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Apr 30, 2002
Onyx Software Announces First Quarter Results
BELLEVUE, Wash. -- Onyx Software Corporation (Nasdaq:ONXS) announced today financial results for the quarter ended March 31, 2002 that were consistent with the preliminary results announced April 1.
First quarter financial performance highlights include:
- Pro-forma costs and expenses were below the $18.0 million targeted level
- Strong service gross margins of 55 percent
- Cash balances of $33.6 million
Revenue for the first quarter of 2002 was $14.6 million, compared to $28.9 million in the first quarter of 2001. Net loss for the first quarter of 2002 was $6.6 million, or $0.14 per share, compared to a net loss of $15.7 million or $0.42 per share in the first quarter of 2001. The first quarter 2002 net and operating losses include $2.6 million in restructuring and excess facilities charges, and $0.4 million in amortization of intangibles and stock compensation expense. The first quarter of 2001 included $2.1 million in amortization of intangibles and stock compensation expense.
Pro-forma operating results for the first quarter of 2002, excluding amortization of intangibles, stock compensation expense, and restructuring-related costs, was a loss of $3.3 million, compared to a pro-forma operating loss of $12.7 million in the first quarter of 2001.
First quarter 2002 license revenue of $3.1 million compared to $6.6 million in the fourth quarter of 2001. License revenue was $13.0 million in the first quarter of 2001.
Service revenue was $11.6 million compared to $13.1 million in the fourth quarter of 2001. Service revenue was $16.0 million in the first quarter of 2001.
Service revenue gross margin rose to 55 percent in the first quarter of 2002 from 53 percent in the fourth quarter of 2001, reflecting a higher proportion of maintenance revenues in the mix compared to the fourth quarter levels. Service gross margin in the first quarter of 2001 was 36percent.
During the quarter, Onyx Software completed a public offering that, including exercise of the underwriter's option, totaled 6.3 million common shares with net proceeds to the Company of $20.5 million.
On March 31, 2002 the Company had cash balances of $33.6 million, compared to $15.9 million on December 31, 2001. In the first quarter of 2002, the Company paid $4.5 million for costs associated with restructuring items.
"Since quarter close, we've taken actions designed to improve our future license revenue," said Onyx Software CEO, Brent Frei. "We've hired additional sales leadership and are adding experienced professional sales personnel. We've already seen a positive impact from John Fraser, the former Sybase executive we announced as our new senior vice president of Americas sales on April 22nd."
"We were very pleased by several milestones achieved during the quarter," Frei added. "Notably, we continued to expand and develop our partnerships with top systems integrators. We released version 3.0 of our advanced partner portal product, and we received important recognition by key industry analysts, including Gartner."
Business Summary
Onyx sold software licenses to 55 companies during the quarter. Onyx had 16 new customer wins in the first quarter of 2002, compared to 31 in the fourth quarter of 2001. Thirty-nine customers placed add-on orders in the first quarter. Of these, more than half had previously purchased licenses during 2001. Eighty-one customers engaged Onyx for professional services other than maintenance in the first quarter.
World-class businesses and organizations purchased Onyx Software licenses in the first quarter. Financial services customers included Suncorp Metway, Toyota Financial Services, Broad Financial Technology, and Fisher Investments. Healthcare customers included UPMC Health Plan and Cigna Behavioral Health. Technology customers included Legato, BCC Software, and Macromedia. Public sector customers included Ontario Lottery and Gaming Commission, Canadian Diabetes Association, and the New Mexico Economic Development Department. Other customers included Airborne Express, Wisconsin Public Service Corp, GIGA Information Group, and Clean Harbors Environmental Services.
The geographic distribution of first quarter revenue was 69 percent North America and 31 percent international. Onyx direct sales provided 84 percent of license revenue, with the balance provided by partners. No customer accounted for more than 5 percent of total revenue in the first quarter.
Onyx Software and Deloitte Touche Tohmatsu announced a global CRM alliance agreement initially targeting the healthcare and public sectors. The alliance has already signed up several government authorities.
Onyx Software continued to develop its strong working partnership with IBM to provide enterprise CRM solutions to mid-market customers in the first quarter. That relationship now touches multiple IBM lines of business, including; Business Innovation Services and eBusiness hosting within IBM Global Services, Software - such as WebSphere MQ, and eServer hardware. Onyx announced the availability of Onyx CRM Software on the new IBM® eServer* xSeries(TM). Onyx and IBM actively engaged in joint implementation projects in the first quarter.
After signing a Latin American reseller agreement with Unisys in the fourth quarter, this relationship developed further in the first quarter. Onyx completed the first round of training in various Unisys Latin American regions in the first quarter. Unisys has strong customer relationships and decades of experience in Latin America.
Onyx continues to conduct joint marketing initiatives with Microsoft. Onyx is building on the success of our partnership initiative in Financial Services and extending that to a new joint campaign in Healthcare.
On March 27th, Onyx Software shipped the latest version of its next-generation Onyx Partner Portal (OPP) to provide a fully web-based, integrated, PRM/CRM platform to its customers. Like the rest of the Onyx CRM platform, OPP 3.0 is built upon XML standards and fully integrates with other front- and back-office systems. A key feature of the product is its permission-based security model for partner profile management, lead distribution, and service and support. The security model is designed to prevent sales channel conflicts among a company and its partners, as well as the accidental sharing of sensitive information.
Onyx achieved beta status in early April on two important product releases: A greatly enhanced Onyx Employee Portal (OEP) and debut of Onyx OEP on the Oracle/Unix platform. Onyx anticipates announcing the general availability on these products in June, 2002.
Recognition
Onyx Software debuted on Gartner's B2B and B2C large enterprise magic quadrant research, and maintained leader quadrant placement on Gartner's magic quadrant for mid-enterprise CRM, according to Gartner, Inc.'s latest mid-enterprise magic quadrant research.*
The Onyx Enterprise 2001 customer relationship management (CRM) software suite was named as one of the Top 15 CRM software packages for 2002 by ISM, Inc.. This is the sixth consecutive year ISM selected Onyx's CRM suite to ISM's Top 15. The Top 15 selections are featured in ISM's 10th anniversary edition of The Guide to CRM Automation, (www.ismguide.com).
Onyx Software First Quarter Conference Call
Onyx Software will discuss final financial results in a conference call today at 4:30 p.m. Eastern, (1:30 p.m. Pacific). We suggest you access the call 10-15 minutes prior to the start time by signing on at http://www.onyx.com/investors/conference.asp. The call will be archived and available for replay at this same URL. Alternatively, you can participate by phone.
| When: | Tuesday, April 30, 2002 |
| Time: | 4:30 pm (Eastern) / 1:30 pm (Pacific) |
| Dial-In: | 1-800-810-0924 |
| International Dial-In: | 1-913-981-4900 |
| Replay: | 1-719-457-0820 (available through 11:45 pm, Tuesday, May 7) |
| Passcode: | 324969 |
About Onyx Software
Onyx Software Corp. (Nasdaq:ONXS - news) is a global supplier of customer relationship management (CRM) enterprise applications that power a company's entire business world, connecting sales, marketing and service organizations with customers, prospects and partners. Through an innovative mix of Internet technology, strategic services and customer commitment, Onyx helps companies create the seamless, branded customer experiences they need to forge competitive advantage and build real business value. Its reliable, scalable, flexible, holistic solutions enable companies to attract, acquire and retain customers and partners across all channels and touch points. Onyx customers include American Express, Broadwing, Commerce One, Credit Suisse, Dreyfus, Prudential Investments and The Regence Group. Get more information at 888-ASK-ONYX, or email info@onyx.com.
| Contact: | Rosemary Moothart Investor Relations Director Onyx Software (425) 519-4068 |
Bob Craig Onyx Software 617-314-6846 |
Onyx Software Corporation
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
Three Months Ended
March 31,
2002 2001
---- ----
(Unaudited) (Unaudited)
Revenue
License $ 3,054 $ 12,988
Service (A) 11,561 15,957
------------- -------------
Total revenue 14,615 28,945
Costs of revenue
Cost of license 171 900
Amortization of acquired
technology 138 204
Cost of service 5,208 10,304
------------- -------------
Total cost of revenue 5,517 11,408
Gross margin 9,098 17,537
Operating Expenses
Sales and marketing 5,997 19,188
Research and development 3,953 7,229
General and administrative 2,539 4,007
Restructuring and
other-related charges 2,617 -
Amortization and impairment
of goodwill and other 209 1,623
acquisition-related
intangibles (B)
Amortization of stock-based
compensation 87 310
------------- -------------
Total operating expenses 15,402 32,357
Operating loss (6,304) (14,820)
Other income (expense), net (373) 232
Equity investment losses
and impairment - (1,500)
------------- -------------
Loss before income taxes (6,677) (16,088)
Income tax provision (benefit) 14 (94)
Minority interest in loss
of consolidated subsidiary (133) (254)
------------- -------------
Net loss $ (6,558) $ (15,740)
============= =============
Basic and diluted net
loss per share $ (0.14) $ (0.42)
============= =============
Shares used in computation
of basic and diluted
net loss per share 48,119 37,821
============= =============
(A) Pursuant to the Financial Accounting Standards Board staff
announcement (Topic No. D-103), reimbursable expenses have been
reclassified into revenue, with a corresponding increase in cost of
revenue. The impact of the reclassification was to increase service
revenue by $378, or 3%, and $630, or 4%, in the first quarter of 2002
and 2001, respectively.
(B) Effective January 1, 2002, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142 "Goodwill and
Other Intangible Assets" (SFAS 142). Under SFAS 142, goodwill is no
longer amortized, beginning January 1, 2002. If the non-amortization
provisions of SFAS 142 had been effective in 2001, net loss and basic
and diluted net loss per share for the three months ended March 31,
2001, would have been a loss of $14,326 and $0.38, respectively.
Onyx Software Corporation
(In Thousands, Except Per Share Data)
Supplemental Pro Forma Information:
Three Months Ended
March 31,
2002 2001
-------- --------
(Unaudited) (Unaudited)
Operating loss $ (6,304) $(14,820)
Adjustments to reconcile operating
loss in the financial statements to
pro forma operating loss:
Restructuring charges
Facilities 2,580 --
Severance 297 --
Other (260) --
-------- --------
Total restructuring charges 2,617 --
Amortization and acquired technology 138 204
Amortization and impairment of goodwill and
other acquisition-related intangibles 209 1,623
Amortization of stock-based compensation 87 310
-------- --------
Pro forma operating loss $ (3,253) $(12,683)
======== ========
Net loss $ (6,558) $(15,740)
Adjustments to reconcile net loss
in the financial statements to pro
forma net loss:
Restructuring charges
Facilities 2,580 --
Severance 297 --
Other (260) --
-------- --------
Total restructuring charges 2,617 --
Amortization and acquired technology 138 204
Amortization and impairment of goodwill and
other acquisition-related intangibles 209 1,623
Amortization of stock-based compensation 87 310
Equity investment losses and impairment -- 1,500
Deferred income tax associated with
acquisitions (89) (148)
-------- --------
Pro forma net loss $ (3,596) $(12,251)
======== ========
Pro forma basic and diluted net loss
per share $ (0.07) $ (0.32)
======== ========
Shares used in computation of pro forma
basic and diluted net loss per share 48,119 37,821
======== ========
Onyx Software Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
March 31, December 31,
2002 2001
---- ----
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents (C) $ 33,551 $ 15,868
Accounts receivable, net 12,485 20,029
Prepaid expenses and other current assets 3,401 2,596
------ -----
Total current assets 49,437 38,493
Property and equipment, net 11,511 12,884
Purchased technology, net 613 751
Other intangibles, net 10,267 10,863
Other assets 1,456 1,520
------ -----
Total Assets $ 73,284 $ 64,511
========= ========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 2,127 $ 2,826
Salary and benefits payable 1,524 1,833
Accrued liabilities 3,812 3,260
Income taxes payable 774 695
Current portion long-term liabilities 156 173
Current portion of restructuring-related
liabilities 20,032 15,384
Deferred revenue 16,646 19,191
------- ------
Total current liabilities 45,071 43,362
Long-term liabilities 204 248
Long-term restructuring-related liabilities 3,368 9,930
Deferred tax liability 747 1,223
Minority interest in joint venture 1,479 1,613
Shareholders' Equity
Common stock 138,956 118,557
Deferred stock-based compensation (390) (809)
Accumulated deficit (114,849) (108,291)
Accumulated other comprehensive loss (1,302) (1,322)
------- -------
Total shareholders' equity 22,415 8,135
------- -----
Total Liabilities and Shareholders' Equity $ 73,284 $ 64,511
========= ========
(C) Includes $5.5 million in restricted cash as of March 31, 2002,
which was pledged in connection with outstanding financing
arrangements.
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