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CONTACTS
For Investors
Jennifer Ruddock
650-216-2129
[email protected]
For Media
Lisa Poulson
Tumbleweed Communications
650-216-2020
[email protected]
TUMBLEWEED ANNOUNCES PRELIMINARY FOURTH QUARTER RESULTS
FOURTH QUARTER REVENUE BELOW COMPANY EXPECTATIONS
COMPANY OUTLINES RESTRUCTURING FOR 2001
REDWOOD CITY, CA - JANUARY 3, 2001 - Tumbleweed-Registered Trademark-
Communications Corp. (Nasdaq: TMWD), a leading provider of secure Internet
messaging services, today announced preliminary financial results for the
quarter and year ending December 31, 2000. As a result of what the company
believes to be slower IT spending industry-wide as well as delayed purchasing
decisions, the company expects fourth quarter revenue to be between $7.5 and
$8.0 million, an increase of between 65 - 76% over fourth quarter 1999
revenues of $4.54 million, but lower than the company's previous expectation
for the quarter. At the end of the calendar year 2000, Tumbleweed's cash
balance was approximately $70 million.
For the quarter ending December 31, 2000, the company expects to report a net
loss, excluding expenses related to stock compensation expense, amortization
of goodwill and other intangibles and acquisition-related charges, of between
$17.0 and $18.1 million, as compared to $7.6 million in the fourth quarter of
1999. For calendar year 2000, the company expects to report total revenue in
the range of $36.6 to $37.1 million, compared to total revenue in 1999 of
$15.3 million from continuing product lines. Also for calendar year 2000, the
company expects to report a net loss, excluding expenses related to stock
compensation expense, amortization of goodwill and other intangibles and
acquisition-related charges, of between $39.9 and $41.0 million, as compared
to $20.6 million in calendar 1999. Actual results are expected to be
announced on January 25, 2001.
"Although we had a good start to the fourth quarter and continue to see demand
for our products, market conditions changed considerably in December. We are
proactively making changes in our organization to operate more effectively in
the new climate. We evaluated our product and sales performance, and continue to
see solid growth opportunities for 2001. We've revised our growth targets
accordingly, and now expect
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revenue growth in 2001 to be in the range of 50-60% over 2000 revenue based on
our current pricing model, rather than our previous expectation of 100% growth,"
said Jeffrey C. Smith, president and CEO, Tumbleweed Communications Corp.
"We've concluded that the best path for Tumbleweed and its shareholders is an
emphasis on the markets and products where we've already achieved the highest
degree of success. We believe that our products, which create significant
cost-efficiencies, will appeal strongly to our customers and prospects who
are focusing more and more on the bottom line in this new economic
environment. By re-aligning our sales, marketing, and engineering efforts to
maximize these opportunities, our objective is to achieve positive cash flow
sooner than we had originally planned," Smith continued.
RESTRUCTURING
In light of changing market conditions, Tumbleweed has thoroughly reviewed its
worldwide business unit and product performance. The company is re-aligning
resources to focus on the strongest opportunities in 2001 and cutting operating
expenses. As a result, Tumbleweed expects to reduce total headcount by
approximately 20% and to recognize a one-time charge related to restructuring in
the first quarter 2001. The company will offer more detail on this charge in its
regularly scheduled quarterly conference call on January 25.
CHANGE TO SUBSCRIPTION-BASED PRICING MODEL
The company also announced it intends to change to a subscription-based pricing
model in 2001. Under the subscription model, revenue from new customer contracts
will be recognized ratably over the life of the contract, generally between
12-24 months. "Tumbleweed's customers have expressed interest in
subscription-based pricing," said Smith. "We're also interested in this new
model because it simplifies the contract process, increases revenue visibility
and improves our cash flow."
CONFERENCE CALL
Tumbleweed Communications Corp. (NASDAQ:TMWD) will hold a conference call with
the investment community at 5:30 a.m. Pacific time today to discuss preliminary
fourth quarter results, the company restructuring, the outlook for 2001, and the
transition to a subscription-based pricing model. This conference call will be
simultaneously webcast via StreetFusion. For information, see
www.tumbleweed.com, http://www.tumbleweed.com/company/investor_relations/index.
html. In addition, a telephonic replay of the call will be available at the same
URL address and also by phone, at 719-457-0820, code #477261.
ABOUT TUMBLEWEED COMMUNICATIONS
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Tumbleweed Communications Corp. (NASDAQ: TMWD) is a leading provider of secure
Internet messaging services. Our products and services enable businesses to
create and manage secure online communication channels that leverage established
e-mail networks and enterprise applications. Tumbleweed Integrated Messaging
Exchange is a platform and set of applications for creating secure
communications channels between a business and its customers, partners, and
suppliers. Tumbleweed Messaging Management System is a comprehensive solution
that extends internal email systems to the Internet through centralized
security, policy enforcement, filtering and archiving. Used together, Tumbleweed
IME and Tumbleweed MMS automatically apply security policies and redirect
sensitive email for secure, trackable delivery. Companies that rely on
Tumbleweed IME or MMS products include American Express, Chase Manhattan Bank,
Datek Online, the European Union's Joint Research Council, the Food and Drug
Administration, Northern Trust, UPS, Pitney Bowes, TD Waterhouse, and the United
States Postal Service.
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS DISCUSSED
IN THIS PRESS RELEASE MAY CONSTITUTE FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE PROJECTED. THESE FORWARD LOOKING STATEMENTS INCLUDE THE COMPANY'S
EXPECTATIONS FOR REVENUE GROWTH IN 2001 AND WITH RESPECT TO QUARTERLY AND
ANNUAL REVENUE, AND EARNINGS IN 2000, WHICH AT THIS TIME ARE PRELIMINARY AND
SUBJECT TO ADJUSTMENT. IN SOME CASES, FORWARD-LOOKING STATEMENTS CAN BE
IDENTIFIED BY TERMINOLOGY SUCH AS "MAY," "WILL," "SHOULD," "POTENTIAL,"
"CONTINUE," "EXPECTS," "ANTICIPATES," "INTENDS," "PLANS," "BELIEVES,"
"ESTIMATES," AND SIMILAR EXPRESSIONS. FOR FURTHER CAUTIONS ABOUT THE RISKS OF
INVESTING IN TUMBLEWEED, WE REFER YOU TO THE DOCUMENTS TUMBLEWEED FILES FROM
TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION, PARTICULARLY
TUMBLEWEED'S FORM S-1 FILED JULY 26, 2000, FORM S-4 FILED AUGUST 3, 2000,
FORM 10-K FILED MARCH 30, 2000, AND FORM 10-Q FILED NOVEMBER 14, 2000.
TUMBLEWEED ASSUMES NO OBLIGATION TO UPDATE INFORMATION CONTAINED IN THIS
PRESS RELEASE.
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