[IPASS LOGO] EXHIBIT 99.1
FOR IMMEDIATE RELEASE
IPASS REPORTS THIRD QUARTER 2004 RESULTS
"MOBILE AUTOMATION AND SAFE3W ACQUISITIONS BOLSTER POLICY
ORCHESTRATION INITIATIVE"
REDWOOD SHORES, Calif., October 26, 2004 /PRNewswire-FirstCall/ -- iPass Inc.
(Nasdaq: IPAS) today announced financial results for the third quarter ending
September 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 third quarter ended September 30, 2004 were $41.9 million,
compared to revenues of $35.0 million for the same period last year and $40.4
million for the quarter ended June 30, 2004.
"We are pleased that we made significant progress in several key areas during
the September quarter, namely Policy Orchestration, Broadband and customer
signings" said Ken Denman, iPass Chairman and CEO . "We have taken steps to
bolster our Policy Orchestration capabilities through our acquisition of Safe3w
and agreement to acquire Mobile Automation and through our expanded partnership
with Sygate Technologies. These agreements will enhance our ability to create
gap-free protection and policy enforcement for our enterprise customers through
value added security services". "In addition, we have continued to make good
progress in broadband and are particularly encouraged by achieving strong
positive growth in quarterly broadband revenues. Lastly we added many new
enterprise customers during the quarter including 13 new Forbes Global 2000
customers bringing our total to 237 of these large, global enterprises as
customers".
GAAP RESULTS: Operating income for the third quarter 2004 was $8.0 million,
compared to operating income of $6.2 million for the same period last year. Net
income, calculated on the basis of generally accepted accounting principles
(GAAP), for the third quarter 2004 was $5.2 million, or $0.08 per diluted share,
based on 65.5 million fully diluted shares outstanding, compared with $4.5
million, or $0.07 per diluted share, based on 64.5 million fully diluted shares
outstanding, for the third quarter 2003.
NON-GAAP RESULTS: The following numbers are non-GAAP financial measures and
exclude non-cash amortization of stock-based compensation and amortization of
intangibles. 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 third quarter 2004 was $5.7 million, or $0.09 per
diluted share, based on 65.5 million fully diluted shares outstanding, compared
with $5.5 million, or $0.09 per diluted share, based on 64.5 million fully
diluted shares outstanding, for the same period last year.
BUSINESS HIGHLIGHTS
Business highlights include:
- The Company entered into three agreements that will allow it
to enhance the capabilities of its Policy Orchestration
platform: the acquisition of Safe3w, the agreement to acquire
Mobile Automation, and the deepening of its technology
partnership with Sygate.
o In September, iPass acquired Safe3w, a privately-held
Woodbury, NY company that has developed an
innovative, patented dynamic device "fingerprinting"
technology. When integrated into the iPass
connectivity platform, this technology will help
ensure that only trusted computers -- those devices
that are identified and known to the IT department,
and protected against identity theft, intrusion,
viruses and worms -- have access to corporate
networks.
o Earlier today, iPass agreed to acquire Mobile
Automation, a company that is a leader in mobile
device patch management. Their products help IT
managers better protect remote and mobile computers
by efficiently and reliably assessing these "at risk"
PCs and updating their security software and OS
patches in compliance with corporate policies. While
Mobile Automation solutions can update both local and
remote computers, they have specifically optimized
their technology for the more challenging mobile
environment. iPass intends to sell Mobile
Automation's existing product portfolio as well as
create new services by integrating their capabilities
into the iPass Policy Orchestration framework.
o In September, the Company entered into an agreement
to further integrate Sygate Secure Enterprise with
the iPass connectivity service platform to both
create the ability to isolate the mobile device
before assessing it, as well as linking endpoint
policy compliance with network access enforcement.
- iPass also made significant progress in the government space:
o iPass announced that it has been awarded a blanket
purchase agreement by the Department of Defense
(DoD). Under the terms of the agreement, any
organization within the DoD, federal, intelligence or
civilian, can purchase the iPass solution under the
blanket purchase agreement.
o The Company also signed three additional government
agencies as customers during the quarter.
o iPass entered into a partnership with one of the
world's leading defense manufacturing and service
companies, to offer iPass Corporate Access to this
organization's government clients.
- Finally, iPass made significant strides in its Broadband
initiative:
o iPass surpassed 13,500 broadband access points in 43
countries, including 11,800 active Wi-Fi hotspots and
Ethernet service in the rooms of over 1,800 hotels.
o The Company entered into an agreement with Connexion
by Boeing, a business unit of the Boeing Company, to
deliver iPass enterprise customers secure in-flight
Wi-Fi Internet connectivity. Through the agreement
iPass users will have access to the Connexion by
Boeing mobile Internet service through the iPass
Global Broadband Roaming network.
o The Company signed a roaming contract with NTT
DoCoMo, which will allow subscribers of NTT DoCoMo's
public Wi-Fi service to use iPass Wi-Fi hotspots when
they are abroad in 33 countries.
o iPass entered into an agreement with Cibernet Corp.,
a leading Mobile Transaction Management and Financial
Settlement company, to deliver a complete end-to-end
solution for Wi-Fi roaming. This partnership opens up
opportunities to sell services to carriers, mobile
operators and wireless ISPs who need to quickly build
Wi-Fi offerings based on multiple roaming
relationships
- The Company ended the third quarter with $162 million in cash,
cash equivalents and short-term investments and no debt. The
Company's third quarter cash balance is net of the $8.5
million of cash used for the Safe3w acquisition and remained
relatively consistent with the second quarter balance due
principally to strong positive cash flow from operations.
NON-FINANCIAL METRICS
- The Company reported that there were 526,000 distinct end
users of its services in the month of September 2004 compared
with 415,000 in September 2003, and 528,000 in June 2004.
- The Company reported that there were 20.6 million user
sessions for the September 2004 quarter compared with 18.0
million in September 2003 quarter and 20.9 million in June
2004 quarter.
- The Company added 13 new Forbes Global 2000 customers during
the third quarter bringing its total to 237.
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. These projections do not include the impact from
any charges related to the acquisition of Mobile Automation.
For the quarter ended December 31, 2004, the Company projects revenue growth of
approximately two to four percent over the September 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 $460,000 as well as the expected
amortization of intangibles related to the Safe3w acquisition of $120,000 for
the fourth quarter of 2004 which, when divided by an expected 66.0 million fully
diluted shares outstanding, results 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 on the 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 Inc. (NASDAQ: IPAS) delivers simple, secure and manageable enterprise
mobility services, maximizing the productivity of workers as they move between
office, home and remote locations. iPass security services - based on unique
Policy Orchestration capabilities - close the gaps in protecting computers,
network assets, user identities and data whenever users connect over the
Internet. iPass connectivity services utilize the iPass global virtual network,
a unified network of hundreds of dial-up, wireless, and broadband providers in
over 150 countries. iPass services are the choice of hundreds of Global 2000
corporations including General Motors, John Deere and Hershey Foods. 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 the expected benefits of
expanded partnership with Sygate Technologies and its acquisition of Safe3w and
potential acquisition of Mobile Automation, 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 not be able to integrate the Safe3w
technology into its product offerings due to unexpected technical difficulties;
the risk that the acquisition of Mobile Automation may not occur or may be
delayed due to the failure to satisfy the conditions necessary to close the
transaction; 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 August 16, 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 and the
amortization of intangibles, 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. Furthermore, management
excludes the effect of amortization of stock-based compensation and amortization
of intangibles for budgeting purposes, as well as for 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenues $ 41,912 $ 34,989 $ 123,001 $ 98,590
Operating expenses:
Network access 9,443 7,424 27,690 21,769
Network operations 4,752 3,640 14,169 10,268
Research and development 3,337 2,531 9,697 7,154
Sales and marketing 11,416 10,548 34,227 30,389
General and administrative 4,513 3,602 13,023 9,774
Amortization of stock-based compensation (a) 480 1,081 1,890 3,045
Amortization of intangibles (b) 21 - 21 -
-------- -------- --------- ---------
Total operating expenses 33,962 28,826 100,717 82,399
-------- -------- --------- ---------
Operating income 7,950 6,163 22,284 16,191
Other income, net 590 193 1,493 25
-------- -------- --------- ---------
Income before income taxes 8,540 6,356 23,777 16,216
Provision for income taxes 3,334 1,895 9,385 6,493
-------- -------- --------- ---------
Net income $ 5,206 $ 4,461 $ 14,392 $ 9,723
======== ======== ========= =========
Net income per share:
Basic $ 0.08 $ 0.08 $ 0.24 $ 0.19
Diluted $ 0.08 $ 0.07 $ 0.22 $ 0.17
Number of shares used in per share calculations:
Basic 61,352,058 56,320,096 60,400,040 51,657,956
Diluted 65,463,843 64,501,011 65,558,403 58,743,468
A RECONCILIATION BETWEEN NET INCOME ON A GAAP BASIS AND NON-GAAP NET INCOME IS AS FOLLOWS:
GAAP net income $ 5,206 $ 4,461 $ 14,392 $ 9,723
(a) Amortization of stock-based compensation 480 1,081 1,890 3,045
(b) Amortization of intangibles 21 - 21 -
-------- -------- --------- ---------
Non-GAAP net income $ 5,707 $ 5,542 $ 16,303 $ 12,768
======== ======== ========= =========
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 $ 0.08 $ 0.07 $ 0.22 $ 0.17
Per share effect of amortization of
stock-based compensation and intangibles 0.01 0.02 0.03 0.05
-------- -------- --------- ---------
Non-GAAP diluted net income per share $ 0.09 $ 0.09 $ 0.25 $ 0.22
======== ======== ========= =========
IPASS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
------------- ------------
2004 2003
------------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 32,740 $ 45,646
Short-term investments 128,864 93,639
Accounts receivable, net 23,382 20,658
Prepaid expenses and other current assets 3,733 3,310
Deferred income tax asset 8,651 17,341
--------- ---------
Total current assets 197,370 180,594
Property and equipment, net 10,060 8,288
Other assets 1,194 1,235
Intangible assets, net 3,979 -
Goodwill 5,381 -
--------- ---------
Total assets $ 217,984 $ 190,117
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,137 $ 7,421
Accrued liabilities 11,997 10,974
--------- ---------
Total current liabilities 20,134 18,395
--------- ---------
Total liabilities 20,134 18,395
--------- ---------
Stockholders' equity:
Common stock 62 60
Additional paid-in capital 236,336 229,026
Notes receivable from stockholders - (2,831)
Deferred stock-based compensation (2,283) (4,326)
Accumulated other comprehensive income (loss) (325) 125
Accumulated deficit (35,940) (50,332)
--------- ---------
Total stockholders' equity 197,850 171,722
--------- ---------
Total liabilities and stockholders' equity $ 217,984 $ 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