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EXHIBIT 99.1
FINANCIAL ANALYST & INVESTOR CONTACT: MEDIA CONTACT:
Dave Miller Christopher Walker
USinternetworking, Inc. USinternetworking, Inc.
(410) 897-1746 (410) 897-3560
dave.miller@usi.net christopher.walker@usi.net
USINTERNETWORKING, INC. ANNOUNCES THIRD QUARTER 2000 FINANCIAL RESULTS
EBITDA LOSSES CONTINUE TO NARROW, BACKLOG EXCEEDS $100 MILLION
ANNAPOLIS, MARYLAND, OCTOBER 24, 2000 - USinternetworking, Inc. (USi, Nasdaq:
USIX), a leading Application Service Provider, today announced results for the
quarter ended September 30, 2000. Revenue for the third quarter of $28.3 million
represents a 189% increase compared to the same period for 1999, and an 8%
increase over the previous quarter. EBITDA loss for the quarter improved to
$18.0 million, and the net loss amounted to $47.8 million or $0.49 per share.
Additional highlights:
- Secured over $76 million in new service contract value, the
Company's second highest quarterly performance, bringing
contract value sold year to date to $240 million.
- Secured 45 new service contracts, including enterprise &
government clients such as Amadeus Global Travel Services,
GMAC Home Services, Nextel, the Federal Railroad
Administration, and the Federal Energy Regulatory Commission
through a subcontractual agreement with a systems integrator.
- Renewed contracts with early clients Hershey Foods Corporation
and Knoll Pharmaceutical, indicative of USi's ability to
provide its clients with exceptional service and client
support.
- Reached 12-month backlog of $101.3 million.
- Increased average monthly recurring revenue to $44,200.
- 45% of the Company's clients have now upgraded their
contracts.
- 21% of the Company's clients now utilize multiple services,
buying on average 2.5 services each.
"While revenue and backlog growth this quarter were lower than expected, our
losses narrowed faster than anticipated through substantial gains in operating
efficiency. EBITDA and EPS were better than forecasted despite revenue below
plan," said Andrew A. Stern, Chief Executive Officer of USi. "We were also
pleased by the level of contract value sold given the market environment,
reflecting continued strong demand for USi's solutions."
The Company attributed lower than expected growth for the quarter to a mix of
several factors including a reduction in dot.com business, the timing and level
of new contract value sold, and a decrease in professional services revenue.
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Deteriorating dot.com business was the primary reason the Company experienced
slower growth than expected. During the quarter, several of USi's dot.com
clients faced financial difficulties. As a result, USi discontinued recognizing
revenue and wrote off related costs and backlog associated with these clients.
"Start-up, venture funded companies represented only 13% of our backlog at the
end of the quarter," said Stern. "The vast majority of our revenues come from
contracts with well-established, enterprise companies."
USi achieved significant operating efficiencies in the quarter, as evidenced by
better than anticipated EBITDA and EPS. The Company consolidated the number of
business units from eight to four, and reduced headcount growth to more
effectively utilize labor.
The debt commitments previously announced have closed with the exception of the
$50 million revolving line of credit. The anticipated closure of the revolver
was slowed by the complexities of required inter-creditor agreements. The
commitment expired without final closure due to acceleration in capital
expenditures and a deteriorating debt financing environment. The Company's
discussions with this lender are ongoing. The Company's ability to draw on its
credit lines is subject to achievement of operating metrics and other customary
terms and conditions.
The Company is in the process of raising additional capital and is in engaged in
discussions with strategic partners and investors. A nationally recognized first
tier investment bank has been retained to manage this process and to review a
broad range of financing alternatives.
"The capital structure enhancements we are pursuing will form a strong base
from which to finance future growth," said Stern. "This capital base, combined
with our actions to improve capital utilization and cost efficiency, will allow
the Company to realize its longer-term objective of maintaining our leadership
position in the ASP market while generating attractive returns on our capital."
USinternetworking, Inc. will hold its quarterly conference call on Tuesday,
October 24, 2000 at 5:30 p.m. ET, at which time the aforementioned issues will
be further addressed. The call will be accessible via Webcast at
http://www.usi.net/aboutusi/investors . A re-play of the call will be available
beginning at 9:00 p.m. ET on October 24, 2000 and will remain available through
7:00 p.m. ET on October 31, 2000.
ABOUT USINTERNETWORKING, INC.
USinternetworking Inc. (Nasdaq: USIX), a leading Application Service Provider
delivering e-commerce and enterprise software as a service. The company's iMAP
portfolio of service offerings delivers the rich functionality of leading
software from Ariba, BroadVision, Lawson, Microsoft, Oracle, PeopleSoft and
Siebel as a continuously supported, flat-rate monthly service via an advanced,
secure global data center network.
Internet Managed Application Provider, iMAP, AppHost, PriorityPeering, USiGSP,
USiSAN USiAccelerate, and Making Software Simple are service marks of
USinternetworking, Inc. All other
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trademarks are the property of their respective owners. USi strategic partners
and providers are publicly traded on Nasdaq under the symbols: ARBA, BVSN, CSCO,
MSFT,ORCL, PSFT and SEBL.
Information in this release may involve guidance, expectations, beliefs, plans,
intentions or strategies regarding the future. These forward-looking statements
involve risks and uncertainties. All forward-looking statements included in this
release are based upon information available to USinternetworking Inc. as of the
date of the release, and we assume no obligation to update any such
forward-looking statement. The statements in this release are not guarantees of
future performance and actual results could differ materially from our current
expectations. Numerous factors could cause or contribute to such differences.
Some of the factors and risks associated with our business are discussed in the
Company's registration statement on Form S-3 filed with the Securities and
Exchange Commission ("SEC") on October 12, 2000, the Company's Form 10-Q filed
with the SEC on August 15, 2000, and in our other reports filed from time to
time with the SEC.
# # #
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USINTERNETWORKING, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, JUNE 30,
2000 2000
----------------- -----------------
(unaudited) (unaudited)
ASSETS
Current assets:
Cash, cash equivalents, and marketable securities $ 81,071,731 $ 165,354,222
Accounts receivable, net 29,071,528 26,500,532
Prepaid expenses and other current assets 21,579,609 18,606,877
----------------- -----------------
Total current assets 131,722,868 210,461,631
Deferred iMAP costs, net 28,822,137 22,058,691
Property and equipment, net and prepaid software licenses 226,522,876 197,014,594
Goodwill 29,957,716 25,929,716
Other assets 11,504,421 6,721,706
----------------- -----------------
Total assets $ 428,530,018 $ 462,186,338
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses, and other current liabilities $ 47,025,803 $ 47,285,484
Deferred revenue 19,623,730 17,201,639
Current portion of capital lease obligations and long term debt 45,933,041 41,753,915
----------------- -----------------
Total current liabilities 112,582,574 106,241,038
Capital lease obligations and long term debt, less current portion 74,701,512 78,120,432
Long term subordinated notes payable 125,000,000 125,000,000
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Total liabilities 312,284,086 309,361,470
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Stockholders' equity:
Common stock, $.001 par value, 450,000,000 shares authorized,
97,778,753 and 96,853,430 shares issued and outstanding 97,778 96,853
Additional paid-in capital 384,264,933 372,621,121
Due from officer for purchase of common stock (2,250,000) (2,250,000)
Other comprehensive income - 779,298
Unearned compensation (724,208) (1,031,624)
Accumulated deficit (265,142,571) (217,390,780)
----------------- -----------------
Total stockholders' equity 116,245,932 152,824,868
----------------- -----------------
Total liabilities and stockholders' equity $ 428,530,018 $ 462,186,338
================= =================
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USINTERNETWORKING, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three months Three months Nine months Nine months
ended ended ended ended
Sept. 30, 2000 Sept. 30, 1999 Sept. 30, 2000 Sept. 30, 1999
---------------- ---------------- ---------------- ----------------
REVENUE $ 28,268,486 $ 9,776,622 $ 72,280,955 $ 20,851,714
DIRECT COST OF REVENUE
Directs cost of services 18,222,017 5,822,941 46,758,044 13,897,698
Network and infrastructure costs 7,038,279 4,613,826 19,350,579 11,360,299
------------- ------------- ------------- -------------
Cost of goods sold 25,260,296 10,436,767 66,108,623 25,257,997
------------- ------------- ------------- -------------
Gross margin 3,008,190 (660,145) 6,172,332 (4,406,283)
------------- ------------- ------------- -------------
Sales and marketing expenses 17,740,115 10,960,212 52,676,141 24,552,985
General and administrative expenses 6,843,910 4,959,316 19,855,611 15,841,863
Product research and development 944,919 1,197,379 2,285,812 2,005,107
Depreciation and amortization 13,475,117 4,546,714 30,660,816 10,710,756
Amortization of goodwill 1,972,000 1,401,000 5,716,000 4,083,000
Non-stock compensation expense 6,019,444 3,445,248 15,895,184 6,805,486
------------- ------------- ------------- -------------
Operating expenses 46,995,505 26,509,869 127,089,564 63,999,197
Operating loss (43,987,315) (27,170,014) (120,917,232) (68,405,480)
------------- ------------- ------------- -------------
Other income (expense)
Interest income 2,384,610 725,445 6,882,760 2,146,810
Interest expense (6,149,086) (1,322,469) (15,336,764) (2,793,399)
------------- ------------- ------------- -------------
(3,764,476) (597,024) (8,454,004) (646,589)
------------- ------------- ------------- -------------
Net loss $ (47,751,791) $ (27,767,038) $(129,371,236) $ (69,052,069)
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Basic and diluted loss per common share $ (0.49) $ (0.31) $ (1.36) $ (1.65)
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OTHER FINANCIAL DATA
EBITDA (a) $ (17,985,787) $ (16,864,349) $ (59,269,420) $ (45,546,238)
Recurring revenue 88% 69% 84% 54%
12-Month Contract Backlog (b) $ 101,298,964 $ 29,840,690 $ 101,298,964 $ 29,840,690
Total Contract Backlog (c ) $ 311,667,779 $ 82,180,564 $ 311,667,779 $ 82,180,564
Weighted average shares outstanding 97,146,353 90,142,979 95,342,494 57,688,153
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(a) The Company defines EBITDA as Earnings Before Interest, Taxes,
Depreciation, Amortization, and Non-Cash Stock Compensation Expense.
Amortization of implementation labor and other costs for the three months
ended September 30, 2000 and 1999 was $4,534,967 and $912,703 respectively.
Amortization of implementation labor for the nine months ended September
30, 2000 and 1999 was $9,375,812 and $ 1,260,000, respectively.
(b) The Company defines 12-month contract backlog as the minimum recurring
revenue to be recognized over the next twelve-months from existing
contracts.
(c) The Company defines total contract backlog as the total recurring revenue
not yet recognized from existing contracts.