<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-Q
----------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-15213
BRAUN CONSULTING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3702425
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 WEST MONROE, SUITE 300, 60603
CHICAGO, ILLINOIS (Zip Code)
(Address of principal executive
offices)
312-984-7000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Number of shares outstanding as of April 20, 2000--19,959,251
- --------------------------------------------------------------------------------
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<PAGE>
PART I--CONSOLIDATED FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
----------------------
2000 1999
---------- ----------
<S> <C> <C>
Revenues:
Consulting services................................... $ 16,247 $ 9,632
Product sales......................................... 1,411 400
---------- ----------
Total revenues...................................... 17,658 10,032
Costs and expenses:
Project personnel and expenses........................ 8,456 5,450
Cost of products sold................................. 1,356 352
Selling and marketing expenses........................ 1,387 797
General and administrative expenses................... 4,420 2,384
Amortization of intangible assets..................... 2,196 --
Stock compensation.................................... 1,257 64
---------- ----------
Total costs and expenses............................ 19,072 9,047
---------- ----------
Operating income (loss)................................. (1,414) 985
Interest income......................................... 153 5
Interest expense........................................ 2 47
---------- ----------
Income (loss) before provision for income taxes......... (1,263) 943
Provision for income taxes.............................. 900 --
---------- ----------
Net income (loss)................................... $ (2,163) $ 943
========== ==========
Pro forma (Note 5):
Income (loss) before pro forma provision for income
taxes................................................ $ 943
Pro forma provision for income taxes.................. 398
----------
Pro forma net income (loss)........................... $ 545
==========
Earnings (loss) per share--basic (Note 6):
Historical Actual..................................... $ (0.12)
Pro forma (Note 5).................................... $ 0.04
Earnings (loss) per share--diluted (Note 6):
Historical Actual..................................... $ (0.12)
Pro forma (Note 5).................................... $ 0.04
Weighted average shares:
Basic................................................. 17,383,598 12,197,899
Diluted............................................... 19,371,630 12,926,070
</TABLE>
See notes to unaudited consolidated financial statements.
2
<PAGE>
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 2000 1999
------ --------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents............................. $ 7,976 $ 5,947
Marketable securities................................. -- 3,902
Accounts receivable (net of allowances: $183 in 2000;
$100 in 1999)........................................ 15,653 12,251
Accounts receivable--employees........................ 70 73
Receivable from Wincite--current portion.............. 110 114
Income taxes receivable............................... 490 609
Prepaid expenses and other current assets............. 1,455 948
------- -------
Total current assets................................ 25,754 23,844
Equipment, furniture and software--net.................. 4,838 3,703
Intangibles (net of accumulated amortization of $3,049
in 2000 and $840 in 1999).............................. 23,451 25,545
------- -------
Total assets........................................ $54,043 $53,092
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable......................................... $ 151 $ 639
Accounts payable...................................... 2,837 1,648
Accrued offering expenses............................. 366 366
Accrued compensation.................................. 782 741
Accrued merger costs.................................. 224 325
Other accrued liabilities............................. 271 389
Unearned revenue...................................... 80 414
Current deferred income taxes......................... 222 159
------- -------
Total current liabilities........................... 4,933 4,681
Deferred income taxes................................... 371 425
Stockholders' equity:
Common stock, $0.001 par value at March 31, 2000 and
December 31, 1999; authorized 50,000,000 shares March
31, 2000 and December 31, 1999; issued and
outstanding 17,458,230 shares at March 31, 2000,
17,130,783 shares at December 31, 1999............... 17 17
Additional paid-in capital............................ 55,264 48,041
Unearned deferred compensation........................ (5,145) (837)
Retained earnings..................................... (1,397) 765
------- -------
Total stockholders' equity.......................... 48,739 47,986
------- -------
Total liabilities and stockholders' equity.......... $54,043 $53,092
======= =======
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-----------------
2000 1999
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ (2,163) $ 943
Adjustments to reconcile net income (loss) to net cash
flows from operating activities:
Compensation expense related to stock options........... 1,257 64
Income tax benefit from disqualifying dispositions...... 690 --
Deferred income taxes................................... 9 --
Depreciation and amortization........................... 2,429 166
Changes in assets and liabilities:
Accounts receivable................................... (3,399) (2,306)
Income taxes receivable............................... 119 --
Prepaid expenses and other current assets............. (507) (39)
Accounts payable...................................... 1,189 461
Accrued liabilities................................... (178) 266
Unearned revenue...................................... (334) (135)
-------- -------
Net cash flows from operating activities............ (888) (580)
Cash flows from investing activities:
Purchases of marketable securities........................ (11,534) --
Sales of marketable securities............................ 15,436 --
Purchases of equipment, furniture and software............ (1,470) (291)
Proceeds from sale of discontinued operations............. 4 --
-------- -------
Net cash flows from investing activities............ 2,436 (291)
Cash flows from financing activities:
Borrowings................................................ 1,775 710
Repayment of debt......................................... (2,263) (151)
Exercise of stock options................................. 991 1
Distributions paid to stockholders........................ (22) (100)
-------- -------
Net cash flows from financing activities............ 481 460
-------- -------
Net increase (decrease) in cash and cash equivalents........ 2,029 (411)
Cash and cash equivalents, January 1........................ 5,947 570
-------- -------
Cash and cash equivalents, March 31......................... $ 7,976 $ 159
======== =======
Supplemental disclosure of cash flow information:
Interest paid............................................. $ 2 $ 46
======== =======
Income taxes paid......................................... $ 82 $ --
======== =======
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, except share and per share data)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared from the records of Braun Consulting, Inc. (the "Company"), and, in
the opinion of management, include all adjustments (consisting only of normal
and recurring adjustments) necessary to present fairly the Company's financial
position, results of operations and of cash flows as of the dates and for the
periods presented. The balance sheet as of December 31, 1999, presented
herein, has been derived from the audited financial statements for the year
then ended.
Accounting policies followed by the Company are described in Note 2 to the
audited consolidated financial statements for the year ended December 31,
1999, included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999. Certain other information and footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted for purposes of
the consolidated interim financial statements. The consolidated interim
financial statements should be read in conjunction with the audited
consolidated financial statements, including the notes thereto, for the year
ended December 31, 1999.
The consolidated results of operations for the periods presented herein are
not necessarily indicative of the results to be expected for the full year.
2. Cash and Cash Equivalents
Cash and cash equivalents include cash deposits in banks and highly liquid
investments with original maturities of three months or less at the time of
purchase.
3. Marketable Securities
Marketable securities represent available-for-sale securities, which are
recorded at fair market value, which approximates cost as of March 31, 2000.
Realized gains and losses from sales of available-for-sale securities were not
material for any period presented. Interest on marketable securities is
included in interest income.
4. Equipment, Furniture and Software
Equipment, furniture, and software are stated at cost, less accumulated
depreciation and amortization of $2,867 at March 31, 2000 and $2,531 at
December 31, 1999.
5. Pro forma Information
Prior to the termination of its status as an S corporation on July 28,
1999, the Company was treated as an S corporation for federal and certain
state income tax purposes. The pro forma information is presented to show what
the significant effects on the historical information might have been had the
Company not been treated as an S corporation for tax purposes.
6. Earnings (Loss) Per Share
Basic earnings (loss) per share is computed based on the weighted average
number of common shares outstanding during the period. Diluted earnings per
share is computed based on the weighted average number of
5
<PAGE>
common shares outstanding plus the dilutive effect of stock options
outstanding during the period. The Company is in a net loss position for the
three months ended March 31, 2000. Therefore, the common stock equivalents are
not considered in pro forma earnings (loss) per share-diluted, since their
effect is anti-dilutive.
7. Secondary Public Offering
On April 12, 2000, the Company closed its secondary public offering of
securities and issued 2,400,000 shares of common stock at $21.00 per share. In
addition, on April 22, 2000, the underwriters exercised a portion of their
over-allotment option by selling 45,000 shares of the Company's common stock.
Proceeds to the Company from its secondary public offering, net of
underwriting discounts and costs of the offering, were approximately $47.7
million.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview
Braun Consulting, Inc. (the "Company") is a leading Internet professional
services firm delivering customer-focused business solutions to clients. The
Company's approach combines cutting-edge business intelligence and customer
relationship management technologies with business strategy to help clients
drive business performance, generate sustainable growth and profitability and
cultivate long-term customer relationships. Our solutions integrate strategy
and technology to help clients identify and implement the strategies, tools
and tactics necessary to drive organizational change and fundamentally change
the way they do business.
The Company derives substantially all of its revenues from fees for
consulting services, which are billed on a time-and-materials or fixed-price
basis. Invoices are typically issued bi-weekly to monitor client satisfaction
and manage outstanding accounts receivable balances. Revenues on time-and-
materials contracts are recognized as the services are provided. The Company
recognizes revenue on fixed-price projects as services are performed over the
life of the contract. Losses on contracts, if any, are provided for in full in
the period when determined. Approximately 42% or our consulting services
revenues for the three months ended March 31, 2000 was derived from fixed-
price contracts as compared to approximately 43% for the three months ended
March 31, 1999.
The Company also realizes a limited amount of revenue from product sales as
a value-added reseller of software products. The Company currently resells
software products primarily as an accommodation to clients who prefer to
retain a single-source provider. For the three months ended March 31, 2000,
product sales accounted for 8.0% of revenues as compared to 4.0% of revenues
for the three months ended March 31,1999.
The Company's most significant expense is project personnel and expenses,
which consists primarily of project personnel salaries, bonuses and benefits,
and non-reimbursed expenses incurred to complete projects. The Company seeks
to manage its costs by adding a variable portion of employee compensation
payable upon the achievement of measurable performance goals.
The Company's project personnel and expenses as a percentage of revenues
are also related to consultant utilization. The Company manages utilization by
monitoring project requirements and timetables. The number of consultants
assigned to a project will vary according to the size, complexity, duration
and demands of the project. Project completions and scheduling delays may
result in periods when consultants are not fully utilized. An unexpected
termination of a significant project could also cause the Company to
experience lower consultant utilization, resulting in a higher than expected
number of unassigned consultants. In addition, the Company does not fully
utilize its consulting personnel on billable projects during the initial
months of their employment. During that time, they undergo training and become
integrated into the Company's operations.
To sustain its growth and profitability, the Company has and continues to
make substantial investments in infrastructure, including senior management
and other experienced administrative personnel, experienced business
development managers and an advanced management reporting system.
Selling and marketing expenses consist primarily of salaries, employee
benefits and travel costs of selling and marketing personnel and promotional
costs. General and administrative expenses consist primarily of costs
associated with the Company's executive management, finance and administrative
groups including personnel devoted to recruiting, employee retention and
training; occupancy costs including depreciation, amortization and office
equipment leases; travel; and all other branch and corporate costs. The
Company continues to incur increased rent associated with its growth and the
opening of new offices.
Stock compensation expenses consist of non-cash compensation expenses
arising from option grants. The Company recorded aggregate unearned stock
compensation totaling $2.8 million in connection with certain stock option
grants from November 1998 through March 31, 2000. This stock compensation
expense will be
7
<PAGE>
recognized over a period ending December 31, 2006, which is the end of the
vesting period for the related options.
Prior to July 28, 1999, the Company was treated as an S corporation for
federal income tax purposes under the Internal Revenue Code and for certain
state income tax purposes. As a result, substantially all of the income of the
Company during the 3 months ended March 31, 1999 was taxed directly to its
stockholders rather than to the Company. The consolidated statements of income
reflects a pro forma adjustment for federal and state income taxes for the
three months ended March 31, 1999, assuming the Company had been operating as
a C corporation during such period.
Statements in this Quarterly Report on Form 10-Q that are not strictly
historical are "forward-looking" statements that involve risks or
uncertainties, many of which are not under the control of the Company. The
risks and uncertainties include, but are not limited to, competition, general
economic conditions, the number of projects undertaken and completed during a
period, attracting and retaining highly skilled employees, as well as other
risks identified in the Company's prospectus dated April 6, 2000. The Company
is under no duty to update any of the forward-looking statements after the
date of this report or to conform these statements to actual results or
changes in its expectations.
8
<PAGE>
Results of Operations
The following table sets forth, for the periods indicated, selected
consolidated statements of income data as a percentage of total revenues:
<TABLE>
<CAPTION>
Three
Months
Ended
March 31,
-------------
2000 1999
----- -----
<S> <C> <C>
Revenues:
Consulting services..................................... 92.0 % 96.0%
Product sales........................................... 8.0 4.0
----- -----
Total revenues........................................ 100.0 100.0
Costs and expenses:
Project personnel and expenses.......................... 47.9 54.3
Cost of products sold................................... 7.7 3.5
Selling and marketing expenses.......................... 7.9 7.9
General and administrative expenses..................... 25.0 23.8
Amortization of intangible assets....................... 12.4 --
Stock compensation...................................... 7.1 0.7
----- -----
Total costs and expenses.............................. 108.0 90.2
Operating income (loss)................................... (8.0) 9.8
Interest income........................................... 0.9 0.0
Interest expense.......................................... 0.0 0.4
----- -----
Income (loss) before provision for income taxes........... (7.1) 9.4
Provision for income taxes................................ 5.1 --
----- -----
Net income (loss)..................................... (12.2)% 9.4%
===== =====
Pro forma:
Income (loss) before pro forma provision for income
taxes.................................................. 9.4%
Pro forma provision for income taxes.................... 4.0
-----
Pro forma net income (loss)............................. 5.4%
=====
</TABLE>
9
<PAGE>
Total Revenues. Total revenues increased 76.0% to $17.7 million for the
three months ended March 31, 2000 from $10.0 million for the three months
ended March 31, 1999. Consulting services increased 68.7% to $16.2 million for
the three months ended March 31, 2000 from $9.6 million for the three months
ended March 31, 1999. These increases primarily reflect increases in the
volume of consulting services provided to existing and new clients. During the
first quarter of 2000, the Company continued to sell some software products as
an accommodation to clients. As a result, product sales increased to $1.4
million for the three months ended March 31, 2000 compared to $400,000 for the
three months ended March 31, 1999.
Project Personnel and Expenses. Project personnel and expenses increased
55.2% to $8.5 million for the three months ended March 31, 2000 from $5.5
million for the three months ended March 31, 1999. The increase in project
personnel and expenses for the three months ended March 31, 2000 was due
primarily to an increase in project personnel to 369 as of March 31, 2000 as
compared to 219 as of March 31, 1999. Project personnel and expenses decreased
as a percentage of consulting services to 52.0% for the three months ended
March 31, 2000 from 56.6% for the three months ended March 31, 1999.
Selling and Marketing Expenses. Selling and marketing expenses increased
74.0% to $1.4 million for the three months ended March 31, 2000 from $797,000
for the three months ended March 31, 1999. Selling and marketing expenses
increased as a percentage of consulting services to 8.5% for the three months
ended March 31, 2000 from 8.3% for the three months ended March 31, 1999. The
increase in selling and marketing expenses primarily results from an increase
in selling and marketing personnel and the funding of business development
costs to increase lead generation activities and to broaden market awareness
and customer base. The selling and marketing department consisted of 28
employees at March 31, 2000 as compared to 19 employees at March 31, 1999.
General and Administrative Expenses. General and administrative costs
increased 85.4% to $4.4 million for the three months ended March 31, 2000 from
$2.4 million for the three months ended March 31, 1999. General and
administrative costs increased as a percentage of consulting revenues to 27.2%
for the three months ended March 31, 2000 from 24.8% for the three months
ended March 31, 1999. An important part of the increase in general and
administrative expenses for the three months ended March 31, 2000 compared to
the three months ended March 31, 1999 was due to an increase in facilities
costs. The Company expanded its offices in Boston, Chicago, Denver and
Indianapolis. In addition, the Company's total general and administrative
headcount increased to 51 employees at March 31, 2000 from 43 employees at
March 31, 1999.
Amortization of Intangible Assets. For the three months ended March 31,
2000, amortization of intangible assets, primarily goodwill, was $2.2 million
as a result of the Company's acquisition of Emerging Technologies Consultants,
Inc.
Stock Compensation Expense. Stock compensation expense increased to $1.3
million for the three months ended March 31, 2000 from $64,000 for the three
months ended March 31, 1999. The increase in stock compensation expense was
primarily the result of options granted in the first quarter 2000 related to
the hiring of senior personnel during the first quarter.
Interest (Income) Expense. Interest income increased to $153,000 for the
three months ended March 31, 2000 from $5,000 for the three months ended March
31, 1999. The increase was due to the investment of the proceeds from the
initial public offering in August 1999. The decrease in interest expense for
the three months ended March 31, 2000 versus March 31, 1999 was due to
decreased borrowings under the Company's line of credit during 2000.
Net Income (Loss). Net income decreased to a loss of $2.2 million for the
three months ended March 31, 2000 from a profit of $943,000 for the three
months ended March 31, 1999. The decrease in net income was due primarily to
the amortization of intangible assets related to the acquisition of Emerging
Technologies Consultants, Inc. and the increased stock compensation expense
attributable to various option grants.
10
<PAGE>
Provision for Income Taxes. The provision for income taxes was $900,000 for
the three months ended March 31, 2000 as compared to the pro forma provision
for income taxes of $398,000 for the three months ended March 31, 1999. The
effective income tax rate was 71.3% for the three months ended March 31, 2000.
The pro forma effective tax rate was 42.2% for the three months ended March
31, 1999.
Liquidity and Capital Resources. In August 1999, the Company sold 4,000,000
shares of common stock in its initial public offering. Of the net proceeds of
approximately $24.5 million, approximately $3.8 million was used for
distribution to stockholders of previously taxed but undistributed S
corporation income, and the remainder of the net proceeds has been invested in
cash, cash equivalents and marketable securities until used for working
capital purposes or acquisitions.
In April 2000, the Company sold 2,445,000 shares of common stock in its
secondary public offering. The Company has invested all of the net proceeds of
approximately $47.7 million in cash and cash equivalents.
As of March 31, 2000, the Company maintained a line of credit providing for
borrowings of up to $5.0 million. The Company's line of credit for $5.0
million is with LaSalle Bank National Association, bears interest at the
bank's prime rate and expires on June 30, 2000. The terms of the LaSalle Bank
National Association line of credit include financial covenants covering the
relationships of borrowings to accounts receivable and to tangible net worth,
and the relationship of total liabilities to tangible net worth. The Company
expects to renew the line of credit upon its expiration. In addition, the
Company has a $100,000 term loan from Sovereign Bank. The term loan bears
interest at 7.25% and matures February 1, 2002. At March 31, 2000, there were
no borrowings outstanding under the $5.0 million line of credit and
approximately $66,000 of bank borrowings outstanding under the $100,000 term
loan. Capital expenditures of approximately $1.5 million for the three months
ended March 31, 2000 and approximately $300,000 for the three months ended
March 31, 1999 were primarily used for computers, office equipment and
leasehold improvements related to the Company's growth.
Management believes that the cash and cash equivalents of $8.0 million as
of March 31, 2000, the net proceeds of $47.7 million from the Company's
recently completed sale of common stock, together with cash provided from
operations and borrowings available under the credit facilities at March 31,
2000 will be sufficient to meet working capital and capital expenditure
requirements for at least the next 24 months.
Market Risk. The Company's investment in cash and cash equivalents of
approximately $8.0 million at March 31, 2000 primarily consists of investments
in commercial paper. The Company does not invest in complex derivatives. The
fair market value of marketable securities represents the Company's cost at
March 31, 2000.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
The Company may be exposed to market risk related to changes in interest
rates. The Company's borrowing arrangements and short-term investments are
based on variable rates of varying maturities. The Company does not have any
agreements to protect the Company from the risk presented by a change in its
interest rates. If interest rates on the Company's borrowings were to increase
immediately and uniformly by 10% from levels as of March 31, 2000 from 9.00 to
9.9%, the Company's net income would decrease by $594, which is equal to the
product of the 10% increase in the interest rate multiplied by the
approximately $66,000 of bank borrowings outstanding as of March 31, 2000. If
interest rates on the Company's investments were to decrease immediately and
uniformly by 10% from levels at March 31, 2000 from approximately 5.5% to
4.95%, the Company's net income would decrease by $44,000, which is equal to
the product of 10% decrease in the interest rate multiplied by the
approximately $8 million of short-term investments in cash equivalents as of
March 31, 2000.
11
<PAGE>
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not involved in any material legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
During the period covered by this report, pursuant to Rule 701, the Company
has sold and issued pursuant to the 1998 Employee Long-Term Stock Investment
Plan, 248,216 shares of common stock pursuant to the exercise of options by
130 employees at a weighted average exercise price of $3.39 per share. During
the period covered by this report, the Company has sold and issued pursuant to
the 1995 Director Stock Option Plan, 33,396 shares of common stock pursuant to
the exercise of options by 6 employees at a weighted average exercise price of
$0.35 per share. During the period covered by this report, the Company has
sold and issued pursuant to the 1998 Executive Long-Term Stock Investment
Plan, 45,835 shares of common stock pursuant to the exercise of options by 2
employees at a weighted average exercise price of $3.00 per share. These
issuances were made in reliance on Rule 701. None of the foregoing
transactions involved any underwriter, underwriting discount or commissions,
or any public offerings.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
27.1 Financial Data Schedule.
</TABLE>
- --------
(b) Reports on Form 8-K.
Of February 14, 2000, the Company amended its Current Report on Form 8-K
dated December 1, 1999 to provide the financial statements and related notes
of Emerging Technologies Consultants, Inc. and required pro forma financial
information.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Braun Consulting, Inc.
(Registrant)
/s/ John C. Burke
-------------------------------------
John C. Burke
Chief Financial Officer
(Duly Authorized and Chief
Accounting Officer)
Date: May 12, 2000
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,976
<SECURITIES> 0
<RECEIVABLES> 15,836
<ALLOWANCES> 183
<INVENTORY> 0
<CURRENT-ASSETS> 25,754
<PP&E> 7,705
<DEPRECIATION> 2,867
<TOTAL-ASSETS> 54,043
<CURRENT-LIABILITIES> 4,933
<BONDS> 0
0
0
<COMMON> 17
<OTHER-SE> 48,722
<TOTAL-LIABILITY-AND-EQUITY> 54,043
<SALES> 16,247
<TOTAL-REVENUES> 17,658
<CGS> 9,812
<TOTAL-COSTS> 18,889
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 183
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> (1,263)
<INCOME-TAX> 900
<INCOME-CONTINUING> (2,163)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,163)
<EPS-BASIC> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
