Ascential Software Reports Third Quarter Revenue of $45.9 Million with License Revenue of $22.4 Million
Thursday October 23, 4:50 pm ET
Marks Sixth Consecutive Quarter of Sequential Revenue Growth
Completes Acquisition and Integration of Mercator into Company Operations
Initiates 2004 Guidance
WESTBORO, Mass., Oct. 23 /PRNewswire-FirstCall/ -- Ascential Software Corporation (Nasdaq: ASCL - News), the enterprise data integration leader, today announced results for the third quarter ended September 30, 2003.
On a GAAP basis, third quarter 2003 revenue was $45.9 million, up 52 percent from $30.2 million in the third quarter of last year, and up 15 percent from $39.9 million in this year's second quarter. License revenue was $22.4 million in the third quarter of 2003, up 50 percent from $14.9 million in license revenue reported in the third quarter of 2002, and up 7 percent from $21.0 million in the second quarter. Net loss was $1.7 million, or ($0.03) per share, for the third quarter, compared to a net loss of $16.3 million, or ($0.27) per share, in the third quarter of 2002, and net income of $0.7 million, or $0.01 per share in the second quarter. All share and per share amounts have been retroactively adjusted for the 1-for-4 reverse stock split effected June 17, 2003.
GAAP and pro forma results for the third quarter of 2003 include eighteen days of Mercator Software results since the September 12, 2003 completion of Ascential's acquisition of that company, as well as related charges and transition expenses.
On a pro forma basis, as described below, the company realized pro forma net income of $3.7 million, or $0.06 per share, in the third quarter of 2003, compared with a pro forma net loss of $5.7 million, or ($0.09) per share, in the third quarter of 2002, and pro forma net income of $3.0 million, or $0.05 per share in the second quarter this year.
"We are extremely pleased to again report record quarterly revenue since becoming Ascential Software in July 2001, marking our sixth consecutive quarter of sequential revenue growth - even before the contribution of the Mercator acquisition to our business this quarter," said Peter Gyenes, chairman and chief executive officer. "These results reflect the superior customer value and strong differentiation of our unique and integrated, end- to-end solution for enterprise data integration. The addition of Mercator creates the largest independent enterprise data integration software company, and is yet another "first" in our market as we uniquely provide customers end- to-end data integration solutions for the full spectrum of transactional, operational, and analytical application environments regardless of data source, volume or latency. Activity levels and sales pipeline remain robust, as our expanded customer base and the market in general respond to our increased market presence."
At September 30, 2003, the company had $524.7 million in cash, cash equivalents and short-term investments. The major items affecting cash in the quarter were the payment of $98.0 million for 32.7 million of Mercator shares, and a tax payment of $8.1 million. Excluding these items, the company was cash flow positive. During the fourth quarter the company plans to pay the remaining balance of $11.3 million for the remaining Mercator shares not submitted in the original tender.
Highlights
During the third quarter of 2003, Ascential Software:
-- Announced and completed the acquisition of Mercator Software.
Mercator's products provide enhanced transactional data transformation
and routing capabilities and leading vertical industry solutions. The
combined technologies uniquely allow customers to apply Ascential's
comprehensive data integration platform pervasively, throughout their
enterprise, to support transactional, operational and analytical
application environments, regardless of data sources, targets, volumes
or latency. Ascential Software is now the largest independent software
vendor focused exclusively on enterprise data integration with more
than 3,000 customers and 900 employees worldwide.
-- Signed 44 new customers including: China Unicom, Cooper Industries,
Gibralter Insurance, Kellwood Company, Microstrategy, National Life
Finance Corporation, Office Depot, Perot Systems, Polk Australia Pty
Ltd., Saint-Gobain, Toshiba Industrial Products, the University of
Missouri, The University of Texas and Yokohama Bank.
-- Expanded business with 189 existing customers including: Acxiom, AIG,
Airbus, AT&T, Bank of America, Beckman Coulter, Boeing, Blockbuster,
Ingenix, International Paper, J.P. Morgan Chase, Kinkos, McKesson,
Munich Reinsurance, Novartis, Pfizer, Rockwell Automation, Safeway,
Inc., Sandia National Labs and Towers Perrin.
-- Won the Best Enterprise Integration award from Software Business
magazine. Ascential was honored at a ceremony in Boston on October 22,
2003 during the Software Business 2003 Conference. The publication
wrote that "The Ascential Enterprise Integration Suite is unique in the
integration landscape because it provides the only complete,
comprehensive data integration solution. Competing solutions overlook
data profiling and quality, focusing primarily on transformation ...
and no company moves data faster."
-- Was recognized by IDC, one of the industry's most respected IT analyst
firms, in their September 2003 report, "Ascential Introduces
QualityStage", for delivering a unique data matching capability that
allows companies to execute successful strategic initiatives in the
areas of ERP, CRM, direct marketing campaigns and mergers with superior
results. In a special report, IDC commends Ascential Software's
commitment to a class of technology that they believe will
revolutionize the way complex IT problems are approached.
-- Engaged in a number of activities with strategic partner IBM,
including:
- Building on Ascential's already strong relationship through support
for WebSphere Application Server 5.0. The deployment of Ascential(TM)
Enterprise Integration Suite and Real-Time Integration (RTI) Services
with WebSphere delivers advanced technology solutions to power the
real-time enterprise. IBM and Ascential together make the real-time
enterprise a reality, enabling users to take advantage of reliable,
accurate and current information available from anywhere across the
enterprise, at any time, further driving their strategic business
initiatives.
- In September, the IBM Software Group distributed a major announcement
introducing the Ascential Enterprise Integration Suite 7.0 to their
global base of over 150,000 customers through its iSource Newsletter,
the vehicle for introducing new IBM products and services.
- Delivered an international training program to the IBM sales
organizations for Data Management, Websphere, and Business Consulting
Services.
- Joined with the IBM Data Management Group and Meta for a customer
event in France to promote the IBM DB2 Information Integrator and the
Ascential Enterprise Integration Suite to IBM customers and partners.
- Established a multi-national procurement agreement enabling IBM's
operations worldwide to purchase Ascential products and services for
internal use.
-- Teamed with Hewlett Packard to deliver programs for "Driving Business
Value with 'Right-Time' Integration". Ascential Software and HP experts
explored strategies for leveraging real-time technologies through a
pragmatic, cost-effective approach that puts business information where
it needs to be exactly when customers need it. Ascential Software calls
this "right-time" integration because the delivery of each piece of
information is determined by the specific needs of a particular
industry, business and process at hand.
-- Hosted a special event in conjunction with The Data Warehousing
Institute (TDWI) World Conference in August to lead a best practices
discussion of one of the greatest challenges and opportunities facing
IT organizations today - delivering valuable business information from
strategic enterprise applications in "real time." The Experts Forum
featured four customers and was moderated by Maryfran Johnson, editor-
in-chief of Computerworld.
-- Appointed Mark Register as vice president and chief marketing officer.
Mr. Register is responsible for directing and leading the company's
activities in Corporate and Product Marketing, Global Strategic
Alliances, and Industry Solutions. Mr. Register joins Ascential from
Mercator Software, where he was executive vice president and president,
worldwide field operations.
-- Was named a ZapThought Leader by industry analyst firm ZapThink for
guiding Ascential Software customers in using XML, Web Services, and
Service Oriented Architectures (SOA's) to meet business needs.
-- Gained increased visibility by being recognized for enterprise data
integration leadership in research reports and notes by several
industry analyst firms, including AMR Research, Current Analysis,
Gartner, Giga Information Group, IDC, Meta Group, and Ventana Research.
Outlook and Guidance
"Our continuing financial and market share gain is increasing the visibility of our company at a time when CIOs are reassessing their internal integration infrastructures," said Pete Fiore, president of Ascential Software. "As IT organizations strain under the weight of the one-piece-at-a- time approaches to integration, a significant market opportunity has been created which we uniquely address with the Ascential Enterprise Integration Suite. The expanded talents, products and resources of Ascential Software provide us with an increased size, scale and market reach from which to serve our expanded customer base and growing market demand.
"During the third quarter, we shipped the Ascential Enterprise Integration Suite 7.0, along with Ascential's Real-Time Integration (RTI) Services. This offering provides customers with the latest enhancements and expansions to our product suite. With this release, Ascential Software is changing the enterprise data integration landscape and making data integration pervasive by harnessing the benefits of a Services-Oriented Architecture and eliminating concerns about data sources, quality, volumes, and latency. Our customers can now integrate and leverage data across all strategic analytic and enterprise applications - including CRM, ERP, and supply chain management, as well as business-to-business transactional processes - with complete confidence in the accuracy, completeness and timeliness of their critical information."
The company is currently anticipating fourth quarter revenue in the range of $61 million to $64 million, with GAAP profitability in the quarter on a net income basis toward the higher end of that revenue range. Pro forma profitability is calculated as described in the following paragraph, with the predominant factors detailed as follows: Mercator related transition expenses were approximately $1.2 million in the third quarter, and are anticipated to be approximately $3.5 million in the fourth quarter. Amortization of purchased intangibles and stock-based compensation was approximately $1.6 million in the third quarter, and is anticipated to be approximately $3.0 million in the fourth quarter, reflecting the full quarter effect of the Mercator acquisition. Legacy expenses related to previously divested business operations were approximately $0.3 million in the third quarter, and are anticipated to be approximately $0.3 million to $0.5 million in the fourth quarter. Merger, realignment and other charges were approximately $1.7 million and write-off of in-process research and development was $2.0 million in the third quarter. These charges are related to the Mercator acquisition and are not anticipated to recur in the fourth quarter. For 2004 the company anticipates revenue in the range of $265 million to $275 million, and anticipates GAAP profitability in each quarter of 2004, barring unforeseen circumstances. Total costs and expenses for 2004 are anticipated to be between $61 million and $64 million per quarter. Included in those costs and expenses are amortization of purchased intangibles and stock-based compensation, estimated at $3.0 million per quarter and legacy expenses related to divested business operations estimated as less than $0.5 million per quarter. Interest income, based on recent interest rates and expected cash balances, is expected to be approximately $2.3 million per quarter. The tax rate planned for 2004 is 33%.
The company believes that the pro forma results described in this release are useful for an understanding of its ongoing operations because GAAP results include expenses unrelated to the company's ongoing data integration business, as well as the non-cash charges associated with the amortization of purchased intangibles and stock-based compensation. Management of the company uses these pro forma results to compare the company's performance to that of prior periods for analysis of trends, and to evaluate the company's financial strength, develop budgets, manage expenditures, and develop a financial outlook. Pro forma results are supplemental and are not intended as a substitute for GAAP results. Relative to GAAP, pro forma results described in this release exclude the following items, net of associated taxes: amortization of purchased intangibles, such as developed technology and customer lists; amortization of stock-based compensation; a litigation settlement; merger, realignment and other costs primarily related to employee severance and the closure of idle facilities; in-process research and development charges; non-recurring acquisition-related transition expenses; and revenue, expenses and other items related to divested business operations.
Conference Call
Management will host a conference call at 5:00 PM (EST) today to discuss the company's operating performance and results. The conference call will be broadcast live through a link on the Investor Relations page on the Ascential web site at www.ascential.com/investors. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software.
For those who cannot attend the live broadcast, a replay will be available on the web site at www.ascential.com/investors or by calling (888) 562-6892 beginning about two hours after the call ends.
About Ascential Software
Ascential Software Corporation is the leading provider of enterprise data integration solutions to organizations worldwide. Customers use the Ascential Enterprise Integration Suite to integrate and leverage data across all transactional, operational, and analytical applications with confidence in the accuracy, completeness and timeliness of critical information. Ascential Software's powerful data profiling, data quality, data transformation, parallel processing, meta data and connectivity solutions enable customers to reduce total cost of ownership and increase return on IT investment. Headquartered in Westboro, Mass., Ascential Software has offices worldwide and supports more than 3,000 customers in such industries as financial services, telecommunications, healthcare, life sciences, manufacturing, consumer goods, retail, and government. More information on Ascential Software can be found on the web at www.ascential.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This public announcement contains forward-looking statements that are subject to numerous risks and uncertainties. These forward-looking statements address a variety of subjects including, for example, revenue growth; customer value; technology differentiation; activity levels and sales pipeline; market validation; increased market presence and visibility; payment of the remaining balance for the remaining Mercator shares; market opportunity of integration infrastructure; expanded customer base and growing market demand; changes to the enterprise data integration landscape; increased presence of data integration through the harnessing of the benefits of a Service Oriented Architecture and elimination of concerns about data sources, quality, volumes and latency; ability of customers to integrate and leverage data; growth of the enterprise data integration market and the company's unique position therein; seasonality; the functionality, characteristics, quality and performance capabilities of Ascential Software's products and technology; results achievable and benefits attainable through deployment of Ascential Software's products; anticipated innovation and product development; reduction in total cost of ownership for customers and return on IT investment; profitability; costs and expenses; interest income; 2004 tax rates; and the usefulness of pro forma results. Any statements contained in this public announcement, including without limitation statements to the effect that the company or its management "believes," "expects," "anticipates," "plans," "may," "will," "projects," "continues," "intends" or "estimates," or statements concerning "potential" or "opportunity" or other variations thereof or comparable terminology or the negative thereof that are not statements of historical fact should be considered forward-looking statements as a result of certain risks and uncertainties. These risks and uncertainties could cause actual results and events materially to differ for historical or anticipated results and events. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements: the closing of the company's books and customary quarter-end accounting procedures; the ability of Ascential Software to expand its market share; growth rates for the enterprise data integration software market; general business conditions in the software industry, the technology sector, and in the domestic and international economies; rapid technological change in the markets served by Ascential Software; dependence on international operations; global and geopolitical instability; and difficulties that Ascential Software may experience integrating technologies, operations and personnel of completed or future acquisitions, including the recent acquisition of Mercator Software, Inc. The financial measures discussed in this press release also involve risks and uncertainties and are subject to final audited results for the period or periods covered. Investors and potential investors should review carefully the description of risks and uncertainties that, together with other detailed information about the company, is contained in the periodic reports that the company files from time to time with the Securities and Exchange Commission, including the company's most recent Form 10-Q. The forward-looking statements and financial measures contained herein represent the judgment of Ascential Software, as of the date of this release, and Ascential Software disclaims any intent or obligation to update such forward-looking statements to reflect any change in Ascential's expectations with regard thereto or any change in events, conditions, and circumstances on which such statements are based.
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