Achieves Non-GAAP Net Income; GAAP Loss Narrows
REDWOOD CITY, Calif., May 1 /PRNewswire-FirstCall/ -- Tumbleweed(R)
Communications Corp. (Nasdaq: TMWD), an industry leader in managed file
transfer and email security, today reported financial results for its first
quarter ended March 31, 2008. These results included revenue growth,
generation of cash, a strong contribution from IP licensing fees, increased
orders for core products, and continued improvement in channel
contribution.
Revenue was $15.3 million for the quarter ended March 31, 2008,
compared to $15.0 million for the same period last year. Non-GAAP net
income for the first quarter of 2008 was $444,000, or $0.01 per share,
compared to a non-GAAP net loss of $368,000, or $(0.01) per share, in the
first quarter of 2007. Non-GAAP results exclude expenses for stock-based
compensation and intangible asset amortization of a combined $1.6 million
for the first quarter of 2008 and a combined $1.5 million for the first
quarter of 2007. On a GAAP basis, the net loss for the first quarter of
2008 was $1.1 million, or $(0.02) per share, compared to a net loss of $1.9
million, or $(0.04) per share, for the first quarter of 2007. A
reconciliation of GAAP and non-GAAP results is presented in the tables
below. Cash and cash equivalents were $28.5 million at March 31, 2008, an
increase of $2.2 million from $26.3 million at December 31, 2007.
"We had solid results this quarter -- there was 21 percent
year-over-year growth in orders for our core products and we built backlog.
I'm encouraged that we're beginning to reap rewards from the groundwork we
laid in 2007 and our Q1 results reflect this," said James P. Scullion,
Chief Executive Officer of Tumbleweed. "We exceeded our goals for top and
bottom line results, and added to our cash position. We had a strong
contribution from the licensing of our intellectual property, and we
continued to increase the amount of business being done with our channel
partners, a key initiative for us in 2008.
"Although the current economic climate is challenging, we're optimistic
about the opportunity we see, and we remain focused on continually
improving our financial performance," continued Scullion. "Our balance
sheet strengthened considerably during the quarter as we generated more
than $2 million in cash, decreased collection cycles and maintained a
strong level of deferred revenues."
Product revenue for the first quarter of 2008 was $5.0 million,
compared to $5.9 million in the first quarter of 2007. Service revenue for
the first quarter of 2008 was $8.2 million, compared to $9.0 million in the
first quarter of 2007. Revenue from intellectual property was $2.1 million
in the first quarter of 2008, as compared to $96,000 in the first quarter
of 2007. Backlog at March 31, 2008, which includes deferred revenue,
increased by $1.6 million from the level at December 31, 2007.
Recent Highlights
-- Tumbleweed's core products represented 89% of non-intellectual
property revenue for the quarter ended March 31, 2008, as compared to
88% in the first quarter of 2007 and 84% in the fourth quarter of
2007. These core products include award-winning SecureTransport(TM),
Secure Messenger(TM) and MailGate(R), a suite of managed file transfer
and email security solutions that enable customers to safely utilize
the Internet for mission-critical communications.
-- Tumbleweed's channel partners delivered 52% of the company's
non-renewal commercial bookings for the first quarter of 2008 compared
with 29% for the first quarter of 2007. New channel partners in the
first quarter included Dimension Data and Gotham Technology Group in
the U.S., DNS Arrow in Europe, Sigma 5 in Australia, NetEdge Computing
Solutions, Nortech Infonet, SoftCell Technologies, and Texport
Technologies in India and ACW Distribution and Avnet Azure in
Malaysia.
-- Tumbleweed announced the launch of the FTP Analyzer, a diagnostic tool
that effectively detects and reports rogue and unsecured FTP (File
Transfer Protocol) traffic. As file sizes have grown, FTP has emerged
as a new target for security attacks, and numerous high-profile data
breaches have occurred. The FTP Analyzer provides IT departments with
the ability to monitor FTP activity on their networks, and assess
their need for a managed file transfer solution.
-- Tumbleweed announced the availability of SecureTransport version 4.8.
SecureTransport enables enterprises to securely exchange files of any
size over the Internet. SecureTransport 4.8 includes key new features
such as delegated administration, enhanced security, expanded platform
options and support for a Fiber SAN Card with 4.8 appliances.
Financial Outlook
Second Quarter of 2008:
-- Tumbleweed currently expects total revenue for the second quarter of
2008 to be between $14.5 million and $16.0 million.
-- Non-GAAP results are expected to range from $(0.01) to $0.01 per
share. Non-GAAP results exclude expected costs for stock-based
compensation expense of $(0.03) per share for the second quarter of
2008.
-- GAAP results are expected to range from $(0.04) to $(0.02) per share.
-- Per share amounts are based on an estimated 51.2 million basic and
53.1 million fully diluted shares outstanding.
Conference Call Information:
Tumbleweed management will host a conference call on Thursday, May 1,
2008 at 2:00 p.m. PDT (5:00 p.m. EDT) to discuss the first quarter 2008
results. The call can be accessed by dialing (800) 366-3908 and giving the
company name, "Tumbleweed." Participants are asked to call the assigned
number approximately 10 minutes before the conference call begins. A replay
of the conference call will be available after 5:00 p.m. PDT on May 1, 2008
through May 14, 2008 by dialing (800) 405-2236 and entering pass code
11111876#. The conference call and supplemental financial information will
also be available on the investor relations portion of the Tumbleweed
website.
Safe Harbor Statement
Except for the historical information contained herein, the matters
discussed in this press release may constitute forward-looking statements
that could cause actual results to differ materially from those currently
expected, particularly with respect to Tumbleweed's financial outlook for
the second quarter of 2008 (including estimated revenue, loss, loss per
share, income and income per share on both a GAAP and a non-GAAP basis), as
well as Tumbleweed's beliefs about its opportunities, improved financial
performance, and future growth and success. In some cases, forward-looking
statements can be identified by terminology such as "may," "will,"
"should," "potential," "continue," "expects," "anticipates," "intends,"
"plans," "believes," "estimates," and similar expressions. For further
cautions about the risks of investing in Tumbleweed, we refer you to the
documents Tumbleweed files from time to time with the Securities and
Exchange Commission, particularly Tumbleweed's Form 10-K filed March 17,
2008 and such filings for the periods referred to above, to be filed
subsequently.
Tumbleweed assumes no obligation to update information contained in
this press release. Although this release may remain available on
Tumbleweed's website or elsewhere, its continued availability does not
indicate that Tumbleweed is reaffirming or confirming any of the
information contained herein as of a later date.
Non-GAAP Information
The non-GAAP financial information included in this press release is
not prepared in accordance with GAAP as it excludes amortization of
intangible assets and stock-based compensation expense. Management believes
that the presentation of non-GAAP information may provide useful
information to investors because Tumbleweed has historically provided this
information and understands that some investors consider it useful in
evaluating Tumbleweed's expenses. Management also uses this non-GAAP
information, along with GAAP information, in evaluating Tumbleweed's
expenses and comparing Tumbleweed's performance with that of its
competitors. The non-GAAP results should not be considered a substitute for
financial information presented in accordance with generally accepted
accounting principles, and may be different from non-GAAP measures used by
other companies.
About Tumbleweed
Tumbleweed Communications Corp. (Nasdaq: TMWD), an industry leader in
managed file transfer and email security, provides enterprise-class
solutions to organizations of all sizes. Tumbleweed's innovative products
enable organizations to effectively manage and protect business-critical
Internet communications, with capabilities that span secure file transfer,
encryption, data loss prevention, and email security. Tumbleweed has more
than 3,300 customers worldwide, including blue-chip companies across an
array of industries such as Technology, Retail, Finance, Healthcare,
Manufacturing, Consumer Packaged Goods, Telecom, Energy, and the U.S.
Government. The world's most security conscious organizations rely upon
Tumbleweed technology including Bank of America Securities, JP Morgan Chase
& Co., the U.S. Food and Drug Administration, and the U.S. Department of
Defense. Tumbleweed's award-winning products build on 14 years of R&D and
27 security patents in the U.S. alone -- many of which are licensed by
other security vendors. More information can be found at
http://www.tumbleweed.com.
Tumbleweed, SecureTransport, Secure Messenger and MailGate are either
registered trademarks or trademarks of Tumbleweed Communications Corp. in
the United States and/or other countries. All other trademarks are the
property of their respective owners.
Contact:
Tumbleweed Communications Corp.
Dan Matsui, 949-474-4300 (Investor Relations)
d.matsui@allencaron.com
or
SHIFT Communications
Dan Gould, 415-591-8428 (Media Relations)
dgould@shiftcomm.com
[Financial tables next pages]
Tumbleweed Communications Corp.
Condensed Consolidated Statements of Operations
March 31, 2008
(in 000s, except per share data)
Three Months Ended
March 31,
(unaudited)
2008 2007
REVENUES
Product revenue $4,998 $5,897
Service revenue 8,212 9,022
Intellectual property and other revenue 2,050 96
NET REVENUE 15,260 15,015
COST OF REVENUE
Cost of product revenue 1,370 1,756
Provision for excess inventory - 164
Cost of service revenue (1) 1,746 1,899
Amortization of intangible assets 201 234
GROSS PROFIT 11,943 10,962
OPERATING EXPENSES
Research and development (1) 3,857 3,896
Sales and marketing (1) 6,595 6,617
General and administrative (1) 2,793 2,487
Amortization of intangible assets 32 183
TOTAL OPERATING EXPENSES 13,277 13,183
OPERATING LOSS (1,334) (2,221)
Other income, net 224 339
NET LOSS BEFORE TAXES (1,110) (1,882)
Provision for income taxes 25 13
NET LOSS $(1,135) $(1,895)
BASIC AND DILUTED NET LOSS PER SHARE $(0.02) $(0.04)
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 51,150 50,840
DILUTED 51,150 50,840
RECONCILIATION TO NON-GAAP NET INCOME (LOSS)
NET LOSS $(1,135) $(1,895)
Stock-based compensation expense 1,346 1,110
Amortization of intangible assets 233 417
NON-GAAP NET INCOME (LOSS) $444 $(368)
NON-GAAP BASIC NET INCOME (LOSS) PER SHARE $0.01 $(0.01)
NON-GAAP DILUTED NET INCOME (LOSS) PER SHARE $0.01 $(0.01)
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 51,150 50,840
DILUTED 52,193 50,840
(1) Stock-based compensation expense is
classified as follows:
Cost of service revenue $38 $26
Research and development 274 303
Sales and marketing 400 220
General and administrative 634 561
$1,346 $1,110
Tumbleweed Communications Corp.
Condensed Consolidated Balance Sheets
March 31, 2008
(in 000s)
3/31/2008 12/31/2007
ASSETS (unaudited) (unaudited)
CURRENT ASSETS
Cash and cash equivalents $28,517 $26,299
Accounts receivable, net 9,273 13,074
Other current assets 2,750 1,733
TOTAL CURRENT ASSETS 40,540 41,106
Goodwill 48,074 48,074
Intangible assets, net - 233
Property and equipment, net 2,096 2,038
Other assets 392 385
TOTAL ASSETS $91,102 $91,836
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $288 $820
Accrued liabilities 6,189 6,795
Deferred revenue 21,674 20,996
TOTAL CURRENT LIABILITIES 28,151 28,611
LONG TERM LIABILITIES
Deferred revenue, excluding current portion 4,814 5,401
Other long term liabilities 13 13
TOTAL LONG TERM LIABILITIES 4,827 5,414
TOTAL LIABILITIES 32,978 34,025
STOCKHOLDERS' EQUITY
Common stock 52 52
Additional paid-in capital 366,514 365,155
Treasury stock (796) (796)
Accumulated other comprehensive income 183 94
Accumulated deficit (307,829) (306,694)
TOTAL STOCKHOLDERS' EQUITY 58,124 57,811
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $91,102 $91,836
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