EXHIBIT 99.1
------------
DATAWATCH CORPORATION REPORTS RESULTS FOR THIRD QUARTER FISCAL 2005
REVENUE GROWS 19% IN THIRD QUARTER, AND 10% FOR THE NINE MONTHS YEAR-TO-DATE
LOWELL, MA - JULY 25, 2005 -- Datawatch Corporation (NASDAQ: DWCH), a leading
provider of business intelligence, data transformation and IT support solutions,
today announced results for its third fiscal quarter of 2005.
Revenues for the quarter ended June 30, 2005 were $5,619,000, up by 19%
when compared to $4,709,000 for the quarter ended June 30, 2004. Net income for
the third quarter fiscal 2005 was $330,000 or $0.06 per diluted share, compared
to net income of $100,000, or $0.02 per diluted share, for the third quarter
fiscal 2004.
Revenues for the nine months ended June 30, 2005 were $15,815,000, up by
10.5% when compared to $14,311,000 for the nine months ended June 30, 2004. Net
income for the nine months ended June 30, 2005 was $183,000 or $0.03 per diluted
share, compared to net income of $819,000, or $0.14 per diluted share, a year
ago.
As of June 30, 2005, the Company had $4.4 million in cash and marketable
securities, an increase of $0.8 million or 23% from the second quarter, and no
long-term debt.
Commenting on the third quarter's results, president and CEO Robert Hagger
said, "We are excited by the progress being made at Datawatch. A good result was
achieved in our third fiscal quarter by significant improvements to revenue and
net income, compared to the same period last year"
"The increase in sales is attributable mainly to license revenue generated
by the successful launch of Monarch V8. Monarch is used in 95% of the Fortune
1,000 companies as a desktop report-mining tool for legacy data. Now with added
capabilities to easily extract, analyze and export data from PDF files, as well
as HTML files, reports, databases and spreadsheets, the market for this product
has expanded. The new version was launched late in March 2005, prior to our
successful user conference in San Diego, California".
"Revenue from Enterprise-scale Business Intelligence and Service Management
products was up by only 3% compared to the same quarter last year, partly due to
a shift from our traditional licensing model towards a subscription licensing
model. In spite of this shift, recognized revenue increased by 7% for the fiscal
year-to-date. Nine new subscription orders were taken in the quarter, helping to
add to the growing subscription revenue stream of $129,000 for the quarter as
compared to $3,000 in the same period last year, and $307,000 year-to-date
versus $10,000 last year. We continue to invest in growing the business over the
medium term. Sales and marketing expenses for the first nine months of this
fiscal year was $6.5 million versus $5.5 million a year ago, and research and
development expenses increased $681,000. We are very pleased by this quarter's
results and satisfied with our year-to-date position."
Datawatch previously announced that the Company will present and discuss
its third quarter of fiscal 2005 results today at 2 p.m. EDT in a live
conference call broadcast via the Internet at
http://www.vcall.com/CEPage.asp?ID=92615. 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 helps organizations easily access, integrate, store,
distribute and analyze information inside and outside the enterprise. From
shared services and productivity portals to help desk and business problem
management, Datawatch Corporation provides solutions that allow organizations to
fully leverage their existing infrastructures to solve their business needs.
Datawatch products are used in more than 20,000 companies, institutions and
government agencies worldwide.
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, 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
Condensed Consolidated Statement of Operations
Amounts in Thousands (except per share data)
Three Months Ended June 30, Nine Months Ended June 30,
2005 2004 2005 2004
------- ------- ------- -------
REVENUE:
Software licenses and subscriptions $ 3,758 $ 2,933 $10,282 $ 9,371
Maintenance and services 1,861 1,776 5,533 4,940
------- ------- ------- -------
Total Revenue 5,619 4,709 15,815 14,311
------- ------- ------- -------
COSTS AND EXPENSES:
Cost of software licenses and subscriptions 699 591 1,859 1,981
Cost of maintenance and services 823 681 2,579 1,954
Sales and marketing 2,168 2,021 6,530 5,515
Engineering and product development 514 311 1,613 932
General and administrative 1,095 986 3,110 3,089
------- ------- ------- -------
Total costs and expenses 5,299 4,590 15,691 13,471
------- ------- ------- -------
INCOME FROM OPERATIONS 320 119 124 840
Other income (expense), net 10 (2) 59 2
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 330 117 183 842
Provision for income taxes -- 17 -- 23
------- ------- ------- -------
NET INCOME $ 330 $ 100 $ 183 $ 819
======= ======= ======= =======
Net income per share - Basic $ 0.06 $ 0.02 $ 0.03 $ 0.16
======= ======= ======= =======
Net income per share - Diluted $ 0.06 $ 0.02 $ 0.03 $ 0.14
======= ======= ======= =======
Weighted-Average
Shares Outstanding - Basic 5,314 5,294 5,308 5,256
======= ======= ======= =======
Weighted-Average
Shares Outstanding - Diluted 5,806 5,830 5,808 5,758
======= ======= ======= =======
DATAWATCH CORPORATION
Condensed Consolidated Balance Sheet
Amounts in Thousands
June 30, September 30,
2005 2004
-------- -------------
Cash and equivalents $ 4,359 $ 4,261
Accounts receivable, net 3,905 3,640
Inventories 50 68
Prepaid expenses 602 646
------- -------
Total current assets 8,916 8,615
------- -------
Property and equipment, net 425 434
Other intangible assets, net 3,264 3,580
------- -------
$12,605 $12,629
======= =======
Accounts payable and accrued expenses $ 2,953 $ 3,165
Deferred revenue 2,901 2,903
Escrow for Mergence shareholders 128 125
------- -------
Total liabilities 5,982 6,193
------- -------
Total shareholders' equity 6,623 6,436
------- -------
$12,605 $12,629
======= =======