Exhibit 99.1
[iPASS LOGO]
FOR IMMEDIATE RELEASE
iPASS REPORTS FOURTH QUARTER AND FULL YEAR 2003 RESULTS
- 2003 REVENUES UP 47% OVER 2002
- FOURTH QUARTER REVENUES UP 37% OVER PRIOR YEAR
- FOURTH QUARTER GAAP EPS $0.06; PRO FORMA EPS $0.08
REDWOOD SHORES, Calif., February 5, 2004 /PRNewswire-FirstCall/ -- iPass Inc.
(Nasdaq: IPAS), a leading software-enabled virtual network operator providing
policy-based secure enterprise connectivity services for mobile workers around
the globe, today announced financial results for its fourth quarter ended
December 31, 2003 and for its full year 2003.
Revenues for the fourth quarter ended December 31, 2003 were $37.5 million,
representing a 37% increase over revenues of $27.4 million for the same period
last year and a 7% increase over revenues of $35.0 million for the quarter ended
September 30, 2003. Revenues for the full year 2003 were $136.1 million,
representing a 47% increase over revenues of $92.8 million for the full year
2002.
"This is a strong quarter that closes an exceptional year for iPass," said Ken
Denman, iPass Chairman and CEO. "Both the quarter and the year represent the
achievement of record revenues, operating income and free cash flow. Our diverse
set of customers, unmatched geographic presence, and best-of-breed secure
connectivity solution all contributed to our success. Additionally, as
indicators of our present success and future momentum, our roaming agreement
with T-Mobile, an industry first, and our multi-faceted partnership with SAIC, a
leading provider of information technology, systems integration and eSolutions
to commercial and government customers, signify important strategic moves that
position iPass for future growth in the areas of broadband footprint and
customer acquisition, particularly as it relates to the government sector."
GAAP RESULTS: Operating income for the fourth quarter was $6.2 million,
representing a 82% increase over operating income of $3.4 million for the same
period last year. Net income, calculated on the basis of generally accepted
accounting principles (GAAP), for the fourth quarter was $4.2 million, or $0.06
per diluted share, based on 66.8 million fully diluted shares outstanding,
compared with $27.1 million, or $0.50 per diluted share, based on 53.9 million
fully diluted shares outstanding, for the fourth quarter 2002. Net income for
the fourth quarter 2002 included a one time $24.3 million tax benefit related to
the recognition of certain deferred tax assets. There was no comparable benefit
in 2003.
Operating income for the full year 2003 was $22.4 million, representing a 234%
increase over operating income of $6.7 million for the full year 2002. Net
income for the full year 2003 was $13.9 million, or $0.23 per diluted share,
based on 60.6 million fully diluted shares outstanding, compared with $29.8
million, or $0.57 per diluted share, based on 51.9 million fully diluted shares
outstanding, for the full year 2002. Net income for 2002 included the one time
$24.3 million tax benefit. There was no comparable benefit in 2003.
PRO-FORMA RESULTS: The following numbers are pro forma and exclude non-cash
amortization of stock-based compensation. Investors are encouraged to refer to
the table that reconciles the company's GAAP results to its pro forma results in
the back of this press release. Pro forma net income for the fourth quarter was
$5.2 million, or $0.08 per diluted share, based on 66.8 million fully diluted
shares outstanding, compared with $27.8 million, or $0.51 per diluted share,
based
on 53.9 million fully diluted shares outstanding, for the same period last year.
Pro forma net income for the full year 2003 was $18.0 million, or $0.30 per
diluted share, based on 60.6 million fully diluted shares outstanding, compared
with $32.5 million, or $0.63 per diluted share, based on 51.9 million fully
diluted shares outstanding, for the full year 2002.
BUSINESS HIGHLIGHTS
Business highlights for the fourth quarter and full year 2003 included:
- In 2003 the company added 50 more Forbes Global 2000 customers to
bring its total to 202.
- iPass entered a multifaceted agreement with SAIC, in which SAIC will
become both a customer and reseller of iPass' global enterprise
connectivity services. SAIC will deploy the iPass service to more
than 20,000 employees around the world. SAIC will also resell the
iPass service in conjunction with their own managed service
offerings in the areas of VPN, personal firewall, anti-virus and
authentication. SAIC's managed service offerings will address the
business need of providing a ubiquitous yet highly secure method of
accessing corporate information and systems.
- The company reported that there were 447,000 distinct end users of
its services in the month of December 2003 compared with 286,000 in
December 2002 and 415,000 in September 2003.
- The company ended the quarter with $139 million in cash, cash
equivalents and short-term investments and no debt. This total
compares to a balance of $132 million at the end of the September
quarter. During the quarter, this balance increased by $7 million
due principally to strong positive cash flow from operations.
- iPass introduced its Endpoint Policy Management service. This new
service helps the IT department stay out in front of threats to the
corporate network caused by worms, viruses and other malicious
agents, reducing the risk of lost productivity and network downtime.
It ensures that access to the corporate network is only given to end
users who are running up-to-date and properly configured security
and operating system software and can force users to a secure web
site where their software is automatically updated to bring them
into compliance with enterprise policies.
- iPass surpassed 5,000 broadband access points, including Wi-Fi
hotspots in more than 3,600 business-oriented venues, in 30
countries.
- iPass signed an agreement with T-Mobile, which will enable
corporations to access the T-Mobile HotSpot network through the
iPass virtual network. With more than 3,900 convenient locations,
the T-Mobile HotSpot network is the largest public Wi-Fi network in
the United States and includes a carrier-class wireless broadband
network at airports, airline clubs and lounges of American Airlines,
Delta Air Lines and United Airlines, Borders Books and Music,
Kinko's and Starbucks coffeehouses. The company expects to have
these hotspots deployed in the first quarter of 2004.
- iPass signed an agreement with McDonald's where McDonald's will
recommend that all of its Wi-Fi hotspots are certified iPass
Enterprise-Ready. The Enterprise Ready
certification is required of all networks before they are integrated
into the iPass Global Broadband Roaming footprint and includes
testing for connection reliability, proper security mechanisms, and
interoperability with leading enterprise VPN systems. This testing
assures enterprise IT departments that their business travelers can
connect with confidence to their corporate networks from McDonald's
hotspot locations.
- iPass significantly increased its international Wi-Fi footprint by
signing international Wi-Fi roaming agreements with Swisscom
Eurospot, ADP Telecom of France, NetNearU and China Telecom.
- iPass introduced the iPass Wireless LAN Roaming Service. This new
offering utilizes the functionality in iPassConnect(TM) and the
flexibility of the iPass virtual network platform to enable seamless
roaming between public hotspots, home broadband networks and the
corporate campus.
COMPANY PROJECTIONS
The following statements are based on information available to iPass today, and
the company does not assume any duty to update these numbers at any time during
the quarter or thereafter. These statements are forward-looking and actual
results may differ materially.
For the quarter ended March 31, 2004, the company projects revenue growth of
approximately seven to eight percent over the December quarter. For the quarter
ended March 31, 2004, the company projects fully diluted GAAP earnings per share
to be in the range of $0.06 to $0.07. Fully diluted Pro Forma earnings per
share, for the same period, are projected to be in the range of $0.07 to $0.08.
The difference between projected fully diluted GAAP earnings per share and
projected Pro Forma earnings per share of $0.01 is based on expected
amortization of stock-based compensation of $800,000 for the first quarter of
2004, divided by an expected 67.1 million fully diluted shares outstanding,
resulting in the $0.01 difference.
For the full year ended December 31, 2004, iPass projects revenue in the range
of $180 to $190 million. For the full year ended December 31, 2004, fully
diluted GAAP earnings per share are projected to be in the range of $0.32 to
$0.34. Fully diluted Pro Forma earnings per share, for the same period, are
projected to be in the range of $0.36 to $0.38. The difference between projected
fully diluted GAAP earnings per share and projected Pro Forma earnings per share
of $0.04 is based on expected amortization of stock-based compensation of
$2.4 million for the full year 2004, divided by an expected 68.0 million fully
diluted shares outstanding, resulting in the $0.04 difference.
CONFERENCE CALL
The company will host a public conference call today to discuss its financial
results and outlook and current corporate developments at 5:00 p.m. Eastern Time
(2:00 p.m. Pacific Time).
This call is being webcast by CCBN and can be accessed at iPass web site at:
http://investor.ipass.com/phoenix.zhtml?c=91479&p=irol-Calendar. The webcast
will be available until the company's next earnings call.
A taped replay of this call will be available for two weeks following the call.
The dial-in numbers for the replay are 888.286.8010 (U.S. and Canada) and
617.801.6888 (International). The ID number for the call is: 59177994.
The webcast is also being 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 at www.fulldisclosure.com
or by visiting any of the investor sites in
CCBN's Individual Investor Network. Institutional investors can access the call
via CCBN's password-protected event management site, StreetEvents
(www.streetevents.com).
ABOUT iPASS INC.
iPass Inc. (Nasdaq: IPAS) is a software-enabled virtual network operator (VNO)
that provides enterprise connectivity services permitting secure access to
information and applications on corporate networks from over 150 countries
around the world. iPass has built a global Internet network that comprises over
20,000 access points, including an iPass Global Broadband Roaming (GBR)
footprint of over 5,000 broadband access points, including more than 3,600 Wi-Fi
hotspots at business-oriented locations such as airports, hotels and conference
centers worldwide. The award-winning iPassConnect(TM) service interface
simplifies the user connection experience and is easily deployed across multiple
computing devices and operating systems. iPass service offerings also give
enhanced control over security policy and connectivity management to information
technology departments at iPass users like General Motors, Dow Corning and
Mellon Financial. Founded in 1996, iPass is headquartered in Redwood Shores,
Calif., with offices throughout North America, Europe and Asia Pacific. For more
information visit www.ipass.com.
The statements in this press release regarding iPass being positioned for future
growth and iPass' projections of future financial results are forward-looking
statements. Actual results may differ materially from the expectations contained
in these statements due to a number of risks and uncertainties including:
volatility in the telecommunications and technology industries, which may make
it difficult for iPass to expand its services; rapidly emerging changes in the
nature of markets served by the company, which may not be compatible with the
company's services; and increased competition, which may cause pricing pressure
on the fees iPass charges. Detailed information about potential factors that
could affect iPass' business, financial condition and results of operations is
included in the company's Quarterly Report on Form 10-Q under the caption "Risk
Factors" in "Management's Discussion and Analysis of Financial Conditions and
Results of Operations," filed with the Securities and Exchange Commission (the
"SEC") on November 13, 2003 and available at the SEC's website at www.sec.gov.
The company undertakes no responsibility to update the information in this press
release if any forward-looking statement later turns out to be inaccurate.
iPass provides pro forma net income and pro forma earnings per share data as
additional information for its operating results. These measures are not in
accordance with, or an alternative for, GAAP and may be different from pro forma
measures used by other companies. iPass believes that this presentation of pro
forma net income and pro forma earnings per share, excluding the effect of
amortization of stock-based compensation, provides additional useful information
to management and investors. Specifically, amortization of stock-based
compensation is a non-cash expense, and management currently expects that once
the company's deferred stock-based compensation reflected on its balance sheet
is fully amortized iPass will not, absent changes in financial reporting
requirements, report additional stock-based compensation expense. Consequently,
management excludes the effect of amortization of stock-based compensation for
budgeting purposes, as well as analyzing the underlying performance of the
company. Management believes that although GAAP measures are important for
investors to understand, providing investors with these non-GAAP measures
provides investors additional important information to enable them to assess, in
the way that management assesses, both the current and future operations of
iPass.
iPass(R) is a registered trademark of iPass Inc.
iPASS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------------------- -----------------------------
2003 2002 2003 2002
---- ---- ---- ----
Revenues $ 37,488 $ 27,406 $ 136,078 $ 92,830
Operating expenses:
Network access 8,352 6,516 30,121 23,323
Network operations 4,038 2,916 14,306 10,459
Research and development 2,790 2,220 9,944 7,070
Sales and marketing 10,660 9,128 41,049 32,931
General and administrative 4,458 2,583 14,232 9,630
Amortization of stock-based compensation (a) 1,024 669 4,069 2,765
----------- ------------ ----------- ------------
Total operating expenses 31,322 24,032 113,721 86,178
----------- ------------ ----------- ------------
Operating income 6,166 3,374 22,357 6,652
Other income (expense), net 488 (116) 513 (586)
Income before income taxes 6,654 3,258 22,870 6,066
Provision for (benefit from) income taxes 2,475 (23,838) 8,968 (23,693)
----------- ------------ ----------- ------------
Net income $ 4,179 $ 27,096 $ 13,902 $ 29,759
----------- ------------ ----------- ------------
Net income per share:
Basic $ 0.07 $ 2.04 $ 0.26 $ 2.34
Diluted $ 0.06 $ 0.50 $ 0.23 $ 0.57
Number of shares used in per share calculations:
Basic 58,865,045 13,307,222 53,474,537 12,742,068
Diluted 66,758,133 53,929,548 60,622,040 51,873,067
A RECONCILIATION BETWEEN NET INCOME ON A GAAP BASIS
AND PRO FORMA NET INCOME IS AS FOLLOWS:
GAAP net income $ 4,179 $ 27,096 $ 13,902 $ 29,759
(a) Amortization of stock-based compensation 1,024 669 4,069 2,765
----------- ------------ ----------- ------------
Pro forma net income $ 5,203 $ 27,765 $ 17,971 $ 32,524
=========== ============ =========== ============
A RECONCILIATION BETWEEN DILUTED NET INCOME PER SHARE
ON A GAAP BASIS AND PRO FORMA DILUTED NET INCOME
PER SHARE IS AS FOLLOWS:
GAAP diluted net income per share $ 0.06 $ 0.50 $ 0.23 $ 0.57
Per share effect of amortization of stock-based compensation 0.02 0.01 0.07 0.06
----------- ------------ ----------- ------------
Pro forma diluted net income per share $ 0.08 $ 0.51 $ 0.30 $ 0.63
=========== ============ =========== ============
iPASS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31,
-----------------------
2003 2002
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 45,646 $ 27,916
Short-term investments 93,639 --
Accounts receivable, net 20,658 14,227
Prepaid expenses and other current assets 3,310 1,379
Deferred income tax asset 17,341 10,155
-------- ---------
Total current assets 180,594 53,677
Property and equipment, net 8,288 6,408
Other assets 1,235 1,213
Deferred income tax asset -- 14,144
-------- ---------
Total assets $190,117 $ 75,442
======== =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 7,421 $ 6,979
Accrued liabilities 10,974 8,488
Current portion of loans payable -- 1,827
Line of credit -- 6,794
-------- ---------
Total current liabilities 18,395 24,088
Loans payable, net of current portion -- 1,754
-------- ---------
Total liabilities 18,395 25,842
-------- ---------
Stockholders' equity:
Convertible preferred stock -- 35
Common stock 60 16
Additional paid-in capital 229,026 119,268
Notes receivable from stockholders (2,831) (2,644)
Deferred stock-based compensation (4,326) (2,841)
Accumulated other comprehensive income 125 --
Accumulated deficit (50,332) (64,234)
-------- ---------
Total stockholders' equity 171,722 49,600
-------- ---------
Total liabilities and stockholders' equity $190,117 $ 75,442
======== =========
CONTACT
iPass Inc., Redwood Shores
INVESTORS
Bryan R. Parker
Director of Finance & IR
650-232-4170
bparker@ipass.com
MEDIA
John Sidline
Public Relations Manager
650-232-4112
jsidline@ipass.com