CONVERA(R) REPORTS FOURTH QUARTER AND FISCAL YEAR 2007 RESULTS; SIGNED THREE
AGREEMENTS FOR SEVEN VERTICAL SITES
Vienna, Va., March 14, 2007 -- Convera Corporation (NASDAQ: CNVR),
www.convera.com, a leading provider of search technologies for professionals,
today announced financial results for the three-month period and fiscal year
(fiscal year 2007) ended January 31, 2007.
Revenue for the fourth quarter of fiscal 2007 totaled $2.8 million, a 24%
decrease from the comparable period of fiscal 2006, while full-year revenue
totaled $16.7 million versus $21.0 million for the prior fiscal year period.
Revenue for the RetrievalWare enterprise search product offering in the fourth
quarter of fiscal 2007 totaled $2.6 million as compared to $3.6 million for the
comparable period of fiscal 2006. Revenue for the Excalibur web search product
for the fourth quarter totaled $117,000 as compared to $20,000 in the prior
fiscal year. Full year revenue for RetrievalWare totaled $16.4 million as
compared to $21.0 million for the comparable full year period. Full year revenue
for Excalibur totaled approximately $270,000 as compared to $20,000 in the
comparable full year period.
Expenses for the three month period ended January 31, 2007 totaled $13.1
million, which compares to $13.1 million for the year-ago quarter, while
full-year expenses totaled $63.8 million representing a 78% increase from the
$35.9 million as reported for the prior fiscal year period.
Expenses for the fiscal year ended January 31, 2007 includes $20.4 million of
non-cash charges, including; $6.8 million in stock compensation expense related
to the Company's adoption of FAS 123(R) and the Company's deferred stock plan
expense, $6.4 million writedown of capitalized software development costs and
related hosting assets on the Excalibur product offering to fair value,
depreciation of $3.7 million and the amortization of capitalized software
development costs of $3.0 million.
Non cash charges included in expenses for the prior full fiscal period were
approximately $5.7 million, including; approximately $1.0 million in
amortization of capitalized software development costs,$2.9 million of
depreciation and $1.6 million of deferred stock plan expense. Additionally,
expenses for the full year of fiscal 2006 were reduced on a net basis by $7.1
million for the capitalization of software development costs.
The net loss for the quarter ended January 31, 2007 was $9.7 million or $0.18
per share, compared to a net loss of $9.3 million, or $0.20 per share, for the
comparable quarter of fiscal 2006. The net loss for the fiscal year ended
January 31, 2007 was $44.8 million, or $0.86 per share, compared to a net loss
of $14.3 million, or $0.33 per share for the fiscal year ended January 31, 2006.
The impact of the Company's pending restatement of the financial statements
contained in its Form 10-Q for the three months and nine months ended October
31, 2006 is reflected in the full year amounts reported above.
These results reflect 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.
During the fourth quarter the Company signed contracts to provide professional
search under its Excalibur product offering to the websites of seven
publications. The Company completed implementation and began providing
professional search services for four websites during the fourth quarter and, as
of January 31, 2007, is providing services to the websites of five publications.
The Company commenced an initiative to separate its RetrievalWare enterprise
search product and the Excalibur web search product into separate lines of
business in February 2007 to improve visibility over each both businesses and
find opportunities to accelerate revenue growth and to reduce expenses for each
of these businesses in fiscal 2008.
Cash and cash equivalents as of January 31, 2007 totaled $47.4 million, this
compares to $37.7 million as of January 31, 2006.
"This past year was one of transition," stated Pat Condo, president and chief
executive officer of Convera." Following the launch of the Excalibur service
offering in the business to business publisher market, much of Management's
attention has been on the acquisition of new publishing customers. To date we
have 5 of the top 10 Business publishers using Excalibur. This focus has also
contributed to the decline of our enterprise search business during the past
year. However, we have separated the Company into two business units and
streamlined the expenses which could enable the enterprise business to be
profitable and accelerate the progress we are making in the vertical search
business as well."
The attached financial information compares the results of operations for the
three-month and twelve-month periods ended January 31, 2007 to the same periods
in 2006 and the balance sheet as of January 31, 2007 to the balance sheet as of
January 31, 2006.
About Convera(R)
Convera(R) is a leading provider of search technologies for professional
workers. Convera has developed a unified product platform that makes sense of
vast amounts of information--wherever it resides--across multiple data formats,
languages and meanings. Based on proprietary technologies that extract relevant
results from public and private data, Convera enables professionals to quickly
retrieve exactly the information essential for action. The Convera search
platform is delivered as a hosted service, software or a bundled hardware and
software package. Thousands of government and business professionals in 40
countries rely on Convera search solutions to power a broad range of mission
critical applications.
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; the ability to continue
funding operating losses; fluctuations in operating results including impacts
from reduced corporate IT spending and lengthier sales cycles; continued success
in technological advances and development including the TrueKnowledge Platform
(TM); 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 reports to the Securities
and Exchange Commission. 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 SEC. 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 trademarks of Convera in the United States and other
countries: Convera(R), the Convera design logo, Screening Room(R),
RetrievalWare(R), Excalibur(TM), Govmine(TM), baseRelevance(TM), TrueKnowledge
Platform(TM), TrueB2B(TM), TrueKnowledge for Enterprise(TM), TrueKnowledge for
Discovery(TM), TrueKnowledge for Web(TM), and Knewworld(TM)."
The condensed consolidated statements of operations and balance sheets 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,
2007 2006 2007 2006
---------- ---------- ---------- ----------
(unaudited) (unaudited) (unaudited)
Revenues:
License $ 768 $ 1,242 $ 7,629 $ 10,573
Services 297 433 1,558 2,379
Maintenance 1,574 1,918 7,215 8,036
Excalibur hosted services 117 20 269 20
---------- ---------- ---------- ----------
Total Revenue $ 2,756 $ 3,613 $ 16,671 $ 21,008
---------- ---------- ---------- ----------
Expenses:
Cost of revenues:
License 345 421 1,679 1,383
Services 2,472 2,375 9,712 4,903
Maintenance 322 218 1,205 981
Sales and marketing 2,679 1,783 11,506 8,190
Research and product development 3,606 4,023 15,044 8,346
General and administrative 3,671 3,317 15,168 11,113
Restructuring charge - - - (57)
Amortization of capitalized software
development costs - 1,012 3,045 1,012
Impairment of capitalized software
development costs and fixed
assets - - 6,407 -
---------- ---------- ---------- ----------
Total Expense 13,095 13,149 63,766 35,871
---------- ---------- ---------- ----------
Operating loss (10,339) (9,536) (47,095) (14,863)
Interest income (expense), net 602 260 2,267 602
---------- ---------- ---------- ----------
Net loss $ (9,737) $ (9,276) $ (44,828) $ (14,261)
========== ========== ========== ==========
Earnings per share- basic & diluted $ (0.18) $ (0.20) $ (0.86) $ (0.33)
========== ========== ========== ==========
Weighted average number of common
shares outstanding - basic and
diluted 52,810 46,876 52,222 43,089
========== ========== ========== ==========
ASSETS
January 31, 2007 January 31, 2006
---------------- ----------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 47,433 $ 37,741
Restricted cash 71 71
Accounts receivable, net 3,023 4,364
Prepaid expenses and other 1,762 2,396
---------------- ----------------
Total current assets 52,289 44,572
Equipment and leasehold improvements, net 3,928 9,152
Other assets 761 819
Capitalized software development costs, net - 7,102
Goodwill and other intangible assets 2,303 2,572
---------------- ----------------
Total assets $ 59,281 $ 64,217
================ ================
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 1,837 $ 1,367
Accrued expenses 2,680 2,680
Deferred revenues 3,446 3,931
Current maturities of long-term debt - 1,283
---------------- ----------------
Total current liabilities 7,963 9,261
Other long-term liability - 3,717
Deferred revenues - long term 221 398
---------------- ----------------
Total liabilities 8,184 13,376
Shareholders' Equity 51,097 50,841
---------------- ----------------
Total liabilities and shareholders' equity $ 59,281 $ 64,217
================ ================
Contact:
Matthew Jones
Chief Financial Officer
703.761.3700
mjones@convera.com