Exhibit 99.1
Investor contacts:
Todd Friedman / Stacie Bosinoff
The Blueshirt Group for CallWave
415-217-7722
todd@blueshirtgroup.com
CallWave Announces Financial Results for First Quarter of Fiscal 2006
Santa Barbara, Calif., November 2, 2005 — CallWave, Inc. (Nasdaq: CALL), a leading provider of VOIP enhanced services, today reported financial results for the first quarter ended September 30, 2005.
For the first quarter of fiscal 2006, CallWave reported total revenue of $10.6 million, compared to $11 million reported in the first quarter of fiscal 2005. Net income for the first quarter of 2006 was $932,000, or $0.04 per diluted share, compared to $2.9 million, or $0.17 per diluted share reported in the prior year. Net income for the 2006 first quarter includes a tax provision of $633,000, compared to the same period last year which included a tax benefit of $66,000.
Gross margins for the first quarter were 64% and operating margins were 10%. CallWave generated $3.4 million in cash in its operations and closed the quarter with $61.9 million in cash, cash equivalents and marketable securities. At September 30, 2005, CallWave had 790,000 total subscribers, including 10,000 mobile subscribers up from 5,000 in the prior quarter.
“CallWave is in an important transition phase as we deliver new services that simplify the convergence of fixed and mobile phones,” commented David Hofstatter, President and CEO of CallWave. “When you look at our sequential mobile subscriber growth and the validation of mobile services, both at the end-user and carrier/channel level we are encouraged by the early results. Our mobile subscriber base doubled to 10,000 users this quarter with minimal marketing, and our efforts to maximize cash flow in our land line business resulted in generating $3.4 million in cash this quarter.
The Company reaffirmed its previous guidance for fiscal 2006 expecting revenue of approximately $40 million with pretax margins of approximately 10%.
Conference Call Details
The CallWave First Quarter 2006 teleconference and Webcast is scheduled to begin at 5:00 p.m. Eastern Time, on Wednesday, November 2, 2005. To access the live Webcast, please visit the investor relations section of the Company’s website http://www.callwave.com at least 30 minutes prior to the scheduled time to download any necessary audio or plug-in software. An audio replay of the call will also be available to investors beginning at 8:00 p.m. ET on November 2, 2005, through November 16, 2005, by dialing (800) 405-2236 and entering the passcode 11041665#.
About CallWave
CallWave (Nasdaq:CALL) is a leader in VoIP enhanced services for the consumer and small business markets. The company provides VoIP application services on a subscription basis that add features and functionality to both the landline and wireless telecommunications services used in homes and small offices. CallWave’s proprietary VoIP software allows subscribers to get more out of their existing personal communications networks — landline, mobile and IP — by adding software-based call-handling features and by bridging all three networks to help subscribers get their important calls. Founded in 1998, CallWave is headquartered in Santa Barbara, California. For further information, please visit www.callwave.com.
Safe Harbor Statement
Except for the historical statements contained herein, the foregoing release contains forward-looking statements, including statements regarding, among other matters, our future financial performance. These forward-looking statements are subject to risks and uncertainties, and actual results could differ materially due to several factors, including but not limited to the ability to forecast consumer behavior and recognize or respond to emerging trends, changing preferences or competitive factors, the market acceptance of our new products and product enhancements, claims regarding alleged infringement of third parties’ intellectual property rights, the ability to maintain or expand our customer and partner relationships and other risks and uncertainties. Please consult the various reports and documents filed by CallWave with the U.S. Securities and Exchange Commission, including but not limited to CallWave’s annual report on Form 10-K for the fiscal year ended June 30, 2005, for factors potentially affecting the Company’s future financial results. All forward-looking statements are made as of the date hereof and CallWave disclaims any responsibility to update or revise any forward-looking statement provided in this news release. The results for the first quarter of fiscal 2006 are not necessarily indicative of CallWave’s operating results for any future periods.
CallWave is a registered trademark of CallWave, Inc. All other trademarks are the property of their respective holders.
CALLWAVE, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited, in thousands, except per share data)
For the Three Months Ending
| | | | | | | |
| | | 9/30/2005
| | 9/30/2004
| |
Revenues | | $ | 10,572 | | $ | 11,045 | |
| | |
Cost of Sales | | | 3,761 | | | 3,202 | |
| | |
Gross Profit | | | 6,811 | | | 7,843 | |
| | |
Operating Expenses: | | | | | | | |
Sales and Marketing | | | 2,109 | | | 2,116 | |
Research and Development | | | 1,216 | | | 1,668 | |
General and Administrative | | | 2,182 | | | 1,276 | |
Impairment of long-lived assets | | | 243 | | | — | |
| | |
|
| |
|
|
|
Total operating expenses | | | 5,750 | | | 5,060 | |
| | |
Operating income | | | 1,061 | | | 2,783 | |
| | |
Interest Income, net | | | 506 | | | 52 | |
| | |
Income before income taxes | | | 1,565 | | | 2,835 | |
| | |
Income tax provision | | | 633 | | | (66 | ) |
| | |
Net income | | $ | 932 | | $ | 2,901 | |
| | |
|
| |
|
|
|
EPS | | | | | | | |
Basic | | $ | 0.05 | | $ | 0.44 | |
Diluted | | $ | 0.04 | | $ | 0.17 | |
| | |
Weighted average shares | | | 20,374 | | | 6,540 | |
Fully diluted weighted average shares | | | 21,160 | | | 17,365 | |
CALLWAVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
| | | | | | | | |
| | | 9/30/2005
| | | 6/30/2005
| |
| | | (unaudited) | | | | |
ASSETS | | | | | | | | |
Current Assets: | | | | | | | | |
Cash and Cash Equivalents | | $ | 34,883 | | | $ | 16,828 | |
Marketable Securities | | | 26,653 | | | | 39,996 | |
Restricted Cash | | | 335 | | | | 335 | |
Accounts Receivable; net of allowance for doubtful accounts | | | 4,867 | | | | 5,676 | |
Inventory | | | — | | | | 454 | |
Prepaid Income Tax | | | 336 | | | | 113 | |
Other Current Assets | | | 199 | | | | 476 | |
Total Current Assets | | | 67,273 | | | | 63,878 | |
| | |
Property and Equipment, net | | | 1,867 | | | | 2,024 | |
Deferred Tax Asset | | | 2,295 | | | | 2,929 | |
Other Assets | | | 156 | | | | 414 | |
| | |
Total Assets | | $ | 71,591 | | | $ | 69,245 | |
| | |
|
|
| |
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current Liabilities: | | | | | | | | |
Accounts Payable | | $ | 798 | | | $ | 801 | |
Accrued Payroll | | | 1,037 | | | | 1,014 | |
Deferred Revenues | | | 1,398 | | | | 1,587 | |
Income Taxes Payable | | | 2 | | | | — | |
Other Current Liabilities | | | 1,526 | | | | 1,447 | |
| | |
Total Current Liabilities | | | 4,761 | | | | 4,849 | |
| | |
Total Liabilities | | | 4,761 | | | | 4,849 | |
| | |
Stockholders’ equity: | | | | | | | | |
Common Stock | | | 71,311 | | | | 70,296 | |
Deferred Compensation | | | — | | | | (545 | ) |
Unrealized Gains/Losses | | | (82 | ) | | | (24 | ) |
Accumulated Deficit | | | (4,399 | ) | | | (5,331 | ) |
| | |
Total Stockholders’ equity | | | 66,830 | | | | 64,396 | |
| | |
Total Liabilities and stockholders’ equity | | $ | 71,591 | | | $ | 69,245 | |
| | |
|
|
| |
|
|
|
CALLWAVE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| | | | | | | | |
| | | For the three months ended September 30,
| |
| | | 2005
| | | 2004
| |
| | | (unaudited) | |
Cash flows from operating activities: | | | | | | | | |
Net income | | $ | 932 | | | $ | 2,901 | |
Operating activity adjustments | | | | | | | | |
Depreciation and amortization | | | 217 | | | | 194 | |
Impairment of long lived assets | | | 243 | | | | — | |
Share based compensation | | | 107 | | | | 46 | |
Deferred tax asset | | | 634 | | | | 485 | |
Bad debt expense | | | 542 | | | | 191 | |
| | |
Changes in operating assets & liabilities: | | | | | | | | |
Accounts receivable, net of bad debt expense | | | 267 | | | | (759 | ) |
Inventory | | | 454 | | | | — | |
Prepaid income tax | | | (223 | ) | | | (58 | ) |
Other assets | | | 292 | | | | 608 | |
Accounts payable | | | (3 | ) | | | (42 | ) |
Accrued payroll | | | 23 | | | | (133 | ) |
Deferred revenue | | | (189 | ) | | | (54 | ) |
Income taxes payable | | | 2 | | | | (781 | ) |
Accrued other liabilities | | | 79 | | | | 571 | |
| | |
|
|
| |
|
|
|
Net cash provided by operating activities | | | 3,377 | | | | 3,169 | |
| | |
Cash flows from investing activities: | | | | | | | | |
Purchases of marketable securities | | | (3,180 | ) | | | (2,997 | ) |
Sales of marketable securities | | | 16,465 | | | | — | |
Purchases of property and equipment | | | (60 | ) | | | (159 | ) |
| | |
|
|
| |
|
|
|
Net cash provided by (used in) investing activities | | | 13,225 | | | | (3,156 | ) |
| | |
|
|
| |
|
|
|
Cash flows from financing activities: | | | | | | | | |
Exercises of stock options and warrants | | | 1,453 | | | | 137 | |
Costs incurred in initial public offering | | | — | | | | (1,522 | ) |
| | |
|
|
| |
|
|
|
Net cash provided by (used in ) financing activities | | | 1,453 | | | | (1,385 | ) |
| | |
|
|
| |
|
|
|
Net increase in cash and cash equivalents | | | 18,055 | | | | (1,372 | ) |
Cash and cash equivalents at beginning of the period | | | 16,828 | | | | 6,187 | |
| | |
|
|
| |
|
|
|
Cash and cash equivalents at end of the period | | $ | 34,883 | | | $ | 4,815 | |
| | |
|
|
| |
|
|
|
