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FRONT PORCH DIGITAL
20000 HORIZON WAY SUITE 120, MOUNT LAUREL, NEW JERSEY 08054
CONTACT: ALLISON WITHERS
WILKIN GUGE MARKETING
909-625-2225
FOR IMMEDIATE RELEASE
FRONT PORCH DIGITAL REPORTS 2003 THIRD QUARTER RESULTS
-- COMPANY COMPLETES CRITICAL TRANSITION INTO BROADCAST, MEDIA AND
ENTERTAINMENT MARKET --
Mount Laurel, NJ - November 18, 2003 - Front Porch Digital Inc. (OTCBB:FPDI)
today announced financial results for the three- and nine-month periods, ended
September 30, 2003, and reported the completion of its transition into the
broadcast arena.
"At the close of the third quarter, we had largely completed the company's
restructuring, which began twelve months ago," said Tom Sweeney, Chairman of the
Board. "We believe our financial results year to date are just beginning to
reflect the progress we have made in repositioning Front Porch as a leading
provider of software solutions for the management and distribution of digital
content to the broadcast, media and entertainment industries. We are optimistic
about the increased interest in our products that we are seeing from the
marketplace and excited about the momentum we have achieved this year in
generating strong new broadcast sales, particularly in Europe and Asia."
Financial results for the nine-month period, ended September 30, 2003:
o Revenues for the nine-month period increased 155% to $5.4 million,
compared with $2.1 million in revenue for the comparable prior year
period.
o Gross margin as a percent of revenue increased to 74%, as compared
with 67% for the comparable prior year period, reflecting the
increased levels of revenue generated in the current year.
o Excluding a one-time charge of $3.3 million taken in this year's
second quarter for the impairment of goodwill and intellectual
property from the company's Media Services business segment, operating
losses year to date were $540,000, reflecting a significant
improvement over operating losses of $2.4 million reported for the
same period a year ago. The net loss for the nine-month period was
$4.9 million, including the $3.3 million one-time charge and a net
loss from discontinued operations of $394,000 associated with the
company's former DIVArchive Medical business. This compares with a net
loss of $2.8 million for the prior year period, which included a loss
from discontinued operations of $221,000.
o Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the nine-month period remained positive at $393,000,
before the second quarter $3.3 million one-time charge, compared with
an EBITDA loss of $1.7 million a year ago.
Financial results for the third quarter, ended September 30, 2003:
o For the third quarter of 2003, revenues were $1.1 million, which were
substantially the same as revenues of $1.1 million reported for the
third quarter a year ago, and reflected the completion of the
company's transition into the broadcast industry. Current third
quarter revenues were also impacted by a slightly longer completion
period related to the company's exit from the medical business and the
transfer of its DIVArchive broadcast operations to the New Jersey
office.
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FRONT PORCH DIGITAL
20000 HORIZON WAY SUITE 120, MOUNT LAUREL, NEW JERSEY 08054
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o Gross margin as a percent of revenue for the third quarter decreased
slightly to 62%, as compared with 65% for the prior year period, and
was lower than the gross margin realized in the first and second
quarters of 2003. The decline in gross margin for the current quarter
was the result of lower revenues in the period and increased staffing
costs incurred for the development of the DIVArchive broadcast
business in North America. The company believes the decline in gross
margin is temporary, and the company expects that gross margins will
increase as revenues continue to increase in the broadcast arena.
o The company posted an operating loss of $0.9 million for the quarter,
compared with an operating loss of $0.8 million for the third quarter
last year. The net loss for the quarter was $1.5 million, as compared
to $1.2 million for the prior year period. Included in the net loss
for the current third quarter and last year's third quarter was a
$229,000 loss and a $221,000 loss, respectively, from discontinued
operations related to the company's former DIVArchive Medical business
in France, which was sold in June 2003.
o The company reported an EBITDA loss of $701,000 for the quarter, as
compared to a loss of $485,000 in the third quarter of 2002.
The company also reported that, as part of the completion of the transition
phase, it has established DIVArchive broadcast operations in the U.S., and has
hired 11 additional employees to meet the development and delivery requirements
associated with customer contracts. As of October 31, 2003, the company had more
than $2 million in backlog related to signed customer contracts executed in
2003, which is expected to generate revenue over the next two or three quarters.
The company's chief financial officer, Matthew Richman, said, "As part of the
company's restructuring, we have realigned our cost structure and are currently
fully staffed and positioned to meet the delivery requirements of our existing
customer contracts and anticipated new sales in the broadcast and entertainment
space. Our current cost levels are in line with our overall plan to support a
sustainable business in the broadcast industry into 2004. As we continue our
efforts to manage costs and grow sales, we believe we have adequate resources to
support our operational and staffing needs and to continue the development of
the broadcast business. Although certain third quarter revenues were impacted by
delays, our DIVArchive broadcast operation is currently fully functional and
well staffed, and we believe we are on target to deliver the contracted revenues
and to meet any additional needs resulting from new sales."
"Looking ahead, we believe we are well positioned for further progress and a
strong beginning next year," Richman added. "With our current backlog of
contracted sales and with our recent addition of a new director of U.S. sales,
we look forward to further developing our business and meeting the increasing
demand within the broadcast, media and entertainment markets."
ABOUT FRONT PORCH DIGITAL: Front Porch Digital Inc. (www.fpdigital.com) is
transforming the digital world by developing unique software and services that
convert audio, video, images, text and data into digital formats that enable
searching, browsing, editing, storage and on-demand delivery of content in
nearly any other digital format through a single capture. To join Front Porch
Digital's investor e-mail list, please complete the form found at
http://www.fpdigital.com/html/e-mail_notification.html.
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FRONT PORCH DIGITAL
20000 HORIZON WAY SUITE 120, MOUNT LAUREL, NEW JERSEY 08054
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Front Porch Digital Forward Looking Statements: This news release contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, which reflect Front Porch Digital's current views
with respect to future events and financial performance. Such statements are
subject to certain risks and uncertainties that could cause actual events or
results to differ materially from those indicated from such forward-looking
statements. The potential risk factors include Front Porch Digital's limited
operating history and experience in the data and video digital conversion
business, Front Porch Digital's ability to attract significant additional
financing and incur operational losses and negative cash flow, and risks
associated with expansion. Additional risk factors are set forth in Front Porch
Digital's reports and documents filed with the Securities and Exchange
Commission.
TRADEMARKS: All products or company names mentioned are used for identification
purposes only and may be trademarks of their respective owners.