SAN FRANCISCO — (August 7, 2002) Critical Path, Inc. (Nasdaq: CPTH) a global leader in Internet communications, today announced financial results for the second quarter ended June 30, 2002. The quarter's results are in-line with the Company's prior guidance.
Highlights for the quarter include:
- Significant contracts with new and existing customers including Kaiser Permanente, Pactiv Corporation, Nortel Networks, Tiscali and Deutsche Post, among others
- Successful launch of a new partner program
- Significant international license sales growth
- Increased professional services revenue and margin
Revenue for the second quarter of 2002 was $22.4 million, compared to $23.7 million in the first quarter 2002. Operating expenses, excluding special charges and depreciation, were $28.0 million in the second quarter of 2002, compared with $27.5 million in the first quarter of 2002.
Based on Generally Accepted Accounting Principles (GAAP), net loss for the second quarter of 2002 was $35.6 million, or $0.46 per share, compared to a net loss of $26.0 million, or $0.34 per share in the first quarter of 2002. Net loss attributable to common shares for the second quarter of 2002 was $38.8 million, or $0.50 per share, compared with a net loss attributable to common shares of $29.2 million, or $0.38 per share, in the first quarter of 2002.
Earnings before interest, taxes, depreciation, and amortization (EBITDA), excluding special charges, amounted to a loss of $5.6 million for the second quarter, compared to an EBITDA loss of $3.8 million in the first quarter of 2002.
The Company incurred a $1.5 million restructuring charge primarily related to one-time employee severance costs incurred in connection with a new cost reduction initiative.
"Critical Path executed on its key initiatives and reported a better than expected expense level, yielding results that were on plan for the second quarter," said William McGlashan, Jr., chairman and chief executive officer. "The quarter was highlighted by the successful kickoff of our partner program and strong sales results in the extremely tough U.S. enterprise market. While IT and communications spending levels are still down, we have increased our sales pipeline. Additionally, the continued introduction of new products provides us with a real opportunity to expand adoption of the Critical Path Communications Platform by customers worldwide."
Guidance
The Company expects that overall market conditions will remain challenging, limiting its ability to forecast financial results. For the third quarter of 2002, Critical Path expects to report revenues that are flat or slightly above its second quarter revenue, and quarterly cash operating expenses that are in-line with prior guidance of $29 million to $31 million.
Conference Call
Critical Path will hold a conference call to discuss the results on August 7, 2002 at 5:00 PM ET. Those who would like to participate in the conference call should dial 877/231-3543 or 706/634-1329 (international) prior to 4:50 PM ET on the day of the call. 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 4892007.
About Critical Path, Inc.
Critical Path, Inc. (Nasdaq: CPTH) delivers software and services that maximize the value of Internet communications. The company provides messaging and collaboration 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. 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 with offices throughout North America, Europe, Asia and Latin America. More information on Critical Path can be found at www.cp.net.
Forward-Looking Statements:
This press release contains forward-looking statements, including the Company's statements regarding, its finance, business and operations 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, issues 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 delisting 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 Report on Form 10-Q for quarter ended March 30, 2002, both as may be amended from time to time, and all subsequent filings with the Securities and Exchange Commission (www.sec.gov)
NOTE: Company names mentioned herein may be trademarks of their respective owners.
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For additional information, contact:
For Reporters:
Michelle Cox
Horn Group, Inc.
415.905.4039
mcox@horngroup.com For Investors:
Mike Bishop
Critical Path, Inc.
415.541.2619
mike.bishop@cp.net
Ernst van der Ploeg
Regional Sales Director
For Cr tical Path Netherlands
+31 (0) 6 512 77060 phone
+31 (0) 6 105 48013 fax
A Global Leader in Internet Communications