Exhibit 99.1
Concord Reports First Quarter Results
MARLBORO, Mass.--(BUSINESS WIRE)--April 14, 2004--Concord Communications
Inc. (Nasdaq: CCRD) today announced revenue and earnings for its first quarter
ended March 31, 2004. Total revenue was $23.8 million. GAAP loss per share was
$0.03 and pro forma loss per share was $0.02. (See below for pro forma/GAAP
reconciliation).
"We have had an opportunity to review our performance during the first
quarter and we are currently developing and prioritizing the steps necessary to
increase revenue growth and return the company to profitability. Our financial
goal is to make progress towards our target of 14-16% operating profit. We are
confident that our core markets will continue to produce well and that we will
see increased growth in our emerging markets such as VoIP, wireless and business
service management," said Concord CEO Jack Blaeser.
Future Expectations
Second quarter 2004 revenue is expected to be between $26.5 million and
$27.5 million, within the range of previously set expectations. EPS is expected
to be between $0.00 and $0.04 on a GAAP basis and $0.01 and $0.05 on a pro forma
basis. (See below for a reconciliation of GAAP and pro forma guidance).
Operating expenses are expected to increase approximately $1 million over the
first quarter to $21 million.
First Quarter Results
Cash Increases $2M and Deferred Revenue Increases $3M
-- Cash was $164.3 million in Q1-04, up from $162.1 million in Q4-03.
-- Deferred revenue was $29.5 million in Q1-04, up from $26.5 million in
Q4-03
Average Deal Size Remains High
-- Average deal size for new customers was $126,000.
-- Number of deals over $100,000 was 35.
Market Segment Sales Remain Close to Historical Averages
-- Enterprise customers accounted for 64% of revenue. Managed service
provider customers accounted for 22% of revenue. Telco infrastructure
customers accounted for 14% of revenue.
-- International customers accounted for $9.3 million or 41% of revenue.
-- The installed base revenue was 88%. Of the revenue from existing
customers, 38% was from existing customers expanding deployment of
their existing Concord products across a larger portion of their IT
infrastructure and 62% was from customers expanding toward an
end-to-end solution by purchasing new products in the eHealth(R)
Suite.
Other Metrics
-- Gross margin was 80%.
-- DSO was 74 days.
Conference Call: April 14th, at 8:30 AM EDT
Concord will hold a conference call to discuss results on April 14th at
8:30AM EDT. The phone number for the call is 888-889-5345 (domestic) and
973-339-3086 (international). The call will be available on April 14th and will
be available for approximately two weeks thereafter. The number for the replay
is 877-519-4471 for U.S./Canada and 973-341-3080 for international callers. The
access code is 4686290. The information in this press release, call replay and
reconciliation of non-GAAP financials is posted at www.concord.com.
About Concord Communications
Concord Communications, Inc. (Nasdaq: CCRD) optimizes application
performance and availability across networks and systems. Concord's 3000
eHealth(R) customers worldwide use the eHealth(R) Suite as the software solution
to manage their IT infrastructure to drive profitable business operations,
reduce costs, and increase competitive positioning.
Concord is headquartered in Marlboro, Massachusetts. For more information
on Concord, call 1-800-851-8725 or visit Concord on the Web at www.concord.com.
Concord Communications, Inc., the Concord logo and eHealth are trademarks of
Concord Communications, Inc. All other trademarks are the property of their
respective owners.
Safe Harbor
This press release contains forward-looking statements, including
statements regarding revenue and profit expectations, revenue growth,
goals for profitability, operating profit, market opportunities and
business growth. These forward-looking statements are neither promises
nor guarantees, but involve risks and uncertainties that could cause
actual results to differ materially from the forward-looking
statements. Such risks and uncertainties include, without limitation,
the magnitude and duration of the current domestic financial crisis
and economic slowdown and specifically their impact on the software,
networking and telecommunications industries; our customers' ability
to obtain funding, specifically in light of the aforementioned
financial and economic climate, and the resulting potential delay of
customer purchasing decisions; risks of continued operating losses;
the ability to attract and retain quality professional employees;
uncertainties involving intellectual property rights and litigation;
litigation in general; risks in technology development and
commercialization; risks in product development and market acceptance
of and demand for the Company's products; risks associated with
competition and competitive pricing pressures; risks associated with
international sales, including foreign currency risks; and other risks
detailed in the Company's filings with the Securities and Exchange
Commission, including but not limited to, the Company's annual report
on Form 10-K for the fiscal year ended December 31, 2003 and quarterly
reports on Form 10-Q. Any forward-looking statements should be
considered in light of all these factors. The information contained in
this press release is applicable only as of today and should
thereafter be considered historical and will no longer constitute the
Company's current expectations. The company undertakes no obligation
to update information contained in this press release.
Concord Communications, Inc.
Condensed Consolidated
Statement of Operations
(Unaudited, in thousands, except share data)
Three Months Ended
March 31, March 31,
2004 2003
----------- -----------
Revenues:
Licenses $10,350 $12,909
Services 13,495 11,208
----------- -----------
Total revenues 23,845 24,117
----------- -----------
Cost of revenues:
Cost of license and service revenues 4,638 4,631
netViz technology amortization 133 -
----------- -----------
Total cost of revenues 4,771 4,631
----------- -----------
Gross profit 19,074 19,486
----------- -----------
Operating expenses:
Research and development 5,765 5,427
Sales and marketing 11,470 11,365
General and administrative 2,643 2,245
Acquisition-related charges, in-process R&D,
amortization, and equity-based compensation
expense 70 20
----------- -----------
Total operating expenses 19,948 19,057
----------- -----------
Operating (loss) income (874) 429
Other income, net 97 493
----------- -----------
(Loss) income before income taxes (777) 922
----------- -----------
(Benefit from) provision for income taxes (295) 86
----------- -----------
Net (loss) income $(482) $836
=========== ===========
Net (loss) income per common and potential
common share:
Basic $(0.03) $0.05
Diluted $(0.03) $0.05
Pro forma diluted $(0.02) $0.04
Weighted average common shares outstanding 18,159,503 17,254,342
Diluted weighted average common and potential
common shares outstanding 18,159,503 17,448,566
Pro Forma Financial Results
We prepare and release quarterly unaudited financial statements prepared in
accordance with generally accepted accounting principles ("GAAP"). We also
disclose and discuss certain pro forma financial information, used to evaluate
our performance, in this and other earnings releases and investor conference
calls. We believe that current shareholders and potential investors in our
company use multiples of pro-forma EPS in making investment decisions about our
company. We use pro-forma EPS to evaluate the results of our ongoing operations
and to assist in historical comparisons. This measure, and other pro-forma
information, should not be considered an alternative to measurements required by
accounting principles generally accepted in the United States of America such as
net income and net cash provided by operations and should not be considered
measures of our liquidity. In addition, our non-GAAP measures may not be
comparable to similar measures reported by other companies. Our key non-GAAP
measure is:
Pro-forma EPS
Pro-forma EPS is calculated by dividing pro-forma net income by the diluted
number of shares. Pro-forma Net Income excludes certain non-cash and special
charges, consisting primarily of non-cash compensation charges,
in-process-research-and-development costs, amortization of intangible assets and
transaction costs associated with acquisitions. This pro forma calculation also
substitutes current period GAAP tax provisions with a pro forma tax rate of 28%.
Historically, we have had significant deferred tax assets and have not recorded
a significant federal tax provision and so the GAAP tax provision related
primarily to state and foreign taxes and has been minimal.
From a tax return perspective, and thus cash flow perspective, we do not
believe Concord will pay significant state or federal income taxes for at least
2 years. We will continue incurring small foreign, federal minimum and state
minimum tax payments. Due to the release of our valuation allowance in the
fourth quarter of 2003, our GAAP tax rate has increased to 38%. We will continue
providing pro forma guidance and results at a 28% tax rate to normalize our
results against historical reported results and are provided for comparative
purposes only.
Reconciliation
The table below reconciles Net (Loss) Income to Pro forma Net
(Loss) Income for the first quarter ended 2004 vs. 2003:
Three Months Ended
-----------------------
In thousands, except per share data March 31, March 31,
2004 2003
----------- -----------
Reconciliation of GAAP & Pro forma Net (Loss)
Income:
Net (loss) income $(482) $836
Add: (Benefit from) provision for income
taxes (295) 86
netViz technology amortization 133 -
Acquisition-related charges, in-
process R&D, amortization,
and equity-based compensation
expense 70 20
----------- -----------
Pro forma (loss) income before income taxes (574) 942
----------- -----------
Pro forma income taxes (Pro-forma rate: 28%) (161) 264
----------- -----------
Pro forma net (loss) income $(413) $678
=========== ===========
Pro forma net (loss) income per diluted share: $(0.02) $0.04
Diluted weighted average common and potential
common shares outstanding 18,159,503 17,448,566
Q2 2004 Guidance
The table below reconciles Q2 2004 Pro forma EPS guidance
to GAAP EPS:
Guidance for
Quarter ending
June 30, 2004
--------------
Pro forma EPS guidance $0.01 - $0.05
Estimated:
Income taxes (0.00)
Estimated amortization of intangible assets (0.01)
--------------
Estimated GAAP EPS $0.00 - $0.04
==============
Concord Communications, Inc.
Condensed Consolidated Balance Sheets
As of
(Unaudited, in thousands)
--------------------------------------
March 31, December 31,
2004 2003
------------- ------------
Assets
Current assets:
Cash, cash equivalents and marketable
securities $164,314 $162,085
Accounts receivable, net 19,620 22,194
Deferred tax assets 5,351 4,638
Prepaid expenses and other current assets 4,641 4,851
------------ ------------
Total current assets 193,926 193,768
Equipment and improvements, net 6,564 6,697
Goodwill 6,225 6,225
Other intangible assets, net 2,800 3,004
Long-term deferred tax assets 4,245 4,962
Unamortized debt issuance costs and other
long-term assets 3,607 3,770
------------ ------------
Total assets $217,367 $218,426
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $13,167 $17,845
Deferred revenue 29,451 26,490
------------ ------------
Total current liabilities 42,618 44,335
Convertible notes 86,250 86,250
------------ ------------
Common stock, additional paid-in capital,
deferred compensation and accumulated
other comprehensive income 113,788 112,648
Accumulated deficit (25,289) (24,807)
------------ ------------
Total stockholders' equity 88,499 87,841
------------ ------------
Total Liabilities and Stockholders' Equity $217,367 $218,426
============ ============
CONTACT: Concord Communications Inc.
Public Relations:
Eric Snow, 508-486-4508
pr@concord.com
or
Investor Relations:
Raymond Ruddy, 508-303-4350
investorrelations@concord.com