Company To Host Conference Call This Afternoon at 4:30 p.m. ET
BEDFORD, Mass., April 27 /PRNewswire-FirstCall/ -- RSA Security Inc.
(Nasdaq: RSAS) today reported financial results for the first quarter ended
March 31, 2005.
Revenue for the first quarter of 2005 increased 5% to $75.6 million from
$72.0 million for the first quarter of 2004. Net income for the first quarter
of 2005 increased 12% to $7.2 million, or $0.10 per diluted share, from $6.5
million, or $0.10 per diluted share, for the comparable period a year ago.
"While we experienced slower than anticipated uptake rates during the
first quarter, we remain confident in our ability to build upon our leadership
position in identity management," said Art Coviello, president and chief
executive officer of RSA Security.
First-Quarter Financial Overview
* Revenue: Revenue for the first quarter of 2005 increased 5% to $75.6
million from $72.0 million for the first quarter of 2004. The Company
experienced a slower than expected growth rate in software sales in
both Europe and the Americas. RSA Security's book-to-bill ratio for
the quarter was approximately 1.0 to 1, and the Company closed the
quarter with $59.2 million in combined backlog and deferred revenue.
This represents a 19% increase from RSA Security's $49.9 million in
backlog and deferred revenue at March 31, 2004.
* Net Income: Net income for the first quarter of 2005 increased 12% to
$7.2 million, or $0.10 per diluted share, from $6.5 million, or $0.10
per diluted share, from the first quarter of 2004.
* Cash Position: Cash, cash equivalents, and marketable securities
decreased to $282.3 million at March 31, 2005 from $289.7 million at
December 31, 2004. During the quarter, in accordance with the
Company's approved stock buyback plan, RSA Security repurchased
750,000 shares of its common stock for $12.4 million.
Operational Overview
* Customers and Partners: RSA Security shipped product to more than
5,400 customers in the first quarter, including 622 new customers.
While the technology, financial services, professional services and
manufacturing sectors generated the most revenue for the Company,
revenue from the technology vertical market was lower than
anticipated. RSA Security sold approximately 77% of its RSA
SecurID(R) products through its indirect channel during the first
quarter of 2005, consistent with the first quarter of 2004.
Business Outlook
RSA Security's financial guidance for the second quarter of 2005 is only
current as of today, Wednesday, April 27th, 2005, and the Company undertakes
no obligation to update its estimates:
* Total quarterly revenue in the range of $76 million to $80 million.
* Diluted earnings per share in the range of $0.10 to $0.13.
Conference Call Details
In conjunction with this announcement, RSA Security will host a conference
call today at 4:30 p.m. (ET) to discuss the Company's financial results,
highlights of the quarter and business strategy. A live webcast of this
conference call will be available on the "Investor" page of the Company's
website, and a webcast archive will be available for approximately three
months. To access this call by telephone, dial (800) 811-0667 or (913) 981-
4901. A replay will be available through midnight on Tuesday, May 3, 2005 at
888-203-1112 or 719-457-0820. Both live and replay numbers have a pass code
of 2614831.
About RSA Security Inc.
RSA Security Inc. helps organizations confidently protect identities and
information access. The company secures more than 15 million user identities,
safeguards trillions of business transactions annually, and manages the
confidentiality of data in tens of thousands of applications worldwide. RSA
Security's portfolio of award-winning solutions -- including identity & access
management, secure mobile & remote access, secure enterprise access, secure
transactions and consumer identity protection -- sets the standard in the
industry. Our strong reputation is built on a 20-year history of ingenuity,
leadership and proven technologies, and our more than 17,000 customers around
the globe. Together with more than 1,000 technology and integration partners,
RSA Security inspires confidence in everyone to experience the power and
promise of the Internet. For more information, please visit
http://www.rsasecurity.com.
RSA 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 financial guidance for the second quarter of 2005. 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 general economic conditions,
including the global economy, changes in our operating expenses, 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.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
2005 2004
Revenue
Products $54,634 $55,198
Maintenance and professional services 20,984 16,770
Total revenue 75,618 71,968
Cost of revenue
Products 8,715 8,221
Maintenance and professional services 6,092 5,605
Total cost of revenue 14,807 13,826
Gross profit 60,811 58,142
Costs and expenses
Research and development 15,954 14,709
Marketing and selling 29,142 26,327
General and administrative 8,347 7,573
Total 53,443 48,609
Income from operations 7,368 9,533
Interest expense and other 1,891 (1,345)
Income (loss) from investing activities -- (119)
Income before provision for income taxes 9,259 8,069
Provision for income taxes 2,037 1,614
Net income $7,222 $6,455
Basic earnings per share
Per share amount $0.10 $0.11
Weighted average shares 71,462 61,177
Diluted earnings per share
Per share amount $0.10 $0.10
Weighted average shares 71,462 61,177
Effect of dilutive equity instruments 3,678 4,369
Adjusted weighted average shares 75,140 65,546
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
March 31, December 31,
2005 2004
ASSETS
Current assets
Cash and cash equivalents $54,163 $68,210
Marketable securities 228,126 221,509
Accounts receivable (less allowance for
doubtful accounts of $1,729 in 2005 and
$1,672 in 2004) 45,992 53,494
Inventory 3,563 3,465
Prepaid expenses and other assets 7,886 8,702
Refundable income taxes 3,146 3,146
Deferred taxes 2,623 2,459
Total current assets 345,499 360,985
Property and equipment, net 69,690 70,700
Other assets
Goodwill, net 172,736 172,736
Deferred taxes 8,222 8,222
Other 14,371 12,184
Total other assets 195,329 193,142
Total assets $610,518 $624,827
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Convertible debentures -- --
Accounts payable $9,518 $10,995
Accrued payroll and related benefits 10,423 18,964
Accrued expenses and other liabilities 20,968 18,952
Current portion of accrued restructurings 5,674 6,031
Income taxes accrued and payable 21,684 22,479
Deferred revenue 48,784 51,135
Total current liabilities 117,051 128,556
Deferred taxes, long-term -- --
Deferred compensation liability 6,360 6,057
Accrued restructurings, long-term 12,734 13,682
Total liabilities 136,145 148,295
Stockholders' equity 474,373 476,532
Total liabilities and shareholders'
equity $610,518 $624,827
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
March 31,
2005 2004
Cash flows from operating activities
Net income $7,222 $6,455
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,895 2,964
Tax benefit from exercise of stock options 819 2,035
Amortization of convertible debentures deferred
financing costs -- 401
Non cash warrant accretion -- 354
Decrease in Crosby Finance, LLC fair value -- 119
Increase (decrease) in cash from changes in:
Accounts receivable 7,333 (4,400)
Inventory (98) 542
Prepaid expenses and other assets 727 2,488
Accounts payable (1,440) 729
Accrued payroll and related benefits (8,384) (5,853)
Accrued expenses and other liabilities 253 (1,368)
Accrued restructurings (1,305) (2,583)
Refundable income taxes and income taxes
accrued and payable (781) 1,099
Deferred revenue (2,397) 3,965
Net cash provided by operating activities 4,844 6,947
Cash flows from investing activities
Purchase of marketable securities (64,325) (32,870)
Sale/maturities of marketable securities 57,234 --
Purchases of property and equipment (2,209) (1,451)
Other (636) (398)
Net cash used for investing activities (9,936) (34,719)
Cash flows from financing activities
Proceeds from exercise of stock options and
purchase plans 3,620 7,204
Share repurchase (12,441) --
Net cash (used for) provided by
financing activities (8,821) 7,204
Effect of exchange rate changes on cash and
cash equivalents (134) (640)
Net decrease in cash and cash equivalents (14,047) (21,208)
Cash and cash equivalents, beginning of period 68,210 207,323
Cash and cash equivalents, end of period $54,163 $186,115
Supplemental Financial Data
(Unaudited)
(In thousands, except per share data)
Three Months Ended
March 31, June 30, Sept 30, Dec 31, March 31,
2004 2004 2004 2004 2005
Revenue
Enterprise
solutions $66,601 $68,742 $70,542 $73,340 $70,185
Developer
solutions 5,367 6,835 6,189 9,891 5,433
Total $71,968 $75,577 $76,731 $83,231 $75,618
Enterprise
solutions 93% 91% 92% 88% 93%
Developer
solutions 7% 9% 8% 12% 7%
Total 100% 100% 100% 100% 100%
Products $55,198 $56,455 $57,776 $63,068 $54,634
Maintenance
and
professional
services 16,770 19,122 18,955 20,163 20,984
Total $71,968 $75,577 $76,731 $83,231 $75,618
Products 77% 75% 75% 76% 72%
Maintenance
and
professional
services 23% 25% 25% 24% 28%
Total 100% 100% 100% 100% 100%
Domestic $40,467 $42,559 $42,942 $46,731 $41,117
International 31,501 33,018 33,789 36,500 34,501
Total $71,968 $75,577 $76,731 $83,231 $75,618
Domestic 56% 56% 56% 56% 54%
International 44% 44% 44% 44% 46%
Total 100% 100% 100% 100% 100%
Statements of
Operations
Data
Gross profit $58,142 $62,114 $62,905 $69,113 $60,811
Gross margin 80.8% 82.2% 82.0% 83.0% 80.4%
Total
operating
expenses $48,609 $50,569 $51,268 $55,109 $53,443
Income from
operations $9,533 $11,545 $11,637 $14,004 $7,368
Operating
margin(1) 13.2% 15.3% 15.2% 16.8% 9.7%
Interest
expense and
other $(1,345) $(1,623) $(935) $625 $1,891
Income (loss)
from
investing
activities $(119) $49 $354 $(74) --
Provision
for income
taxes $1,614 $1,995 $2,315 $2,745 $2,037
Net income $6,455 $7,976 $8,741 $11,810 $7,222
Diluted
earnings per
share $0.10 $0.12 $0.13 $0.16 $0.10
Other Financial
Data
Gross
margin --
products 85.2% 86.1% 86.2% 87.5% 84.0%
Gross
margin --
maintenance
and
professional
services 66.6% 70.6% 69.2% 69.1% 71.0%
Authentica-
tion
credentials (4)927,000 905,000 1,033,000 1,021,000 1,039,000
Cash and cash
equivalents
and marketable
securities $219,009 $244,631 $255,996 $289,719 $282,289
Deferred
revenue
balance $38,590 $40,056 $42,526 $51,135 $48,784
Book to bill
ratio (2) 1.0 1.1 1.0 1.1 1.0
Day sales
outstanding
(DSO) 49 42 50 59 55
Current ratio 1.4 1.6 1.7 2.8 3.0
Debt to
equity ratio 0.3 0.2 0.2 NA NA
Cash flow
from
operations $6,947 $19,854 $11,872 $15,640 $4,844
Cash flow
from
operations
per diluted
share (3) $0.11 $0.30 $0.19 $0.21 $0.06
(1) Operating margin is equal to total income from operations as a
percentage of total revenue for the period presented.
(2) The book to bill ratio is equal to the ratio of total orders booked
for the period as compared to total revenue for the period.
(3) Cash flow from operations per diluted share is calculated as cash flow
from operations divided by dilutive weighted average shares
outstanding during the period.
(4) Includes RSA SecurID tokens (both enterprise and consumer) as well as
software tokens, smart cards and USB.
Condensed Consolidated Statements of Operations
(Unaudited)
The following table sets forth certain consolidated financial data as a
percentage of our total revenue:
Three Months Ended
March 31, Percentage
Increase
(Decrease)
2005 2004 in Dollars
Revenue
Products 72.2% 76.7% (1.0)%
Maintenance and professional
services 27.8 23.3 25.1
Total revenue 100.0 100.0 5.1
Cost of revenue
Products 11.5 11.4 6.0
Maintenance and professional
services 8.1 7.8 8.7
Total cost of revenue 19.6 19.2 7.1
Gross margin 80.4 80.8 4.6
Costs and expenses
Research and development 21.1 20.4 8.5
Marketing and selling 38.5 36.6 10.7
General and administrative 11.1 10.5 10.2
Total 70.7 67.5 9.9
Income from operations 9.7 13.3 (22.7)
Interest expense and other 2.5 (1.9) (240.6)
Income from investing activities 0.0 (0.2) (100.0)
Income before provision for income
taxes 12.2 11.2 14.7
Provision for income taxes 2.6 2.2 26.2
Net income 9.6% 9.0% 11.9%
Press contact: Financial contact:
Matt Buckley Jeremiah Sisitsky
RSA Security Inc. RSA Security Inc.
(781) 515-6212 (781) 515-6065
mbuckley@rsasecurity.com jsisitsky@rsasecurity.com
SOURCE RSA SECURITY, INC.
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Related links:
http://www.rsasecurity.com
CONTACT:
Press contact: Matt Buckley,
+1-781-515-6212, mbuckley@rsasecurity.com, or Financial contact:
Jeremiah Sisitsky, +1-781-515-6065, jsisitsky@rsasecurity.com,
both of RSA Security Inc.
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