PRESS RELEASE--OCTOBER 24, 2000
-------------------------------------------------------------------------------
CONTACT: Tom Donnelly Anthony Carideo
Chief Financial Officer Director, Investor Relations
Net Perceptions, Inc. Net Perceptions, Inc.
952-842-5400 952-842-5454
[email protected] [email protected]
-------------------------------------------------------------------------------
NET PERCEPTIONS ANNOUNCES THIRD QUARTER RESULTS
COMPANY ALIGNS TO INCREASE MOMENTUM TOWARD SERVING
CORE CUSTOMERS AND PROSPECTS
MINNEAPOLIS- Net Perceptions, Inc. (Nasdaq: NETP) today announced revenue
of $7.7 million for the quarter ended Sept. 30, 2000, and a loss of $8.0
million, or ($0.30) per share before the amortization of intangibles and
stock compensation expense. These results compare with revenues of $12.4
million for the second quarter ended June 30, 2000, and a net loss of
($0.15) per share, before the amortization of intangibles and stock
compensation expense. In the same period last year the company reported
$4.1 million in revenue and a net loss of ($0.13) per share before stock
compensation expense.
For the nine months ended Sept. 30, 2000, the company reported $29.6
million in revenue and a loss of $15.5 million, or ($0.62) per share before
amortization of intangibles and stock compensation expense, compared with
$8.8 million in revenue, and a loss of $7.8 million, or ($0.59) per share,
in the first nine months of 1999.
Including the amortization of intangibles and stock compensation expense,
the company reported a loss of ($0.60) per share for the third quarter
ended Sept. 30, 2000, compared to ($0.15) per share for the same period
last year. For the nine months ended Sept. 30, 2000, the loss including
amortization of intangibles and stock compensation expense was ($1.41) per
share, compared to ($0.68) for the same period last year.
"We believe we have the right ingredients for success," Snyder said. "We
have the right people, great technology and blue-chip customers. We're
committed to leveraging these assets to build on the success we've already
achieved in four short years as a company."
Snyder said while disappointed by third quarter results, the company has
taken decisive action to refine its near-term focus and to ensure
significant improvement in both its near- and long-term performance. Among
measures taken, the company has recently reorganized to improve sales and
customer management, streamlined decision-making and aligned its internal
skill mix and spending directly with the strategic objectives to serve the
needs of large multi-channel retailers and Fortune 1000 companies. Specific
actions include:
o Net Perceptions has combined its Network and Commerce Solutions
business units to align its resources more strategically around
the multi-channel retailer. Knowledge Solutions will maintain its
focus on serving Fortune 1000 companies. In addition, the company
will allocate resources selectively to market initiatives where it
sees potential for extending its core technologies.
o Steve Jacob will now head the company's worldwide sales and
customer solutions organization. Jacob brings extensive experience
in running large, enterprise-focused sales and consulting efforts
to this new role.
o Trimming the workforce by approximately 17 percent, or 65
employees, to align the cost structure and skill sets more closely
with the strategic direction. Of the 65, 16 of the eliminations
were in sales, primarily from the telemarketing organization. This
also reflects the transition from a coverage sales model to a
targeted enterprise approach. Sixteen positions were eliminated
from the consulting organization - an action to align skill sets
in this group with the company's backlog and sales pipeline - five
positions were eliminated from the marketing organization, eight
from the general and administrative group and 20 from research and
development. The company does not believe that the eliminations in
research and development will adversely impact any current product
development efforts.
o The company is training and integrating its sales and consulting
resources to more effectively focus on its core markets. Instead
of assigning one sales person to cover 10 to 15 accounts, Net
Perceptions will reorganize its field organization into teams of
two to three people covering only three to four active accounts.
o The company's business alliances team has tightened its focus on
cultivating partnerships with key industry players in Net
Perceptions' strategic sweet spot - including both software
companies that play in the retail and knowledge management spaces
as well as Big 5 systems integrators.
o The company is revamping its pipeline management process to more
accurately assess visibility.
o Steve Larsen will transition from Net Perceptions to head up the
Personalization Summits, its interest in the personalization
magazine published by Peppers and Rogers and
www.personalization.com, which will become an independent entity.
From its start, the company envisioned the Summits as a
vendor-neutral industry event. The growth of these assets is now
at a point where they are best managed as a separate business and
the company is evaluating its options for making this change.
ABOUT NET PERCEPTIONS
Net Perceptions, a leading provider of precision merchandising and
personalization infrastructure software, is the innovator and preeminent
supplier of software solutions that allow companies to translate knowledge
into profitable business action. Its Commerce Solutions and Knowledge
Solutions products enable companies to capitalize on business information
and optimize product assortments, pricing, customer relationships and
intellectual capital. Customers include market leaders such as Best Buy,
Hudson's Bay, JC Penney, J.P. Morgan, Kmart, Procter and Gamble and
Walgreen's. The company is based in the U.S. and has offices in six other
countries. For more visit http://www.netperceptions.com or call
800-466-0711.
NET PERCEPTIONS AND THE NET PERCEPTIONS LOGO ARE REGISTERED TRADEMARKS OF
NET PERCEPTIONS, INC. ALL OTHER TRADEMARKS ARE THE PROPERTY OF THEIR
RESPECTIVE OWNERS. THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS
THAT INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES. AMONG THE IMPORTANT
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
INDICATED BY SUCH FORWARD-LOOKING STATEMENTS ARE THE COMPANY'S LIMITED
OPERATING HISTORY, DELAYS IN PRODUCT DEVELOPMENT, DEVELOPMENT OF THE
INTERNET MARKET, CHANGES IN PRODUCT PRICING POLICIES, COMPETITIVE
PRESSURES, AND THE RISK FACTORS DETAILED FROM TIME TO TIME IN THE COMPANY'S
PERIODIC REPORTS AND REGISTRATION
NET PERCEPTIONS, INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS * (in
thousands, except share and per share amounts)
-------------------------------------------------------------------------------
Three Months Ended Nine Months
September 30, Ended
September 30,
2000 1999 2000 1999
-------------------------------------------------------------------------------
Revenues:
Product $ 4,424 $ 3,035 $ 21,456 $ 6,700
Service and maintenance 3,301 1,079 8,162 2,123
-------------------------------------------------------------------------------
Total revenues 7,725 4,114 29,618 8,823
Cost of revenues:
Product 193 32 520 127
Service and maintenance 3,019 782 7,552 1,586
-------------------------------------------------------------------------------
Total cost of revenues 3,212 814 8,072 1,713
Gross margin 4,513 3,300 21,546 7,110
Operating expenses:
Sales and marketing 6,311 3,275 18,490 7,570
Research and development 5,464 2,270 13,974 5,839
General and administrative 2,628 1,169 7,637 2,556
Lease abandonment expense - - 800 -
-------------------------------------------------------------------------------
Total operating expenses 14,403 6,714 40,901 15,965
-------------------------------------------------------------------------------
Loss from operations (9,890) (3,414) (19,355) (8,855)
Other income, net 1,907 735 3,812 1,044
-------------------------------------------------------------------------------
Net loss $ (7,983) $ (2,679) $ (15,543) $ (7,811)
-------------------------------------------------------------------------------
Net loss per share:
Basic and diluted $ (0.30) $ (0.13) $ (0.62) $ (0.59)
Shares used in computing
basic and diluted net 26,339,150 20,587,072 24,892,510 13,281,169
loss per share
-------------------------------------------------------------------------------
Pro forma basic and
diluted net loss $ (0.30) $ 0.13) $ (0.62) $ (0.44)
per share
Shares used in computing
pro forma basic and 26,339,150 20,587,072 24,892,510 17,892,549
diluted net loss
per share
-------------------------------------------------------------------------------
* For the three and nine months ended September 30, 2000, this Pro Forma
Statement of Operations excludes stock compensation expense and
amortization of acquired intangibles related to the company's first quarter
2000 acquisition of Knowledge Discovery One of $7,786 and $19,536
respectively. For the three and nine months ended September 30, 1999, this
Pro Forma Statement of Operations excludes stock compensation expense of
$339 and $1,206, respectively.
NET PERCEPTIONS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
-------------------------------------------------------------------------------
Three Months Ended Nine Months
September 30, Ended
September 30,
2000 1999 2000 1999
-------------------------------------------------------------------------------
Revenues:
Product $ 4,424 $ 3,035 $ 21,456 $ 6,700
Service and maintenance 3,301 1,079 8,162 2,123
-------------------------------------------------------------------------------
Total revenues 7,725 4,114 29,618 8,823
Cost of revenues:
Product 526 32 1,354 127
Service and maintenance 3,019 782 7,551 1,586
-------------------------------------------------------------------------------
Total cost of revenues 3,545 814 8,905 1,713
Gross margin 4,180 3,300 20,713 7,110
Operating expenses:
Sales and marketing 6,311 3,275 18,490 7,570
Research and development 5,464 2,270 13,974 5,839
General and administrative 2,628 1,169 7,637 2,556
Lease abandonment expense - - 800 -
Amortization of intangibles 7,255 - 18,139 -
Stock compensation expense 198 339 564 1,206
-------------------------------------------------------------------------------
Total operating expenses 21,856 7,053 59,604 17,171
-------------------------------------------------------------------------------
Loss from operations (17,676) (3,753) (38,891) (10,061)
Other income, net 1,907 735 3,812 1,044
-------------------------------------------------------------------------------
Net loss $ (15,769) $ (3,018) $ (35,079) $ (9,017)
-------------------------------------------------------------------------------
Net loss per share:
Basic and diluted $ (0.60) $ (0.15) $ (1.41) $ (0.68)
Shares used in computing
basic and diluted net 26,339,150 20,587,072 24,892,510 13,281,169
loss per share
-------------------------------------------------------------------------------
Pro forma basic and
diluted net loss per share $ (0.60) $ (0.15) $ (1.41) $ (0.50)
Shares used in computing
pro forma basic and
diluted net loss 26,339,150 20,587,072 24,892,510 17,892,549
per share
-------------------------------------------------------------------------------
NET PERCEPTIONS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
-------------------------------------------------------------------------------
September 30, December 31,
2000 1999
------------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 16,609 $ 17,457
Short-term investments 50,737 19,397
Accounts receivable, net 5,943 7,663
Royalties receivable 518 1,135
Prepaid expenses and 2,261 1,373
other current assets
------------------------------------------------------------------------------
Total current assets 76,068 47,025
Marketable securities 41,793 6,317
Property and equipment, net 13,064 4,749
Goodwill & other intangible 99,782 -
assets, net
Other assets 1,375 657
------------------------------------------------------------------------------
Total assets $ 232,082 $ 58,748
------------------------------------------------------------------------------
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and $ 8,400 $ 5,846
accrued expenses
Deferred revenue 4,871 3,336
Current portion of long-term 576 471
liabilities
------------------------------------------------------------------------------
Total current liabilities 13,847 9,653
Long-term liabilities, 2,205 707
net of current portion
------------------------------------------------------------------------------
Total liabilities 16,052 10,360
------------------------------------------------------------------------------
Commitments and contingencies
Stockholders' equity:
Common stock 2 2
Additional paid-in capital 273,541 71,231
Other comprehensive 322 (89)
income (loss)
Accumulated deficit (57,835) (22,756)
------------------------------------------------------------------------------
Total stockholders' equity 216,030 48,388
------------------------------------------------------------------------------
Total liabilities and $ 232,082 $ 58,748
stockholders' equity
-------------------------------------------------------------------------------
