Exhibit 99.1
Zix Corporation Announces First Quarter 2003 Financial Results
DALLAS--(BUSINESS WIRE)--April 24, 2003--
ZixCorp's New End-User Order Commitments Total $1.9 Million,
Including $1.6 Million in New Healthcare Business
During the First Quarter
Zix Corporation (ZixCorp(TM)), (Nasdaq: ZIXI), a global provider
of e-messaging management and protection services, today announced
financial results for the first quarter ended March 31, 2003. For the
first quarter 2003, ZixCorp reported a net loss of $6,831,000 or $0.36
per share, on revenues of $639,000, a 30% improvement over the net
loss of $9,788,000, or $0.56 per share, on revenues of $389,000
recorded for the first quarter of 2002.
"New end-user commitments for the first quarter total
approximately $1.9 million, with $1.6 million of those attributable to
the healthcare business we captured during this first quarter," said
John A. Ryan, president and CEO of ZixCorp. "A significant new
customer win for ZixCorp this quarter is Anthem, Inc., the fifth
largest health benefits provider in the United States, which ordered
an enterprise-wide solution with 20,000 end-user licenses. Three out
of the top six publicly traded health benefits providers in the U.S.
industry -- Cigna, Humana, and now Anthem -- along with another
important new customer -- the Blue Cross Blue Shield Association
(BCBSA) -- have now selected ZixCorp for enterprise-wide solutions.
BCBSA is the trade association that represents 42 independent Blue
Cross and Blue Shield companies that collectively provide healthcare
for 85 million Americans. In addition to BCBSA, ZixCorp has to date
been selected by 13 Blue Cross Blue Shield organizations, including
Anthem. We are honored to be their preferred supplier.
"Equally important is the mix of new healthcare business in the
quarter. Excluding transactions over $300,000, we concluded over 25
major transactions averaging in excess of $50,000 each. This result
compares to only five transactions at an average of $34,000 each
concluded in the fourth quarter of 2002. By comparison, this quarter's
results represent a five-fold increase in the number of such
transactions and almost a seven-fold increase in the total dollar
value of such transactions over last quarter's."
Other health benefits providers that selected ZixCorp solutions
during the quarter include Blue Cross Blue Shield of Kansas, the
largest health insurer in the state of Kansas; Blue Cross of
Northeastern Pennsylvania, the leading healthcare payor serving the
northeastern areas of the state; American Medical Security, a health
benefits provider serving members in 32 states; National Medical
Health Card Systems Inc., a full-service pharmacy benefit management
company with a nationwide network of pharmacies serving approximately
2.5 million plan members.
In the Northeast, ZixCorp extended its presence in New Jersey by
becoming the solutions provider of choice to Robert Wood Johnson
University Hospital and Health System, where ZixCorp is now the
standard, and St. Barnabas Health Care System, the oldest and largest
nonprofit, nonsectarian hospital in New Jersey. New customers for
ZixCorp solutions came from all other areas of the United States as
well, including, for example: in the West, the University of Utah
Health Sciences Center, a major university-based patient care hospital
system, education, research, and health professions training center
that ordered licenses for 12,000 users during the quarter; in the
South, IASIS Healthcare, a leading owner and operator of acute care
and medium-sized hospitals across the United States; and in the
Central part of the United States, Healtheast Care System, a nonprofit
healthcare system based in St. Paul, Minn. All chose ZixCorp solutions
to comply with the Health Insurance Portability and Accountability Act
of 1996 (HIPAA).
During the quarter, orders were received from 147 unique corporate
customers in all sectors, of which 107 were from new customers,
representing growth in the number of new customers of approximately
49%. Approximately 88% of the dollar value of new bookings during the
first quarter was in the healthcare sector. Orders for ZixVPM(TM)
constituted 55% of the dollar value of total bookings, with 9.5%
attributable to the company's newest offering, ZixWorks(TM). This
quarter's results bring the total number of ZixCorp corporate
customers to over 300.
Steve York, senior vice president and CFO of ZixCorp, said,
"End-user order commitments continue to be the best gauge of our
market penetration, since revenues from our services are generally
recognized ratably over the respective subscription periods, usually
one year. Accordingly, our end-user order backlog as of March 31,
2003, has grown to approximately $3.7 million, which includes
approximately $1.9 million in deferred revenues on the company's
balance sheet. It is expected that approximately 60% of this backlog
will be recognized as revenue over the next three quarters."
At March 31, 2003, the cash and marketable securities position of
the company was $10,598,000. Pursuant to the previously disclosed
March 2003 warrant exercise and replacement agreement with former Note
holders, the company has received proceeds of $1,600,000, $334,000 of
which was received in the first quarter, resulting from the exercise
of the Note holders' 386,473 warrant shares at $4.14 per share. The
company will be issuing the former Note holders new warrants covering
455,017 shares at an exercise price of $5.00 per share, as required by
the warrant exercise and replacement agreement. Net cash used by
continuing operations during the first quarter of 2003 was $3,957,000,
as compared to $4,856,000 for the first quarter of 2002. The recent
trend for a reduced level of additions to property and equipment is
expected to reverse in 2003, as evidenced by first quarter 2003
purchases of property and equipment totaling $576,000, as the company
upgrades certain computer hardware in its data center and acquires
computer equipment to satisfy customer orders for the company's
products and services, primarily ZixVPM and ZixWorks. Quarterly
revenues in 2002 and 2003 included $234,000 resulting from the pro
rata recognition of certain minimum payments associated with ZixCorp's
Marketing and Distribution Agreement with Entrust, Inc.
York commented further, "Regarding the company's liquidity, based
upon the level of new business expected the rest of the year, coupled
with an increased emphasis on cost controls, the company believes it
has adequate cash resources in 2003 to grow its business. However, we
continue to consider various capital funding alternatives in order to
strengthen our financial position."
About Zix Corporation
Zix Corporation (ZixCorp(TM)) is a global provider of e-messaging
management and protection services. ZixCorp offers a portfolio of
managed on-site and hosted e-messaging solutions to protect
organizations from viruses, spam, and electronic attack, while
delivering the ability to enforce corporate policies and securely send
to anyone. ZixCorp's advisory services and secure e-messaging
solutions enable organizations of any size to streamline operations,
avoid obsolescence, mitigate risks, and leverage the cost and time
efficiencies of e-messaging. For more information, visit
www.zixcorp.com.
Safe Harbor Statement
The following is a "Safe Harbor" statement under the Private
Securities Litigation Reform Act of 1995. Any forward-looking
statements contained in this release are not guarantees of future
performance and involve risks and uncertainties. Actual results may
differ materially from those projected in the forward-looking
statements. These risks and uncertainties include, but are not limited
to, the following: the company's lack of significant revenues; the
company's ability to achieve broad market acceptance for its products
and services; the company's reliance on establishing and maintaining
strategic relationships to gain customers and grow revenues; the
expected increase in competition in the e-messaging management and
protection business; and the company's ability to successfully and
timely introduce new e-messaging management and protection products
and related services and implement technological changes. Further
details on such risks and uncertainties may be found in the company's
public filings with the SEC.
ZIX CORPORATION
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
---------------------
March 31, March 31,
2003 2002
--------- ---------
Revenues $639 $389
Cost of revenues (1,760) (2,895)
Research and development expenses (1,204) (2,064)
Selling, general and administrative expenses (4,523) (5,333)
Investment and other income 41 115
--------- ---------
Loss from continuing operations
before income taxes (6,807) (9,788)
Income taxes (24) -
--------- ---------
Loss from continuing operations (6,831) (9,788)
Discontinued operations - -
--------- ---------
Net loss $(6,831) $(9,788)
========= =========
Basic and diluted loss per common share:
Continuing operations $(0.36) $(0.56)
Discontinued operations - -
--------- ---------
Net loss $(0.36) $(0.56)
========= =========
Weighted average shares outstanding 20,570 17,563
ZIX CORPORATION
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March December
31, 31,
2003 2002
-------- --------
ASSETS
Cash and marketable securities $10,598 $14,832
Receivables 194 1,014
Other current assets 1,087 1,546
Property and equipment, net 3,444 3,608
-------- --------
$15,323 $21,000
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $2,561 $2,976
Deferred revenues 1,881 826
Convertible preferred stock 5,718 5,653
Stockholders' equity 5,163 11,545
-------- --------
$15,323 $21,000
======== ========
ZIX CORPORATION
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
---------------------
March 31, March 31,
2003 2002
--------- ---------
Loss from continuing operations $(6,831) $(9,788)
Non-cash expenses 1,104 4,569
Changes in assets and liabilities, net 1,770 363
Discontinued operations (35) (8)
--------- ---------
Net cash used by operating activities (3,992) (4,864)
Purchases of property and equipment, net (576) (42)
Purchases and sales of marketable securities,
net 4,981 955
Proceeds from exercise of warrants 334 -
--------- ---------
Increase (decrease) in cash and cash equivalents 747 (3,951)
Cash and cash equivalents, beginning of period 7,586 8,857
--------- ---------
Cash and cash equivalents, end of period $8,333 $4,906
========= =========
CONTACT: ZixCorp
Investor Contact:
Beverly V. Fuortes, 214/515-7357
invest@zixcorp.com
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