DATAWATCH CORPORATION REPORTS THIRD QUARTER
EARNINGS
DATAWATCH ANNOUNCES YEAR-TO-DATE REVENUE GROWTH OF 4% AND NET INCOME
GROWTH OF 23%
LOWELL, MA - JULY 22, 2004 -- Datawatch Corporation (NASDAQ: DWCH), a leading
provider of business intelligence, data transformation and IT support solutions,
today announced results for its third fiscal quarter.
Revenues for the quarter ended June 30, 2004 were $4,709,000, a decrease of
8% from $5,101,000 in the same period of fiscal 2003. Net income for the third
fiscal 2004 quarter was $100,000, or $0.02 per diluted share, compared to
$698,000, or $0.13 per diluted share, a year ago. Our fiscal 2003 third quarter
was favorably affected by a catch-up effect from the previous quarter when
revenue was depressed by international affairs. Costs in this year's quarter
reflect our increased investment in marketing and sales activities.
Revenues for the nine months ended June 30, 2004 were $14,311,000, an
increase of 4% from $13,710,000 in the same period of fiscal 2003. Net income
for the first nine months of fiscal 2004 was $819,000, or $0.14 per diluted
share, compared to $665,000, or $0.12 per diluted share, a year ago.
Commenting on the third quarter's results, president and CEO Robert Hagger
said, "Revenue was lower in the third quarter compared to the same quarter last
year, but we continued to perform well in terms of new orders booked. In
November 2003, Datawatch added a subscription model as an optional method of
purchasing our products and we are pleased by the customer response. This new
initiative provides customers with an alternative to the outright purchase of
software and can save on the high capital investment that is needed for larger
projects. By using the Datawatch subscription model, companies can simply
expense a monthly fee. The business advantage for Datawatch is that it reduces
quarterly sales volatility and helps create a larger customer base for future
business opportunities. We recognize revenues from such orders over the period
of the contract and account for the sales and marketing expense as incurred.
We are pleased with our year-to-date improvements with revenues up 4% and
net income up 23% over last year. We continue to generate positive cash flow,
while investing in activities designed to improve the market awareness of our
products and increase the coverage and effectiveness of our sales force.
Investments in research and development continue to extend the
functionality of our existing solutions and create new products. The recently
announced .NET version of
Monarch DataPump will provide users with the means to easily deploy and
integrate DataPump with other Microsoft solutions. The increased functionality
also broadens the potential customer base for Monarch DataPump, and again
demonstrates our ongoing commitment to helping customers improve the
productivity of information users in the workplace."
Datawatch previously announced that the company will present and discuss
its third quarter results today at 2 p.m. (EDT) in a live conference call
broadcast via the Internet at http://www.vcall.com/ClientPage.asp?ID=88513.
Listeners are recommended to go to the website at least 15 minutes early to
register and download any necessary audio software. An archived replay of the
broadcast will be available for 30 days at the same location.
ABOUT DATAWATCH
Datawatch Corporation helps organizations easily access, store, distribute,
transform and analyze information throughout the enterprise. From report
management and analytics to data transformation and Internet presentment,
Datawatch Corporation provides solutions that allow organizations to fully
integrate and leverage their existing sources of information. Datawatch products
are used in more than 20,000 companies, institutions and government agencies
worldwide.
Datawatch works with VARs, integrators, consultants and independent
software vendors who sell and support Datawatch products. In addition, Datawatch
works with OEM customers who embed Datawatch components and technologies in
their own solutions. The corporate address for Datawatch is 175 Cabot Street,
Suite 503, Lowell, MA 01854-3633; telephone (978) 441-2200. More information on
Datawatch and its solutions can be found at www.datawatch.com.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Any statements contained in this press release that do not describe historical
facts may constitute forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Any such statements contained
herein are based on current expectations, but are subject to a number of risks
and uncertainties that may cause actual results to differ materially from
expectations. The factors that could cause actual future results to differ
materially from current expectations include the following: risks associated
with the uncertainty of the current economic climate; risks associated with
fluctuations in quarterly operating results; Datawatch's dependence on its
principal products; risks associated with international sales; risks associated
with distributor sales; an unfavorable result in any litigation; market
acceptance of new products; dependence on the introduction
of new products and possible delays in those introductions. Further information
on factors that could cause actual results to differ from those anticipated is
detailed in various publicly-available documents, which include, but are not
limited to, filings made by Datawatch from time to time with the Securities and
Exchange Commission, including but not limited to, those appearing in the
Company's Form 10-K for the year ended September 30, 2003 and Form 10-Q for the
quarters ended December 31, 2003 and March 31, 2004. Any forward-looking
statements should be considered in light of those factors.
# # # #
Datawatch Contact:
Larry Bouchie, (978) 275-8264
larry_bouchie@datawatch.com
DATAWATCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Amounts in Thousands (except per share data)
Quarter Ended Quarter Ended Nine Months Ended Nine Months Ended
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
------------- ------------- ------------- -------------
Revenue:
Software licenses ......................... $ 2,930 $ 3,604 $ 9,361 $ 9,524
Maintenance and services .................. 1,779 1,497 4,950 4,186
------------- ------------- ------------- -------------
Total Revenue .................................. 4,709 5,101 14,311 13,710
Costs and expenses:
Cost of software licenses ................. 591 775 1,981 1,919
Cost of maintenance and services .......... 681 563 1,954 1,794
Sales and marketing expenses .............. 2,021 1,664 5,515 4,626
Product development expenses .............. 311 390 932 1,205
General and administration expenses ....... 985 1,013 3,088 3,321
Restructuring costs ....................... -- -- -- 181
------------- ------------- ------------- -------------
Income from operations ......................... 120 696 841 664
Other income (expense), net .................... (3) 3 1 2
------------- ------------- ------------- -------------
Income before income taxes ..................... 117 699 842 666
Provision for income taxes ..................... (17) (1) (23) (1)
------------- ------------- ------------- -------------
Net income ..................................... $ 100 $ 698 $ 819 $ 665
============= ============= ============= =============
Net income per share - basic ................... $ 0.02 $ 0.13 $ 0.16 $ 0.13
============= ============= ============= =============
Weighted average basic shares outstanding ...... 5,294 5,199 5,256 5,193
============= ============= ============= =============
Net income per share - diluted ................. $ 0.02 $ 0.13 $ 0.14 $ 0.12
============= ============= ============= =============
Weighted average diluted shares outstanding .... 5,830 5,331 5,758 5,347
============= ============= ============= =============
DATAWATCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Amounts in Thousands
June 30, 2004 September 30, 2003
------------------ ------------------
ASSETS:
Cash and investments ..................... $ 6,227 $ 5,071
Accounts receivable, net ................. 3,607 3,041
Inventories .............................. 82 105
Prepaid expenses ......................... 527 553
------------------ ------------------
Total Current Assets ........................... 10,443 8,770
Property and equipment, net .................... 426 461
Other assets ................................... 972 1,273
------------------ ------------------
Total Assets ................................... $ 11,841 $ 10,504
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses .... $ 2,785 $ 2,422
Deferred revenue ......................... 2,890 2,941
------------------ ------------------
Total Current Liabilities ...................... 5,675 5,363
Accrued severance, less current portion ........ -- 3
------------------ ------------------
Total Liabilities .............................. 5,675 5,366
Stockholders' equity ........................... 6,166 5,138
------------------ ------------------
Total Liabilities and Stockholders' Equity ..... $ 11,841 $ 10,504
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