Verity Reports First Quarter Results
Continued Profitability in Challenging Economic Environment
- Revenue & earnings in line with September 3rd pre-announcement
- Revenue for the quarter was $22.0 million
- EPS for the quarter was $0.04 per share
- Net income for the quarter was $1.4 million
- Cash and investments at $243 million
- Repurchased $6.6 million in Verity common stock during the quarter
- DSO's of 71 days
- K2 Enterprise 4.5 launch gets strong positive response
- Verity technology is a key component in just-launched Documentum 5
content management platform
- K2 software is used by the U.S. Department of Defense, E*Trade and KPMG
UK to enhance their knowledge management infrastructures
- Signed significant deals with Alcoa, Boeing, Caterpillar, CSFB, Diageo
PLC, Dupont, Eastman Kodak, Home Depot, Pfizer, Standard Life, Unocal,
Verizon, Wells Fargo and others
- Continued leadership in OEM market with significant new or extended
licensing agreements with Plumtree, Stellent, TrendMicro and others
SUNNYVALE, Calif., Sept. 12 -- Verity, Inc. (Nasdaq: VRTY), a leading provider of infrastructure software powering corporate intranets and e-commerce sites as well as e-business applications, today reported financial results for its first fiscal quarter ended August 31, 2002. Verity's revenues for its first quarter were $22.0 million, representing a 9% increase over revenues of $20.1 million for the same period last year. Software product revenues, which represented 56% of total revenues for the quarter, were $12.3 million, a 20% increase from the $10.3 million for the same period last year. Net income for the quarter was $1.4 million, or $0.04 per diluted share, compared with a net loss of $2.5 million, or $0.07 per share, for the same period last year.
"First quarter results were in line with the projections we provided on September 3, 2002," said Gary J. Sbona, Verity's chairman and chief executive officer. "As we indicated at that time, we believe that Verity's long-term prospects for growth and profitability continue to be strong. While global economic conditions remain challenging, our goal at Verity continues to be maximizing long-term shareholder value, by developing and delivering industry leading products, by prudently managing our expenses and by constantly focusing on sales execution."
During the period, Verity realized sales from a range of world-class companies in the banking and financial services, high technology, professional services, and telecommunications industries. First quarter wins include Alcoa, Boeing, Caterpillar, CSFB, Diageo PLC, Dupont, Eastman Kodak, Home Depot, Pfizer, Standard Life, Unocal, Verizon, Wells Fargo and others.
The company extended its position in the OEM market for enterprise search and categorization software technology by way of new or extended licensing agreements achieved with Plumtree, Stellent, TrendMicro and others.
Based on current economic conditions, Verity is projecting second quarter revenues between $21 million and $23 million with continued profitability.
Operating Results Conference Call Scheduled
During a conference call, scheduled for Thursday, September 12, 2002 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time), Gary J. Sbona, chairman and chief executive officer, and key members of Verity's management team will review the operating results from the Company's first quarter that ended August 31, 2002 and Verity's current business outlook.
To participate, dial 1-888-789-0089, in the United States or Canada, or 1-416-695-6120 (International) five (5) minutes prior to the scheduled start time.
Alternatively, investors may access the web cast of Verity's earnings call at: http://www.vcall.com/EventPage.asp?ID=82280 .
A replay of the operating results call will be available through September 27, 2002 at the above listed Web site or by dialing 1-888-509-0082, 4 a.m. to 8 p.m. PT.
Headquartered in Sunnyvale, Calif., Verity is a leading provider of business portal infrastructure software. Verity software gives businesses a multitude of ways to improve access to vital information and perform a range of e-business operations, while enhancing the end-user experience. Verity-powered business portals, which include corporate intranets used for sharing information within an enterprise; e-commerce sites for online selling; and market exchange portals for B2B activities, all provide personalized information to employees, partners, customers and suppliers.
Verity products are used by approximately 80 percent of the Fortune 50 and by more than 1,500 corporations in various markets. Customers include Adobe Systems, AT&T, Cap Gemini Ernst & Young, Cisco, CNET, Compaq, Dow Jones, EDGAR Online, FairMarket, Financial Times, Globe and Mail, Home Depot, Lotus, SAP, Siemens, Sybase, Time New Media and Timex.
The statements in this press release regarding Verity's beliefs regarding its long term prospects for growth and profitability, how it intends to maximize long-term shareholder value, and under the heading "Business Outlook," are forward-looking statements. Actual financial results could differ materially as a result of many factors, including: these expectations and beliefs are based on assumptions that may not prove to be accurate, including the future demand for Verity's products may not be as strong as Verity predicts; many of Verity's product orders are large, and a delay in closing a large sale during the second quarter could materially reduce Verity's revenues for that period; transactions accounting for a disproportionate percentage of Verity's quarterly revenues are frequently closed in the last few weeks or days of a quarter and, accordingly, even a slight delay in the closing of some of these transactions could materially reduce Verity's revenues for that period; Verity incurs expenses based upon anticipated revenues and, consequently, if the revenues are less than anticipated, Verity will have lower gross margins and operating results; if competitors develop new products that compete favorably against Verity's products, sales of Verity's products will be less than projected; and a portion of Verity's sales are into the international market, which exposes Verity to currency fluctuation and other risks. These and other risks relating to Verity and its business and products are as set forth under the caption "Risk Factors" in Item 1 of Verity's latest Form 10-K filed with the Securities and Exchange Commission.
NOTE: Verity and the Verity logo are registered trademarks or trademarks of Verity, Inc.
All other trademarks are the property of their respective owners. World Wide Web site http://www.verity.com .
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)
August 31, August 31,
Software products $12,306 $10,267
Service and other 9,704 9,838
Total revenues 22,010 20,105
Costs of revenues:
Software products 374 542
Service and other 2,570 3,046
Total costs of revenues 2,944 3,588
Gross profit 19,066 16,517
Research and development 5,943 5,936
Marketing and sales 10,204 14,598
General and administrative 2,595 2,832
Total operating expenses 18,742 23,366
Income (loss) from operations 324 (6,849)
Other income, net 1,904 2,870
Net income (loss) before income tax provision 2,228 (3,979)
Income tax provision (benefit) 847 (1,512)
Net income (loss) $1,381 $(2,467)
Net income (loss) per share - basic $0.04 $(0.07)
Net income (loss) per share - diluted $0.04 $(0.07)
Number of shares used in per share
calculation - basic 35,548 35,362
Number of shares used in per share
calculation - diluted 36,645 35,362
CONSOLIDATED BALANCE SHEETS
August 31, May 31,
Cash and cash equivalents $14,384 $23,251
Short-term investments 119,958 130,672
Trade accounts receivable, less allowance for
doubtful accounts of $1,577 and $1,428 17,278 20,961
Deferred tax assets 2,636 3,114
Prepaid and other current assets 4,724 5,497
Total current assets 158,980 183,495
Property and equipment 6,100 6,625
Long-term investments 108,548 91,433
Deferred tax assets 16,597 16,597
Total assets $290,225 $298,150
Accounts payable $4,796 $5,749
Accrued compensation 9,537 10,376
Other accrued liabilities 2,724 2,779
Deferred revenue 12,271 14,981
Total current liabilities 29,328 33,885
Common stock 35 36
Additional paid-in capital 244,048 250,133
Other comprehensive income 3,300 1,963
Retained earnings 13,514 12,133
Total stockholders' equity 260,897 264,265
Total liabilities and stockholders'
equity $290,225 $298,150
SOURCE Verity, Inc.
/CONTACT: Derek van Bronkhorst of Verity, Inc., +1-408-542-2217, or
/Web site: http://www.verity.com/