Contact: John R. Polchin
Chief Financial Officer
Convera
(703)761.3700
jpolchin@convera.com
Convera Reports Fourth Quarter and Full-Year Results
Company Completes Private Placement; Cash Position Increases to $70 Million
Vienna, Va., March 1, 2006 - Convera Corporation (NASDAQ: CNVR), a leading
provider of search technologies to commercial enterprises and government
agencies, today announced financial results for the three-month period and
fiscal year (fiscal year 2006) ended January 31, 2006.
Revenue for the fourth quarter of fiscal 2006 totaled $3.6 million, a 43%
decrease from the comparable period of fiscal 2005, while full-year revenue
totaled $21.0 million versus $25.7 million for the prior fiscal year period.
Expenses for the period ended January 31, 2006 totaled $13.1 million, which
compares to $9.9 million for the year-ago quarter, while full-year expenses
totaled $35.9 million representing a 21% decrease from the $45.7 million as
reported for the prior fiscal year period.
The net loss for the quarter ended January 31, 2006 was $9.3 million (inclusive
of approximately $1 million of amortization of capitalized software development
costs attributable to the Company's Excalibur offering) or $0.20 per share,
compared to a net loss of $3.5 million, or $0.09 per share, for the comparable
quarter of fiscal 2005. The net loss for the fiscal year ended January 31, 2006
was $14.3 million, or $0.33 per share, compared to a net loss of $19.8 million,
or $0.56 per share for the fiscal year ended January 31, 2005.
These results are indicative of the Company's continuing transition from a pure
enterprise search software concern to a more diverse search provider offering a
professional grade Web-based search technology through its Excalibur solution.
Cash and investments as of January 31, 2006 totaled $37.8 million, this compares
to $17.8 million as of January 31, 2005. As of March 1, 2006, cash and
investments totaled approximately $70 million, reflecting net proceeds of
approximately $36.7 million from the Company's recently completed private
placement to a group of institutional investors and the subsequent retirement of
the Silicon Valley Bank Term facility.
"This past year continued to demonstrate our efforts to transform Convera",
stated Patrick C. Condo, Convera's President and Chief Executive Officer.
"Following the launch of our Excalibur Web search offering, much of our
management efforts, as well as our sales and marketing resources were primarily
focused on expanding the Excalibur sales and distribution channels. While this
realignment resulted in acquiring our first commercial customers for Excalibur
(HighBeam Research, Vivisimo and CNET), the performance of our software products
group during the fourth quarter felt the effects of this shift in focus.
Going-forward, we will continue to concentrate our efforts on marketing the
dynamic search capabilities of our Excalibur solution, while also seeking to
improve bottom-line performance. With the recent private placement now complete,
our balance sheet is well-positioned, furthering our ability to transform
Convera into a leading player within today's growing Internet search market",
Condo concluded.
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Page 2 - Convera Reports Fourth Quarter and Full-Year Results
The attached financial information compares the results of operations for the
three-month and twelve-month periods ended January 31, 2006 to the same periods
in 2005 and the balance sheet as of January 31, 2006 to the balance sheet as of
January 31, 2005.
About Convera
Convera is a leading provider of search technologies to commercial enterprises
and government agencies. Through its two offerings, Excalibur(TM), a newly
developed Web search solution and RetrievalWare(R), its enterprise search
product, Convera offers unique search technology capable of providing an
integrated results page derived from both intranet and Internet content.
Convera's technologies manage vast stores of structured and unstructured
information that exist within internal repositories and on the Web by providing
highly scalable, fast, accurate and secure search capabilities across text,
video, image and audio information, in multiple languages. More than 900
customers in 40 countries rely on Convera search solutions to power a broad
range of mission-critical applications. For more information, contact Convera at
800-755-7005, via e-mail at or on the Web at www.convera.com.
This release, including any statements from Convera personnel, contains
statements about Convera's future expectations, performance, plans, and
prospects, as well as assumptions about future events. The reader is cautioned
not to put undue reliance on these forward-looking statements, as these
statements are subject to numerous factors and uncertainties, including without
limitation, business and economic conditions and trends; continued success in
technological advances and development including the Excalibur Web offering;
possible disruption in commercial activities caused by terrorist activity and
armed conflict, such as changes in logistics and security arrangements; reduced
customer demand relative to expectations; competitive factors; and other risk
factors listed from time to time in the company's SEC reports. Actual results
may differ materially from our expectations as the result of these and other
important factors relating to Convera's business and product development
efforts, which are further described in Convera's filings with the Securities
and Exchange Commission. These filings can be obtained from the SEC's website
located at www.sec.gov. Any forward-looking statements are based on information
available to Convera on the date of this release, and Convera assumes no
obligation to update such statements. The Convera design logo and the following
are worldwide trademarks of Convera: Convera(TM), RetrievalWare(R), and
Screening Room(R). The names of actual companies and products mentioned herein
may be the trademarks of their respective owners.
The condensed, consolidated statements of operations for the Company appear
below and are presented in accordance with accounting principles generally
accepted in the United States. All amounts, except per share amounts, are
expressed in thousands of U.S. dollars.
Three Months Ended Twelve Months Ended
January 31, January 31,
2006 2005 2006 2005
(unaudited) (unaudited) (unaudited)
Revenues:
License $ 1,242 $ 3,263 $ 10,573 $ 14,360
Services 453 849 2,399 3,746
Maintenance 1,918 2,219 8,036 7,592
-------------- --------------- --------------- ---------------
Total revenues 3,613 6,331 21,008 25,698
-------------- --------------- --------------- ---------------
Expenses:
Cost or revenues:
License 421 14 1,383 1,658
Services 2,375 741 4,903 3,332
Maintenance 218 332 981 1,718
Sales and marketing 1,783 2,230 8,190 14,476
Research and development 4,023 3,490 8,346 13,801
General and administrative 3,317 2,655 11,113 9,764
Amortization of capitalized R&D costs 1,012 - 1,012 -
Restructuring charge - 426 (57) 944
--------------- --------------- --------------- ---------------
Total expenses 13,149 9,888 35,871 45,693
--------------- --------------- --------------- ---------------
Operating Loss (9,536) (3,557) (14,863) (19,995)
Other Income, net 260 63 602 175
--------------- --------------- --------------- ---------------
Net Loss $ (9,276) $ (3,494) $(14,261) $(19,820)
=============== =============== =============== ===============
Net loss per common share - basic & diluted $ (0.20) $ (0.09) $ (0.33) $ (0.56)
=============== =============== =============== ===============
Weighted-average number of common
shares outstanding - basic & diluted 46,876 37,899 43,089 35,433
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Page 3 - Convera Reports Fourth Quarter and Full-Year Results
The condensed, consolidated balance sheets for the Company appear below and are
presented in accordance with accounting principles generally accepted in the
United States. All amounts are expressed in thousands of U.S. dollars.
ASSETS January 31, 2006 January 31, 2005
(unaudited)
Current Assets
Cash and cash equivalents $ 37,741 $ 17,766
Short term investments 71 71
Accounts receivable, net 4,364 6,530
Prepaid expenses and other 2,396 2,390
---------------------- ----------------------
Total current assets 44,572 26,757
Other assets, net 9,971 6,696
Capitalized software development costs, net 7,102 -
Goodwill 2,275 2,275
Other intangible assets 297 566
--------------------- ----------------------
Total Assets $ 64,217 $ 36,294
====================== ======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,367 $ 1,967
Accrued expenses 2,301 3,529
Accrued bonuses 379 526
Deferred revenues 3,931 4,288
Restructuring reserve - 835
---------------------- ----------------------
7,978 11,145
Other long-term liabilities 5,398 -
Total Liabilities 13,376 11,145
---------------------- ----------------------
Shareholders' Equity 50,841 25,149
Total Liabilities & Shareholders'
Equity $ 64,217 $ 36,294
====================== ======================
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