Company Expects Revenue of $81 Million to $82 Million and GAAP Earnings Per
Share in the Range of $0.15 - $0.19; Company Has Record Quarterly Orders of
$107 Million, Including a $10 million RSA SecurID(R) Consumer Order, and Has
Record Quarterly Authentication Credential Shipments
Company to Hold Conference Call at 5:30 p.m. ET
BEDFORD, Mass., Jan. 9 /PRNewswire-FirstCall/ -- RSA Security Inc.
(Nasdaq: RSAS) today reported preliminary financial results for the fourth
quarter ended December 31, 2005. Based on preliminary financial data, the
Company anticipates that revenue for the fourth quarter will be in the range
of $81 million to $82 million and GAAP earnings per diluted share will be in
the range of $0.15 to $0.19. GAAP earnings per diluted share for the fourth
quarter of 2005 includes the previously announced restructuring activities,
expected to be in the range of $(0.02) to $(0.03) per share and a net
beneficial adjustment made to the Company's tax rate for the fourth quarter,
which is expected to be in the range of $0.01 to $0.05 per share.
The Company also announced that it anticipates its book-to-bill ratio for
the fourth quarter of 2005 to be approximately 1.3 to 1 and that it closed the
quarter with a total of approximately $32 million in backlog and $54 million
in deferred revenue, across all of its product lines. This compares to a
book-to-bill ratio for the third quarter of 2005 of approximately 1.0 to 1,
backlog of $12.7 million and deferred revenue of $48.8 million at the close of
the third quarter of 2005.
RSA Security also announced that during the fourth quarter it received a
$10 million RSA SecurID(R) order from a new customer. Due to the subscription
nature of this transaction, revenue will be recognized over the course of five
years. This financial institution will deploy RSA SecurID authentication
credentials to all of its online consumers over the course of the next 12
months. RSA Security has not shipped any credentials related to this
transaction and the Company intends to begin shipping a significant number of
these authentication credentials to the financial institution in the first
quarter of 2006.
Additionally, the Company disclosed that it shipped approximately 1.5
million authentication credentials during the fourth quarter, up 45% from the
third quarter of 2005. Of the 1.5 million authentication credentials shipped
during the quarter, approximately 500,000 credentials were consumer related.
"We had a record quarter for bookings, we shipped a record number of
authentication credentials, and during the fourth quarter we closed the single
largest transaction in the history of the company," said Art Coviello,
president and CEO of RSA Security. "I am extremely pleased with our results
this quarter, and with the successful closing of the Cyota acquisition and our
recent wins in the financial sector, we believe we are poised to garner a
significant share of the consumer market in 2006."
Prior Financial Guidance
The Company's anticipated results for the fourth quarter of 2005 are
consistent with the Company's guidance previously provided in its press
release and related conference call on December 5, 2005. At that time, the
Company indicated that it anticipated fourth quarter revenue in the range of
$78 million to $82 million, GAAP earnings per diluted share in the range of
$0.09 to $0.16, and non-GAAP earnings per diluted share in the range of $0.15
to $0.19. At the time the Company provided non-GAAP earnings per diluted
share guidance it defined non-GAAP earnings per diluted share as GAAP earnings
per diluted share, less a restructuring charge that was anticipated to be in
the range of $3 million to $6 million for the fourth quarter. It was
anticipated at that time that this restructuring charge would have reduced the
Company's GAAP earnings per diluted share in the range of $0.03 to $0.06.
Additionally the Company provided guidance at that time that it anticipated at
least a 20 percent sequential increase in authenticator shipments (primarily
driven by consumer sales) in addition to a book to bill ratio significantly
greater than 1.0 to 1.
Use of Non-GAAP Financial Measures
The Company is providing non-GAAP financial measures to ensure that its
preliminary results for the fourth quarter of 2005 can be accurately
reconciled to its previously provided financial guidance. The below table
presents the most directly comparable GAAP financial measure and reconciles
each non-GAAP financial metric to the comparable GAAP measure.
Fourth Quarter Preliminary Fourth
Financial Results Quarter Financial
Guidance Provided Results Provided
December 5, 2005 January 9, 2005
Earnings per diluted share (non-GAAP) $0.15 to $0.19 $0.16 to $0.17
Net restructuring charge per share $(0.03) to $(0.06) $(0.02) to $(0.03)
Net tax benefit per share -- $0.01 to $0.05
Net adjustment $(0.03) to $(0.06) $(0.01) to $0.02
Earnings per diluted share (GAAP) $0.09 to $0.16 $0.15 to $0.19
The Company's financial results for the fourth quarter of 2005 do not
reflect the acquisition of Cyota, Inc., the privately held online security and
anti-fraud solutions company that RSA Security recently acquired. This
acquisition closed on December 30, 2005. Beginning in the first quarter of
2006, RSA Security will report full financial results reflecting the combined
operations of the two companies.
First Quarter 2006 Financial Update
A significant portion of the authentication credentials shipped during the
fourth quarter of 2005 and those scheduled to be shipped over the coming
quarters are consumer authentication credentials. The current guidance
reflects the fact that most of these consumer authentication credentials are
sold on a subscription basis, with much of the revenue associated with these
units being recognized over longer term subscription contracts. Additionally,
guidance for the first quarter of 2006 is only current as of today, Monday
January 9, 2006; the Company undertakes no obligation to update its estimates.
* The Company currently expects first quarter 2006 revenue to be in the
range of $81 million to $84 million, excluding any revenue associated
with the operations of Cyota.
* The Company is also reaffirming its previously issued guidance with
regard to the operations of Cyota, stating that it anticipates revenue
from Cyota to contribute in the range of $22 million to $25 million for
the full year 2006.
* Additionally, the Company indicated that it anticipates Cyota's revenue
contribution for the first quarter of 2006 to be in the range of $3
million to $4 million.
* The Company anticipates revenue for the first quarter of 2006 to be in
the range of $84 million to $88 million on a combined basis.
Final financial results for the fourth quarter and for the year-ended
December 31, 2005, and full guidance for the first quarter of 2006 will be
issued on Monday, January 30, 2006, after the close of the market. For dial-
in and live Web cast information for the company's final financial results
conference call for the fourth quarter and year-ended December 31, 2005, refer
to the Company's press release dated January 4, 2006.
Conference Call and Web Cast Information
RSA Security will host a conference call today at 5:30 p.m. ET. A live
Web cast of this conference call will be available on the "Investor" page of
the Company's Web site; http://www.RSASecurity.com. To access this call by
telephone, dial (866) 592-8995 or (706) 634-1223. A replay will be available
through midnight on January 16, 2006 at (800) 642-1687 or (706) 645-9291.
Both live and replay numbers have a pass code of 4163196.
About RSA Security Inc.
RSA Security Inc. is the expert in protecting online identities and
digital assets. The inventor of core security technologies for the Internet,
the company leads the way in strong authentication and encryption, bringing
trust to millions of user identities and the transactions that they perform.
RSA Security's portfolio of award-winning identity & access management
solutions helps businesses to establish who's who online -- and what they can
do.
With a strong reputation built on a 20-year history of ingenuity,
leadership and proven technologies, we serve approximately 19,000 customers
around the globe and interoperate with more than 1,000 technology and
integration partners. For more information, please visit
http://www.rsasecurity.com
RSA, BSAFE, SecurWorld and SecurID are either registered trademarks or
trademarks of RSA Security Inc. in the United States and/or other countries.
All other products and services mentioned are trademarks of their respective
companies.
This press release contains forward-looking statements regarding RSA
Security's preliminary financial results for the fourth quarter of 2005 and
financial guidance for future periods. These statements involve a number of
risks and uncertainties. Some of the important factors that could cause
actual results to differ materially from those indicated by the forward-
looking statements are our final analysis and review of RSA Security's
financials for the fourth quarter, our ability to successfully integrate
Cyota's employees and operations, general economic conditions, changes in our
operating expenses, the long and unpredictable nature of the sales cycle for
some of our products, the timing of the introduction or enhancement of our
products and our competitors' and strategic partners' products, changes in
product pricing, including changes in competitors' pricing policies,
development and performance of our direct and indirect distribution channels,
delays in product development, competitive pressures, changes in customer and
market requirements and standards, market acceptance of new products and
technologies, technological changes in the computer industry, and the risk
factors detailed from time to time in RSA Security's periodic reports and
registration statements filed with the Securities and Exchange Commission,
including, without limitation, RSA Security's Annual Report on Form 10-K filed
on March 14, 2005 and Quarterly Report on Form 10-Q filed on November 7,
2005.
Press contact: Financial contact:
Matt Buckley Jeremiah Sisitsky
RSA Security Inc. RSA Security Inc.
(781) 515-66212 (781) 515-6065
mbuckley@rsasecurity.com jsisitsky@rsasecurity.com
SOURCE RSA Security Inc.
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Related links:
http://www.rsasecurity.com
CONTACT:
Matt Buckley of RSA Security Inc.,
+1-781-515-66212, mbuckley@rsasecurity.com; or Jeremiah Sisitsky
of RSA Security Inc., +1-781- 515-6065, jsisitsky@rsasecurity.com
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