Performance Reflects the Continued Execution
Of Organic Expansion, Acquisition Strategy
DENVER, Aug. 9 /PRNewswire/ -- RMI.NET, Inc. (Nasdaq: RMII), a national
e-business and convergent communications company, today reported a 196 percent
increase in second quarter revenue. The company also announced that it
anticipates continued strong growth for the remainder of the year as a result
of its recent acquisitions, and the execution of an aggressive customer
cultivation and retention strategy.
(Photo: http://www.newscom.com/cgi-bin/prnh/19990628/RMILOGO )
Total revenue for the second quarter of 1999 climbed by 196 percent to
$6.39 million from the $2.16 million reported for the second quarter of 1998.
Total revenues for the first six months of 1999 rose to $11.65 million, a
196 percent increase from $3.94 million generated in the same period in 1998.
"RMI.NET completed a number of significant steps during the second quarter
of 1999 that contributed to our revenue growth and further positioned the
company to execute its operating strategy," said Douglas H. Hanson, chairman
and chief executive officer for RMI.NET. "Our organic expansion and an active
acquisition program have made RMI.NET a premier commerce solutions provider.
We are enabling our clients to fully realize the commercial potential of the
Internet."
Hanson noted that RMI.NET is now uniquely positioned in the industry to
offer customers the three major components of a successful commerce solutions
provider: e-business applications services, Internet access services, and
Internet hosting and Internet marketing services. RMI.NET will begin to
aggressively market these services through the remainder of 1999 and beyond.
"As part of our stated strategy of leveraging existing and acquired
customer relationships and increasing revenue per customer, we intend to
aggressively cultivate all of these newly acquired telecommunications
customers through product and service bundling, and the up-sale promotion of
higher margin services," Hanson said.
Second Quarter Milestones
Second quarter financial and operational milestones for RMI.NET included:
-- The addition of more than 6,000 new Internet subscribers through the
acquisition of three Internet service providers (ISPs) during the
quarter;
-- The expansion of business-to-business Internet commerce capabilities
through the acquisition of Seattle-based CommerceGate Corp.;
-- A $5.8 million increase in shareholder equity through a successful
warrant call;
-- The launch of e-SELL(R) "Small Business Solution," a virtual storefront
e-commerce offering designed to meet the online needs of small
businesses;
-- Teaming with industry leaders Microsoft Corp., Inc., Compaq Computer
Corp., and Intel Corp. to offer e-commerce products for medium-sized
businesses;
-- The launch of Simplified Domains, a revolutionary new Internet domain
registration system;
-- The introduction of e-commerce custom portals through Infohiway.
Infohiway delivered more than 7.5 million page views during the second
quarter; and
-- A favorable court ruling in the Internet Communications Corp. (INCC)
litigation.
Initiatives for Second Half of 1999
RMI.NET corporate initiatives for the second half of 1999 include:
-- Revenue growth targeted at 50 percent more than the first half of 1999;
-- Further efficiencies from the consolidation of acquisitions;
-- Expansion of small and middle market corporate e-commerce solutions
relationships;
-- The initiation of an aggressive marketing campaign demonstrating
services for existing and newly acquired customers;
-- Support of continued growth through restructured debt financing; and
-- Bringing online new information systems infrastructure.
Hanson noted that the acquisitions completed during the quarter fulfilled
a number of key strategic initiatives and are expected to add approximately
$4.0 million to total revenues for the remainder of 1999.
During the quarter, total corporate customer count increased to more than
12,400 relationships, the majority of which the company intends to expand into
multiple service accounts. In addition, total customer relationships grew to
more than 63,000 by the end of the quarter.
Financial Results
Gross margins for the quarter were $3.28 million, compared to $1.2 million
in the year ago period. The company continues executing its strategy of
generating revenue growth and long-term profitability by migrating new
low-cost customers, to incremental higher fee and margin services. RMI.NET
anticipates completing the transition of newly acquired customers to full
service relationships over the next several quarters.
SG&A expenditures excluding depreciation and amortization increased to
$5.79 million for the second quarter of 1999, compared to $1.63 million during
the second quarter of 1998. Depreciation and amortization charges were
$1.46 million for the second quarter of 1999 versus $0.25 million in the
second quarter of 1998. The relative increase in the above costs was
primarily a result of expenses associated with the company's active
acquisition program, costs related to the expansion of the Web Solutions
division and costs to ramp sales efforts in the Alabama call center. The
company expects to realize greater economies of scale and improve operating
efficiencies in the near future as it consolidates the operations of recent
acquisitions. Net loss for the quarter was $4.14 million, versus net losses
of $0.72 million in the prior year period.
Financial results
Financial Highlights as of June 30 2Q98 2Q99
Revenue
Communication Services $1,790,000 $5,394,000
Web Solutions $372,000 $995,000
$2,162,000 $6,389,000
Cost of revenue earned
Communication Services $854,000 $2,858,000
Web Solutions $101,000 $245,000
$955,000 $3,103,000
Gross Margin $1,207,000 $3,286,000
Selling, general &
administrative expenses $1,625,000 $5,792,000
Depreciation and Amortization $249,000 $1,462,000
Operating (loss) income ($667,000) ($3,968,000)
Other income (expense) ($52,000) ($97,000)
Net income (loss) ($719,000) ($4,065,000)
Preferred Stock Dividends $0 $79,000
Net loss applicable to common
Shareholders ($719,000) ($4,144,000)
Basic and diluted (loss) income
per common share ($0.10) ($0.39)
EBITDA ($41,000) ($2,506,000)
Company Outlook
The company has implemented a number of key sales and marketing
initiatives for the second half of 1999 designed to leverage its acquired
operations to increase revenue and margin per customer account. In addition,
company management is actively pursuing greater operating efficiencies at the
department levels to reduce costs, improve corporate expense ratios and fuel
further organic customer growth.
RMI.NET has invested heavily in a new management information system to be
brought on-line during second half of 1999 that will integrate and streamline
customer billing, management, service and data mining, as well as accounting
and financial reporting functions. The company anticipates that this new
system will enable it to capture the economies of scale inherent in its recent
and future acquisitions faster and with less cost and effort than has been
possible with its current information system.
Denver-based RMI.NET, Inc., formerly Rocky Mountain Internet, is a
national commerce solutions provider focusing on turnkey e-business
applications and convergent communications. RMI.NET has developed and
provides small and medium-sized companies with scalable e-business
capabilities; customized web page development and hosting; nationwide Internet
dialup and dedicated access; digital subscriber line (DSL) service; and local,
long distance and enhanced telephony. RMI.NET also provides Internet, and
data and voice communications services to consumer households. The company
wholly owns a proprietary portal site and search engine, Infohiway, at
http://www.infohiway.com; and develops and markets Simplified Domains, a new and
emerging Internet domain registration, at http://www.simplifieddomains.com. For more
information on RMI.NET, call (800) 864-4327, or visit the company's web site
at http://www.rmi.net.
This press release might contain forward-looking statements. These
forward-looking statements are subject to risks and uncertainties. Actual
results may differ materially from such forward-looking statements as a result
of risks and uncertainties which are described in the cautionary statements
section of the company's 10K dated December 31, 1998, and may include other
risks described in all Securities and Exchange Commission filings submitted as
of this date.
SOURCE RMI.NET, Inc.
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http://www.prnewswire.com/comp/139760.html or fax,
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CONTACT:
Mark Stutz of RMI.NET, Inc., 303-313-0672,
mark.stutz@corp.rmi.net
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