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eSoft Announces Financial Results for Third Quarter 2001
Company Reports 113% Revenue Increase, 68% Earnings Improvement, Subscription Bookings up 223%
BROOMFIELD, Colo., Oct. 23 /PRNewswire/ -- eSoft, Inc. (Nasdaq: ESFT - news) today reported financial results for the third quarter ended September 30, 2001. The Company reported total revenue of $2.6 million, a 113% increase over the third quarter of 2000. The Company's revenue, EBITDA and earnings results mark the fourth consecutive quarter of successfully delivering results in line with expectations.
``We are pleased to see the continued adoption of our products and SoftPak applications by customers and channel partners,'' said Jeff Finn, president and CEO of eSoft. ``We believe our secure Internet appliances are providing eSoft with rapid revenue and unit growth while the recurring revenue from SoftPak subscriptions is contributing to improved predictability and visibility to future periods.''
Finn continued, ``We are delighted that we were able to deliver our strongest quarterly sales bookings in the Company's history, while simultaneously improving the gross margin from 31% to 45% and reducing our operating expenses by 11% compared to the second quarter of this year.''
Financial Results
The Company successfully met its financial objectives for the fourth consecutive quarter and continues to make progress towards near-term positive EBITDA and net profitability. Total revenue for the quarter was $2.6 million, a 113% increase over the third quarter of 2000. The Company has achieved an average sequential revenue growth rate of 22% over the past four quarters.
EBITDA was a loss of $1.4 million, an improvement of 33% from the second quarter and a 75% improvement over the third quarter of 2000. Net loss for the quarter was $1.87 million, excluding an impairment of $341,000 for the decline in the value of the investment in Gateway, Inc. common stock. This was an improvement of 28% from the net loss in the second quarter of $2.6 million. EPS for the quarter, excluding the impairment, was a loss of $0.12 per share, calculated on 15.7 million weighted average shares outstanding, a 29% improvement in EPS over the second quarter of this year and a 68% improvement over the third quarter of 2000. EPS for the quarter including the impairment was a loss of $0.14 per share.
Based on the current cash burn rate that is projected to be under $1 million for the fourth quarter and anticipated ongoing progress towards profitability, the Company believes its current cash reserves and investments of over $14 million will provide the capital required to sustain operations for the foreseeable future.
During the quarter, the Company's Board of Directors authorized a share repurchase program, whereby the Company may repurchase up to $2 million of its common stock. Under the terms of this program, the Company repurchased 104,400 shares at an average price of $0.96 per share during the quarter. The Company also repurchased the 266,000 remaining shares owned by Intel in early October at a price of $1.00 per share. During the quarter, the Company transferred to the Nasdaq SmallCap Market. The Company is currently not in compliance with all of the Nasdaq SmallCap Market's listing requirements and there can be no assurance that the Company can regain compliance with these listing requirements.
Net Internet security appliance and SoftPak revenue rose to $2.3 million for the quarter, an increase of 38% over the second quarter of this year and an increase of 112% over the third quarter of 2000. Revenue from SoftPak applications, which is predominantly recurring due to the subscription distribution model, grew to $834,000, a 31% increase from the second quarter of this year. SoftPak bookings increased to $1.6 million, a 72% increase over the second quarter, while subscription bookings from the IBM transition services program announced during the quarter reached $1.5 million. Combined SoftPak and subscription bookings exceeded $3 million for the quarter, which was an increase of 223% over subscription bookings in the second quarter. In addition, the Company's deferred revenue grew 35% to $1.4 million, during the third quarter. The deferred revenue amount does not include amounts from the IBM transition services program as these customers are billed on a monthly basis.
For the second consecutive quarter, the Company signed over 100 new value added resellers (VARs). In addition, the Company added over 20 new distributors internationally, bringing the number of international markets covered by the Company to over 40. The Company believes it will continue to witness the successful adoption of the SoftPak business model by these channel partners.
Recent Highlights
During the third quarter and in recent weeks, the Company has made several announcements related to the Company's strategic focus on accelerated revenue growth.
During the quarter, three new SoftPak applications were launched as part of the Company's continuous efforts to deliver value-added software applications to meet the IT and security needs of its customers.
The Company announced a partnership with Velocitus, a leading Internet service provider, to bundle eSoft's InstaGate EX2 Internet security appliance with Velocitus' broadband services. Velocitus' customers can now purchase a firewall service based on the InstaGate EX2 Internet security appliance as well as SoftPak business applications delivered via the Company's patent-pending SoftPak Director technology.
The Company announced that its patent-pending SoftPak Director(TM) technology is being highlighted through a marketing program with Intel® Corporation. As part of this program, Intel and eSoft will promote the company's InstaRak secure server appliance and the InstaGate EX2 Internet security appliance to more than 15,000 Intel product dealers, resellers, service providers, solution providers and other vendors of embedded components, highlighting eSoft's capabilities and design.
The Company launched the InstaRak secure server appliance during the quarter and began initial shipping in the last part of the quarter. According to International Data Corporation (IDC), the worldwide Appliance Web server market was $161.9 million in 2000 and is projected to grow to $2.2 billion by 2005. The InstaRak secure server appliance is designed to meet the market's need for a server appliance with integrated security technology, and the Company believes it is well positioned for this market.
The InstaGate EX2 Internet security appliance earned recognition as a Computer Reseller News (CRN) ``recommended'' product from the CRN Test Center at PC Expo 2001.
Outlook
For the fourth quarter ending December 31, 2001, the Company anticipates revenue of $2.9 to $3.3 million. In addition, the Company is projecting an EBITDA loss of $400,000 to $800,000 and a loss per share of $0.05 to $0.08 for the fourth quarter.
For the 2002 fiscal year, the Company is projecting 70-100% revenue growth over 2001 and is targeting near-term positive EBITDA and net profitability.
``We have now completed one full year with our current business model in place and believe that the results we have experienced provide a strong base to build upon moving into the new year. We continue to grow our revenue each quarter and remain very focused on our goals of near term positive EBITDA and net profitability,'' said Finn.
Conference Call
eSoft's Third Quarter 2001 conference call will take place today at 4:30 PM EDT. The call will be led by Jeff Finn, eSoft President and CEO, and Amy Beth Hansman, Vice President of Finance. Dial in information for the call is 800-453-2086 (Domestic callers) or 952-556-1523 (International callers). This conference call will also be available via webcast. Please visit www.esoft.com for information on accessing via webcast.
bewegt Euch mal.
eSoft Announces Financial Results for Third Quarter 2001
Company Reports 113% Revenue Increase, 68% Earnings Improvement, Subscription Bookings up 223%
BROOMFIELD, Colo., Oct. 23 /PRNewswire/ -- eSoft, Inc. (Nasdaq: ESFT - news) today reported financial results for the third quarter ended September 30, 2001. The Company reported total revenue of $2.6 million, a 113% increase over the third quarter of 2000. The Company's revenue, EBITDA and earnings results mark the fourth consecutive quarter of successfully delivering results in line with expectations.
``We are pleased to see the continued adoption of our products and SoftPak applications by customers and channel partners,'' said Jeff Finn, president and CEO of eSoft. ``We believe our secure Internet appliances are providing eSoft with rapid revenue and unit growth while the recurring revenue from SoftPak subscriptions is contributing to improved predictability and visibility to future periods.''
Finn continued, ``We are delighted that we were able to deliver our strongest quarterly sales bookings in the Company's history, while simultaneously improving the gross margin from 31% to 45% and reducing our operating expenses by 11% compared to the second quarter of this year.''
Financial Results
The Company successfully met its financial objectives for the fourth consecutive quarter and continues to make progress towards near-term positive EBITDA and net profitability. Total revenue for the quarter was $2.6 million, a 113% increase over the third quarter of 2000. The Company has achieved an average sequential revenue growth rate of 22% over the past four quarters.
EBITDA was a loss of $1.4 million, an improvement of 33% from the second quarter and a 75% improvement over the third quarter of 2000. Net loss for the quarter was $1.87 million, excluding an impairment of $341,000 for the decline in the value of the investment in Gateway, Inc. common stock. This was an improvement of 28% from the net loss in the second quarter of $2.6 million. EPS for the quarter, excluding the impairment, was a loss of $0.12 per share, calculated on 15.7 million weighted average shares outstanding, a 29% improvement in EPS over the second quarter of this year and a 68% improvement over the third quarter of 2000. EPS for the quarter including the impairment was a loss of $0.14 per share.
Based on the current cash burn rate that is projected to be under $1 million for the fourth quarter and anticipated ongoing progress towards profitability, the Company believes its current cash reserves and investments of over $14 million will provide the capital required to sustain operations for the foreseeable future.
During the quarter, the Company's Board of Directors authorized a share repurchase program, whereby the Company may repurchase up to $2 million of its common stock. Under the terms of this program, the Company repurchased 104,400 shares at an average price of $0.96 per share during the quarter. The Company also repurchased the 266,000 remaining shares owned by Intel in early October at a price of $1.00 per share. During the quarter, the Company transferred to the Nasdaq SmallCap Market. The Company is currently not in compliance with all of the Nasdaq SmallCap Market's listing requirements and there can be no assurance that the Company can regain compliance with these listing requirements.
Net Internet security appliance and SoftPak revenue rose to $2.3 million for the quarter, an increase of 38% over the second quarter of this year and an increase of 112% over the third quarter of 2000. Revenue from SoftPak applications, which is predominantly recurring due to the subscription distribution model, grew to $834,000, a 31% increase from the second quarter of this year. SoftPak bookings increased to $1.6 million, a 72% increase over the second quarter, while subscription bookings from the IBM transition services program announced during the quarter reached $1.5 million. Combined SoftPak and subscription bookings exceeded $3 million for the quarter, which was an increase of 223% over subscription bookings in the second quarter. In addition, the Company's deferred revenue grew 35% to $1.4 million, during the third quarter. The deferred revenue amount does not include amounts from the IBM transition services program as these customers are billed on a monthly basis.
For the second consecutive quarter, the Company signed over 100 new value added resellers (VARs). In addition, the Company added over 20 new distributors internationally, bringing the number of international markets covered by the Company to over 40. The Company believes it will continue to witness the successful adoption of the SoftPak business model by these channel partners.
Recent Highlights
During the third quarter and in recent weeks, the Company has made several announcements related to the Company's strategic focus on accelerated revenue growth.
During the quarter, three new SoftPak applications were launched as part of the Company's continuous efforts to deliver value-added software applications to meet the IT and security needs of its customers.
The Company announced a partnership with Velocitus, a leading Internet service provider, to bundle eSoft's InstaGate EX2 Internet security appliance with Velocitus' broadband services. Velocitus' customers can now purchase a firewall service based on the InstaGate EX2 Internet security appliance as well as SoftPak business applications delivered via the Company's patent-pending SoftPak Director technology.
The Company announced that its patent-pending SoftPak Director(TM) technology is being highlighted through a marketing program with Intel® Corporation. As part of this program, Intel and eSoft will promote the company's InstaRak secure server appliance and the InstaGate EX2 Internet security appliance to more than 15,000 Intel product dealers, resellers, service providers, solution providers and other vendors of embedded components, highlighting eSoft's capabilities and design.
The Company launched the InstaRak secure server appliance during the quarter and began initial shipping in the last part of the quarter. According to International Data Corporation (IDC), the worldwide Appliance Web server market was $161.9 million in 2000 and is projected to grow to $2.2 billion by 2005. The InstaRak secure server appliance is designed to meet the market's need for a server appliance with integrated security technology, and the Company believes it is well positioned for this market.
The InstaGate EX2 Internet security appliance earned recognition as a Computer Reseller News (CRN) ``recommended'' product from the CRN Test Center at PC Expo 2001.
Outlook
For the fourth quarter ending December 31, 2001, the Company anticipates revenue of $2.9 to $3.3 million. In addition, the Company is projecting an EBITDA loss of $400,000 to $800,000 and a loss per share of $0.05 to $0.08 for the fourth quarter.
For the 2002 fiscal year, the Company is projecting 70-100% revenue growth over 2001 and is targeting near-term positive EBITDA and net profitability.
``We have now completed one full year with our current business model in place and believe that the results we have experienced provide a strong base to build upon moving into the new year. We continue to grow our revenue each quarter and remain very focused on our goals of near term positive EBITDA and net profitability,'' said Finn.
Conference Call
eSoft's Third Quarter 2001 conference call will take place today at 4:30 PM EDT. The call will be led by Jeff Finn, eSoft President and CEO, and Amy Beth Hansman, Vice President of Finance. Dial in information for the call is 800-453-2086 (Domestic callers) or 952-556-1523 (International callers). This conference call will also be available via webcast. Please visit www.esoft.com for information on accessing via webcast.
