SPSS Inc. (NASDAQ: SPSS), a leading provider of predictive analytics technology and services, today announced results for its fourth quarter and fiscal year ended December 31, 2004.
In the 2004 fourth quarter, revenues were a record $60.5 million compared to $57.8 million in the quarter ended December 31, 2003. License revenues were $27.7 million compared to $26.2 million in the same period last year. Diluted earnings per share were $0.20 including a $1.5 million pretax write-off of fixed assets, compared with $0.34 in 2003, which included a one-time income tax benefit of $2.3 million.
Revenues for the 2004 fiscal year were the highest in the company’s history, totaling $224.1 million compared to $208.4 million in 2003. License revenues were $95.8 million compared to $91.5 million in 2003. Diluted earnings per share in 2004 were $0.31 compared to $0.53 in the 2003 fiscal year. Results in 2004 include unusual pre-tax charges of approximately $6.5 million. As of December 31, 2004, cash was $37.1 million and cash flow from operating activities was $12.2 million.
“We had a good fourth quarter,” said Jack Noonan, SPSS president and chief executive officer. “License revenues increased across all major offerings, geographic markets and customer segments. Sales of SPSS data mining and statistical tools were at record levels, resulting in yet another quarter of double-digit growth. We also saw higher revenues from our new predictive applications, including a hard-fought competitive win at a leading financial services firm. These results were achieved without closing any seven-figure transactions in the quarter. Instead, we increased the number of high five-figure and low six-figure contracts. Overall, this was a positive end to a challenging year.”
Noonan continued, “Quick rebounds in performance from the third quarter in Japan and the United Kingdom enabled us to build on the growing revenues we’ve seen all year in the United States. Growth in maintenance revenues remained strong. Services revenues declined as we continued to focus on data mining and predictive applications consulting.”
Organizations with which SPSS signed significant software license or service agreements in the quarter included: Analytical Information System Inc.; Aon UK Ltd.; Canon Inc.; Capital One; Centers for Disease Control and Prevention; Connecticut State University System; Fortis Insurance Ltd.; Fuji Xerox Co. Ltd.; Harley-Davidson; HP Hood; Iowa State University; Kelley Blue Book; Millward Brown; National Research Center, Inc.; NTT Docomo; Orbit GmbH; Pacific Crest Research Group; Pulte Homes Inc.; Synovate; Telstra; The Ohio State University; U.S. Drug Enforcement Administration; U.S. Bureau of Alcohol, Tobacco and Firearms and Windber Medical Center.
Noonan concluded, “SPSS has a strong market position going into 2005. Predictive analytics is now recognized as an emerging market distinct from traditional business intelligence, as International Data Corporation (IDC) recently confirmed. Industry analysts have identified SPSS as a market leader in this space. We plan to build on this momentum throughout 2005.”
Outlook and Guidance
Raymond Panza, SPSS executive vice president and chief financial officer, said, “Our revenue growth should continue to be driven by increases in our predictive analytic tools. We also expect a more significant contribution from applications sales. However, service revenues should be flat as we continue to transition to higher-margin revenue. Overall, we anticipate extended sales cycles involving mostly low- to medium-sized transactions.”
Panza continued, “While our earnings growth is most dependent on increasing revenues, we will continue reducing expenses wherever possible to improve the operating leverage of our business. These cost reduction programs will result in approximately $1.0 million pretax charges to be incurred during the 2005 first quarter.”
Panza concluded, “We expect revenues in the first quarter of 2005 to be between $56 and $58 million, with diluted earnings per share of between $0.05 and $0.10. For the fiscal year 2005, we expect revenues to be between $230 and $235 million, with diluted earnings per share of between $0.65 and $0.75, excluding any charges related to the expensing of stock options as required under FAS 123R.”
About SPSS Inc.
SPSS Inc. (NASDAQ: SPSS) is a leading worldwide provider of predictive analytics software and solutions. The company's predictive analytics technology connects data to effective strategic action by drawing reliable conclusions about current conditions and critical future events. More than 250,000 commercial, academic, and public sector customers rely on SPSS technology to help increase revenue, reduce costs, improve important processes, and detect and prevent fraud. More than 95 percent of the Fortune 1000 companies are SPSS customers. Founded in 1968, SPSS is headquartered in Chicago, Illinois. For additional information, please visit www.spss.com.
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