Returns to Profitability and Meets Targets Set For Year
ATLANTA, May 6, 2004 – Indus International, Inc. (NASDAQ: IINT), a leading provider of Service Delivery Management (SDM) solutions, today announced results of operations for its fiscal fourth quarter and 12 months ended March 31, 2004, and provided guidance for future financial performance.
Fourth quarter fiscal 2004 results include results from operations of Wishbone Systems, Inc., (Wishbone), which was acquired in January 2004.Fourth quarter fiscal 2004 revenue increased 46 percent to $39.8 million, versus $27.2 million in the quarter ended March 31, 2003, incorporating the revenues from Indus Utility Systems (IUS), which was acquired from Systems & Computer Technology Corporation on March 5, 2003.
Revenue growth was generated across all revenue categories, especially license revenue. Software license fees were higher for all product suites.
Net income for the quarter was $651,000, or $0.01 per share, compared to a net loss of $9.9 million, or $0.27 per share, in the year-ago quarter.
Per-share amounts reflect a 17.7 million share, year-over-year increase in average shares outstanding relating to shares issued in the financings associated with the IUS and Wishbone acquisitions. Indus’ fourth quarter results mark the Company’s return to quarterly profitability and represent the Company’s fourth consecutive quarter of improved bottom line performance. Revenue exceeded the outlook provided by the Company on January 28, 2004, and profits and cash performance were within guidance.
License revenue in the fourth quarter of fiscal 2004 totaled $6.8 million, compared to $2.6 million in the quarter ended March 31, 2003. The increase is attributable to the strong flow of new license orders and the recognition of deferred revenue following the completion and delivery of the PassPort 10.0 release under a major license contract signed prior to the fourth quarter of fiscal 2004.
Fourth quarter new license orders totaled $7.1 million, the highest quarterly level since 2001 and a 10 percent increase over the $6.4 million of new license orders signed in the corresponding quarter a year ago. As a reminder, new license orders for the quarter ended March 31, 2003 included a significant order from Tokyo Electric Power Company (TEPCO), for which all of the revenue was deferred until delivery and acceptance of a localized version of PassPort, which occurred in April 2004, as announced in the Company’s April 19, 2004 news release. None of this TEPCO revenue was recognized in the quarter ended March 31, 2004.
Of the more than 30+ license orders received this quarter, five were for field service suite products of the newly acquired Wishbone business. Services revenue for the quarter rose 34 percent to $33.0 million versus $24.6 million in the quarter ended March 31, 2003.
Cash (including cash equivalents and restricted cash) was $36.6 million at March 31, 2004, compared to $31.6 million at December 31, 2003, and within guidance provided on January 28, 2004.
The increase is attributable to the $14.5 million raised through the sale of common stock in February 2004, offset by the $8.2 million used for the Wishbone acquisition, as well as cash used in operating activities.Deferred revenue was $38.3 million at March 31, 2004, compared with $42.8 million at December 31, 2003.
The decrease is attributable to normal amortization of prepaid annual support fees along with recognition in the current quarter of license fee revenue previously deferred in accordance with accounting requirements.
Year-End Results
The Company changed its fiscal year end to March 31st last year and, as a result, previously reported the January to March 2003 period as a “transition” period. To provide a more comparable explanation of results, the Company will compare the current fiscal year-end results with those for the immediately preceding 12 month period. For the 12 months ended March 31, 2004, revenue increased 31% to $146.4 million, compared to $112.0 million in the 12-month period ended March 31, 2003, incorporating revenues from the acquired IUS business.
Net loss for the 2004 fiscal year totaled $12.0 million, or $0.24 per share, compared to a net loss of $34.1 million, or $0.95 per share, in the year ended March 31, 2003.
Per-share amounts reflect a year-over-year, 13.6 million share increase in average shares outstanding related to shares issued in the two previously mentioned acquisition financings. The gross margin percentage of 54% for the 12 months ended March 31, 2004 was higher than the 48% for the 12-month period ended March 31, 2003, driven by a higher license gross margin and a higher proportion of license revenue to total revenue for the fiscal 2004 period. Operating expenses for the 12 months ended March 31, 2004 totaled $89.6 million, or 3% lower than the 12-month period ended March 31, 2003.
Operating expenses, excluding restructure charges, for fiscal 2004 were higher than the comparable period ending March 31, 2003, primarily due to cost associated with the integration of our operations with the acquired IUS business.
CEO Commentary
”We have worked diligently this past year to expand our solution capabilities and customer responsiveness. These efforts have borne fruit as the Company has returned to profitability through continued growth in revenue and license bookings,” said Indus President and CEO Greg Dukat. “We expect to build upon this level of performance and continue to focus on our long-term goals – increasing our leadership in Service Delivery Management, broadening our client base in new growth markets, and improving our financial performance.” Dukat added, “By combining the asset, customer, and field service suites into an integrated Service Delivery Management solution, Indus has made steady progress throughout the year in growing its license orders and recurring revenue while reducing operating expenses.
As a result, we are very pleased to have returned to profitability in the March 2004 quarter, a goal that we established for ourselves a year ago. We are continuing to invest in industry-leading solutions and the Company is poised for continued financial stability and growth as we move into fiscal year 2005.”
Outlook
In its continuing efforts to reduce recurring operating expenses, in the first fiscal quarter ending June 30, 2004, the Company will restructure certain business activities, and record restructuring charges of up to $11 million. Of this amount, approximately $10 million relates to the consolidation of office space in Atlanta and San Francisco, wherein functions will be transferred to the company-owned office buildings in Columbia, South Carolina. The remaining restructuring charge is related to the anticipated severance costs associated with the elimination of approximately 50 positions, resulting from the outsourcing of some development functions to India and consolidating some business functions.
The resultant income statement savings, estimated to be between $6 million to $8 million annually, should phase in during the second and third fiscal quarters and are expected to lower Indus’ break-even point and strengthen the Company’s ability to remain profitable in the future. For the first fiscal quarter ending June 30, 2004, the Company currently projects revenues of between $38 million to $40 million. Excluding the approximate $11 million restructuring charges, the bottom line performance for the quarter will range between a loss of $500,000 and profit of $500,000.
With the recording of the $11 million restructuring charge previously mentioned, net losses on a GAAP basis will range between $10.5 million and $11.5 million. This projection assumes recognition of previously deferred revenue from the TEPCO contract and the corresponding amortization of capitalized development costs to modify the PassPort product for the Japan marketplace. According to Dukat, ”Following the strong results produced in the last quarter of our fiscal year just ended, we expect to see some normal seasonality in revenue in the first quarter of our new fiscal year.
Growth in total revenue in the first half of fiscal 2005 is projected to be modest as a result of our shift to greater use of resellers and systems integrators. During the second half of fiscal 2005, as our SDM strategy gains momentum and cost savings begin to be realized, we expect quarter-to-quarter revenue growth, with increasing profitability and cash flow, positioning Indus for sustained, long-term profitability.” The Company expects its cash balance at June 30, 2004, to be approximately $30 million, with cash usage due to the aforementioned restructuring charges to be taken in the June quarter.
Investor Conference Call
As announced on April 19 and April 28, Indus will conduct an investor conference call to discuss the Company’s results at 5:00 p.m. (Eastern) today. Investors may access the conference call over the Internet via the Company’s Website, or via telephone by dialing 973-409-9260. Those listening via the Internet should go to the site 15 minutes early to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay will be available through 6:30 p.m.
(Eastern) Friday, May 14th, by dialing (877) 519-4471 (international callers dial (973) 341-3080) and entering reservation number 4697012; or by going to the Company’s Website ( www.Investor.Indus.com ).Like most companies, Indus will be taking live questions from securities analysts and institutional portfolio managers, but the complete call is open to all interested parties on a listen-only basis.
Furthermore, Indus will answer questions submitted by individual investors at any time prior to and during the call. Individual investors should send their questions via email to [email protected] .
About Indus International
Indus is a leading provider of Service Delivery Management (SDM) solutions, which help clients in a broad array of industries optimize the management of their customers, workforce, spare parts inventory, tools and documentation in order to maximize performance and customer satisfaction while achieving significant cost savings. Indus customer, asset and workforce management software products, professional services and hosted service offerings improve our clients’ profitability by reducing costs, increasing capacity and competitiveness, improving service to their customers, facilitating billing for services and ensuring regulatory compliance.
Indus solutions are used by more than 300,000 end users, at over 1,300 client sites of it’s 500+ customers, in more than 40 countries and diverse industries -- including manufacturing, utilities, telecommunications, government, education, transportation, facilities and property management, consumer packaged goods and more. For more information, visit our Website at www.indus.com .