(CRITICAL PATH LOGO Critical Path, Inc. 415.541.2500 (Main)
350 The Embarcadero 415.541.2300 (Fax)
San Francisco, CA 94105-1204 www.criticalpath.net
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
THURSDAY, APRIL 29, 2004
Critical Path Announces First Quarter 2004 Results
Conference Call Scheduled for 5:00 p.m. ET on Thursday, April 29, 2004
SAN FRANCISCO (APRIL 29, 2004) - Critical Path, Inc. (Nasdaq: CPTH), a global
provider of digital communications software and services, today announced
financial results for the first quarter ended March 31, 2004.
Revenues for the first quarter of 2004 were $17.1 million, compared to
$20.0 million in the fourth quarter of 2003 and $18.0 million in the first
quarter of 2003.
Based on Generally Accepted Accounting Principles (GAAP) in the United
States, net loss attributable to common shares for the first quarter of 2004 was
$13.1 million, or $0.63 per share, compared to $18.1 million, or $0.89 per
share, in the fourth quarter of 2003 and $26.9 million, or $1.36 per share, in
the first quarter of 2003.
Based on GAAP in the United States, the total of cost of net revenues and
operating expenses, were $28.8 million in the first quarter of 2004, compared to
$33.6 million in the fourth quarter of 2003 and $33.8 million in the first
quarter of 2003.
Cash operating expenses, which are comprised of cost of net revenues and
operating expenses, excluding amortization, depreciation and restructuring
charges, were $25.0 million in the first quarter of 2004, compared to $23.4
million in the fourth quarter of 2003 and $26.0 million in the first quarter of
2003.
Earnings before interest, taxes, depreciation and amortization, adjusted
to exclude special charges (Adjusted EBITDA), amounted to a loss of $7.9 million
in the first quarter of 2004, compared to an Adjusted EBITDA loss of $3.5
million in the fourth quarter of 2003 and an Adjusted EBITDA loss of $7.9
million in the first quarter of 2003.
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Critical Path Announces First Quarter 2004 Results
"We accomplished a lot in the quarter, having brought on a new CEO and a
new CFO as well as having raised $33.5 million of capital," said William
McGlashan, Jr., chairman of Critical Path. "In addition, we saw continued
business from customers such as Applied Materials and O2 as well as new business
from customers such as CTI Movil and RM."
As of March 31, 2004, the Company's cash and cash equivalents totaled
$37.1 million, compared to its December 31, 2003 balance of $19.0 million and
its March 31, 2003 balance of $31.4 million. During the first quarter of 2004,
the Company raised $33.5 million through financings with multiple investors and
repaid $2.3 million of its line of credit facility with Silicon Valley Bank.
REGULATION G
The Company uses both GAAP and non-GAAP metrics to measure its financial
results. It utilizes two primary non-GAAP metrics: cash operating expenses and
Adjusted EBITDA. The most directly comparable GAAP measures are of the total of
cost of net revenues and operating expenses, and net loss attributable to common
shares, respectively. Management believes that, in addition to GAAP metrics,
these non-GAAP metrics assist the Company in measuring its cash-based
performance. In addition, management believes these non-GAAP metrics are useful
to investors because they remove unusual and nonrecurring charges that occur in
the affected period and provide a basis for measuring the Company's financial
condition against other quarters. Since the Company has historically reported
non-GAAP results to the investment community, management also believes the
inclusion of non-GAAP measures provides consistency in its financial reporting.
However, non-GAAP financial measures should not be considered in isolation from,
or as a substitute for, financial information prepared in accordance with GAAP.
The calculations for cash operating expenses and Adjusted EBITDA are in the
Alternative Measurement Reconciliation table below.
CONFERENCE CALL
Critical Path will host a conference call on Thursday, April 29, 2004, at 5:00
p.m. Eastern Time to discuss the financial results for the first quarter of
2004. The conference call is scheduled to last up to one hour. Those who would
like to participate should dial 877-231-3543 (domestic) or +1 706-634-1329
(international) five to ten minutes prior to the scheduled start time. In
addition, the conference call and a subsequent replay will be available via Web
cast from the Company's
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Critical Path Announces First Quarter 2004 Results
Web site, www.criticalpath.net. A replay of the conference call will also be
available by telephone for seven days following the call; to access the
telephone replay, please dial 800-642-1687 (domestic) or +1 706-645-9291
(international), passcode 6914430. The Web cast and this earnings release will
be available on the Company's Web site for twelve months following the
conference call.
ABOUT CRITICAL PATH, INC.
Critical Path, Inc. (Nasdaq: CPTH) is a global provider of digital
communications software and services, headquartered in San Francisco. More
information is available at www.criticalpath.net.
Forward-Looking Statements:
This press release contains forward-looking statements by the Company and its
executives regarding the performance, security, scalability and interoperability
of our product and service offerings, the ability of our customers to achieve
cost savings in the provision of services, industry trends, market and customer
requirements, the ability of our products and services to meet the business
needs of our customers, the market for products and services like ours and the
performance of our senior management in achieving strategic goals. The words and
expressions "look forward to," "will," "expect," "plan," "believe," "seek,"
"strive for," "anticipate," "hope," "estimate" and similar expressions are
intended to identify the Company's forward-looking statements. These
forward-looking statements involve a number of risks and uncertainties that
could cause actual results to differ materially from those anticipated. These
risks include, but are not limited to, our evolving business strategy and the
emerging and changing nature of the market for our products and services, our
ability to deliver on our sales objectives, the ability of our technology and
our competitors' technologies to address customer demands, changes in economic
and market conditions, unplanned system interruptions and capacity constraints,
software and service design defects. These and other risks and uncertainties are
described in more detail in the Company's filings with the U.S. Securities and
Exchange Commission (www.sec.gov) made from time to time, including Critical
Path's Annual Report on Form 10-K for the fiscal year ended December 31, 2003,
and all subsequent filings with the Securities and Exchange Commission
(www.sec.gov). The company makes no commitment to revise or update any
forward-looking statements in order to reflect events or circumstances after the
date any such statement is made.
Note to Editors: See attached tables.
Note to Editors: Critical Path and the Critical Path logo are the trademarks of
Critical Path, Inc. All other trademarks are the property of their holders.
# # #
CONTACT INFORMATION
FOR REPORTERS AND EDITORS: FOR INVESTORS:
Critical Path, Inc. Critical Path, Inc.
Michelle Weber Investor Relations
415.541.2575 415.541.2619
pr@criticalpath.net ir@criticalpath.net
www.criticalpath.net www.criticalpath.net
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Critical Path Announces First Quarter 2004 Results
CRITICAL PATH, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, March 31,
2003 2004
---------- ----------
(Unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 18,984 $ 37,131
Accounts receivable, net 16,880 16,704
Other current assets 4,664 5,355
---------- ----------
Total current assets 40,528 59,190
Property and equipment, net 14,821 13,304
Goodwill 6,613 6,613
Other assets 5,763 7,751
---------- ----------
Total assets $ 67,725 $ 86,858
========== ==========
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 5,022 $ 4,102
Accrued liabilities 20,755 22,280
Deferred revenue 8,856 9,966
Line of credit facility 2,298 --
Capital lease and other obligations, current 1,721 1,587
---------- ----------
Total current liabilities 38,652 37,935
Deferred revenue 1,343 1,360
Convertible subordinated notes payable 38,360 38,360
Convertible secured notes payable 10,016 43,561
Capital lease and other obligations, long-term 1,295 1,009
---------- ----------
Total liabilities 89,666 122,225
---------- ----------
Mandatorily redeemable preferred stock 55,301 55,288
---------- ----------
Shareholders' deficit (77,242) (90,655)
---------- ----------
Total liabilities, mandatorily redeemable preferred stock
and shareholders' deficit $ 67,725 $ 86,858
========== ==========
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Critical Path Announces First Quarter 2004 Results
CRITICAL PATH, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
--------------------------------------------
March 31, December 31, March 31,
2003 2003 2004
---------- ---------- ----------
Net revenues
Software license $ 5,047 $ 7,201 $ 4,251
Hosted messaging 5,386 4,619 4,343
Professional services 3,220 3,366 2,659
Maintenance and support 4,381 4,776 5,825
---------- ---------- ----------
Total net revenues 18,034 19,962 17,078
---------- ---------- ----------
Cost of net revenues
Software license 1,797 1,008 911
Hosted messaging 6,263 6,631 6,381
Professional services 3,450 3,109 3,094
Maintenance and support 1,929 1,224 1,449
Stock-based expense - Hosted messaging 8 -- 5
Stock-based expense - Professional services 3 -- --
Stock-based expense - Maintenance and support 6 -- --
---------- ---------- ----------
Total cost of net revenues 13,456 11,972 11,840
---------- ---------- ----------
Gross profit 4,578 7,990 5,238
---------- ---------- ----------
Operating expenses
Sales and marketing 9,309 6,834 6,939
Research and development 4,623 5,003 5,779
General and administrative 3,226 2,829 3,122
Stock-based expense - Sales and marketing 18 -- 14
Stock-based expense - Research and development 15 -- 18
Stock-based expense - General and administrative 9 5,082 9
Restructuring and other expense 3,189 1,852 1,065
---------- ---------- ----------
Total operating expenses 20,389 21,600 16,946
---------- ---------- ----------
Loss from operations (15,811) (13,610) (11,708)
Non-operating expenses
Interest and other income (expense), net (6,427) (774) 3,667
Interest expense (769) (932) (1,580)
Gain on investments, net -- 200 --
---------- ---------- ----------
Total non-operating expenses (7,196) (1,506) 2,087
---------- ---------- ----------
Loss before provision for income taxes (23,007) (15,116) (9,621)
Provision for income taxes (194) (102) (366)
---------- ---------- ----------
Net loss (23,201) (15,218) (9,987)
Accretion on mandatorily redeemable preferred stock (3,665) (2,917) (3,147)
---------- ---------- ----------
Net loss attributable to common shares $ (26,866) $ (18,135) $ (13,134)
========== ========== ==========
Net loss per share attributable to
common shares - basic and diluted $ (1.36) $ (0.89) $ (0.63)
========== ========== ==========
Weighted average common shares outstanding 19,666 20,415 21,014
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Critical Path Announces First Quarter 2004 Results
CRITICAL PATH, INC.
Alternative Measurement Reconciliations
(Unaudited)
(In thousands)
Three Months Ended
--------------------------------------------
March 31, December 31, March 31,
2003 2003 2004
---------- ---------- ----------
ADJUSTED EBITDA (1)
Net loss attributable to common shares $ (26,866) $ (18,135) $ (13,134)
Adjustments
Cost of net revenues
Depreciation 2,830 1,695 1,264
Amortization of purchased technology -- 46 --
Stock-based expense - Hosted messaging 8 -- 5
Stock-based expense - Professional services 3 -- --
Stock-based expense - Maintenance and support 6 -- --
Operating expenses
Depreciation 1,794 1,468 1,393
Stock-based expense - Sales and marketing 18 -- 14
Stock-based expense - Research and development 15 -- 18
Stock-based expense - General and administrative 9 5,082 9
Restructuring and other expense 3,189 1,852 1,065
Non-operating expenses
Interest and other income and expense, net
Change in fair-value of preferred stock instrument 6,200 720 (3,160)
Other income and expense, net 227 54 (507)
Interest expense 769 932 1,580
Gain on investments, net -- (200) --
Provision for income taxes 194 102 366
Accretion on mandatorily redeemable preferred stock 3,665 2,917 3,147
---------- ---------- ----------
Total non-cash and non-operating adjustments (2) 18,927 14,668 5,194
---------- ---------- ----------
Adjusted EBITDA (1) $ (7,939) $ (3,467) $ (7,940)
========== ========== ==========
CASH OPERATING EXPENSES
Net loss attributable to common shares $ (26,866) $ (18,135) $ (13,134)
Adjustments
Total net revenues (18,034) (19,962) (17,078)
Total non-cash, restructuring and non-operating adjustments (2) 18,927 14,668 5,194
---------- ---------- ----------
Cash Operating Expenses $ (25,973) $ (23,429) $ (25,018)
========== ========== ==========
(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation
and amortization, adjusted to exclude non-cash stock-based charges,
extraordinary restructuring expenses, accretion on redeemable convertible
preferred stock and other non-operating expenses.
(2) Total non-cash, restructuring and non-operating adjustments is defined in
the Adjusted EBITDA table presented above.
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