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 Third Quarter of Fiscal 2006
Santa Barbara, Calif., May 4, 2006 — CallWave, Inc. (Nasdaq: CALL), a leading provider of on-demand communications services to service providers and consumers, today reported financial results for the third quarter ended March 31, 2006.
For the third quarter of fiscal 2006, CallWave reported total revenue of $8.8 million, pretax loss of $0.3 million, and a net loss of $0.4 million, or ($0.02) per diluted share. In the third quarter of fiscal 2005, the company reported revenue of $11.2 million, pretax income of $1.9 million, and net income of $2.3 million, or $0.11 per diluted share.
CallWave closed the quarter with $62 million in cash, cash equivalents and marketable securities. At March 31, 2006, CallWave had 763,000 total subscribers,.
David Hofstatter, President and CEO of CallWave, commented, “CallWave is actively developing partnerships with carriers to deliver the only On Demand services to speed the deployment of converged services at significantly reduced capital cost. We were pleased in the third quarter to add a second carrier partner under contract and expand our potential access lines from 700,000 to 2.9 million. In order to establish CallWave at the forefront of this emerging market, we plan to continue investing aggressively in product development and new partnerships. While this strategy will result in net losses, our strong balance sheet provides the foundation to make these important strategic investments which we believe will reward our company and our shareholders over the long term.”
Conference Call Details
The CallWave Third Quarter 2006 teleconference and Webcast is scheduled to begin at 5:00 p.m. Eastern Time, on Thursday, May 4, 2006. 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 7:00 p.m. ET on May 4, 2006, through May 18, 2006, by dialing (800) 405-2236 or (303) 590-3000 and entering the passcode 11059842#.
About CallWave
CallWave (Nasdaq:CALL) is an on-demand communications services company, helping service providers reduce customer churn and drive revenues by enabling new landline, Internet and mobile convergence applications. Founded in 1998, CallWave is headquartered in Santa Barbara, Calif. 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 second 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.
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TABLES TO FOLLOW
CALLWAVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
| | | | | | | | |
| | | As of
March 31,
2006 | | | As of
June 30,
2005 | |
| | | (unaudited) | | | | |
ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 20,600 | | | $ | 16,828 | |
Marketable securities | | | 41,702 | | | | 39,996 | |
Restricted cash | | | — | | | | 335 | |
Accounts receivable; net of allowance for doubtful accounts of $315 and $370 | | | 3,819 | | | | 5,676 | |
Inventory | | | — | | | | 454 | |
Prepaid income tax | | | 179 | | | | 113 | |
Other current assets | | | 507 | | | | 476 | |
Total current assets | | | 66,807 | | | | 63,878 | |
Property and equipment, net | | | 1,772 | | | | 2,024 | |
Intangible assets-net | | | 546 | | | | 0 | |
| | |
Deferred tax asset | | | — | | | | 2,929 | |
Other assets | | | 66 | | | | 414 | |
| | | | | | | | |
Total assets | | $ | 69,191 | | | $ | 69,245 | |
| | | | | | | | |
Liabilities And Stockholders’ Equity | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 839 | | | $ | 801 | |
Accrued payroll | | | 825 | | | | 1,014 | |
Deferred revenue | | | 287 | | | | 1,587 | |
Other current liabilities | | | 1,924 | | | | 1,447 | |
| | | | | | | | |
Total current liabilities | | $ | 3,875 | | | $ | 4,849 | |
Commitments and contingencies | | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Common stock, $0 par value; 100,000 and 50,000 shares authorized at March 31, 2006 and June 30, 2005, respectively; 20,678 and 19,799 shares issued and outstanding at March 31, 2006 and June 30, 2005, respectively | | | 71,656 | | | | 70,296 | |
Deferred compensation | | | — | | | | (545 | ) |
Accumulated comprehensive loss | | | (103 | ) | | | (24 | ) |
Accumulated deficit | | | (6,237 | ) | | | (5,331 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 65,316 | | | | 64,396 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 69,191 | | | $ | 69,245 | |
| | | | | | | | |
CALLWAVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | For the Three Months Ended
March 31 | | | For the Nine Months Ended
March 31, | |
| | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
Revenues | | $ | 8,801 | | | $ | 11,194 | | | $ | 28,910 | | | $ | 33,908 | |
Cost of sales | | | 3,125 | | | | 3,017 | | | | 10,275 | | | | 9,160 | |
Gross profit | | | 5,676 | | | | 8,177 | | | | 18,635 | | | | 24,748 | |
Operating expenses: | | | | | | | | | | | | | | | | |
Sales and marketing | | | 2,270 | | | | 2,748 | | | | 6,406 | | | | 7,722 | |
Research and development | | | 1,371 | | | | 1,778 | | | | 3,865 | | | | 5,054 | |
General and administrative | | | 2,959 | | | | 2,070 | | | | 7,683 | | | | 5,151 | |
Impairment of long-lived assets | | | — | | | | — | | | | 243 | | | | — | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 6,600 | | | | 6,596 | | | | 18,197 | | | | 17,927 | |
| | | | | | | | | | | | | | | | |
Operating income | | | (924 | ) | | | 1,581 | | | | 438 | | | | 6,821 | |
Interest income (expense), net | | | 659 | | | | 344 | | | | 1,741 | | | | 661 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | (265 | ) | | | 1,925 | | | | 2,179 | | | | 7,482 | |
Income tax expense (benefit) | | | 156 | | | | (347 | ) | | | 3,085 | | | | (2,056 | ) |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | (421 | ) | | $ | 2,272 | | | $ | (906 | ) | | $ | 9,538 | |
| | | | | | | | | | | | | | | | |
Net income (loss) per share: | | | | | | | | | | | | | | | | |
Basic | | $ | (0.02 | ) | | $ | 0.12 | | | $ | (0.04 | ) | | $ | 0.63 | |
Diluted | | $ | (0.02 | ) | | $ | 0.11 | | | $ | (0.04 | ) | | $ | 0.48 | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | |
Basic | | | 20,746 | | | | 19,377 | | | | 20,578 | | | | 15,033 | |
Diluted | | | 21,406 | | | | 21,331 | | | | 21,287 | | | | 20,026 | |
