First Quarter Press Release
GENTIA SOFTWARE
Tuition House, St. George's Road
Wimbledon
London SW19 4EU
(Nasdaq: GNTIY)
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
George Sprenkle For Analyst Info: Julie Creed (312) 640-6724
Chief Financial Officer For General Info: Kelly Lofts (212) 661-8030
44 181 971 4000 For Media Info: Alicia Nieva-Woodgate (212) 661-8030
FOR IMMEDIATE RELEASE
April 28, 1998
GENTIA REPORTS FIRST QUARTER RESULTS
LONDON, April 28, 1998 -- Gentia Software (Nasdaq: GNTIY), developer of
analytical applications for enterprise-wide deployment, today reported first
quarter results. Revenues for the first quarter of 1998 totaled $5.9 million,
compared with revenues of $5.5 million for the fourth quarter ended December 31,
1997 and $7.0 million for the first quarter ended March 31, 1997. Comparing the
first quarter ended March 31, 1998 with the fourth quarter ended December 31,
1997, revenues increased 7.1% and costs of revenues decreased 9.0%, resulting in
a 16.6% increase in gross profit.
The Company reported a net loss of $2.6 million for the most recent
quarter, or $0.27 cents per share, compared with a net loss of $3.1 million, or
$0.33 per share, in the fourth quarter of 1997 and a profit of $0.06 million, or
$0.01 per share, in the first quarter of 1997. The most recent quarter results
include approximately $0.5 million in software development expenditures, made
during the quarter to develop the Balanced Scorecard application. Although
eligible for capitalization under the FAS 86 guidelines, the Company elects to
expense these costs in the most recent period rather than amortize them over the
product's life.
The Company continued its strong working capital management, ending the
quarter with over $18 million in cash.
Paul Rolph, Chairman and Chief Executive Officer of Gentia, said "Our
transition to an analytical applications company is on track. We are very
encouraged by several recent events, most notably our partnership with
Renaissance Worldwide, pioneers of the Balanced Scorecard management approach.
The Balanced Scorecard application, powered by Gentia's leading business
intelligence software, enables senior management to communicate and manage
strategy from the `Boardroom to the Back room'."
"We are beginning to realize benefits from our relationship and the ability
to deliver a high impact business solution. We believe the Balanced Scorecard's
potential to impact the marketplace is endorsed by the positive reaction we have
received to our worldwide seminar series. Within two weeks of announcing the
available dates, over 1,100 people enrolled, the majority being senior level
management."
"The analytical applications market has gained recognition from industry
analysts as one of the fastest growing segments in the software industry. We are
investing in the development of such applications that complement the Balanced
Scorecard, because we believe that an applications focus will open up new
business opportunities for Gentia. We are exploring the potential to partner
with leading solution providers to enhance our distribution capacity," concluded
Mr. Rolph.
11
First Quarter Highlights
o The Company shipped Gentia release 4.0--the first Business Intelligence
environment capable of supporting 30 languages. Gentia now supports all the
world's most widely spoken languages, including French, German, Spanish,
Portuguese and Japanese. This multi-language support is critical to global
companies that need to deploy the same solutions to diverse users around
the world.
o On March 30, 1998 Gentia launched its Renaissance Balanced Scorecard,
which is the only solution in the marketplace that completely automates the
Balanced Scorecard approach in a packaged enterprise application.
o Gentia closed major deals during the first quarter with JP Morgan,
Principal Insurance, Top Lease, Heineken and Bell Canada, three of which
were Balanced Scorecard deals.
o Gentia continued to strengthen its management team and sales force during
the first quarter. In addition to adding ten direct salespeople to its
force, four in the U.S., five in Europe and one in the South Pacific. The
Company also appointed three senior managers to accelerate its European
business growth.
o Meta Group, a leading IT industry independent research organization,
recently identified the Balanced Scorecard as the exciting new application
area in Data Warehousing and noted that Gentia is a company to watch
carefully in this rapidly emerging market.
About the Company
Gentia Software (NASDAQ: GNTIY) is the leading supplier of analytical
applications that enable clients to maximize their competitive position through
enterprise-wide deployment of strategic management and predictive decision
making solutions. By leveraging the only networked Business Intelligence
environment designed for enterprise-wide deployment, Gentia enables a new class
of analytical applications, such as the Balanced Scorecard, which ensure
information delivery to key decision makers' desktops and browsers throughout an
enterprise. Gentia Software's worldwide client list of more than 470 customers
includes JP Morgan and Company, Citibank, Volvo, McDonald's Restaurants,
Heineken Export Group, Swiss Reinsurance and Sun Microsystems. The Company has
dual headquarters in Boston and London and operates in more than 20 countries
worldwide.
For additional information about Gentia, visit the Company's Web site at
www.gentia.com or call 1-888-4GENTIA or 1-781-224-0750. To receive additional
information via fax at no charge, dial 1-800-PRO-INFO and enter code GNTIY.
This news release contains statements of a forward-looking nature relating
to the financial performance of Gentia Software. Such statements are based upon
the information available to management at this time, and they necessarily
involve risk because actual results could differ materially from current
expectations. Among the many factors that could cause actual results to differ
from those set forth in the Company's forward-looking statements are changes in
general economic conditions, actions taken by customers or competitors, and the
receipt of more or fewer orders than expected.
(Tables to Follow)
12
GENTIA SOFTWARE PLC
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended
---------------------------------------
March 31, March 31,
1998 1997
--------------- -----------------
(in thousands, except per share amounts)
US$ US$
Revenues:
License .................................. $ 2,878 $3,956
Services and other ....................... 3,039 3,045
------- ------
5,917 7,001
Cost of revenues:
License .................................. 75 167
Services and other ....................... 1,782 1,515
------- ------
1,857 1,682
Gross profit ............................... 4,060 5,319
Operating expenses:
Sales and marketing ...................... 4,115 3,114
Research and development ................. 1,639 1,215
General and administrative ............... 1,082 1,117
Goodwill amortization .................... 102 88
------- ------
Total operating expenses ......... 6,938 5,534
Loss from operations ....................... (2,878) (215)
Other income ............................... 246 303
------- ------
Income before provision for taxes .......... (2,632) 88
Provision for income taxes ............... - 29
------- ------
Net (loss)income ........................... $(2,632) $ 59
======= ======
Basic (loss)income per share ............... $ (0.27) $ 0.01
Diluted (loss) income per share ............ $ (0.27) $ 0.01
Shares used to compute basic EPS ........... 9,637 9,004
Shares used to compute diluted EPS ......... 9,637 11,186
13
GENTIA SOFTWARE PLC
Condensed Consolidated Balance Sheets
March 31, December 31,
1998 1997
---------- ------------
(unaudited (unaudited)
(in thousands)
US$ US$
Assets
Current assets:
Cash and cash equivalents .................... $18,052 $20,332
Accounts receivable, net of allowance $1,729
(Dec 31, 1997 - $1,819) ...................... 9,382 7,758
Prepaid expenses and other current assets .... 1,490 1,921
Deferred taxes ............................... 265 285
------- -------
Total current assets ................................ 29,189 30,296
Property and equipment, net ..................... 2,264 2,037
Goodwill on acquisition, net of amortization
of $596 (Dec 31, 1997 - $494) ................... 3,520 3,602
Deferred taxes .................................. 459 459
------- -------
Total assets ........................................ $35,432 $36,394
======= =======
Liabilities and shareholders' equity
Current liabilities:
Current portion of lease obligations ......... $ 92 $ 105
Accounts payable ............................. 2,470 1,743
Accrued liabilities .......................... 1,241 1,337
Deferred revenues ............................ 4,449 3,630
UK value added tax ........................... 171 227
Other accounts payable ....................... 1,275 1,110
------- -------
Total current liabilities ........................... 9,698 8,152
Non current liabilities:
Deferred taxation ............................ 274 274
Long-term portion of lease obligations ....... 99 109
------- -------
Total liabilities ................................... 10,071 8,535
Shareholders' equity:
Ordinary shares .............................. 2,318 2,300
Additional paid-in capital ................... 27,578 27,406
Retained earnings ............................ (3,868) (1,236)
Cumulative translation adjustment ............ (667) (611)
------- -------
Total shareholders' equity .......................... 25,361 27,859
------- -------
Total liabilities and shareholders' equity .......... $35,432 $36,394
======= =======