Exhibit 99.1
ACTIVCARD Reports 13% Year over Year Increase in 3rd Quarter Revenue
FREMONT, Calif., November 11, 2004 – ActivCard Corp. (Nasdaq: ACTI), a leading global provider of strong authentication and trusted digital identity solutions for secure remote access, single sign-on and enterprise access cards, today reported financial results for the quarter and nine month transition period ended September 30, 2004.
As previously announced, ActivCard has changed its fiscal year end to September 30 from December 31. The year end results are for the nine month transition period ended September 30. As previously disclosed, effective May 27, 2004, ActivCard began consolidating the results of Aspace Solutions Ltd.
GAAP Results – Including Aspace Solutions Ltd.
Revenue for the September 2004 quarter was $10.1 million compared to $9.0 million for the comparable quarter of the prior year, an increase of 13%. Revenue grew by 7% during the September 2004 quarter compared to $9.5 million for the quarter ended June 2004. Net loss for the September 2004 quarter was $8.0 million, or $0.19 per basic and diluted share, compared to $5.6 million, or $0.14 per basic and diluted share, for the comparable period in the prior year. Net loss for the September 2004 quarter included a charge of $820,000 related to the 2004 restructuring. Net loss for the June 2004 quarter was $10.1 million, or $0.24 per basic and diluted share.
Revenue for the nine month transition period ended September 2004 was $26.9 million compared to $31.5 million for the nine months ended September 2003. Net loss for the nine month transition period ended September 2004 was $27.1 million, or $0.64 per basic and diluted share, compared to $20.4 million, or $0.50 per basic and diluted share, for the nine months ended September 2003. The 2004 loss includes $3.5 million related to the 2004 restructuring and $2.4 million related to the equity loss for Aspace Solutions Ltd. prior to the consolidation as of May 27, 2004.
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Non-GAAP Results – Excluding Aspace Solutions Ltd.
Excluding Aspace Solutions Ltd., revenue for the September 2004 quarter was $10.1 million compared to $9.0 million for the comparable quarter of the prior year. Net loss for the September 2004 quarter was $5.9 million, or $0.14 per basic and diluted share, compared to $4.8 million, or $0.12 per basic and diluted share, for the comparable period in the prior year. Net loss for the June 2004 quarter was $8.3 million, or $0.20 per basic and diluted share. Net loss for Aspace for the quarter ended September 30, 2004 was $2.1 million.
Excluding Aspace, revenue for the nine month transition period September 2004 was $26.9 million compared to $31.5 million for the nine months ended September 2003. Net loss for nine month transition period ended September 2004 was $21.7 million, or $0.51 per basic and diluted share, compared to $19.6 million, or $0.48 per basic and diluted share, in the comparable period in the prior year. Net loss for Aspace for the period May 27, 2004 to September 30, 2004 was $3.0 million.
The non-GAAP information is not in accordance with, or an alternative for, GAAP and may be materially different from non-GAAP measures used by other companies. Management believes that the non-GAAP information will provide shareholders with useful data about the Company’s performance and provide a more consistent basis for quarter-to-quarter comparison of the Company’s operating results. Set forth below in the financial tables are the Company’s non-GAAP results of operations including a reconciliation to our GAAP results of operations, net loss and net loss per share.
September Quarter Financial Highlights
| • | Increase in gross margin from 56% in the June quarter to 62% in the September quarter |
| • | Decline of $0.05 in basic and diluted loss per share from the June to the September quarter |
| • | Increase in cash and short-term investments by $2.0 million to $214.1 million from the June to the September quarter |
| • | Decrease in days sales outstanding (DSO) to 47 days for the September quarter |
| • | Increase in deferred revenue to $10.6 million at the end of September quarter |
| • | Provided Aspace $1.2 million in funding during the September quarter |
“We are encouraged with our third consecutive quarter of revenue growth,” said Ben C. Barnes, ActivCard Chief Executive Officer. “The Company’s continued improvement in sales execution
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and partner network expansion, coupled with the increase in gross margin has resulted in a 21% decline in net loss from the previous quarter. The products and solutions ActivCard provides are gaining wider acceptance in both the government and general enterprise markets,” Mr. Barnes continued.
September Quarter Business Highlights
| • | During the September quarter ActivCard gained 143 new customers and added 34 value-added-resellers. |
| • | IBM in collaboration with ActivCard, Bioscrypt, ImageWare and VeriSign designed the first complete and scalable, physical and logical access solution. This breakthrough solution is on display at IBM’s Institute for Electronic Government in Washington, D.C.ActivCard has already received an order for 2000 licenses from Emory Health Care as a result of its expanding relationship with IBM. |
Outlook
ActivCard anticipates revenue for the first quarter of fiscal 2005 ending December 31, 2004, to be in the range of $10.0 to $11.0 million.
Annual Meeting
ActivCard will hold its annual meeting of stockholders on Monday, February 7, 2005 at 10 a.m., local time, at the Company’s offices located at 6623 Dumbarton Circle, Fremont, California.
Conference Call
ActivCard will hold a conference call at 2 p.m. Pacific Standard Time today, Thursday, November 11, 2004, to discuss September 2004 quarter results. To access the call dial 877-292-2820 domestically or 706-679-4390 for international callers, referencing “ActivCard Fiscal Year End Financial Results.” A live web cast of the conference call will also be available on the investor relations section of the Company’s website at www.activcard.com. A replay of the web cast will be available approximately two hours after the conclusion of the call. An audio replay of the conference call will also be made available approximately one hour after the conclusion of the call. The audio replay will remain available until December 3, 2004 at 9 p.m. Pacific Standard Time and can be accessed by dialing 800-642-1687 or 706-645-9291 and entering pass code 1628829.
About ActivCard
ActivCard is a global provider of strong authentication and trusted digital identity solutions for secure remote access, single sign-on, and enterprise access cards. ActivCard’s scalable systems and strong authentication solutions are deployed by organizations, from enterprises to governments, around the world. ActivCard provides organizations with industry-specific solutions offering increased security, reduced cost, and user convenience. The modular product
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design allows customers to add capabilities as required, preserving their investment. Headquartered in Fremont, California, ActivCard has sales and service centers in more than seven countries. For more information, visit www.activcard.com.
The statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties, including risks identified in our periodic filings with the United States Securities and Exchange Commission (SEC), including, but not limited to, those appearing under the caption “Risk Factors” in our most recent Annual Report on Form 10-K, and in our Quarterly Reports on Form 10-Q. Copies of these filings are available from ActivCard and on the SEC’s website at www.sec.gov. Actual results, events and performance may differ materially from our forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. ActivCard disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
ActivCard is a registered trademark and Return on Identity is a trademark of ActivCard in the United States and/or other countries. All other trademarks are the property of their respective owners in the United States and/or other countries.
IR Contacts
Ragu Bhargava | Erica Mannion | |||||
ActivCard Corp. | Sapphire Investor Relations | |||||
510-574-0100 | 415-399-9345 | |||||
sasche@activcard.com | erica@sapphireinvestorrelations.com |
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ActivCard Corp.
Condensed Consolidated Balance Sheets
(in thousands)
| September 30, 2004 | December 31, 2003 | |||||||
| (Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 21,713 | $ | 33,599 | ||||
Short-term investments | 192,350 | 196,424 | ||||||
Accounts receivable, net | 5,325 | 3,364 | ||||||
Inventories | 1,996 | 2,744 | ||||||
Prepaid and other current assets | 2,450 | 2,165 | ||||||
Total current assets | 223,834 | 238,296 | ||||||
Property and equipment, net | 3,989 | 4,498 | ||||||
Restricted investments | 644 | 551 | ||||||
Investment in Aspace Solutions Ltd. | — | 5,816 | ||||||
Other intangible assets, net | 2,286 | 1,825 | ||||||
Other long-term assets | 800 | 793 | ||||||
Goodwill | 19,462 | 15,322 | ||||||
Total assets | $ | 251,015 | $ | 267,101 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,324 | $ | 1,412 | ||||
Short-term borrowings | 1,605 | — | ||||||
Accrued compensation and related benefits | 7,262 | 6,261 | ||||||
Current portion of accrual for restructuring, business realignment, and severance benefits | 1,262 | 892 | ||||||
Accrued and other current liabilities | 2,990 | 3,654 | ||||||
Current portion of deferred revenue | 6,962 | 2,796 | ||||||
Total current liabilities | 22,405 | 15,015 | ||||||
Deferred revenue, net of current portion | 3,677 | 79 | ||||||
Accrual for restructuring, business realignment, and severance benefits, net of current portion | 3,605 | 3,859 | ||||||
Long-term deferred rent | 1,109 | 1,056 | ||||||
Total liabilities | 30,796 | 20,009 | ||||||
Minority interest | 1,392 | 1,513 | ||||||
Shareholders’ equity: | ||||||||
Common stock | 399,814 | 398,004 | ||||||
Deferred employee stock-based compensation | (639 | ) | (211 | ) | ||||
Accumulated deficit | (166,509 | ) | (139,398 | ) | ||||
Accumulated other comprehensive loss | (13,839 | ) | (12,816 | ) | ||||
Total shareholders’ equity | 218,827 | 245,579 | ||||||
Total liabilities and shareholders’ equity | $ | 251,015 | $ | 267,101 | ||||
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ActivCard Corp.
Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||
Revenue: | ||||||||||||||||
Hardware | $ | 3,971 | $ | 3,814 | $ | 11,733 | $ | 13,829 | ||||||||
Software | 4,062 | 3,507 | 10,103 | 13,140 | ||||||||||||
Maintenance and support | 2,083 | 1,629 | 5,074 | 4,570 | ||||||||||||
Total revenue | 10,116 | 8,950 | 26,910 | 31,539 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Hardware | 2,289 | 1,885 | 6,585 | 9,394 | ||||||||||||
Software | 944 | 849 | 2,717 | 6,670 | ||||||||||||
Maintenance and support | 576 | 288 | 1,684 | 925 | ||||||||||||
Total cost of revenue | 3,809 | 3,022 | 10,986 | 16,989 | ||||||||||||
Gross profit | 6,307 | 5,928 | 15,924 | 14,550 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing | 7,357 | 5,130 | 20,591 | 15,382 | ||||||||||||
Research and development | 4,653 | 4,692 | 12,896 | 13,801 | ||||||||||||
General and administration | 2,554 | 1,625 | 6,193 | 4,712 | ||||||||||||
Restructuring, business realignment, and severance benefits | 820 | 1 | 3,529 | 1,293 | ||||||||||||
Amortization of other intangible assets | 224 | 113 | 492 | 416 | ||||||||||||
In-process research and development | — | 306 | 383 | 306 | ||||||||||||
Write-down of acquired intangible assets | 45 | — | 45 | 758 | ||||||||||||
Re-incorporation expenses | — | 1 | — | 1,067 | ||||||||||||
Total operating expenses | 15,653 | 11,868 | 44,129 | 37,735 | ||||||||||||
Loss from operations | (9,346 | ) | (5,940 | ) | (28,205 | ) | (23,185 | ) | ||||||||
Other income (expenses): | ||||||||||||||||
Interest income, net | 1,048 | 870 | 3,022 | 3,241 | ||||||||||||
Equity in net loss of Aspace Solutions Ltd. | — | (855 | ) | (2,431 | ) | (855 | ) | |||||||||
Other income (expenses), net | 301 | 23 | 140 | (147 | ) | |||||||||||
Total other income (expenses), net | 1,349 | 38 | 731 | 2,239 | ||||||||||||
Loss from operations before income tax provision, minority interest, and other investors’ interest in Aspace Solutions Ltd. | (7,997 | ) | (5,902 | ) | (27,474 | ) | (20,946 | ) | ||||||||
Income tax provision | (6 | ) | (1 | ) | (44 | ) | (84 | ) | ||||||||
Minority interest | 31 | 100 | 115 | 699 | ||||||||||||
Other investors’ interest in Aspace Solutions Ltd. | — | 292 | — | |||||||||||||
Loss from continuing operations | (7,972 | ) | (5,803 | ) | (27,111 | ) | (20,331 | ) | ||||||||
Loss from discontinued operations | — | 158 | — | (70 | ) | |||||||||||
Net loss | $ | (7,972 | ) | $ | (5,645 | ) | $ | (27,111 | ) | $ | (20,401 | ) | ||||
Basic and diluted loss per share: | ||||||||||||||||
From continuing operations | $ | (0.19 | ) | $ | (0.14 | ) | $ | (0.64 | ) | $ | (0.50 | ) | ||||
From discontinued operations | — | — | — | — | ||||||||||||
Net loss per share | $ | (0.19 | ) | $ | (0.14 | ) | $ | (0.64 | ) | $ | (0.50 | ) | ||||
Shares used to compute basic and diluted loss per share | 42,359 | 41,686 | 42,251 | 40,789 | ||||||||||||
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ActivCard Corp.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(Unaudited)
Nine Months Ended September 30, | ||||||||
| 2004 | 2003 | |||||||
Cash flows from operating activities: | ||||||||
Loss from continuing operations | $ | (27,111 | ) | $ | (20,331 | ) | ||
Adjustments to reconcile loss from continuing operations to net cash used by operating activities: | ||||||||
Depreciation and amortization | 1,931 | 2,368 | ||||||
Equity in net loss of Aspace Solutions Ltd. | 2,431 | 855 | ||||||
Amortization of acquired intangible assets | 492 | 416 | ||||||
In-process research and development | 383 | 306 | ||||||
Warrant issued in lieu of compensation | 242 | — | ||||||
Amortization of employee stock-based compensation | 207 | 757 | ||||||
Loss (gain) on disposal of property and equipment | 151 | (10 | ) | |||||
Write-down of acquired intangible assets | 45 | 758 | ||||||
Other investors’ interest in Aspace Solutions Limited | (292 | ) | — | |||||
Minority interest | (115 | ) | (698 | ) | ||||
Write-down of property and equipment | — | 1,684 | ||||||
Changes in: | ||||||||
Accounts receivable | (2,012 | ) | 3,859 | |||||
Inventories | 616 | 1,182 | ||||||
Prepaid and other current assets | 100 | 814 | ||||||
Accounts payable | 727 | (830 | ) | |||||
Accrued compensation and related benefits | 149 | 17 | ||||||
Accrual for restructuring, business realignment, and severance benefits | 100 | (20 | ) | |||||
Accrued and other current liabilities | (785 | ) | — | |||||
Deferred revenue | 7,857 | (1,038 | ) | |||||
Deferred rent | 82 | 128 | ||||||
Net cash used in continuing operations | (14,802 | ) | (9,783 | ) | ||||
Net cash used in discontinued operations | — | (106 | ) | |||||
Net cash used in operating activities | (14,802 | ) | (9,889 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (1,042 | ) | (966 | ) | ||||
Purchases of short-term investments | (121,350 | ) | (208,557 | ) | ||||
Proceeds from sales and maturities of short-term investments | 124,353 | 142,598 | ||||||
Investment in Aspace Solutions, Ltd. | (458 | ) | (6,033 | ) | ||||
Acquisition of ActivCard S.A. minority interest | — | (395 | ) | |||||
Other long-term assets | (10 | ) | 12 | |||||
Net cash used in investing activities | 1,493 | (73,341 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from sale of common stock | 1,170 | 3,506 | ||||||
Net increase in short-term borrowings | 675 | — | ||||||
Repayment of long-term debt | — | (17 | ) | |||||
Net cash provided by financing activities | 1,845 | 3,489 | ||||||
Effect of exchange rate changes on cash | (422 | ) | 962 | |||||
Net increase (decrease) in cash and cash equivalents | (11,886 | ) | (78,779 | ) | ||||
Cash and cash equivalents, beginning of period | 33,599 | 158,880 | ||||||
Cash and cash equivalents, end of period | $ | 21,713 | $ | 80,101 | ||||
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The following presents ActivCard’s quarter and nine month transition period ended September 30, 2004 and 2003 condensed consolidated results of operations with and without the results of operations of Aspace Solutions Ltd.
ActivCard Corp.
Non-GAAP Condensed Consolidated Statement of Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months Ended September 30, 2004 | Nine Months Ended September 30, 2004 | |||||||||||||||||||||||
| GAAP Information | Aspace | Non-GAAP Information | GAAP Information | Aspace | Non-GAAP Information | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Hardware | $ | 3,971 | $ | — | $ | 3,971 | $ | 11,733 | $ | — | $ | 11,733 | ||||||||||||
Software | 4,062 | 53 | 4,009 | 10,103 | 53 | 10,050 | ||||||||||||||||||
Maintenance and support | 2,083 | 3 | 2,080 | 5,074 | 6 | 5,068 | ||||||||||||||||||
Total revenue | 10,116 | 56 | 10,060 | 26,910 | 59 | 26,851 | ||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||||
Hardware | 2,289 | — | 2,289 | 6,585 | — | 6,585 | ||||||||||||||||||
Software | 944 | — | 944 | 2,717 | — | 2,717 | ||||||||||||||||||
Maintenance and support | 576 | — | 576 | 1,684 | — | 1,684 | ||||||||||||||||||
Total cost of revenue | 3,809 | — | 3,809 | 10,986 | — | 10,986 | ||||||||||||||||||
Gross profit | 6,307 | 56 | 6,251 | 15,924 | 59 | 15,865 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Sales and marketing | 7,357 | 318 | 7,039 | 20,591 | 439 | 20,152 | ||||||||||||||||||
Research and development | 4,653 | 1,279 | 3,374 | 12,896 | 1,738 | 11,158 | ||||||||||||||||||
General and administration | 2,554 | 403 | 2,151 | 6,193 | 557 | 5,636 | ||||||||||||||||||
Restructuring, business realignment, and severance benefits | 820 | — | 820 | 3,529 | — | 3,529 | ||||||||||||||||||
Amortization of other intangible assets | 224 | 112 | 112 | 492 | 154 | 338 | ||||||||||||||||||
In-process research and development | — | — | — | 383 | 383 | — | ||||||||||||||||||
Write-down of acquired intangible assets | 45 | — | 45 | 45 | — | 45 | ||||||||||||||||||
Total operating expenses | 15,653 | 2,112 | 13,541 | 44,129 | 3,271 | 40,858 | ||||||||||||||||||
Loss from operations | (9,346 | ) | (2,056 | ) | (7,290 | ) | (28,205 | ) | (3,212 | ) | (24,993 | ) | ||||||||||||
Other income (expenses): | ||||||||||||||||||||||||
Interest income (expense), net | 1,048 | (63 | ) | 1,111 | 3,022 | (106 | ) | 3,128 | ||||||||||||||||
Equity in net loss of Aspace Solutions Ltd. | — | — | — | (2,431 | ) | (2,431 | ) | — | ||||||||||||||||
Other income (expenses), net | 301 | 48 | 253 | 140 | 41 | 99 | ||||||||||||||||||
Total other income (expenses), net | 1,349 | (15 | ) | 1,364 | 731 | (2,496 | ) | 3,227 | ||||||||||||||||
Loss from operations before income tax provision, minority interest, and other investors’ interest in Aspace Solutions Ltd. | (7,997 | ) | (2,071 | ) | (5,926 | ) | (27,474 | ) | (5,708 | ) | (21,766 | ) | ||||||||||||
Income tax provision | (6 | ) | — | (6 | ) | (44 | ) | — | (44 | ) | ||||||||||||||
Minority interest | 31 | — | 31 | 115 | — | 115 | ||||||||||||||||||
Other investors’ interest in Aspace Solutions Ltd. | — | — | — | 292 | 292 | — | ||||||||||||||||||
Net loss | $ | (7,972 | ) | $ | (2,071 | ) | $ | (5,901 | ) | $ | (27,111 | ) | $ | (5,416 | ) | $ | (21,695 | ) | ||||||
Basic and diluted net loss per share | $ | (0.19 | ) | $ | (0.05 | ) | $ | (0.14 | ) | $ | (0.64 | ) | $ | (0.13 | ) | $ | (0.51 | ) | ||||||
Shares used to compute basic and diluted net loss per share | 42,359 | 42,359 | 42,359 | 42,251 | 42,251 | 42,251 | ||||||||||||||||||
Three Months Ended September 30, 2003 | Nine Months Ended September 30, 2003 | |||||||||||||||||||||||
| GAAP Information | Aspace* | Non-GAAP Information | GAAP Information | Aspace* | Non-GAAP Information | |||||||||||||||||||
Net loss | $ | (5,645 | ) | $ | (855 | ) | $ | (4,790 | ) | $ | (20,401 | ) | $ | (855 | ) | $ | (19,546 | ) | ||||||
Basic and diluted loss per share | $ | (0.14 | ) | $ | (0.02 | ) | $ | (0.12 | ) | $ | (0.50 | ) | $ | (0.02 | ) | $ | (0.48 | ) | ||||||
Shares used to compute basic and diluted loss per share | 41,686 | 41,686 | 41,686 | 40,789 | 40,789 | 40,789 | ||||||||||||||||||
| * | Represents equity in net loss of Aspace Solutions Ltd. recorded during the period. |
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