Utrecht, — APRIL 17, 2003 —Mercury Interactive Corporation
(NASDAQ: MERQ), the global leader in business technology optimization (BTO), today reported results for the first quarter ended March 31, 2003.
Revenue for the first quarter of 2003 was $110.4 million, an increase of 22 percent over the $90.5 million reported in the first quarter of 2002. On a GAAP basis, net income for the first quarter of 2003 was $18.1 million, an increase of 20 percent over the $15.2 million in the comparable quarter last year. Net income for the first quarter of 2003 includes amortization of unearned stock-based compensation and intangibles of $0.6 million associated with the Freshwater Software acquisition. Net income for the first quarter of 2002 included a gain of $4.6 million associated with the early retirement of debt (or $0.03 per fully diluted share), a reversal of $0.5 million in restructuring charges and amortization of $1.0 million associated with the Freshwater Software acquisition. Diluted earnings per share for the first quarter of 2003 were $0.20, an increase of 18 percent over the $0.17 diluted earnings per share in the comparable quarter last year.
Deferred revenue for the first quarter of 2003 increased $21.8 million from the fourth quarter of 2002 to $181.2 million. Cash generated from operations for the first quarter of 2003 was $53.2 million compared to $27.5 million in the first quarter of 2002.
"Mercury Interactive’s solid first quarter results, despite a difficult IT spending environment, demonstrate the value of our application delivery and management solutions, the viability of our business model and the ability of our team to execute," said Amnon Landan, chairman, CEO and president of Mercury Interactive Corporation. "We attribute these results to the emergence of Business Technology Optimization (BTO) as a strategic agenda for IT executives, as they strive to apply quality management principles to IT in order to optimize performance, reduce costs and align business and IT objectives."
FINANCIAL OUTLOOK
The following financial outlook is provided on a GAAP basis and is based on information as of April 16, 2003. GAAP earnings per share guidance includes on-going operating expenses and recurring amortization expenses of approximately $0.6 million per quarter associated with the Freshwater acquisition.
Management initiates the following guidance for the quarter ending June 30, 2003:
* Revenue is expected to be in the range of $110 million and $117 million.
* Operating margin is expected to be in the range of 17% and 20%.
* Diluted earnings per share is expected to be in the range of $0.16 and $0.22.
Consistent with prior guidance provided, management offers the following guidance for the full fiscal year ending December 31, 2003:
* Revenue is expected to be in the range of $460 million and $500 million.
* Operating margin is expected to be in the range of 18% and 20%.
* Diluted earnings per share is expected to be in the range of $0.82 and $0.97.
ABOUT MERCURY INTERACTIVE
Mercury Interactive, the global leader in business technology optimization (BTO), delivers Optane, a suite of integrated products for enterprise testing, production tuning and performance management, that enables customers to optimize business processes and maximize business results. Customers worldwide use Mercury Interactive solutions across their application and technology infrastructures to continuously measure, maximize and manage performance at every level of the business process and each stage of the application lifecycle to improve quality, reduce costs, and align IT with business goals. Founded in 1989, Mercury Interactive is headquartered in Sunnyvale, California, with offices in more than 25 countries. Further information is available at www.mercuryinteractive.com or by phone at U.S.
+1.408.822.5200.
FORWARD LOOKING STATEMENTS
This press release contain "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury Interactive's expected financial performance (as described in the Financial Outlook section and quotations from management in this press release), as well Mercury Interactive’s future business prospects and product and service offerings. Mercury Interactive’s actual results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury Interactive and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among other things: 1) the effect of continued weak economic factors on the overall demand for software and services which could result in decreased revenues or lower revenue growth rates and increased uncertainty as to our expected revenues in future periods; 2) Mercury Interactive has historically received a substantial portion of its orders at the end of the quarter and if an order shortfall occurs at the end of a quarter it could negatively impact the company’s operating results for that quarter; 3) the effect of the timing of the recognition of revenue from products sold under subscription and term licenses; 4) the dependence of Mercury Interactive's financial growth on the continued success and acceptance of its existing and new software products and services, and the success of its Business Technology Optimization (BTO) strategy; 5) the impairment of the value of investments in non-consolidated companies; 6) the ability to increase sales through our indirect channels as well as international sales; 7) intense competition for Mercury Interactive's products and services; and 8) the additional risks and important factors described in Mercury Interactive's SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2002, which are available at the SEC’s website at www.sec.gov. Additional information will also be set forth in Mercury Interactive’s Quarterly Report on Form 10-Q for the three month period ended March 31, 2003, which will be filed with the SEC in the second quarter of 2003. All of the information in this press release is as of April 16, 2003, and Mercury Interactive undertakes no duty to update this information. # # #