SAN FRANCISCO — (November 11, 2003) Critical Path, Inc. (Nasdaq: CPTH), a global leader in digital communications software and services, today announced financial results for the third quarter ended September 30, 2003.
Revenues for the third quarter of 2003 were $16.2 million, compared to $18.1 million in the second quarter of 2003. Cash operating expenses, which exclude amortization, depreciation and restructuring charges, improved to $21.8 million, compared with $23.6 million in the second quarter of 2003.
Based on Generally Accepted Accounting Principles (GAAP) in the United States, net loss attributable to common shares for the third quarter of 2003 was $18.6 million, or $0.92 per share, compared to $11.0 million, or $0.55 per share in the second quarter of 2003.
Earnings before interest, taxes, depreciation and amortization, adjusted to exclude special charges (Adjusted EBITDA), amounted to a loss of $5.6 million in the third quarter of 2003, compared to an Adjusted EBITDA loss of $5.4 million in the second quarter of 2003.
"Although we are obviously disappointed with our revenue for the quarter, the results do not reflect a number of significant new customer commitments for our hosted and licensed solutions that we expect will result in revenue in future quarters," said William McGlashan, Jr., chairman and chief executive officer of Critical Path. "Our latest deals with such customers as T-Mobile, Virgin.net, SK Communications, AFLAC, Z-Tel, Telecom Italia Media, Wind and one of the largest financial services companies in Europe demonstrate our continued traction and market opportunity. In addition, we continued to reduce expenses while also investing significantly in our new hosted business, which we believe will ultimately create substantial value for the Company."
As of September 30, 2003, the Company's cash and cash equivalents totaled $18.2 million as compared with its June 30, 2003 balance of $24.5 million. During the quarter the Company used cash of approximately $3.2 million to fund operating losses, approximately $1.1 million in restructuring payments, and approximately $3.1 million in capital expenditures for an aggregate cash usage of $7.4 million. These uses were offset by net cash proceeds from financing activities of approximately $900,000 and approximately $200,000 related to the effects of foreign exchange. In the current quarter it will be essential to the Company's continued viability for it to complete a financing or other strategic transaction. The Company is currently in negotiations in an attempt to raise additional capital.
Regulation G
The Company uses both GAAP and non-GAAP metrics to measure its financial results. It utilizes two primary non-GAAP metrics: cash operating expenses and Adjusted EBITDA. Management believes that, in addition to GAAP metrics, these non-GAAP metrics assist the Company in measuring its cash based performance. In addition, management believes these non-GAAP metrics are useful to investors because they remove unusual and nonrecurring charges that occur in the affected period and provide a basis for measuring the Company's financial condition against other quarters. Since the Company has historically reported non-GAAP results to the investment community, management also believes the inclusion of non-GAAP measures provides consistency in its financial reporting. However, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The calculations for cash operating expenses and Adjusted EBITDA are in the Alternative Measurement Reconciliation table below.
Conference Call
Critical Path will host a conference call tomorrow, Wednesday, November 12, 2003, to discuss the financial results for the third quarter of 2003. Those who would like to participate in the conference call should dial 877-231-3543 (in USA) or +1 706-634-1329 (international) prior to 7:50 AM EST. The conference call and its replay will also be available via Web cast from the Company's Web site, www.criticalpath.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 (in USA) or +1 706-645-9291 (international), passcode 3467213. The Web cast and this earnings release will be available on our Web site for twelve months following the conference call.
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, 200 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 by the Company and its executives regarding the market for products and services like ours, the demand for our products, and the performance of our senior management in achieving our goals. The words and expressions "look forward to," "will," "expect," "plan," "believe," "seek," "strive for," "anticipate," hope," "estimate" and similar expressions are intended to identify the Company's forward-looking statements. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks include, but are not limited to, our success in raising sufficient capital to continue operations, our evolving business strategy and the emerging and changing nature of the market for our products and services, our ability to deliver on our sales objectives, the ability of our technology and our competitors' technologies to address customer demands, changes in economic and market conditions, unplanned system interruptions and capacity constraints, software and service design defects. These and other risks and uncertainties are described in more detail in the Company's filings with the U.S Securities and Exchange Commission (www.sec.gov) made from time to time, including Critical Path's Annual Report on Form 10-K for the fiscal year ended December 31, 2002,and Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31 and June 30, 2003, as may be amended from time to time, and all subsequent filings with the Securities and Exchange Commission (www.sec.gov). The company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made.
Note to Editors: Critical Path and the Critical Path logo are the trademarks of Critical Path, Inc.