. Net loss from continuing operations for the second quarter of 2000 totaled $2,054,000, compared to a loss from continuing operations of $639,000 for the second quarter of 1999. Excluding one-time expenses of $668,000 related to final retention cost incurred as part of the terminated acquisition of NewsEdge by RoweCom, Inc. and a one-time expense credit of $453,000 related to the reversal of prior acquisition-related reserves, the net loss from continuing operations in the second quarter totaled $1,839,000. The loss from continuing operations was reduced by almost $1.9 million compared to the first quarter 2000's net loss from continuing operations of $3,698,000. Revenue for the second quarter of 2000 totaled $17,672,000, and was up sequentially from the $17,329,000 reported in the first quarter of 2000. Revenue from the second quarter of 1999 was $18,441,000.
For the six months ended June 30, 2000, the Company reported a net loss of $4,778,000, or $0.28 per share, compared to a net loss of $5,796,000, or $0.33 per share, in the first six months of 1999. Net loss from continuing operations for the first six months of 2000 totaled $9,186,000, compared to a net loss of $1,896,000 from continuing operations for the first six months of 1999. Excluding one-time expenses of $2,036,000 related to expenses incurred as part of the terminated acquisition of NewsEdge by RoweCom, Inc., $2,066,000 related to charges associated with the Company's transition to its eContent strategy and the reversed acquisition related reserves, the net loss from continuing operations totaled $5,537,000. Revenue for the first six months of 2000 totaled $35,001,000, compared to equivalent revenue of $35,770,000 in the first half of 1999 that totaled $36,801,000 and included $1,031,000 related to harvested product lines.
Executing on eContent strategy
The Company achieved solid results from its new eContent strategy during the second quarter of 2000. In May, NewsEdge unveiled the biggest change in direction in the Company's 10-year history. The strategic realignment dramatically broadens the NewsEdge focus to providing existing and new customers with eContent services to power the estimated 2.5 million business-oriented Web sites worldwide. The global plan capitalizes on the firm's extensive media partnerships, proprietary technology, editorial expertise and international sales and support infrastructure, to provide targeted eContent applications to make corporate Intranets, Extranets, public Web sites, e-commerce exchanges and portals more effective. The new Internet eContent marketplace, in which NewsEdge is investing a considerable portion of its resources, is a multi-billion dollar industry and is growing rapidly.
Recent Highlights include:
More than doubling of eTopics customers to 125 (from 60 reported at the end of the first quarter). New orders for eContent in the second quarter of $2.1 million, bringing the Company's eContent ACV (Annual Contract Value) to $8.1 million after only a few months of active marketing and selling, which shows considerable progress toward the Company's upwardly revised $12 million year-end goal.
The release and early sales of iTopics, the Company's service that integrates global business-focused content into enterprise Intranets. Companies can bolster Intranet usage and ensure that employees worldwide are up on the latest news and trends within their industry.
A major strategic eContent relationship with IndustryClick, a unit of Primedia, Inc. (NYSE:PRM - news) o Significant new partnerships including a joint business development with corporate portal market-leader Plumtree Software and a global strategic alliance with Hummingbird Communications (NASDAQ:HUMC, TSE:HUM), a world-leading enterprise software company.
The publication of a May 26 Outsell, Inc. Information About Information report naming NewsEdge Corporation as the largest news infomediary. ``Everyone at NewsEdge is thrilled by our noteworthy success after only a few months of executing on our new strategic direction and introducing our eTopics and iTopics offerings to the marketplace,'' said Cliff Pollan, CEO of NewsEdge Corporation. ``NewsEdge has doubled its eContent customers and announced a major strategic relationship with Primedia's IndustryClick to assist us in continuing to execute this viable new strategy.''
``With $20 million in cash and a debt-free balance sheet, NewsEdge has the financial resources to continue to execute on its new strategy,'' said NewsEdge CFO Ron Benanto. ``I'm encouraged about the progress in halving our sequential loss and bringing in $2.1 million in new high margin eContent orders. This progress should allow us to reach our goal of EBITDA break even within just a few quarters and deliver increasing shareholder value.''
``With millions of business-oriented Websites already in existence, and many more being created each day, there is substantial room for NewsEdge to grow,'' added Pollan.
``NewsEdge eContent has recently been integrated into such premier sites as those from Cable & Wireless, Mercedes Benz and Lockheed Martin as well as Industry Solutions Online and European Energy Services. We offer over 1,500 highly specific topics, which will enable companies in the high-tech, biomedical, manufacturing, consulting and financial services businesses to drive and retain traffic to their Web sites and Intranets.''
Separately, the Company announced that it has been notified by Nasdaq that it currently does not meet certain price and capitalization standards required for its National Market system. The Company is considering either raising capital to maintain its National Market listing or moving to the Nasdaq's Small Cap Market or AMEX. Given the Company's strong cash position and recent success with its new eContent strategy, the Company believes a listing on the Nasdaq Small Cap Market or the AMEX may be preferable to a dilutive financing intended only to meet the National Market capitalization requirement. The Company expects to make a decision on this matter on or about August 10, when management will be meeting with Nasdaq officials.
About NewsEdge Corporation
NewsEdge Corporation (Nasdaq:NEWZ - news) is a leading syndicator of eContent and global news services. Differentiating NewsEdge is the Company's core competency--built over more than a decade--in refining tens of thousands of daily news and eContent items into useful, granular feeds and delivering them over the Internet. The Company employs a unique combination of leading technology and an editorial team of industry specialists to create an extensive and proprietary library of 1,500 business-oriented topics. NewsEdge serves Intranets, Extranets and eBusiness initiatives at 1,700 organizations with award-winning news and information solutions including iTopics(TM), eTopics(TM), NewsEdge Insight(TM), NewsEdge Live(TM), and NewsEdge Review(TM) topics. NewsEdge Corporation is headquartered in Burlington, Massachusetts, with sales offices and distributors throughout North America, South America, Europe, Japan and the Middle East. For more information about NewsEdge Corporation, please visit the company's Web site at newsedge.com. (tables follow)
(c)NewsEdge Corporation, 2000, all rights reserved. NewsEdge is a registered trademark of NewsEdge Corporation. All other product or service marks mentioned herein are those of NewsEdge or their respective owners. Certain of the above statements on the Company's future revenue and financial performance, are forward-looking statements that involve risks and uncertainties. Actual results could differ materially as a result of a variety of factors, including, risks associated with acquisitions, the timely development and acceptance of new products, competitive developments, the success of relationships with third parties, and other risk factors described from time to time in the Company's SEC reports.
NEWSEDGE CORPORATION Consolidated Statement of Operations (unaudited) (in thousands, except per share data)
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 ------------ --------- ------------ ----------
Revenues $17,672 $18,051 $35,001 $35,770
Other revenues (a) 390 1,031
Total Revenues 17,672 18,441 35,001 36,801
Cost of Revenues 7,605 7,616 15,171 15,336 ------------ ----------- ------------ ----------
Gross Profit 10,067 10,825 19,830 21,465
Operating Expenses (b)
Customer Support Expenses 1,345 1,226 2,843 2,519
Development expenses 2,384 2,146 5,627 4,485
Sales and marketing expenses 7,685 7,807 17,451 15,744
General and administrative exps 1,420 723 4,013 1,450
Mergers, dispositions and other expenses (453) - (453) - ------------ ----------- ------------ ----------
Total expenses 12,381 11,902 29,481 24,198
Operating loss (2,314) (1,077) (9,651) (2,733)
Interest income, net 275 456 504 888 ------------ ----------- ------------- ---------- Loss from continuing operations before provision for taxes (2,039) (621) (9,147) (1,845)
Provision for income taxes 15 18 39 51 ------------ ------------- ------------ ----------
Net loss from continuing operations (2,054) (639) (9,186) (1,896)
Loss from discontinued operations, net (1,972) (1,859) (3,900)
Net gain on the sale of Individual.com, Inc. 773 - 6,267 -
Income (loss) from discontinued operations 773 (1,972) 4,408 (3,900)
Net loss applicable to common stockholders $(1,281) $(2,611) $(4,778) $(5,796)
Net loss per common share
Continuing operations $(0.12) $(0.04) $(0.52) $(0.11)
Discontinued operations 0.04 (0.11) 0.24 (0.22) ------------ ----------- ------------ -------- Total loss per common share $(0.08) $(0.15) $(0.28) $(0.33) ============ =========== ============ =========
Weighted average common shares outstanding 17,696,000 17,351,000 17,690,000 17,328,000 ============ ========== ============ ==========
(a) "Other" represents terminated / harvested product lines that have been phased out and/or de-emphasized by the Company
(b) 2000 second quarter expenses include certain non-recurring charges totaling $215,000. These include $668,000 in costs related to final retention payments as part of the termination of the RoweCom, Inc. acquisition of NewsEdge offset by the reversal of $453,000 of acquisition related reserves no longer required. Year-to-date 2000 expenses include non-recurring charges totaling $3,649,000. These include $2,036,000 related to retention payments, transaction costs and expenses incurred as part of the RoweCom, Inc. termination, $2,066,000 in asset write-offs and reserves associated with the Company's transition to its new strategic direction and the ($453,000) reversal of acquisition related reserves no longer required.
NEWSEDGE CORPORATION Summary Financial Table (unaudited), Excluding One-Time Items (in thousands, except per share data)
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 ------------ ----------- ---------- ---------
Revenues $17,672 $18,051 $35,001 $35,770
Other revenues (a) 390 1,031 ------------ ----------- ---------- --------
Total Revenues 17,672 18,441 35,001 36,801 Operating Expenses
Cost of Revenues 7,605 7,616 15,171 15,336
Customer support expenses 1,345 1,226 2,814 2,519
Development expenses 2,384 2,146 5,021 4,485
Sales and marketing expenses 7,685 7,807 16,480 15,744
General and administrative expenses 752 723 1,517 1,450
Mergers, dispositions and other expenses - - - - ------------ ----------- ---------- ----------
Total expenses 19,771 19,518 41,003 39,534
Operating loss (2,099) (1,077) (6,002) (2,733)
Interest income, net 275 456 504 888 --------------------------------------------------- Loss from continuing operations before provision for taxes (1,824) (621) (5,498) (1,845)
Provision for income taxes 15 18 39 51 ------------ ----------- ---------- ---------
Net loss from continuing operations $(1,839) $(639) $(5,537) $(1,896) ============ =========== ========== ==========
NEWSEDGE CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
June 30, December 31, 2000 1999 -------------- ---------------- ASSETS (unaudited)
Current assets: Cash and cash equivalents $ 20,004 $ 20,278 Accounts receivable 12,720 11,280 Due from WinStar 3,000 - Prepaid expenses and deposits 6,433 5,132
Total current assets 42,157 36,690
Property and equipment, net 7,732 9,398
Other assets 1,124 1,766 ------------------ ------------
Total assets $ 51,013 $ 47,854 ====================== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 4,313 $ 2,869 Accrued expenses 16,502 14,837 Deferred revenue, current 27,348 23,010 Current portion of long-term obligations 74 303
Total current liabilities 48,237 41,109 ------------------ ----------------
Deferred revenue, noncurrent 222 124 ------------------- ---------------- Stockholders' equity: Common stock 182 181 Additional paid-in capital 130,783 130,136 Cumulative translation adjustment (87) (58) Accumulated deficit (125,598) (120,822) Treasury stock, at cost; 432,000 shares at June 30, 2000 and December 31, 1999, respectively (2,726) (2,726)
Total stockholders' equity 2,554 6,711 ---------------------- ------------- Total liabilities & stockholders' equity $ 51,013 $ 47,854 ====================== ============= |