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Oct 23, 00
Onyx Software Reports Record Third Quarter Revenues of $32.8 Million
Web Technology Drives Large Enterprise Sales
Bellevue, Wash. -- Onyx Software Corporation (NASDAQ: ONXS) today announced record revenues for the third quarter ending September 30, 2000. Revenues for the third quarter were $32.8 million, up 108 percent from $15.7 million reported in the third quarter of 1999.
Sequential revenue growth between the second and third quarters of 2000 was 23 percent for license revenue, and 12 percent for services, resulting in 19 percent overall.
Software license revenues for the third quarter of 2000 were $20.4 million, up 106 percent from $9.9 million reported in the third quarter of 1999. Service revenues for the third quarter of 2000 were $12.4 million, up 112 percent from $5.8 million reported in the third quarter of 1999. Pro forma net income for the quarter was $789,000, or income of $0.02 per share on a fully-diluted basis.
Revenues for the first nine months of 2000 totaled $83.6 million, up 108 percent from $40.3 million in revenues reported in the first nine months of 1999. Software license revenues for the first nine months of 2000 grew 103 percent over the same period of 1999, while service revenues grew 115 percent. Pro forma net income for the nine months was $1.7 million, or income of $0.04 per share on a fully-diluted basis.
"Onyx Software generated record revenues and showed operating profits in the third quarter--exceeding analysts expectations for the seventh quarter in a row," said Onyx Software President and CEO, Brent Frei.
Onyx recorded four license sales in excess of one million dollars during the third quarter, including a $3 million license sale and another for $1.9 million. Strong direct sales performance contributed to the addition of 63 new customers in the quarter, for a total of 687 customers worldwide at the quarter's end.
"Third quarter large enterprise sales resulted from the strength and breadth of our web-based technology, the effectiveness of the named-account sales program put in place at the beginning of this year, partner development efforts, and marketing focus on specific verticals - such as healthcare, financial services and telecom," Frei said.
Onyx third quarter sales included The Regence Group, UPMC Health Plan, and Lasik Vision (Vancouver: LSK.V) in the healthcare sector. Financial services customers included DBS Bank, State Street Global Advisors (NYSE: STT), TowerGroup, EuroMoney Interactive, Legal and Financial Needs, Ltd., and NYCE Corporation. Sales to telecom customers included Malaysia Telekom, NTL Incorporated (NASDAQ and EASDAQ: NTLI) and Broadwing (NYSE: BRW). Other third quarter customers of note included the Seattle Mariners Baseball Club, Multiple Zones International (Nasdaq:MZON) and Greenfield Online.
Strategic Alliances and International Development
Onyx Software, Softbank Investment and Prime Systems Corp. announced they are investing to create Onyx Japan to bring Onyx Software's e-business and relationship management solutions to the Japanese market. Onyx Japan, which will be majority owned and controlled by Onyx Software, was structured as a Japanese venture in order to take advantage of local investments and have the flexibility to take advantage of Japanese stock market opportunities.
Softbank Venture Capital selected Onyx Software and Interliant (Nasdaq: INIT) as preferred providers for e-business solutions. As a result, Softbank VC will recommend the Interliant/Onyx hosted solution - already live at Evoke Communications (Nasdaq: EVOK) - to its portfolio of more than 200 technology companies.
Onyx Software announced a series of alliances with regional IBM premium resellers that will work with Onyx Software's direct and indirect sales forces to jointly sell Onyx 2000 running on IBM Netfinity servers.
Compaq Computer Asia Pte. Ltd. and Onyx Software Asia entered into a strategic alliance to extend customer-centric e-business solutions to businesses in Singapore. The scope of the alliance includes joint development and solutions engineering, business development initiatives and marketing campaigns.
Telstra Corp, Ltd., Australia's leading telecommunications provider, has launched Netrading, a hosted offering built on the Onyx e-Business Engine. Initially targeted at 49,000 existing Telstra customers and their 700,000 employees, Netrading enables a wide range of online business transactions and customer interactions.
Scandinavia's largest information technology company, TietoEnator, announced a strategic alliance to provide Onyx's e-business solutions to companies across the region. TietoEnator has 10,000 employees who service a customer base of over 1,000 companies.
Promon IP in Brazil announced their intent to deliver Onyx 2000 through their ASP business unit, making it the first application service provider (ASP) to offer relationship management solutions to the Brazilian market and among the first hosted e-business offering available anywhere in South America.
Platform Leadership
Onyx continued to demonstrate Internet-based platform leadership in the third quarter through additional product releases and strong partnerships with other Internet leaders. To date, more than 75 percent of Onyx's clients have deployed the Onyx platform to manage customer interactions on the Web as well as through employee facing channels. "We have the competitive advantage of offering a single customer platform that spans both Internet and traditional customer contact, allowing Onyx to bring business and e-business together," Frei said.
With the delivery of the thin-client Onyx Employee Portal (OEP) to every new customer in the third quarter, Onyx achieved broad customer acceptance of its web-based employee-facing application. OEP functionality was further enhanced with the release of version 2.5, representing the application's third major release. Customers responded favorably to OEP's secure Web access to customer data, easy end-user personalization and contextual management of Web-based content. Onyx Customer Portal (OCP) was also purchased by a majority of new Onyx customers in the third quarter. OCP provides functionality in customer profiling, site personalization, customer self-service and assisted service, online commerce and more. OCP is fully integrated with Onyx's employee-facing applications.
Several events during the quarter illustrated Onyx's continued leadership on the Microsoft platform.
Onyx and Onyx ASPiN Partner Interliant, Inc. (Nasdaq: INIT) were selected to help Microsoft define and test real-world scenario performance through testing in the Microsoft ASP test lab in order to optimize the upcoming release of SQL Server in a hosted environment.
In conjunction with the launch of .Net Enterprise 2000, Microsoft recognized Onyx as an instrumental independent software vendor (ISV) with the Microsoft Commerce 2000 development team. Onyx announced that its products will support SQL Server 2000, BizTalk Server 2000 and Commerce Server 2000 to quickly build, deploy and manage integrated, Web-based solutions for companies of all sizes.
Onyx continues to hold the record for scalability of enterprise software on the Microsoft 2000 platform.
Additionally, Onyx remains on-track to deliver Unix/Oracle capabilities with a December release. The initial expanded capabilities will target customers using Sun Solaris - which is the leading market share variant of Unix.
"The backbone of our initiative to deliver Unix/Oracle capabilities is a new 100 percent native-XML architecture with scalability and flexibility that will accommodate the complex requirements of even the largest enterprise companies," Frei commented.
Employee Relations
At quarter's end, Onyx Software employee headcount was 656, or 14 percent higher than at the end of the prior quarter. Onyx continued to enjoy strong recruitment and retention results. In the first nine months of 2000, over 90 percent of Onyx's recruitment offers were accepted and employee turnover of 11 percent was a fraction of the high-tech industry norm.
Earnings Conference Call
Onyx Software will host an earnings conference call today featuring remarks by President and CEO Brent Frei followed by a live Q&A session. The call is scheduled to start promptly at 5:30pm Eastern (2:30pm Pacific). We suggest that you access the call 10-15 minutes prior to the start time by signing on at http://investor.onyx.com. The call will be archived and available for replay at this same URL.
When: Monday, October 23, 2000
Time: 5:30p (Eastern) / 2:30p (Pacific)
Dial-In: (800) 289-0493 (please dial in 10-15 minutes prior to call)
Passcode: 763690
Replay: (719) 457-0820
Passcode: 763690
About Onyx Software
Onyx Software Corp. (Nasdaq: ONXS) is a global supplier of enterprise-wide, customer-centric e-business applications. Onyx Software's enterprise-class software connects and powers a company's entire e-business world, including customers, partners and sales, marketing, service and call center functions, making total customer and partner information available enterprise-wide.
Onyx Software's award-winning products are known for flexibility, reliability and ease of use, resulting in high return on investment, low total cost of ownership and industry-leading customer satisfaction. Onyx operates worldwide, supporting large, medium and small companies including Agile Software, American Express, Broadwing, Commerce One, Credit Suisse, Dreyfus, FirstWorld Communications, Hummingbird, NTL Group, Portland Trail Blazers, Prudential Securities, Sierra Health Services and Singapore Cable Vision. For more information, call 888-275-6699 or email info@onyx.com. Please visit http://www.onyx.com/annualreport to download the Onyx Software 1999 annual report and 10K.
| Contact: | Mark Lamb | Heather Knox |
| Onyx Software Corporation | Onyx Software Corporation | |
| Investor Relations Director | PR Director | |
| (425) 519-4034 | (425) 451-9225 |
Onyx Software Corporation
Pro Forma Condensed Consolidated Statements of Earnings (1)
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
(unaudited) (unaudited) (unaudited)(unaudited)
Revenues
License $ 20,403 $ 9,922 $ 51,359 $ 25,238
Service 12,367 5,821 32,230 15,016
--------- --------- --------- ---------
Total revenues 32,770 15,743 83,589 40,254
Costs of Revenues
Cost of license 877 494 2,368 1,488
Cost of service 6,401 2,946 16,615 7,558
--------- --------- --------- ---------
Total cost of revenues 7,278 3,440 18,983 9,046
--------- --------- --------- ---------
Gross margin 25,492 12,303 64,606 31,208
Operating Expenses
Sales and marketing 15,486 7,484 40,452 20,322
Research and
development 6,150 2,643 14,729 7,760
General and
administrative 3,006 1,567 7,667 4,184
--------- --------- --------- ---------
Total operating expenses 24,642 11,694 62,848 32,266
Operating income (loss) 850 609 1,758 (1,058)
Interest income, net 181 407 664 942
--------- --------- --------- ---------
Income (loss) before
income taxes 1,031 1,016 2,422 (116)
Income tax provision 242 128 722 315 - --------- --------- --------- ---------
Net income (loss) 789 888 1,700 (431)
========= ========= ========= =========
Basic earnings per share:
Net income (loss) 0.02 0.03 0.05 (0.01)
========= ========= ========= =========
Weighted average common
shares (2) 35,084 32,193 34,670 30,752
Diluted earnings per share:
Net income (loss) 0.02 0.02 0.04 (0.01)
========= ========= ========= =========
Weighted average common
shares and equivalents (2) 40,912 39,519 41,058 30,752
(1) Amounts and per share data for the periods presented exclude acquisition-related amortization, minority equity investment losses and related income taxes.
(2) The pro forma earnings per share for the nine months ended September 30, 1999 was calculated on a pro-forma basis, which assumes the conversion of preferred stock into common stock at the time of issuance.
Onyx Software Corporation
Condensed Consolidated Statements of Earnings
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
(unaudited) (unaudited) (unaudited)(unaudited)
Revenues
License $ 20,403 $ 9,922 $ 51,359 $ 25,238
Service 12,367 5,821 32,230 15,016
--------- --------- --------- ---------
Total revenues 32,770 15,743 83,589 40,254
Costs of Revenues
Cost of license 877 494 2,368 1,488
Cost of service 6,401 2,946 16,615 7,558
--------- --------- --------- ---------
Total cost of revenues 7,278 3,440 18,983 9,046
--------- --------- --------- ---------
Gross margin 25,492 12,303 64,606 31,208
Operating Expenses
Sales and marketing 15,486 7,484 40,452 20,322
Research and
development 6,150 2,643 14,729 7,760
General and
administrative 3,006 1,567 7,667 4,184
Acquisition-related
amortization 1,551 552 3,518 770
--------- --------- --------- ---------
Total operating expenses 26,193 12,246 66,366 33,036
Operating loss (701) 57 (1,760) (1,828)
Interest income, net 181 407 664 942
Equity investment loss (63) - (500) -
--------- --------- --------- ---------
Loss before income
taxes (583) 464 (1,596) (886)
Income tax provision 108 128 320 315 - --------- --------- --------- ---------
Net loss $ (691) $ 336 $ (1,916) $ (1,201)
========= ========= ========= =========
Basic earnings per share:
Net income (loss) (0.02) 0.01 (0.06) (0.04)
========= ========= ========= =========
Weighted average common
shares (1) 35,084 32,193 34,670 30,752
Diluted earnings per share:
Net income (loss) (0.02) 0.01 (0.06) (0.04)
========= ========= ========= =========
Weighted average common
shares and equivalents (1) 35,084 39,519 34,670 30,752
(1) The loss per share for the nine months ended September 30, 1999 was calculated on a pro-forma basis, which assumes the conversion of preferred stock into common stock at the time of issuance.
Onyx Software Corporation
Condensed Consolidated Balance Sheet
(In Thousands)
September 30, December 31,
2000 1999
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,356 $ 3,691
Short-term marketable securities 7,011 19,804
Accounts receivable, net 31,063 22,987
Prepaid expenses and other current
assets 4,285 2,570
--------- ---------
Total current assets 53,715 49,052
Property and equipment, net 16,510 8,628
Purchased technology, net 2,363 3,071
Other intangibles, net 20,603 10,683
Long-term marketable securities - 991
Other assets 3,300 755
--------- ---------
TOTAL ASSETS $ 96,491 $ 73,180
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,266 $ 1,906
Salary and benefits payable 5,733 2,557
Accrued liabilities 4,126 2,673
Current portion long-term liabilities 125 306
Income taxes payable 682 435
Deferred revenues 16,877 11,028
Notes payable to shareholders in stock 7,920 -
--------- ---------
Total current liabilities 39,729 18,905
Long-term liabilities 65 133
Deferred tax liability 1,926 2,304
Redeemable convertible preferred stock
SHAREHOLDERS' EQUITY
Common stock 65,542 61,166
Notes receivable from officers (157) (212)
Deferred stock-based compensation (503) (903)
Accumulated deficit (9,981) (8,065)
Accumulated other comprehensive loss (130) (148)
--------- --------
Total shareholders' equity 54,771 51,838
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 96,491 $ 73,180
========= ========
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