[IPASS LOGO] EXHIBIT 99.1
FOR IMMEDIATE RELEASE
IPASS REPORTS SECOND QUARTER 2004 RESULTS
"BROADBAND INITIATIVE CONTINUES TO GAIN MOMENTUM"
REDWOOD SHORES, Calif., July 27, 2004 /PRNewswire-FirstCall/ -- iPass Inc.
(Nasdaq: IPAS) today announced financial results for the second quarter ending
June 30, 2004. iPass is a leading provider of services and software which allow
an enterprise's mobile workers to connect easily and securely to their corporate
networks.
Revenues for the second quarter ended June 30, 2004 were $40.4 million, compared
to revenues of $33.1 million for the same period last year and $40.7 million for
the quarter ended March 31, 2004.
"The long-term growth drivers of the business, including expanded broadband
capabilities and significant operating leverage, remain in place despite the
operational decision related to our dial access initiative and the effects from
certain Internet worms and viruses which affected revenue this quarter," said
Ken Denman, iPass Chairman and CEO. "The demand for our offerings continues to
be strong with iPass adding many new customers in the quarter, including 14 new
Forbes Global 2000 customers. In addition, we are also seeing good progress on
the broadband front including adding 3,000 broadband access points in the
quarter. Broadband revenues for the June quarter continued to demonstrate strong
positive momentum."
GAAP RESULTS: Operating income for the second quarter 2004 was $7.2 million,
compared to operating income of $5.6 million for the same period last year. Net
income, calculated on the basis of generally accepted accounting principles
(GAAP), for the second quarter 2004 was $4.5 million, or $0.07 per diluted
share, based on 65.9 million fully diluted shares outstanding, compared with
$3.0 million, or $0.05 per diluted share, based on 57.1 million fully diluted
shares outstanding, for the second quarter 2003.
NON-GAAP RESULTS: The following numbers are non-GAAP financial measures and
exclude non-cash amortization of stock-based compensation. Investors are
encouraged to refer to the table that reconciles the iPass' GAAP results to its
non-GAAP results at the end of this press release. Non-GAAP net income for the
second quarter 2004 was $5.1 million, or $0.08 per diluted share, based on 65.9
million fully diluted shares outstanding, compared with $3.9 million, or $0.07
per diluted share, based on 57.1 million fully diluted shares outstanding, for
the same period last year.
BUSINESS HIGHLIGHTS
Business highlights for the second quarter 2004 included:
o iPass announced an agreement with IBM's ThinkPad division to jointly
sell the iPass service to the IBM enterprise customer base.
o iPass entered into a partnership with Fujitsu Services Ltd, one of
Europe's leading IT infrastructure management services companies, to
offer iPass Corporate Access as part of a comprehensive mobility
solution portfolio to Fujitsu's enterprise clients. As a
further indication of its confidence in the capabilities of the iPass
service, Fujitsu Services is also deploying iPass Corporate Access to
its entire workforce of 14,500.
o iPass surpassed 13,000 broadband access points in 40 countries,
including 11,200 active Wi-Fi hotspots and Ethernet service in the
rooms of over 1,800 hotels.
o The Company successfully tested coexistence of browser-based,
GIS-based and 802.1x authentication at the CommunicAsia conference
together with Intel and other partners paving the way for faster
adoption of the 802.1x secure authentication standard at public
hotspots.
o iPass announced that Radisson SAS is requiring all its hotel
properties to offer iPass Enterprise Ready Broadband Service.
o The Company expanded its relationship with Yahoo! BB Mobile. Under the
expanded relationship, over 600 Japanese Wi-Fi hotspots owned by
Softbank BB will become available to iPass customers.
o iPass signed an agreement with SBC Communications whereby its
customers will get access to SBC's FreedomLink Wi-Fi hotspots.
o The Company announced the iPass Policy Orchestration initiative. The
Policy Orchestration initiative is expected to strengthen mobile
connection security through new services that are being designed to
coordinate the use of laptop security tools with the iPass
connectivity platform. We expect to begin offering Policy
Orchestration-enabled services in the fourth quarter of 2004. Future
services expected in the Policy Orchestration roadmap include:
endpoint self-quarantine, dynamic policy retrieval, assessment
verification and coordinated enforcement.
o The Company ended the second quarter with $162 million in cash, cash
equivalents and short-term investments and no debt. This total
compares to a balance of $147 million at the end of the March 2004
quarter. During the second quarter, this balance increased due
principally to strong positive cash flow from operations.
NON-FINANCIAL METRICS
o The Company reported that there were 528,000 distinct end users of its
services in the month of June 2004 compared with 369,000 in June 2003
and 521,000 in March 2004.
o The Company is also reporting an additional non-financial metric with
this quarter's results. This metric is called "user sessions". The
Company reported that there were 20.9 million user sessions for the
June 2004 quarter. The number of user sessions for the March 2004,
December 2003, September 2003, June 2003 and March 2003 quarters,
respectively, were: 20.6 million, 18.8 million, 18.0 million, 16.2
million and 15.2 million.
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 September 30, 2004, the Company projects revenue growth of
approximately three to six percent over the June quarter and fully diluted GAAP
earnings per share to be approximately $0.06. Fully diluted non-GAAP earnings
per share, for the same period, are projected to be approximately $0.07. The
difference between projected fully diluted GAAP earnings per share and projected
non-GAAP earnings per share of $0.01 is based on expected amortization of
stock-based compensation of $480,000 for the third quarter of 2004, divided by
an expected 66.5 million fully diluted shares outstanding, resulting in the
$0.01 difference.
CONFERENCE CALL
The Company will host a public conference call today to discuss this
announcement at 5:30 p.m. Eastern Time (2:30 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: 15295377.
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 delivers enterprises simple, secure and manageable connectivity services
for mobile workers as they move between office, home, and remote locations.
iPass combines its global network of dial-up, Ethernet and the world's largest
Wi-Fi footprint with support for campus wireless LANs and home broadband
connections to deliver a unified and comprehensive solution. The award-winning
iPassConnect(TM) user interface, centralized management, leading security
features and powerful policy enforcement make iPass services the choice of
hundreds of Global 2000 corporations including General Motors, Hershey Foods and
Underwriters Laboratories. 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.
iPass(R) is a registered trademark of iPass Inc.
iPass' projections of future financial results and its expectations regarding
the timing of offering, and expected features of its Policy
Orchestration-enabled services 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; increased competition, which may cause pricing pressure on the fees
iPass charges the risk that iPass may encounter unexpected technical
difficulties in developing iPass Policy Orchestration, which could delay or
prevent the development of this product or certain of the features of this
product; the risk that security breaches may still occur despite the use of
iPass Policy Orchestration by innovative hackers that develop new methods of
avoiding security software; and the risk that the rate of adoption by
enterprises of network security software or integrated secure connectivity
solutions will not be as iPass anticipates, which if slow would reduce or
eliminate the purchase of this anticipated new product. 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 "Factors Affecting Operating Results" in "Management's
Discussion and Analysis of Financial Conditions and Results of Operations,"
filed with the Securities and Exchange Commission (the "SEC") on May 14, 2004
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 non-GAAP net income and non-GAAP 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 non-GAAP
measures used by other companies. iPass believes that this presentation of
non-GAAP net income and non-GAAP 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, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
JUNE 30, JUNE 30,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues $ 40,394 $ 33,103 $ 81,089 $ 63,601
Operating expenses:
Network access 9,195 7,264 18,247 14,345
Network operations 4,682 3,395 9,417 6,628
Research and development 3,150 2,377 6,360 4,623
Sales and marketing 11,267 10,129 22,811 19,841
General and administrative 4,283 3,311 8,510 6,172
Amortization of stock-based compensation (a) 623 989 1,410 1,964
------------ ------------ ------------ ------------
Total operating expenses 33,200 27,465 66,755 53,573
------------ ------------ ------------ ------------
Operating income 7,194 5,638 14,334 10,028
Other income (expense), net 412 (49) 903 (168)
Income before income taxes 7,606 5,589 15,237 9,860
Provision for income taxes 3,117 2,637 6,051 4,598
------------ ------------ ------------ ------------
Net income $ 4,489 $ 2,952 $ 9,186 $ 5,262
============ ============ ============ ============
Net income per share:
Basic $ 0.07 $ 0.21 $ 0.15 $ 0.38
Diluted $ 0.07 $ 0.05 $ 0.14 $ 0.09
Number of shares used in per share calculations:
Basic 60,477,687 14,165,328 59,912,881 14,015,081
Diluted 65,851,960 57,091,002 65,409,715 56,385,880
A RECONCILIATION BETWEEN NET INCOME ON A GAAP BASIS AND NON-GAAP NET INCOME IS AS FOLLOWS:
GAAP net income 4,489 2,952 9,186 $ 5,262
(a) Amortization of stock-based compensation 623 989 1,410 1,964
------------ ------------ ------------ ------------
Non-GAAP net income 5,112 3,941 10,596 $ 7,226
============ ============ ============ ============
A RECONCILIATION BETWEEN DILUTED NET INCOME PER SHARE ON A GAAP BASIS AND
NON-GAAP DILUTED NET INCOME PER SHARE IS AS FOLLOWS:
GAAP diluted net income per share $ 0.07 $ 0.05 $ 0.14 $ 0.09
Per share effect of amortization of
stock-based compensation 0.01 0.02 0.02 0.04
------------ ------------ ------------ ------------
Non-GAAP diluted net income per share $ 0.08 $ 0.07 $ 0.16 $ 0.13
============ ============ ============ ============
IPASS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
2004 2003
--------- ---------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 49,558 $ 45,646
Short-term investments 112,508 93,639
Accounts receivable, net 22,947 20,658
Prepaid expenses and other current assets 2,257 3,310
Deferred income tax asset 12,196 17,341
--------- ---------
Total current assets 199,466 180,594
Property and equipment, net 10,266 8,288
Other assets 1,196 1,235
--------- ---------
Total assets $ 210,928 $ 190,117
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,449 $ 7,421
Accrued liabilities 11,084 10,974
--------- ---------
Total current liabilities 19,533 18,395
--------- ---------
Total liabilities 19,533 18,395
--------- ---------
Stockholders' equity:
Common stock 62 60
Additional paid-in capital 235,934 229,026
Notes receivable from stockholders (176) (2,831)
Deferred stock-based compensation (2,784) (4,326)
Accumulated other comprehensive income (loss) (495) 125
Accumulated deficit (41,146) (50,332)
--------- ---------
Total stockholders' equity 191,395 171,722
--------- ---------
Total liabilities and stockholders' equity $ 210,928 $ 190,117
========= =========
Contacts
Investors: Media:
Bryan R. Parker John Sidline
Sr. Director of Finance & IR Public Relations Manager
650-232-4170 650-232-4112
ir@ipass.com pr@ipass.com