EXHIBIT 99.1
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PRESS RELEASE
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DATAWATCH CORPORATION REPORTS EARNINGS FOR ITS FOURTH QUARTER AND FISCAL 2004
DATAWATCH ANNOUNCES YEAR-ON-YEAR REVENUE GROWTH OF 9% AND INCOME
FROM OPERATIONS GROWTH OF 12%; CASH RESERVES OVER $4.2 MILLION
LOWELL, MA - NOVEMBER 23, 2004 -- Datawatch Corporation (NASDAQ: DWCH), a
leading provider of business intelligence, data transformation and IT support
solutions, today announced results for its fourth quarter and fiscal year ended
September 30, 2004.
Revenues for the year ended September 30, 2004 were $19,335,000, an
increase of 9% from $17,712,000 for fiscal 2003. Income from operations for
fiscal 2004 was $925,000, an increase of 12% from $826,000 for fiscal 2003. Net
income for fiscal 2004 was $1,085,000, or $0.19 per diluted share, compared to
$847,000, or $0.16 per diluted share, a year ago.
Revenues for the quarter ended September 30, 2004 were $5,024,000, an
increase of 26% from $4,002,000 for the same period of fiscal 2003. Net income
for the fourth fiscal 2004 quarter was $266,000, or $0.05 per diluted share,
compared to $182,000, or $0.03 per diluted share, a year ago.
In the fourth quarter, Datawatch recorded a benefit for income taxes of
$148,000 for the recognition of a reduction in the valuation allowance as a
result of realizing the benefit of certain of the Company's deferred tax assets
resulting from the deferred tax liabilities associated with the Mergence
acquisition. The benefit is included in net income for both the year and quarter
ended September 30, 2004.
Commenting on the fiscal 2004 results, president and CEO Robert Hagger
said, "I am very pleased with the solid progress we have made this year and with
the fiscal year results. Our accomplishments in fiscal 2004 include:
o An increase in sales on all product lines resulting in a 9% overall
improvement in recognized revenue for the year,
o An improvement in income from operations of 12% versus fiscal 2003
with income from operations increasing from $826,000 to $925,000,
o The creation of a larger and stronger sales and marketing resource to
support future sales performance improvements,
o The launch of a new subscriptions sales model providing a new
recurring revenue stream for fiscal 2005 and beyond,
o The acquisition of Mergence Technologies Corporation providing
Datawatch with an added revenue stream and an exciting new product
range.
In addition to the continued earnings trend and solid net cash position in
fiscal 2004, the introduction of a new subscription model for customers of
report management and service management products was well received by our
customers. The new pricing model lowers the initial cost of software acquisition
for our customers, making it easier for them to start using our products. For a
simple monthly fee, users can now have access to large-scale systems that
improve productivity in the workplace by better information and business process
management. This key initiative is designed to grow our enterprise business,
reducing dependency on short-term sales and building a recurring revenue stream
over the next few years.
Our continued investment in research and development of report management
technologies has resulted in Datawatch becoming a leader in report-based
business intelligence software and systems. From individual desktop applications
through to full enterprise-wide report access and distribution methods,
Datawatch is providing easy to implement solutions that deliver a strong return
on investment for our customers. During 2004, Datawatch has added to the
capabilities of its report management systems by providing the ability to search
inter-related data over multiple and disparate repositories, data, documents,
communications and summarize into auditable case records, stored for corporate
compliance and collaboration. This new initiative now provides Datawatch with
the ability to manage both structured and unstructured data.
Based on industry analyst Gartner, Inc., IT services projections call for
the market in the areas of business intelligence and data warehousing to grow
from $17.3 billion in 2002 to $26.4 billion by 2007, an 8.9 percent CAGR.
Datawatch is now well placed to take advantage of the expected growth in this
market. Our base of over 20,000 customers, including a significant number of
Fortune 500 companies, is an excellent on-ramp to this opportunity. The next
stage for Datawatch is to continue to grow revenues and achieve greater market
share. We are focused on the task and have increased the size of our sales force
in preparation for fiscal 2005.
In addition to extending our business intelligence range, we also expanded
our technology capabilities and customer base in the service management space.
Offerings now range from an easy to deploy web-based Visual Help Desktm On-Line
model, through to our full business process management (BPM) suite, Visual|QSM.
With an improving economic climate, Datawatch is well positioned to take
advantage of the recovery as it unfolds and we eagerly look forward to an
exciting fiscal 2005."
Datawatch previously announced that the company will present and discuss
its fourth quarter and fiscal 2004 results today at 2 p.m. (EST) in a live
conference call broadcast via the Internet at
http://www.vcall.com/ClientPage.asp?ID=89751. 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 CORPORATION
Datawatch Corporation is a leader in business intelligence, data
transformation, and IT support solutions that help organizations increase
productivity, reduce costs and gain competitive advantage. 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 the Company's recently introduced
subscription sales model; risks associated with international sales; risks
associated with distributor sales; risks associated with acquisitions; 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, March
31, 2004, and June 30, 2004. Any forward-looking statements should be considered
in light of those factors.
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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)
QUARTERS ENDED SEPTEMBER 30, YEARS ENDED SEPTEMBER 30,
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2004 2003 2004 2003
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Revenue:
Software licenses and subscriptions ....... $ 3,070 $ 2,686 $ 12,442 $ 12,210
Maintenance and services .................. 1,954 1,316 6,893 5,502
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Total Revenue ................................. 5,024 4,002 19,335 17,712
Costs and expenses:
Cost of software licenses and subscriptions 601 644 2,583 2,563
Cost of maintenance and services .......... 757 575 2,710 2,369
Sales and marketing expenses .............. 2,114 1,503 7,629 6,129
Product development expenses .............. 519 301 1,451 1,507
General and administration expenses ....... 949 816 4,037 4,137
Restructuring costs ....................... -- -- -- 181
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Income from operations ........................ 84 163 925 826
Other income and expense, net ................. 32 24 33 26
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Income before income taxes .................... 116 187 958 852
Benefit (provision) for income taxes .......... 150 (5) 127 (5)
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Net income .................................... $ 266 $ 182 $ 1,085 $ 847
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Net income per share - basic .................. $ 0.05 $ 0.03 $ 0.21 $ 0.16
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Weighted average basic shares outstanding ..... 5,301 5,209 5,268 5,197
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Net income per share - diluted ................ $ 0.05 $ 0.03 $ 0.19 $ 0.16
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Weighted average diluted shares outstanding.... 5,751 5,635 5,753 5,445
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DATAWATCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
Amounts in Thousands
SEPTEMBER 30, SEPTEMBER 30,
2003 2004
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ASSETS:
Cash and investments ...................... $ 4,261 $ 5,071
Accounts receivable, net .................. 3,672 3,041
Inventories ............................... 68 105
Prepaid expenses .......................... 614 553
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Total Current Assets .......................... 8,615 8,770
Property and equipment, net ................... 434 461
Other assets .................................. 3,580 1,273
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Total Assets .................................. $ 12,629 $ 10,504
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued expenses ..... $ 3,165 $ 2,422
Deferred revenue .......................... 2,903 2,941
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Total Current Liabilities ..................... 6,068 5,363
Escrow for Mergence acquisition ............... 125 --
Accrued severance, less current portion ....... -- 3
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Total Liabilities ............................. 6,193 5,366
Stockholders' equity .......................... 6,436 5,138
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Total Liabilities and Stockholders' Equity..... $ 12,629 $ 10,504
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