FAIRFAX, Va., July 27 /PRNewswire-FirstCall/ -- webMethods, Inc.
(NASDAQ:WEBM), a leading provider of business integration and
optimization software, today announced financial results for its
fiscal first quarter ended June 30, 2006. Total revenue for the
first quarter was $46.0 million, compared to $47.7 million in the
prior year period. License revenue for the first quarter was $12.6
million, compared to $18.5 million in the prior year period. Under
U.S. generally accepted accounting principles (GAAP), the company's
net loss for the first quarter was $5.8 million, or a loss of $0.11
per share, compared to a net loss of $514,000, or a loss of $0.01
per share, in the prior year period. GAAP results for the first
quarter reflect $2.7 million of stock-based compensation expense as
a result of the company's adoption of Financial Accounting Standard
No. 123R. Fiscal year 2006 results do not include these expenses.
First quarter GAAP results also include $599,000 for amortization
of acquired intangibles. This compares to expenses of $661,000 for
amortization of deferred warrant charges, $599,000 for amortization
of acquired intangibles and $288,000 for restructuring and related
costs included in last year's first quarter GAAP results.
"Subsequent to our July 7th announcement, we've made significant
progress by closing a number of the deals that we expected to
recognize in the first quarter. That said, I want to be clear that
our first quarter results remain unacceptable," said David
Mitchell, president and CEO, webMethods, Inc. "This management team
is rigorously focused on quickly regaining the significant momentum
that we established over the past two years." Mitchell continued,
"Our pipeline is strong and continues to grow. Our markets are
expanding and our technology remains best-in-class, as we remain a
vital component of our customer's operations. We remain confident
that our strategy will continue to positively differentiate us in
the marketplace and allow for growth in our business." First
Quarter Financial Highlights: * Cash and marketable securities at
June 30, 2006 increased by approximately $12.8 million to $175.1
million from $162.3 million at March 31, 2006. * Total deferred
revenue at June 30, 2006 decreased by $4.4 million to $56.5 million
from $60.9 million at March 31, 2006. Financial Outlook: Based on
currently available information, webMethods anticipates total
revenue in the fiscal second quarter ending September 30, 2006 will
be in the range of $53.5 million to $56.5 million, which includes
license revenue in the range of $19.5 million to $22.5 million.
GAAP net income per diluted share for the second quarter is
anticipated to be in the range of $0.02 to $0.07. GAAP net income
for the second quarter is expected to include expenses of
approximately $3.0 million related to stock-based compensation and
$599,000 for amortization of acquired intangibles and assumes a tax
rate of 5%. Quarterly Business Highlights: During the first
quarter, webMethods introduced the SOA Partner Accelerator as a new
component of the webMethods Partner Program. The new program is
designed to equip webMethods' partners with the resources needed to
more fully capitalize on the shift to service- oriented
architecture (SOA) as the next-generation enterprise computing
platform. webMethods signed new or extended partnership agreements
with E- Dynamic, UltimoSoft, and Vertical VAR, among others, during
the quarter. The webMethods Fabric 6.5 Certification Program was
introduced during the quarter. Addressing the specific needs of B2B
integration developers, EAI developers, business analysts, system
administrators, and enterprise architects, it provides a definitive
standard of competency for enterprises employing the webMethods
Fabric product suite. In conjunction with ebizQ, webMethods
published Integration and SOA: Concepts, Technologies, and Best
Practices. Written for business managers and IT practitioners, this
160 page book provides practical recommendations on how to develop
successful business integration, service-oriented architecture and
business process management projects within the enterprise. Peter
Gyenes was elected to the webMethods Board of Directors as an
independent director. With more than four decades of IT industry
experience, Gyenes most recently served as the chairman and CEO of
Ascential Software, having previously served in the same role for
Informix Software, Ascential's predecessor firm. The company also
announced the dates for Integration World 2006, webMethods' annual
customer conference, which is taking place November 6-8, 2006 at
the Wardman Park Marriott Hotel in Washington, DC. Global Customer
Wins: webMethods won new and additional business during the first
quarter with strategic customers worldwide. The following companies
represent important new and follow-on business that closed during
the quarter: ASUSTek Computer, Inc., Bossini Enterprise Ltd.,
FirstEnergy Corp., Flextronic, Hewlett Packard, Lufthansa Technik
AG, New South Wales (Australia) Police, PeopleClick, Inc., Ping An
Insurance, Premier, Inc., PT Bank Mandiri, Renesas Technology
America, Inc., Tchibo GmbH, University of Manchester, and Videotron
Ltd., a Quebecor Media Company, among others. Conference Call
Information: webMethods will host a conference call at 5:00 p.m.
Eastern Time today to discuss the company's fiscal first quarter
financial results and its future guidance. The conference call will
be available via telephone by dialing 1 (877) 468-1591 in North
America or 1 (706) 679-0585 outside North America, or via webcast
at http://www.webmethods.com/investors. A replay of this call will
be available through August 1, 2006. Please dial 1-(800) 642-1687
in North America and 1-(706) 645-9291 outside North America,
confirmation number 2547877. About webMethods, Inc. webMethods
(NASDAQ:WEBM) provides business integration software to integrate,
assemble and optimize available IT assets to drive business process
productivity. webMethods delivers an innovative, enterprise-class
business integration platform that incorporates proven integration
technology with next generation capabilities into one interoperable
set of tools that delivers a unique combination of efficiency,
agility and control. webMethods combines industry leadership with a
zealous commitment to customers to deliver tangible business value
to more than 1,400 global customers. webMethods is headquartered in
Fairfax, Va., with offices throughout the U.S., Europe, Asia
Pacific and Japan. More information about the company can be found
at http://www.webmethods.com/. The webMethods name and logo are
registered trademarks of webMethods, Inc. in the United States and
certain other countries. All other marks mentioned are trademarks
or service marks of their respective companies. This press release
and the conference call announced in it may contain various remarks
about the future expectations, plans and prospects of webMethods
that constitute forward-looking statements for purposes of the safe
harbor provisions of U.S. securities laws. Specific forward-looking
statements relate to future market opportunities for webMethods'
solutions, webMethods' products and services and their performance,
the size and strength of its markets, the size and quality of its
pipeline, expected future financial performance (including total
revenue, license revenue, level of cash and marketable securities,
non-cash or non-recurring charges, expenses, net earnings or loss,
earnings or loss per share), expected financial metrics,
webMethods' future cost savings and expense levels, the anticipated
result of marketing and selling models and approaches, the
anticipated contributions to webMethods' future financial
performance of certain products or geographic regions of its
business, demand for some or all of its products and the
contribution to webMethods' revenue of business partners or
webMethods' products or services. Actual results of webMethods may
differ materially from those indicated by these forward-looking
statements as a result of various risks and uncertainties,
including the impact of economic conditions, geopolitical factors,
seasonal factors, competitive and pricing pressures, terrorism and
related uncertainties in the U.S. and abroad on the company's
customers and prospects and their IT spending budgets and
priorities; impact upon operations of legal compliance matters or
internal controls review, improvement and remediation; difficulties
in achieving or maintaining anticipated expense levels and
controlling major expenses; variations in the size and timing of
customer orders and demand for software offered by webMethods;
impact of compliance programs and claims for alleged violations of
requirements and duties; impact of changes in management or staff
levels; variations in revenue influenced by software vendor or
systems integrator partners; impact of rapid technological change;
and these and other risks and uncertainties discussed more fully in
webMethods' SEC filings, including those discussed in the "Risk
Factors" section of webMethods' Form 10-K for the year ended March
31, 2006, which is on file with the U.S. Securities and Exchange
Commission and may be accessed at http://www.sec.gov/ or
webMethods' investor relations web page at
http://www.webmethods.com/investors. webMethods disclaims any
obligation to update or correct any forward-looking statements made
herein due to the occurrence of events after the issuance of this
press release. webMethods, Inc. Condensed Consolidated Statements
of Operations (in thousands, except shares and per share data)
(Unaudited) Three Months Ended June 30, 2006 2005 Revenue License
$12,637 $18,467 Professional services 13,152 11,683 Maintenance
20,217 17,585 Total revenue 46,006 47,735 Cost of revenue
Amortization of intangibles 599 599 License 324 214 Professional
services 12,153 10,299 Maintenance 3,197 3,255 Total cost of
revenue 16,273 14,367 Gross profit 29,733 33,368 Operating expenses
Sales and marketing 19,488 17,275 Research and development 10,976
11,118 General and administrative 7,129 6,214 Restructuring costs -
288 Total operating expenses 37,593 34,895 Operating loss (7,860)
(1,527) Interest income and other, net 2,284 1,155 Net loss before
taxes $(5,576) $(372) Provision for income taxes 228 142 Net loss
$(5,804) $(514) Basic and fully diluted net loss per share $(0.11)
$(0.01) Shares used in computing per share amount Basic and diluted
54,987,235 53,375,463 webMethods, Inc. Condensed Consolidated
Balance Sheets (in thousands) June 30, March 31, 2006 2006
(unaudited) ASSETS Current assets: Cash and cash equivalents
$129,162 $82,371 Marketable securities available for sale 45,927
79,943 Accounts receivable, net 45,455 64,298 Deferred income tax
assets, net 184 138 Prepaid expenses and other current assets 8,675
6,830 Total current assets 229,403 233,580 Property and equipment,
net 9,582 10,274 Goodwill 46,704 46,704 Intangibles assets, net
5,394 5,993 Long-term deferred income tax assets, net 2,044 1,961
Other assets 4,606 4,299 Total assets $297,733 $302,811 LIABILITIES
& STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$5,782 $7,323 Accrued expenses 12,063 10,866 Accrued salaries and
commissions 9,624 12,694 Deferred revenue 54,293 59,168 Current
portion of capital lease 183 259 Total current liabilities 81,945
90,310 Capital lease obligations, net of current portion - 10 Other
long-term liabilities 3,789 3,941 Long-term deferred revenue 2,226
1,772 Total liabilities 87,960 96,033 Total stockholders' equity
209,773 206,778 Total liabilities and stockholders' equity $297,733
$302,811 DATASOURCE: webMethods, Inc. CONTACT: Christopher Martin,
Investor Relations, +1-703-460-6609, , or John Conley, Public
Relations, +1-703-460-5996, , both of webMethods, Inc. Web site:
http://www.webmethods.com/
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