Critical Path Announces Third Quarter 2002 Results

Revenue for the third quarter of 2002 was $19.2 million, compared to $22.4 million in the second quarter of 2002. Cash operating expenses, excluding special charges and depreciation, were $27.4 million in the third quarter of 2002, compared with $28.0 million in the second quarter of 2002.

 
Highlights for the quarter include:   
New customer wins and expansion of Critical Path products at existing customers including O2, BEA, Orange and La Poste
Sequential decrease in operating expenses
Increased services revenue
Increased professional services margin and utilization rates  
Based on Generally Accepted Accounting Principles (GAAP), net loss for the third quarter of 2002 was $26.0 million compared to a net loss of $35.6 million in the second quarter of 2002. Net loss attributable to common shares for the third quarter of 2002 was $29.6 million, or $0.38 per share compared to a net loss of $38.8 million, or $0.50 per share in the second quarter of 2002.

Earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding special charges, amounted to a loss of $8.2 million in the third quarter, compared to an EBITDA loss of $5.6 million in the second quarter of 2002.

"Corporate and carrier spending remains weak, resulting in a disappointing top-line result for Critical Path and most companies in our sector," said William McGlashan, Jr., Critical Path chairman and chief executive officer. "On a more positive note, we are encouraged by improving margins in our hosted messaging, maintenance and professional services businesses, the global expansion of our partner program and a sequential decrease in expenses. Our business outlook is positive based on our managed messaging alliance with HP, a strong pipeline of business, and a continued focus on controlling our expenses."

Guidance
The Company expects that overall market conditions will remain challenging, limiting its ability to forecast financial results. For the fourth quarter of 2002, Critical Path expects to report revenues in the range of $19 million to $21 million. Quarterly cash operating expenses are expected to continue to decrease on a sequential basis to approximately $26 million to $27 million.

Conference Call
Critical Path will hold a conference call to discuss the results today, November 5, 2002. Those who would like to participate on the conference call should dial 877/231-3543 or 706/634-1329 (international) prior to 4:50 PM ET. The conference call and its replay will also be Web cast and are accessible from the Company's Web site, www.cp.net. A telephone replay of the conference call will be available for seven days following the call. To access the replay, please dial (800) 642-1687 or (706) 645-9291 (international), passcode 6176124.

About Critical Path, Inc.
Critical Path, Inc. (Nasdaq: CPTH) is a global leader in digital communications software and services. The company provides messaging solutions — from wireless, secure and unified messaging to basic email and personal information management — as well as identity management solutions that simplify user profile management and strengthen information security. The standards-based Critical Path Communications Platform, built to perform reliably at the scale of public networks, delivers the industry's lowest total cost of ownership for messaging solutions and lays a solid foundation for next-generation communications services. Solutions are available on a hosted or licensed basis. Critical Path's customers include more than 700 enterprises, 190 carriers and service providers, eight national postal authorities and 35 government agencies. Critical Path is headquartered in San Francisco. More information can be found at www.criticalpath.net
Forward-Looking Statements:
This press release contains forward-looking statements, including the Company's statements regarding its finance, business and operations results and projections including anticipated or projected revenue, expenses and operational growth, markets, strategic partners and potential customers for Critical Path products and services. The words "anticipate," "expect," "intend," "plan," "believe," "seek," and "estimate" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Factors that might cause future results to differ materially from those projected in the forward-looking statements include, but are not limited to, difficulties of forecasting future results due to our limited operating history, failure to meet sales and revenue objectives, forecasts and earnings guidance, failure to negotiate favorable deals with strategic partners for technology and the distribution of our products and services, our evolving business strategies and the emerging nature of the market for our products and services ,lingering doubts related to the SEC investigation of former executive officers and directors, turnover within and integration of senior management, board of directors members and other key personnel, difficulties in delivering and marketing our product and service offerings, protection of our intellectual property, failure to successfully expand our sales and marketing activities, potential difficulties associated with restructuring, strategic relationships, investments and uncollected bills, general economic conditions in markets in which the Company does business, volatility in the market for stock and risks associated with potential de-listing actions by the market on which we are listed, risks associated with our international operations, foreign currency fluctuations, unplanned system interruptions and capacity constraints, software defects, and those discussed elsewhere in this announcement and the attached statements. These and other risks and uncertainties are described in more detail in Critical Path's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 and the Quarterly Reports on Form 10-Q the for quarters ended March 31, and June 30, 2002, all as may be amended from time to time, and all subsequent filings with the Securities and Exchange Commission (www.sec.gov).
Note to Editors: Critical Path and the Critical Path logo are the trademarks of Critical Path, Inc. All other trademarks are the property of their holders.
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Critical Path Contact Information:

 
For Reporters:  For Financial Analysts:   
Shane Dolgin
Public Relations
415.541.2661
shane.dolgin@criticalpath.net   Mike Bishop
Investor Relations
415.541.2619
mike.bishop@criticalpath.net  

Ernst van der Ploeg
Regional S les Director
For Critical Path Netherlands

+31 (0) 6 512 77060 phone
+31 (0) 6 105 48013 fax

A Global Leader in Digital Communications Software and Services