BEDFORD, Mass., January 27, 2005 – RSA Security Inc. (NASDAQ: RSAS) today reported financial results for the fourth quarter ended December 31, 2004.
Revenue for the fourth quarter of 2004 increased 18% to $83.2 million from $70.7 million for the fourth quarter of 2003. Net income for the fourth quarter of 2004 increased 90% to $11.8 million, or $0.16 per diluted share, from $6.2 million, or $0.10 per diluted share, for the comparable period a year ago.
“2004 was a historic year for RSA Security culminating in record revenue growth for the fourth quarter and the full year,” said Art Coviello, RSA Security president and chief executive officer. “Our ongoing growth will be driven by the increasing importance of authentication in the enterprise and the continued growth of the traditional secure remote access market. We expect to gain further traction within the enterprise and consumer markets in 2005 as the products announced and delivered by RSA in 2004 help customers to extend the use of authentication to secure their digital assets both inside and outside the firewall.”
Fourth-Quarter Financial Highlights
- Revenue: RSA Security’s $83.2 million in fourth-quarter revenue and $307.5 million in full-year 2004 revenue were both new Company records. Much of the Company’s growth was generated internationally as RSA Security grew overseas sales by 27% year over year to $36.5 million for the fourth quarter of 2004. RSA Security’s book-to-bill ratio for the quarter was approximately 1.1 to 1, and the Company closed the quarter with $61.3 million in combined backlog and deferred revenue. This is a 24% increase from RSA Security’s $49.6 million in backlog and deferred revenue at December 31, 2003.
- Net Income: RSA Security’s $11.8 million, or $0.16 per diluted share, in net income marked a three-year high for the Company. Revenue growth, together with a continued focus on expense management, enabled RSA Security to increase operating margin to 16.8% in the fourth quarter of 2004 from 13.9% in the year-ago quarter. The Company has increased its net income sequentially in each of the past eight quarters. For the full year 2004, the Company posted net income of $35.0 million, or $0.51 per diluted share. This compares with net income of $14.8 million, or $0.24 per share, for the full year 2003.
- Cash Position: The Company grew its cash balance by $33.7 million in the fourth quarter, bringing its total cash and marketable securities to $289.7 million. This is an increase of 40% from $207.3 million on December 31, 2003.
Operational Highlights
- Customers and Partners: RSA Security shipped product to more than 5,600 customers in the fourth quarter, including 775 new customers. The financial services, professional services, government and manufacturing sectors were among the strongest vertical markets for the Company. RSA Security sold approximately 77% of its RSA SecurID® products through its indirect channel during the fourth quarter of 2004, up from 70% for the fourth quarter of 2003. For the full year 2004, the Company grew its customer base by 22% to nearly 17,000 organizations worldwide.
- RSA® Sign-On Manager: RSA Security announced the availability for the RSA Sign-On Manager secure enterprise access solution that combines the Company’s industry-leading strong authentication technology with enterprise single sign-on (SSO). RSA Sign-On Manager allows organizations to reduce help desk costs from password resets, improve enterprise security and increase end-user productivity, while extending the value of their current security investment. RSA Sign-On Manager delivers a wide range of authentication choices, ranging from password-only mode to strong two-factor authentication.
Business Outlook
RSA Security’s financial guidance for the first quarter of 2005 assumes no material change in the global IT spending environment. This guidance is current as of today only, and is based upon the Company’s expectation of an effective tax rate of approximately 20-22% for 2005. RSA Security undertakes no obligation to update its estimates:
- Total quarterly revenue in the range of $81 million to $84 million, or 12% to 17% year-over-year growth.
- Diluted earnings per share in the range of $0.13 to $0.15, compared with earnings of $0.10 per share in the year-ago first quarter.
Conference Call Details
In conjunction with this announcement, RSA Security will host a conference call today at 8:00 a.m. (ET) to discuss the Company's financial results, highlights of the quarter and business strategy. A live webcast of this conference call will be available on the "Investor" page of the Company's website, and a webcast archive will be available for approximately three months. To access this call by telephone, dial (800) 810-0924 or (913) 981-4900. A replay will be available through midnight on Wednesday, February 2, 2005 at 888-203-1112 or 719-457-0820. Both live and replay numbers have a pass code of 630543.
About RSA Security Inc.
RSA Security Inc. helps organizations protect private information and manage the identities of people and applications accessing and exchanging that information. RSA Security's portfolio of solutions -- including identity & access management, secure mobile & remote access, secure enterprise access, secure transactions and consumer identity protection -- are all designed to provide the most seamless e-security experience in the market. Our strong reputation is built on our history of ingenuity, leadership, proven technologies and our more than 17,000 customers around the globe. Together with more than 1,000 technology and integration partners, RSA Security inspires confidence in everyone to experience the power and promise of the Internet. For more information, please visit www.rsasecurity.com.