EXHIBIT 99.1
Contact: Candace Berman
Concerto Software
(305) 639-2267
cberman@concerto.com
Concerto Software Announces Second Quarter 2002 Results
Pro Forma EPS, Operational Results Exceed Expectations;
Record ContactPro(TM) and Ensemble(TM) Sales Drive Early Return to
Operating Profitability
WESTFORD, Mass., July 23, 2002 -- Concerto Software(TM) (NASDAQ: CRTO), a proven
provider of customer interaction management (CIM) solutions, today announced
financial results for the second quarter, which ended June 30, 2002. The
company's strong financial performance in the second quarter was driven by
unprecedented demand for two of Concerto Software's flagship products,
ContactPro and Ensemble, and a sustained focus on sound fiscal management.
Concerto Software sequentially increased total revenue by 6% to $24.7 million
for the second quarter of 2002, compared to $23.3 million for the first quarter
of 2002 and $25.8 million for the same period in 2001. Pro forma net income for
the second quarter of 2002, which excludes $441,000 of amortization expense
associated with purchased intangible assets, was $576,000 or pro forma diluted
earnings per share of $0.05. This significantly exceeded management's previous
estimate of pro forma diluted earnings per share for the second quarter of $0.01
- - $0.03. Net income for the second quarter of 2002 on a GAAP basis, which
includes the amortization expense associated with the purchased intangible
assets, was $245,000 or $0.02 per diluted share, compared to a net loss of $4.1
million or $0.33 per diluted share in the first quarter of 2002 and net income
of $610,000 or $0.05 per diluted share for the same period in 2001. The
company's first quarter results included a non-recurring $5.1 million charge
associated with the acquisition of CELLIT. Also during the second quarter of
2002, the company generated profits from operations on a pro forma basis of
$585,000 and on a GAAP basis, of $144,000, reaching profitability from
operations one quarter ahead of management's original expectations.
During the second quarter of 2002, Concerto Software sequentially grew product
revenue by 9% to $11.5 million, compared to $10.6 million in the first quarter
and $12.4 million for the same period in 2001. Concerto Software achieved record
sales this quarter for two of its product lines - ContactPro and Ensemble.
ContactPro product and services revenue for the second quarter totaled $4.3
million, compared to $1.1 million in the first quarter. New ContactPro customers
included All American Management Systems Group and Comtec Teleservices, Inc., a
provider of state-of-the-art voice and data communications products. In
addition, Concerto Software achieved another record amount of Ensemble business
this quarter, with product revenue totaling approximately $2.6 million, compared
to $2.5 million in the first quarter of 2002. New Ensemble customers included
Daksh eServices Pvt. LTD., a leading eCRM co-sourcing company in India, and
Network Solutions, one of the top ten network integration firms, also in India.
"Concerto's strong financial performance this quarter, despite an ongoing
difficult economic environment, is another measurable proof point that the
company continues to meet the ambitious goals we set forth at the beginning of
the year," said James Foy, CEO of Concerto Software. "Growing demand for our
expanded product line, evidenced by our quarterly sequential product revenue
growth and record ContactPro and Ensemble sales, has enabled us to exceed
expectations for a second consecutive quarter and return to operating
profitability one quarter ahead of schedule."
In light of the continuing difficult economic environment, especially in North
America, combined with the historical slowness of the third quarter in European
markets due to the summer months, Concerto Software expects to achieve total
revenues of at least $25.0 million in the third quarter of 2002 and pro forma
earnings per share of $0.06 - $0.07. The company also expects total revenues and
earnings per share to continue to increase sequentially through the remainder of
2002, with modest improvement in total pro forma earnings per share for the full
year as compared to 2001.
At the end of the second quarter, cash and short-term investments totaled $41.0
million, a decrease of approximately $5.2 million from the previous quarter. The
decrease in cash and short-term investments was primarily the result of the
company continuing to repurchase shares of stock under its stock repurchase
Concerto Software Announces Second Quarter 2002 Results / Page 2
program. During the second quarter, 451,600 shares of the company's common stock
were repurchased, resulting in cash utilization of approximately $3.9 million.
Days sales outstanding (DSO) were consistent from the first quarter to the
second, at 61 days, remaining well below the industry average and in line with
management's expectations.
Second Quarter Business Highlights
Concerto Software Completes 154 Transactions, Maintains Strong International
Momentum
During the second quarter, Concerto Software completed 154 total transactions,
including adding a significant number of new name accounts. In the Americas, new
customers in the second quarter included All American Management Systems Group,
Baxter Healthcare through channel partner SBC, The Bon Ton Department Stores,
Inc., Centurytel Service Group, LLC, Comtec Teleservices, Inc., Hamilton
TeleCommunications, Remote Response Corp. and Schindler Elevator Corporation.
Follow-on orders from existing Americas customers included American Healthways,
Inc., AT&T Corp., Blue Shield of California, Greenpoint Credit, InPhonic, Inc.,
Option One Mortgage, Thomson Financial and Wells Fargo Financial Information
Services.
Concerto Software continued to enhance its leadership position in the
Asia-Pacific (APAC) region throughout the second quarter. New accounts included
Infowavz Intl Private Ltd, Goldstone Teleservices and Netwiser through channel
partner Bay Talkitec (P) LTD; First Card Payment Services through channel
partner UECI (Universal Electronics and Computers Inc.); M/s Sara Tele Systems P
Ltd through channel partner Ramco Systems Limited; Australian Cable & Telephony
through channel partner NetStar Australia Pty Lmt; AOBA through channel partner
Tomen Telecom Corporation in Japan; and Daksh eServices Pvt. LTD., operator of
the largest contact center in India. Daksh recently implemented Ensemble and
LYRICall(TM), integrating inbound and outbound voice, email and Web
functionality to support Fortune 500 clients including Amazon, Sprint and
Yahoo!.
The company also realized significant growth in Europe, the Middle East and
Africa (EMEA) this quarter, with new customers in the region including Data
Locator, Ltd., Icordia Solutions and Insurance Advisory Services plc in the
United Kingdom; BuW in Germany through channel partner TietoEnator GmbH; Eskom
and Vodacom though channel partner Multi-Connect (Pty) Lmt, and Sage Life
through channel partner ATIO Corporation (PTY) LTD., in South Africa.
Concerto Software Expands Partnerships
During the second quarter, Concerto Software continued to expand its partner
relationships around the world. Working together to address the mid-sized
contact center market, Concerto Software and Siebel recently completed phase two
of a 15-city joint seminar series designed to educate companies on the value of
implementing unified CIM/CRM solutions. Concerto Software also entered into new
agreements with Southeastern Telecom, Inc. and NETCO Communications, Inc. under
which the companies will distribute ContactPro.
In addition, Concerto Software grew its strategic partnerships throughout APAC
this quarter, signing new agreements with NetStar Australia Pty Lmt, and
Intranet Business Systems, Inc. and Trends & Technologies, Inc. in the
Philippines, under which the companies will distribute and implement Concerto
Software solutions. Plans are in place for additional expansion into Thailand,
Sri Lanka and Japan via new and existing partner relationships.
In EMEA this quarter, Concerto Software entered into a new partnership with NTI
in Italy and participated in lead-generation events with Datapoint Iberica, S.A.
and Multi-Connect (Pty) Lmt, both existing channel partners whose relationships
continue to expand and yield new business opportunities in the region.
"Concerto regards strategic partners as an extension of our own sales force and
as a critical component for success," said Foy. "We take great care to align
ourselves with leading companies that deliver our solutions along with the
expertise and value customers demand."
Product News
In June, Concerto Software released the latest version of LYRICall(TM), its
browser-based desktop automation solution. LYRICall 3.0, now fully integrated
with Concerto Software's unified CIM solution, ContactPro, demonstrates
continued execution of Concerto Software's aggressive strategy to converge the
product lines
Concerto Software Announces Second Quarter 2002 Results / Page 3
brought together by the merger of Davox and CELLIT. LYRICall is now fully
integrated with all of Concerto Software's CIM solutions, including Unison(R)
and Ensemble(TM).
During the quarter, Concerto Software also released Ensemble 3.1, which is
designed to improve contact center efficiency for corporations running multiple
Ensemble systems in multiple sites across the enterprise.
In addition, Concerto Software shipped the latest release of its Voice over
Internet Protocol (VoIP) technology in ContactPro Version 4.2. VoIP enables
companies to operate multiple contact centers and support remote agents from a
single centralized location, as well as standardize all voice and data
requirements on a single network.
"Concerto recognizes that leading-edge products, financial stability and
long-standing contact center expertise have an enormous impact on the technology
purchase decisions being made by executives today," Foy added. "We strive to
ensure that we deliver value to our customers around the world - before, during
and after the transaction is complete."
Webcast
Concerto Software will host a conference call and Webcast today, July 23, 2002,
at 5:00 p.m. EDT to discuss its second quarter 2002 financial and operating
results and its business and financial outlook for the third quarter and
remainder of fiscal 2002. To participate in the conference call, RSVP to
978-952-0294 before 4:30 p.m. EDT on July 23. This call is being Webcasted by
CCBN and can be accessed through Concerto Software's Web site at
www.concerto.com. The Webcast will also be distributed over CCBN's Investor
Distribution Network to both institutional and individual investors. Individual
investors can listen to the call through CCBN's individual investor center
(www.companyboardroom.com) or by visiting any of the investor sites in CCBN's
Individual Investor Network such as America Online's Personal Finance Channel,
Fidelity Investments(R) (www.fidelity.com) and others. Institutional investors
can access the call via CCBN's password-protected event management site,
StreetEvents (www.streetevents.com).
A replay of the conference call will be available from July 23, 2002 at 8:00
p.m. EDT until July 30, 2002 at 12 midnight EDT. To access the replay, dial
800-642-1687 (from within the U.S. or Canada) or 706-645-9291 (from outside the
U.S. or Canada) and enter the passcode 4891137, or log on to the Concerto
Software Web site at www.concerto.com.
About Concerto Software(TM)
Concerto Software provides contact center solutions that help companies more
effectively manage customer interactions via voice, fax, email and the Web. More
than 1,100 companies worldwide - including banks, service bureaus,
telecommunications firms, utilities and retailers - use Concerto solutions to
deliver superior customer service, and to successfully acquire, retain and grow
valuable customer relationships. Concerto Software is headquartered in Westford,
Massachusetts, with operations across North America, Europe and Asia. For more
information, visit www.concerto.com.
Note: Concerto Software, ContactPro, Ensemble and LYRICall are trademarks and
Davox, CELLIT and Unison are registered trademarks of Concerto Software, Inc.,
formerly known as Davox Corporation. All other trademarks are the property of
their respective owners.
In addition to historical information contained herein, this press release
contains forward-looking statements concerning future expected financial,
operating results, and product and marketing strategies. Forward-looking
statements in this release include, but are not limited to, estimates of future
business prospects or financial results and statements containing the words
"believe," "estimate," "project," "expect" or similar expressions. Concerto
Software's future actual results could differ materially from the
forward-looking statements discussed or implied herein because of risks or
uncertainties including, but not limited to, the difficulty of converging
products, the difficulty in the development, marketing or selling of the
company's solutions, risks associated with competition and competitive pricing
pressures, technological change, new product introduction and market acceptance,
stock price volatility, the ability of Concerto Software to attract and retain
key personnel, weakness in IT spending, weakness in the contact center market,
general economic conditions in the United States and worldwide markets served by
Concerto Software, acts of terrorism, regulatory changes, including restrictions
placed on predictive dialing, telemarketing and web technologies and those other
factors discussed from time to time in Concerto Software's public reports filed
with the Securities and Exchange Commission, such as those discussed under
"Certain Factors That May Affect Future Results" in Concerto Software's
quarterly reports on Form 10-Q and annual report on Form 10-K. All
forward-looking statements and reasons why results might differ included in this
release are made as of the date hereof, and Concerto Software assumes no
obligation to update any such forward-looking statements or reasons why results
might differ.
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Concerto Software Announces Second Quarter 2002 Results / Page 4
CONCERTO SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
----------- -----------
2002 2001 2002 2001
---- ---- ---- ----
Product revenue $ 11,544 $ 12,369 $ 22,169 $ 24,273
Service revenue 13,160 13,417 25,860 26,445
-------- -------- -------- --------
Total revenue 24,704 25,786 48,029 50,718
-------- -------- -------- --------
Cost of product revenue 2,147 2,171 4,161 4,154
Cost of service revenue 6,391 7,010 12,732 14,305
-------- -------- -------- --------
Total cost of revenue 8,538 9,181 16,893 18,459
-------- -------- -------- --------
Gross profit 16,166 16,605 31,136 32,259
Operating expenses:
Research, development and engineering 3,996 4,966 8,060 9,712
Selling, general and administrative 11,585 11,438 22,789 22,803
Non-recurring merger and integration costs -- -- 3,112 --
Non-recurring restructuring costs -- -- 2,030 --
Amortization of purchased intangible assets 441 -- 809 --
-------- -------- -------- --------
Total operating expenses 16,022 16,404 36,800 32,515
-------- -------- -------- --------
Income/(loss) from operations 144 201 (5,664) (256)
Other income, net 183 683 511 1,621
-------- -------- -------- --------
Income/(loss) before provision for
(benefit from) income taxes 327 884 (5,153) 1,365
Provision for (benefit from) income taxes 82 274 (1,288) 424
-------- -------- -------- --------
Net income (loss) $ 245 $ 610 $ (3,865) $ 941
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Pro forma net income (1) $ 576 $ 610 $ 599 $ 941
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Earnings (loss) per share:
Basic $ 0.02 $ 0.05 $ (0.31) $ 0.07
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Diluted $ 0.02 $ 0.05 $ (0.31) $ 0.07
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Pro forma earnings per share (1):
Basic $ 0.05 $ 0.05 $ 0.05 $ 0.07
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Diluted $ 0.05 $ 0.05 $ 0.05 $ 0.07
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Weighted average shares outstanding:
Basic 12,152 12,784 12,440 12,737
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Diluted 12,313 13,218 12,440 13,229
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Pro forma weighted average shares outstanding:
Diluted 12,313 13,218 12,619 13,229
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(1) Pro forma results exclude the non-recurring restructuring and merger and
integration costs and the amortization of purchased intangible assets as a
result of the acquisition of CellIt on January 14, 2002.
Concerto Software Announces Second Quarter 2002 Results / Page 5
CONCERTO SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
June 30, December 31,
2002 2001
---- ----
ASSETS (Unaudited) (Audited)
Current assets:
Cash and short term investments $ 40,988 $ 67,943
Accounts receivable, net 16,619 11,007
Prepaid expenses & other current assets 5,914 5,310
Deferred tax assets 5,161 3,791
-------- --------
Total current assets 68,682 88,051
Property and equipment, net 7,380 6,447
Goodwill 17,160 --
Purchased intangible assets, net 6,251 --
Long-term deferred tax asset 2,382 2,382
Other assets 518 276
-------- --------
$102,373 $ 97,156
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,152 $ 5,307
Accrued expenses 12,670 8,643
Current portion of long-term debt 828 --
Customer deposits 4,908 4,664
Deferred revenue 12,504 8,074
-------- --------
Total current liabilities 38,062 26,688
Long-term debt 421 --
-------- --------
Total liabilities 38,483 26,688
Total stockholders' equity 63,890 70,468
-------- --------
$102,373 $ 97,156
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