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EXHIBIT 99.2
FINANCIAL ANALYST & INVESTOR CONTACT: MEDIA CONTACTS:
Dave Miller Christopher Walker
USinternetworking, Inc. USinternetworking, Inc.
(410) 897-1746 (410) 897-3560
[email protected] [email protected]
USINTERNETWORKING ANNOUNCES SECOND QUARTER 2000 FINANCIAL RESULTS
Increasing Momentum Yields Improved Gross Margins & Improved EBITDA Trends
ANNAPOLIS, MD, JULY 25, 2000-- USinternetworking, Inc. (USi; Nasdaq: USIX) the
leading Application Service Provider (ASP), today announced results for the
quarter ending June 30, 2000. Revenue for the second quarter increased 292% to
$26.2 million, compared to the same period for 1999.
"This has been a quarter of exceptional performance for USi, as evidenced by
the first-rate clients added, record revenues, tremendous growth in new service
contract value, and a four-fold improvement of our gross margins," remarked
Christopher R. McCleary, Chairman of the Board. "Additionally, the adoption of
USi's services by established mainstream companies is evidence of the efficacy
of our delivery model."
Gross margin for the second quarter improved to 10.3%, up from 2.5% in the
first quarter. USi reported iMAP service contract margins of 5.3%, making this
quarter the first time the company has reported positive iMAP service contract
margins. Second quarter EBITDA loss improved to $19.8 million from $21.4
million in the previous quarter. The Company reported a net loss of $42.0
million or $0.43 per share for the second quarter. Net loss for the previous
quarter was $ 39.6 million or $0.42 per share.
Additional Q2 2000 highlights:
- Secured $88.7 million in new service contract value.
- Secured 42 new service contracts.
- Increased the 12-month backlog to $87.1 million.
- Increased inception to date contract value sold to $322 million.
- Improved average monthly recurring revenue per client to $42,800.
- Upgraded 28% percent of existing base in the quarter, cross-sold 6% of
existing base.
- Announced the first Ariba client, Rohm and Haas.
- Strengthened client-base with additions such as: Sony Electronics Inc.
(eMarker Business Unit), AARP Services, Inc., Yankee Candle Company, American
Cancer Society, Carlson Companies, Inc. and The College Board.
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"USi's second quarter results are indicative of the company's ability to
develop this new market, while executing against our business plan. In addition
to tremendous top line growth, we saw our efforts pay off in dramatically
improved gross margins, as well as positive EBITDA trends," noted Andy Stern,
Chief Executive Officer.
The company also recently announced that it has secured commitments for over
$175 million in commercial credit facilities to facilitate higher customer
growth rates. The financing consisted of a consortium of participants
including: Credit Suisse First Boston, GE Capital, GATX, HP, Sun and others.
ABOUT USINTERNETWORKING, INC.
USinternetworking Inc. (Nasdaq: USIX) is a leading Application Service Provider
delivering e-commerce and enterprise software as a service. The company's iMAP
portfolio of service offerings delivers the rich functionality of leading
software from Ariba, BroadVision, Lawson, Microsoft, Oracle, PeopleSoft and
Siebel as a continuously supported, flat rate monthly service via an advanced,
secure global data center network. For more information, visit www.usi.net.
Internet Managed Application Provider, iMAP, AppHost, PriorityPeering, USiGSP,
USiSAN USiAccelerate, and Making Software Simple are service marks of
USinternetworking, Inc. All other trademarks are the property of their
respective owners. USi strategic partners and providers are publicly traded on
Nasdaq under the symbols: ARBA, BVSN, CSCO, MSFT, ORCL, PSFT and SEBL.
Information in this release may involve expectations, beliefs, plans,
intentions or strategies regarding the future. These forward-looking statements
involve risks and uncertainties. All forward-looking statements included in
this release are based upon information available to USinternetworking Inc. as
of the date of the release, and we assume no obligation to update any such
forward-looking statement. The statements in this release are not guarantees of
future performance and actual results could differ materially from our current
expectations. Numerous factors could cause or contribute to such differences.
Some of the factors and risks associated with our business are discussed in the
Company's registration statement on Form S-1 declared effective by the
Securities and Exchange Commission ("SEC") on April 8, 1999, the Company's Form
10-K filed with the SEC on March 30, 2000, and in our other reports filed from
time to time with the SEC.
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USINTERNETWORKING, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
2000 2000
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(unaudited) (unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash, cash equivalents, and marketable securities $ 165,354,222 $ 210,143,538
Accounts receivable, net 26,500,532 19,841,899
Prepaid expenses and other current assets 18,606,877 16,343,052
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Total current assets 210,461,631 246,328,489
Deferred iMAP costs 22,058,691 14,489,777
Property and equipment, net and prepaid software licenses 197,014,594 141,059,056
Goodwill 25,929,716 27,801,716
Other assets 6,721,706 5,637,359
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Total assets $ 462,186,338 $ 435,316,397
==================== =======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses, and other current liabilities $ 47,285,484 $ 27,289,290
Deferred revenue 17,201,639 11,850,325
Current portion of capital lease obligations and long term debt 41,753,915 31,465,994
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Total current liabilities 106,241,038 70,605,609
Capital lease obligations and long term debt, less current portion 78,120,432 49,846,100
Long term subordinated notes payable 125,000,000 125,000,000
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Total liabilities 309,361,470 245,451,709
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Stockholders' equity:
Common stock, $.001 par value, 450,000,000 shares authorized,
96,853,430 and 96,513,644 shares issued and outstanding 96,853 96,513
Additional paid-in capital 372,621,121 368,538,537
Due from officer for purchase of common stock (2,250,000) (2,250,000)
Other comprehensive income 779,298 326,588
Unearned compensation (1,031,624) (1,429,500)
Accumulated deficit (217,390,780) (175,417,450)
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Total stockholders' equity 152,824,868 189,864,688
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Total liabilities and stockholders' equity $ 462,186,338 $ 435,316,397
==================== =======================
</TABLE>
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USINTERNETWORKING, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000 JUNE 30, 1999
---------------------- -------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
REVENUE $26,222,956 $6,682,986 $44,012,469 $11,075,092
DIRECT COST OF REVENUE
Direct costs of services 17,286,662 4,825,410 28,536,027 8,074,757
Network and infrastructure costs 6,222,051 3,901,733 12,312,300 6,746,473
---------------------- -------------------- ----------------- -----------------
Cost of goods sold 23,508,713 8,727,143 40,848,327 14,821,230
---------------------- -------------------- ----------------- -----------------
Gross margin 2,714,243 (2,044,157) 3,164,142 (3,746,138)
Sales and marketing expenses 17,679,786 7,168,111 34,936,026 13,592,773
General and administrative expenses 6,786,733 5,943,713 13,011,701 10,882,547
Product research and development 829,042 562,481 1,340,893 807,728
Depreciation and amortization 9,728,108 3,571,417 17,185,699 6,164,042
Amortization of goodwill 1,872,000 1,341,000 3,744,000 2,682,000
Non-cash stock compensation expense 5,751,546 3,224,557 9,875,740 3,360,238
---------------------- -------------------- ----------------- -----------------
Operating expenses 42,647,215 21,811,279 80,094,059 37,489,328
---------------------- -------------------- ----------------- -----------------
Operating loss (39,932,972) (23,855,436) (76,929,917) (41,235,466)
---------------------- -------------------- ----------------- -----------------
Other income (expense)
Interest income 2,594,941 1,162,918 4,498,150 1,421,365
Interest expense (4,635,299) (901,543) (9,187,678) (1,470,930)
---------------------- -------------------- ----------------- -----------------
(2,040,358) 261,375 (4,689,528) (49,565)
---------------------- -------------------- ----------------- -----------------
Net loss ($41,973,330) ($23,594,061) ($81,619,445) ($41,285,031)
====================== ==================== ================= =================
Basic and diluted loss per common share ($0.43) ($0.29) ($0.86) ($1.63)
====================== ==================== ================= =================
OTHER FINANCIAL DATA
EBITDA (a) ($19,844,703) ($15,410,917) ($41,283,633) ($28,681,889)
Recurring revenue 83% 51% 81% 41%
Contract Backlog (b) $87,089,080 $16,478,521 $87,089,080 $16,478,521
Total Contract Backlog (c) $261,615,426 $35,863,365 $261,615,426 $35,863,365
Weighted average shares outstanding 96,684,431 81,724,606 94,925,540 41,565,429
</TABLE>
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(a) The Company defines EBITDA as Earnings Before Interest, Taxes,
Depreciation, Amortization, Amortization of Implementation Labor, and
Non-Cash Stock Compensation Expense. Amortization of Implementation Labor
for the three months ended June 30, 2000 and 1999 was $2,736,615 and
$307,545, respectively. Amortization of Implementation Labor for the six
months ended June 30, 2000 and 1999 was $4,840,845 and $347,297,
respectively.
(b) The Company defines contract backlog as the minimum recurring revenue to
be recognized over the next twelve-months from existing contracts.
(c) The Company defines total contract backlog as the total recurring revenue
not yet recognized from existing contracts.
