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EXHIBIT 99.2
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ILOG REPORTS RESULTS FOR FIRST QUARTER OF FISCAL YEAR 2001
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PARIS, France, and MOUNTAIN VIEW, Calif. - October 26, 2000 - ILOG S.A. (NASDAQ:
ILOG and EURO.NM: ILOG), the world's leading provider of software components,
today reported revenues of $13.2 million for its first quarter of fiscal year
2001, ended September 30, 2000, and a loss from operations of $3.6 million. This
compares to revenues of $14.3 million and a loss from operations of $1.2 million
in the previous year's first quarter. Loss per share during the first quarter of
the fiscal year was $0.18 on 15.4 million shares, compared to $0.08 per share on
14.2 million shares in the previous year's first quarter.
ILOG announced on October 16 that its expected results for the quarter would be
revenues of approximately $13 million and a loss per share of $0.20 because
royalty levels anticipated from a major independent software vendor (ISV) were
not received in the quarter. ILOG management has now concluded that this absence
represents a four- to six-month delay in the royalty flow from this ISV. The
Company's revenues of $14.3 million in the first quarter of the previous year
included $4 million in license fees from another major ISV. Excluding these ISV
revenues, license fees increased by 65% compared to the prior-year quarter.
"Despite the unanticipated delay from this supply chain ISV, our relationships
with our many ISV partners in this market remain excellent and they are rolling
out applications that embed our products," said Pierre Haren, ILOG president and
CEO. "We are continuing to make progress in executing our overall business
strategy. For example, 20 new ISVs adopted ILOG products this quarter, bringing
the total to over 200," he stated.
Business Developments
This week, the industry analyst firm AMR Research reported that ILOG's new
Optimization Development Framework (ODF) has been adopted by SAP AG and is
integrated with its flagship mySAP Supply Chain Management product, formerly
known as SAP Advanced Planner and Optimizer (APO). AMR analyst Bob Ferrari wrote
that by using this ILOG technology, SAP is first to meet "the critical need for
deeper functionality in manufacturing planning and production scheduling
applications when they are implemented within a specific industry." Rather than
"the one-size-fits-all product strategy" commonly used in supply chain planning,
wrote Ferrari, SAP is relying on ILOG ODF to let its customers create "routines
that are unique or customized for their particular process and industry needs."
Another example of ILOG's on-going leadership in optimization software is seen
in the new ILOG Concert technology introduced in the quarter that is the first
to provide developers with a new way to combine the two leading optimization
methods to solve resource allocation problems.
In the supply chain market, contracts were recently signed with German ISVs
Flexis AG and proAlpha Software to embed ILOG's products in their offerings.
ILOG has been benefiting in its role of infrastructure provider for e-business
players of both the old and new economy. In particular, ILOG's business rule
engines were selected this quarter by a number of companies to add
personalization features to critical web applications. Financial services
customers such as Fannie Mae and ING Bank provided deployment revenues during
the quarter, joining other ILOG
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financial customers Visa, Deutsche Bank and Goldman Sachs, that placed initial
orders in the preceding quarter. In addition, First Union Home Equity Bank is
using ILOG engines in its just-announced First Union Loan Arranger decision tool
for automating loan origination.
In the transportation sector, ILOG solidified its position as the leading
provider of optimization software used to increase efficiencies in route and
crew scheduling. For example, existing customers including United Airlines and
JB Hunt gave ILOG new business in the quarter. In addition, the Company
announced that industry leader SABRE signed a five-year agreement last quarter
with ILOG under which it will use all three ILOG product lines within its future
transportation and e-travel products.
In the telecommunications space, a number of new ISVs were added such as Tenor
Networks. Further revenues from existing telco customers including Racal, Compaq
and various divisions of Alcatel were also received.
"We're at an early stage of our evolution into a company where a majority of our
revenue stream derives from ISVs," explained Haren. "This supplements the
revenues from large end users in sectors such as finance and transportation
where ISVs are less prevalent. As happened this quarter, the usual summer
seasonality and sales fluctuations of major ILOG partners can have an impact on
our financial performance. However, I'm unwavering in my belief that our
business fundamentals are sound and that our strategy is the right one for the
future."
About ILOG
Dually headquartered in Paris and Mountain View, Calif., ILOG is the world's
leading supplier of C++ and Java software components. ILOG's embeddable
optimization, visualization and business rules software components dramatically
shorten the development time of enterprise software applications in the supply
chain, telecommunications, transportation and financial services industries. In
addition to optimization applications where the company enjoys a significant
market share, ILOG is playing an active role in the emergence of the e-Business
software components market. Visit www.ilog.com for additional information.
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Forward-Looking Information
This release contains "forward-looking" information within the meaning of the
United States Securities laws that involve risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. Potential risks and uncertainties include, without limitation, the
evolution, growth and profitability of the e-business and supply chain and other
software markets, the success of the company's ISV strategy, the economic,
political and currency risks associated with the company's European, North
American and Asian operations, the timing and seasonality of significant
revenues, and those risks and uncertainties mentioned under "Risk Factors" in
the company's form 20-F for the year ended June 30, 1999, which is on file with
the United States Securities and Exchange Commission.
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ILOG S.A.
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Consolidated Statements of Operations (unaudited)
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(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
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Sept. 30 Sept. 30
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2000 1999
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<S> <C> <C>
Revenues:
License Fees $ 7,437 $ 8,513
Services 5,752 5,805
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Total revenues 13,189 14,318
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Cost of revenues
License Fees 279 305
Services 2,883 2,924
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Total cost of revenues 3,162 3,229
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Gross profit 10,027 11,089
Operating expenses
Marketing and selling 8,702 7,368
Research and development 3,188 2,852
General and administrative 1,678 2,007
Write-off of acquired intangibles 20 62
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Total operating expenses 13,588 12,289
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Loss from operations (3,561) (1,200)
Net interest income (expense) and other 730 105
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Net loss $ (2,831) $ (1,095)
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Net loss per share - basic & fully diluted $ (0.18) $ (0.08)
Share and share equivalents used in per share
calculations - basic & fully diluted 15,433 14,150
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</TABLE>
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ILOG S.A.
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Condensed Consolidated Balance Sheets (unaudited)
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(in thousands)
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<TABLE>
<CAPTION>
Sept. 30 June 30
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2000 2000
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<S> <C> <C>
Assets
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Current Assets
Cash and cash equivalents $ 20,397 $ 20,316
Accounts receivable 12,630 23,393
Other receivables and prepaid expenses 3,804 4,770
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Total current assets 36,831 48,479
Property and equipment-net and other assets 5,117 4,258
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Total assets $ 41,948 $ 52,737
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued expenses $ 12,147 $ 15,937
Current debt 3,636 3,627
Deferred revenue 5,666 7,034
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Total current liabilities 21,449 26,598
Long-term portion of debt 226 2,057
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Total liabilities 21,675 28,655
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Shareholders' equity
Paid-in capital 69,746 68,565
Accumulated deficit and currency translation adjustment (49,473) (44,483)
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Total shareholders' equity 20,273 24,082
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Total liabilities and shareholders' equity $ 41,948 $ 52,737
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</TABLE>
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Discussion of Financial Highlights
Revenues and Gross Margin
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Revenues in the quarter declined to $13.2 million from $14.3 million, or by 8%
compared to the same quarter in the previous year. Revenues in the quarter were
impacted by the absence of license fees from the Company's larger ISVs, which in
the prior year represented $4 million, or 28% of total revenues. As a result,
license fee revenues declined from $8.5 million to $7.4 million, or by 15%
compared to the prior year, with service revenues remaining level at $5.8
million. Overall gross margin for the quarter decreased to 76% from 77% for the
same period in the preceding year due to lower high-margin license revenues in
the current year's quarter.
Operating Expenses
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Marketing and selling expenses for the quarter increased by 18% over the same
period in the prior year, reflecting higher levels of sales and marketing
resources. Research and development expenses, net of government funding, for the
quarter increased by 12% over the same period in the prior year, reflecting
higher headcount and compensation growth, offsetting the benefit of the lower
Euro exchange rate against the U.S. dollar. General and administrative expenses
for the quarter decreased by 16% over the same period in the prior year,
reflecting the lower Euro exchange rate plus some bad debt recovery. At
September 30, 2000, the Company had 518 employees compared to 487 a year
earlier.
Other Income (expense)
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Net interest and other income (expense) for the quarter increased from $105,000
to $730,000 over the same period in the prior year, reflecting both realized and
unrealized exchange rate gains on intercompany indebtedness due to the 7%
decline in the Euro against the U.S. dollar during the quarter.
Balance Sheet
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Cash at September 30, 2000, increased to $20.4 million from $20.3 million at
June 30, 2000. Accounts receivable at September 30, 2000, improved to 87 days
sales outstanding from 101 days at June 30, 2000, reflecting strong collections,
particularly in the U.S., during the quarter. Deferred revenues declined during
the quarter to $5.7 million from $7.0 million at June 30, 2000, reflecting the
seasonality of maintenance billings.
Shareholders' equity at September 30, 2000, decreased to $20.2 million from
$24.1 million at June 30, 2000, mainly reflecting the loss for the quarter and a
currency translation adjustment caused by the decline in the value of the Euro.
At September 30, 2000, the Company had 15.5 million shares issued and
outstanding compared to 15.4 million at June 30, 2000.
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Results and Press Release for French/European Shareholders
A translation of this press release, in the French language and with the
financial statements expressed in Euros, is also available.
ILOG is a registered trademark of ILOG. All other product and company names are
trademarks or registered trademarks of their respective owners.
