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For more information contact:
Ashley Nalls
Director of Marketing
Firstwave Technologies, Inc.
770-431-1313
ashleyn@firstwave.net
Firstwave Reports 213% Increase in Net Income and 42% Increase in Revenues in First Quarter over Prior Quarter
Firstwave Continues its Positive Trend by Delivering $0.46 per Basic Share Net Income
ATLANTA, GA - April 22, 2002 -- The Company’s first quarter 2002 financial results reflect strong quarter over prior quarter growth and dramatic quarter over comparable quarter improvement. The results for the quarter validate the continuing positive trend that the Company has demonstrated for the past three quarters.
To summarize the financial highlights of the first quarter of 2002:
Comparing first quarter of 2002 with the comparable quarter of 2001:
* Software licenses increased by 452% to $728,000.
* Services revenues increased by 283% to $2,875,000.
* Total revenues increased by 152% to $4,056,000.
* Net income increased by $2,125,000 from a loss of $1,159,000 in first quarter 2001 to a profit of $966,000.
* Earnings per basic share increased to $.46 from a loss of $.55 per basic share.
Comparing first quarter of 2002 with the results of fourth quarter 2001:
* Software licenses increased by 77%.
* Services revenues increased by 55%.
* Total revenues increased by 42%.
* Net income increased by 213%.
* Earnings per basic share increased from $.15 per basic share to $.46 per basic share. · Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was $1,415,000, further validating the Company’s growing financial strength.
Firstwave reported another quarter of positive cash flow, increasing cash by $410,000 to $2,270,000. Since the end of the first quarter, the Company has received an additional $1,900,000 from outstanding receivables. The Company has no bank or other debt and does not anticipate the need to borrow money or seek outside investment to fund anticipated continued growth.
Firstwave’s balance sheet is strong. In addition to its cash position, the Company’s capitalized software balance is $1,469,000 even though over $11,000,000 has been invested in new technology over the last several years. Furthermore, Firstwave’s Tax Loss Carry Forward of approximately $24,000,000, none of which is reflected on our balance sheet, can be a valuable asset. Deferred revenue increased due to a prepayment of $533,000 for software licenses that will be delivered and recognized as license revenue in the second quarter.
Looking ahead.
Firstwave hopes to enjoy continued positive performance. The Company’s pipeline of prospective business continues to grow, in large part attributable to the acceptance of its new technology.
Beginning in the fourth quarter of 2001, Firstwave began the expansion of its Sales and Marketing team and now has a strong sales and marketing organization in place. We also have increased our Professional Services and Development teams to provide the services for successful customer implementations. Firstwave is positioned to take advantage of the anticipated demand for CRM products.
"We Want Exactly What You Did for . . ."
Satisfied customers are proving to be a source of business referrals as well as expanding their use of Firstwave products. Firstwave customers are contributing to our competitive advantage: they confirm the ease of implementation using our new technology; they are able to easily customize our applications; they do not experience the high project failure rate that is too often associated with CRM implementations – Firstwave is meeting or exceeding their expectations.
Satisfied customers have become a source of new business for Firstwave. In one case, a financial institution initiated the contact with Firstwave requesting that the Company provide the same solution for them that Firstwave had delivered for another bank. This opportunity validates Firstwave’s commitment to customer satisfaction – and doing whatever it takes to ensure the successful implementation of our software. In another instance, one of our smaller customers that was successfully installed in the first quarter of 2002 was so pleased with the implementation that they recommended a Firstwave solution for their parent organization. This referral represents significantly more revenue than was earned from the subsidiary. While neither of these leads has closed, Firstwave did not incur any marketing costs in identifying the prospects but instead is beginning to enjoy a “preferred vendor” status. Another opportunity was created by a customer that successfully upgraded to Firstwave’s newest technology and subsequently was able to recommend the Firstwave solution for another division of his Fortune 50 company.
Large Engagement Should Continue to Generate Revenues in the Next Two Quarters
Firstwave continues to partner with a leading global services company in delivering a Client Contact Center application. This partner contributed a significant portion of revenues and receivables during the quarter and contributed a significant portion of the cash increase of the quarter. In addition, Firstwave has received additional payments since the end of the quarter as we continue to receive payments from this partner. Firstwave reasonably believes that the revenues from this partner will remain at a high level for the next two quarters based upon the projects already in process. Furthermore, our commitment to delivering a successful Firstwave solution has solidified our relationship with the customer with the potential referral for additional opportunities in other business units. Leverage gained through our successful implementations and other opportunities should significantly diversify our future revenue sources.
Our Financial Success is Proving to be a Significant Competitive Advantage.
CRM customers justifiably require assurance of a vendor’s business continuity as an important criteria in their purchase decision. We believe that Firstwave’s growing revenues and profits and positive cash flow will be a contributing factor to our future success. The difficulties being experienced today in the technology industry have reduced the volume of venture capital that funded massive marketing campaigns rather than sound technology investments. This tough climate has proven to be an advantage for companies like Firstwave that have prudently balanced expenses to revenues.
Partnerships – A New Approach to Cracking the Old Chicken and Egg Dilemma.
Systems integrators remain a key control point in most significant CRM purchase decisions. Many other software vendors utilize partnerships as revenue opportunities by charging their partners for initial and recurring training. This creates a dilemma for prospective partners – they have to invest before they can generate revenues. Firstwave has implemented a program to allow potential partners to work closely with our professional services and development staff. Existing and potential partners prefer our open attitude allowing them to understand our technology platform and gain confidence in our solution before committing their own resources.
Firstwave has also introduced an innovative idea to financially assist our partner channel. We utilize our teaching environment to generate revenues for both Firstwave and our new partners. This concept permits both parties to benefit from the knowledge transfer and has the added benefit of establishing personal relationships that will endure as the partners apply their new Firstwave product skills on engagements that they initiate.
Firstwave’s goal is to leverage our software technology investments by using partners to help with our implementations. This theory of knowledge-sharing with our partners allows us to meet the demand for our services when needed. Our formula for combining Firstwave knowledge with partners’ resources assures that our customers receive the best implementation of our software and that the system integrator achieves full utilization of trained resources. Firstwave’s partnership program is being very well received by our partners. Many of our competitors have neglected to focus on their partner relationships. The subsequent lack of vendor involvement to assure proper and efficient implementation is one of the reasons that other CRM vendor installations have a high failure rate. Other CRM vendors are exacerbating this problem by competing for the implementation related professional services with the system integrators that brought them their initial success. This conflict in the system integrator relationships has created new opportunities for Firstwave.
Developing strong relationships with systems integrators is a major focus of Firstwave’s marketing efforts. Because of the benefit Firstwave’s partners gain from a relationship with Firstwave, they will often introduce us to qualified customers late in the sales cycle thereby reducing our cost of sale and the sales cycle.
Demonstrated Scalability Opens Up Opportunities for Larger Deals.
Enterprise wide deployments demand that the software be scaleable. Large companies don’t want to make large investments in unproven technologies. Generally, prospects will want referenceable sites where the proposed enterprise solution has been implemented to the same scale. Firstwave is now deploying our technology in two 500-seat call centers. We will continue to focus on mid-market companies, but we expect to see a growing percentage of our deals to be with larger companies that are re-evaluating their process for choosing software vendors. Firstwave will remain focused on providing the right fit to customer requirements rather than adding unneeded and cumbersome features that only complicate implementation and create user acceptance difficulties.
Large Contact Centers are Again Significant Opportunities for Firstwave.
Firstwave was once one of the largest vendors in the world of "Contact Center" technology. Our large current 1000-seat United Kingdom project has allowed us to develop what we believe is the best web based Contact Center technology in the market. The new Contact Center functionality opens a new market for us in converting some of our larger legacy customers to the new product. We also hope to compete in the market for large call centers – an opportunity we were excluded from for the last several years.
Thanks to the Team
I want to point out that our success has been the result of the consistent hard work of a team including our employees on both sides of the Atlantic Ocean and our Board of Directors. Our company morale and sense of teamwork is at an all time high. Our Board members have been an invaluable source of guidance and support for me personally.
The Company believes that its 18-year history and current financial position are a significant competitive advantage. Firstwave offers a compelling value proposition: leading edge technology, delivered in a customer intimate fashion, by a company with expertise and stability.
Thank you for your interest in Firstwave Technologies, Inc. We value your continued support of our Company.
Richard T. Brock
President and CEO
About Firstwave
Firstwave® (www.firstwave.net) provides web-based, CRM solutions that automate and optimize how companies get, keep and grow customer relationships. Firstwave offers one of the only true, 100% web-based CRM applications in the market today. Originally founded in 1984 as Brock Control Systems, Firstwave maintains the depth and industry experience required to address unique business needs of unique companies. With 18 years of experience in relationship management, Firstwave holds the distinction of being the Best Internet Based CRM Solution for the past two years as selected by the Denali Group, has been chosen as one of the Top 30 CRM Solutions by ISM for the last three years, and has received the CRM Excellence Award by the Technology Marketing Corporation.
NOTE: Except for historical information contained herein, the matters set forth in this news release are forward-looking statements. The Company noted that the forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, such as the Company's capital requirements and other liquidity concerns, potential fluctuations in quarterly results due to market demand, competition, technological developments, the Company's ability to continue to comply with NASDAQ listing requirements, and the size, timing, and contractual terms of orders, and also the risks and uncertainties discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2001, filed with the Securities and Exchange Commission, under the caption “Certain Factors Effecting Forward Looking Statements,” which discussion is incorporated herein by this reference.
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