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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION, PLEASE CONTACT:
Ray McManus Stephen Rouse Monica Zaied
Public Relations Maverick PR Investor Relations
724 Solutions Inc. FOR 724 SOLUTIONS 724 Solutions Inc.
416-228-8191 416.640.5518 416-228-2369
[email protected] [email protected] [email protected]
724 SOLUTIONS REPORTS THIRD QUARTER FINANCIAL RESULTS
SERVICE REVENUE EXPERIENCES 91 PER CENT GROWTH QUARTER OVER QUARTER; OVERALL
REVENUE INCREASES BY 54 PER CENT QUARTER OVER QUARTER
TORONTO, ON -- (OCTOBER 25, 2000) -- 724 Solutions Inc. (Nasdaq: SVNX and TSE:
SVN), the premier wireless financial services infrastructure software provider,
today reported another quarter of record revenue. For the third quarter ended
September 30, 2000, 724 Solutions reported revenue of $6.1 million - up 54 per
cent from $4.0 million in the second quarter. For the nine months ended
September 30, 2000, revenue, before the offset of stock-based compensation, was
$13.4 million, up from $2.1 million for the same period in the prior year. (All
financial information is expressed in U.S. dollars.)
Net loss for the third quarter of fiscal 2000, excluding certain non-cash
charges, was $10.9 million, or $0.29 per basic share, compared to a net loss of
$11.7 million, or $0.32 per basic share, for the second quarter. Net loss,
excluding certain non-cash charges, for the nine months ended September 30, 2000
was $28.4 million or $0.78 per basic share compared to a net loss of $6.2
million or $0.46 per basic share for the nine months ended September 30, 1999.
Non-cash charges include the amortization of intangibles, stock-based
compensation and the equity in affiliate.
"724 Solutions delivered another outstanding quarter, reflecting our continued
strength as the technology platform of choice for world-class financial
institutions," said Greg Wolfond, chief executive officer of 724 Solutions.
"Growth was fueled by our current customers' demand for our services, and new
customers licensing our technology. The quarter was again marked by several
significant announcements - including our acquisition of Spyonit.com and the
launch of LiveClips-TM- - as well as a continuing series of exciting technology
developments with our partners."
724 Solutions had product revenue for the third quarter of $3.5 million, up 34
per cent from $2.6 million for the second quarter of this fiscal year. Product
revenue, before the offset of stock-based compensation, increased seven-fold to
$8.8 million for the nine months ended September 30, 2000 compared to the nine
months ended September 30, 1999. The quarter over quarter increase is largely
due to 724 Solutions achieving major customer milestones. The nine-month
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increase reflects the additional number of customer licenses that 724 Solutions
obtained in fiscal 2000.
Service revenue for the third quarter increased 91 per cent to $2.6 million,
from $1.4 million for the three months ended June 30, 2000. Service revenue was
$4.6 million compared to $788,000 for the nine months ended September 30, 2000
and September 30, 1999, respectively. The growth, quarter over quarter, resulted
from 724 Solutions' customers' increasing demand for implementation and
customization services for the Financial Services Platform and LiveClips.
The company continues to be in a very strong cash position with cash, cash
equivalents, and short-term investments of $178.0 million at September 30, 2000
($199.3 million at June 30, 2000).
724 Solutions' research and development expenses increased as it continues to
develop enhanced functionality for its FSP and integrate other technologies
obtained through acquisitions to deliver on its mobile-commerce platform.
Total operating expenses for the quarter were $26.4 million compared to $18.7
million in the previous quarter. The increase in total costs was primarily
due to the increase in the amortization of intangibles of $6.6 million
relating to the goodwill and acquired intangibles associated with the
acquisition of ezlogin.com and Spyonit.com.
Following the quarter-end, the company made a number of significant
announcements, including Bank of Montreal piloting LiveClips aggregation
technology on its Veev service, a licensing and aggregation distribution
agreement with Australia-based Parker's Edge, announced plans to work with
Sina.com, the world's largest Chinese-language portal, and extending the FSP's
capability to interoperate with Brodia's digital wallet.
"We continue to see major new opportunities arising from applications of the
724 Solutions Financial Services Platform and m-commerce," added Wolfond. "We
believe we have unparalleled opportunities with the global m-commerce market
exploding, our momentum continues and we are well-positioned to achieve
continued strong growth going forward."
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724 SOLUTIONS - SUMMARY RESULTS OF OPERATIONS (UNAUDITED)
(IN 000'S OF U.S. DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Fiscal 2000 Nine Months Ended
Three Months Ended September 30, 2000
September 30 June 30 2000 1999
<S> <C> <C> <C> <C>
Revenue:
Product $3,482 $2,591 $8,835 $1,314
Less: stock-based compensation
related to product -- -- (248) (1,273)
Services 2,632 1,377 4,606 788
---------------------------------------------------------------
Net revenue 6,114 3,968 13,193 829
Cost of revenue 3,777 2,550 8,280 802
---------------------------------------------------------------
Gross margin 2,337 1,418 4,913 27
Operating expenses:
Research and development 8,065 6,545 19,033 4,360
Sales and marketing 3,632 3,315 9,396 1,106
General and administrative 3,879 5,395 11,492 1,883
</TABLE>
<TABLE>
<CAPTION>
Fiscal 2000 Nine Months Ended
Three Months Ended September 30, 2000
September 30 June 30 2000 1999
<S> <C> <C> <C> <C>
Depreciation 1,313 684 2,314 445
Amortization of intangibles 7,917 1,350 9,267 --
Stock-based compensation related
to stock options 1,555 1,456 3,854 124
---------------------------------------------------------------
Total operating expenses 26,361 18,745 55,356 7,918
---------------------------------------------------------------
Loss from operations (24,024) (17,327) (50,443) (7,891)
Interest income 3,633 2,772 8,643 341
Equity in income (losses) of affiliate 965 (213) 686 --
---------------------------------------------------------------
Net loss for the period $(19,426) $(14,768) $(41,114) $ (7,550)
---------------------------------------------------------------
---------------------------------------------------------------
Basic and diluted net
loss per share $ (0.51) $ (0.40) $ (1.13) $ (0.57)
Weighted-average number of shares used in
computing basic and diluted net loss
per share (in thousands) 37,961 36,717 36,246 13,301
---------------------------------------------------------------
---------------------------------------------------------------
Loss before interest, taxes, depreciation
and amortization, amortization of stock-based
compensation and equity in income (losses)
of affiliate $(13,239) $(13,837) $(34,760) $ (6,049)
---------------------------------------------------------------
---------------------------------------------------------------
EPS ADJUSTED FOR CERTAIN NON CASH ITEMS:
Loss from operations $(19,426) $(14,768) $(41,114) $ (7,550)
add back certain non-cash items
Amortization 7,917 1,350 9,267 --
Stock based compensation 1,555 1,456 4,102 1,397
Equity in losses (income) of affiliate (965) 213 (686) --
---------------------------------------------------------------
Adjusted net loss $(10,919) $(11,749) $(28,431) $ (6,153)
---------------------------------------------------------------
EPS adjusted for certain non-cash items $ (0.29) $ (0.32) $ (0.78) $ (0.46)
</TABLE>
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BALANCE SHEET
(UNAUDITED, IN 000'S OF U.S. DOLLARS)
<TABLE>
<CAPTION>
September 30 December 31
2000 1999
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 19,915 $ 65,287
Short-term investments 158,062 --
Accounts receivable-trade
net of allowance of $92 (December 31, 1999 - nil) 3,205 3,121
Prepaid expenses and other receivables 3,623 1,368
----------------------------
184,805 69,776
Capital assets 9,776 2,366
Investments 11,935 --
Intangible and other assets 90,750 1,100
----------------------------
$ 297,266 $ 73,242
----------------------------
----------------------------
</TABLE>
<TABLE>
<CAPTION>
September 30 December 31
2000 1999
(unaudited)
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,676 $ 1,982
Accrued liabilities 8,199 2,967
Deferred revenue, net of deferred stock-based
compensation of nil (December 31, 1999 - $248) 4,135 6,022
----------------------------
14,010 10,971
Leasehold inducements 398 103
Shareholders' equity:
Share capital
Authorized:
Unlimited common shares
Unlimited preferred shares
Issued and outstanding:
39,061,130 common shares
(December 31, 1999 - 29,402,426) 357,079 84,762
Deferred stock-based compensation (16,419) (5,909)
Accumulated deficit (57,802) (16,685)
----------------------------
282,858 62,168
----------------------------
$ 297,266 $ 73,242
----------------------------
----------------------------
</TABLE>
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THIRD QUARTER HIGHLIGHTS
GETTING 724 SOLUTIONS' CUSTOMERS TO MARKET
- Harris Bank, a fully owned U.S. subsidiary of Bank of Montreal,
launched service to its nearly one million Chicago-based retail
customers - providing the ability to conduct banking and investment
services using Internet-enabled mobile phones.
- Bank of America launched its wireless banking and brokerage offering
in the United States. Powered by the 724 Solutions Financial Services
Platform, the initial rollout is available to Private Bank clients in
Dallas and Fort Worth, Texas; Baltimore, Maryland; and Washington, DC.
- Citigroup launched Citibank Alerts in Singapore.
- Wachovia Corporation licensed the FSP for both retail and commercial
banking customers.
- BBVA Bancomer, Mexico's largest financial group, licensed the FSP to
offer mobile banking services in English and Spanish to its customers
throughout Mexico and the United States.
- KeyCorp entered into a pilot agreement to introduce interactive
wireless banking services. It also chose to have the FSP hosted in a
724 Solutions data centre during this first phase.
PRODUCT - CONTINUING TO DEVELOP A POWERFUL SOLUTION
- 724 Solutions introduced the latest iteration of the FSP. The release
offered single sign-on capabilities and multi-byte capabilities that
increased the number of languages supported by the FSP.
- 724 Solutions invested in Neomar, a leading provider of wireless
infrastructure software that enables the delivery of mobile enterprise
applications. Greg Wolfond, CEO of 724 Solutions, joined Neomar's
board of directors.
- 724 Solutions acquired Chicago-based Spyonit.com, Inc., a leading
developer of Web-based monitoring and notification technology.
- 724 Solutions Inc. launched LiveClips, an enhanced aggregation product
based on ezlogin.com's aggregation technology. Home Account will add
LiveClips' account aggregation functionality to its Canopy Central
full-service, Web-based financial service solution. In addition, Ms
Money.com - a women's financial portal - plans to offer a consolidated
view of Web-based accounts to its customers via LiveClips.
- 724 Solutions and Certicom Corp. announced a plan to deliver the first
open and standards-based wireless public key infrastructure solution
for the financial services industry.
- 724 Solutions Inc. and CheckFree announced a strategy to make
electronic billing and payment available quickly to financial
institutions' customers that use both CheckFree and the 724 Solutions
FSP.
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CORPORATE
- 724 Solutions Inc. was added to The Toronto Stock Exchange's TSE 300
Composite Index in the Industrial Products Group, the TSE 200 Index
and Standard and Poor's S&P/TSE Canadian MidCap Index as of market
close on September 19, 2000.
- University of Toronto Professor and President Emeritus J. Robert S.
Prichard joined the company's board of directors - a move designed to
create a more independent board of directors.
- Chris Jarman joined 724 Solutions as Executive Vice-President, Mobile
Commerce. Jarman is a recognized industry leader in the mobile
commerce arena.
INVESTORS WILL HAVE THE OPPORTUNITY TO LISTEN TO 724 SOLUTIONS'
EARNINGS RELEASE CONFERENCE CALL, WHICH COMMENCES AT 5:00 P.M. TODAY, BY DIALING
DOMESTIC (416) 641-6685, OR TOLL FREE AT 1-800-379-4140. POWERPOINT SLIDES USED
ON THE CONFERENCE CALL ARE AVAILABLE ON THE INVESTOR INFORMATION PAGE OF THE 724
SOLUTIONS WEB SITE AT http://www.724.com/investors/IRStart.htm. A REPLAY OF THE
CALL WILL BE AVAILABLE AT THE WEB SITE BEGINNING TODAY AT 8:00 P.M. EST.
About 724 Solutions Inc.
724 Solutions provides an Internet infrastructure solution to financial
institutions that enables them to offer personalized and secure mobile
banking, investment, and e-commerce services across a wide range of
Internet-enabled wireless and consumer electronic devices. The company
provides end-to-end customer support through its global application hosting
and contact center services. 724 Solutions' customers comprise world-class
financial institutions whose combined customer bases total 165 million. 724
Solutions' common shares are listed on the NASDAQ National Market (SVNX) and
The Toronto Stock Exchange (SVN). Headquartered in Toronto, Canada, the
company has offices in London, Paris, San Francisco, Mountain View, Sydney,
and Tokyo. For additional information visit www.724.com.
This press release contains statements of a forward-looking nature. These
statements are made under the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995. You can identify these forward-looking
statements by terminology such as "will," "expects," "anticipates," "future,"
"intends," "plans," "believes," "estimates" and similar expressions. The
accuracy of these statements may be impacted by a number of business risks and
uncertainties that could cause actual results to differ materially from those
projected or anticipated, including risks related to: the risk that technologies
for the delivery of financial or e-commerce services over the Internet and
wireless networks will not be developed or be attractive to consumers as
anticipated; the risk that 724 Solutions will not successfully deploy or operate
services based upon the 724 Solutions Financial Services Platform and LiveClips;
the risk that 724 Solutions' services will not be able to be profitably
independently marketed and other risks outlined in 724 Solutions' SEC filings,
and filings with Canadian Securities Administrators, including but not limited
to 724 Solutions' registration statement on Form F-1, prospectuses, material
change reports, Annual Information Form, Form 20-F, Management Information
Circular, or filings on Form 6-K. 724 Solutions does not undertake any
obligation to update this forward-looking information, except as required under
applicable law.
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