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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended
September 30, 1999
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-28252
BroadVision, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-3184303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
585 Broadway, Redwood City, California 94063
(Address of principal executive offices) (Zip code)
(650) 261-5100
(Registrant's telephone number, including area code)
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
--- ---
As of October 31, 1999, there were 77,618,034 shares of the
Registrant's Common Stock issued and outstanding.
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<PAGE>
<TABLE>
BROADVISION, INC. AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1999
TABLE OF CONTENTS
<CAPTION>
Page No.
--------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1999 and December 31, 1998 3
Consolidated Statements of Operations and Comprehensive Income -
Three and nine months ended September 30, 1999 and 1998 4
Consolidated Statements of Cash Flows -
Nine months ended September 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 18
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
BROADVISION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<CAPTION>
September 30, December 31,
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 55,323 $ 61,878
Short-term investments 24,201 --
Accounts receivable, less allowance for doubtful accounts and
returns of $1,221 and $788, for 1999 and 1998, respectively 23,091 15,361
Prepaids and other 3,992 3,589
--------- ---------
Total current assets 106,607 80,828
Property and equipment, net 12,830 8,034
Long-term investments 25,534 11,546
Deferred income taxes 8,036 --
Other 3,522 1,154
--------- ---------
Total assets $ 156,529 $ 101,562
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 4,602 $ 2,243
Accrued expenses 8,161 4,933
Unearned revenue 3,715 1,918
Deferred maintenance 11,601 6,157
Current portion of capital lease obligations 347 709
Current portion of long-term debt 977 548
--------- ---------
Total current liabilities 29,403 16,508
Long-term debt 5,030 2,924
Other 26 321
--------- ---------
Total liabilities 34,459 19,753
Commitments
Stockholders' equity:
Convertible preferred stock, $0.0001 par value; 10,000
shares authorized; none issued and outstanding -- --
Common stock, $0.0001 par value; 500,000 shares authorized;
77,441 and 74,389 shares issued and outstanding for 1999 and
1998, respectively 8 7
Additional paid-in capital 120,084 98,762
Deferred compensation (307) (555)
Accumulated other comprehensive income, net of tax 11,141 3,198
Accumulated deficit (8,856) (19,603)
--------- ---------
Total stockholders' equity 122,070 81,809
--------- ---------
Total liabilities and stockholders' equity $ 156,529 $ 101,562
========= =========
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
3
<PAGE>
<TABLE>
BROADVISION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- --------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Software licenses $ 18,954 $ 9,158 $ 47,221 $ 24,455
Services 10,877 4,273 24,550 10,439
-------- -------- -------- --------
Total Revenues 29,831 13,431 71,771 34,894
Cost of revenues:
Cost of software licenses 676 237 2,460 637
Cost of services 7,241 2,553 15,114 6,264
-------- -------- -------- --------
Total cost of revenues 7,917 2,790 17,574 6,901
-------- -------- -------- --------
Gross profit 21,914 10,641 54,197 27,993
Operating expenses:
Research and development 3,816 2,394 9,986 6,476
Sales and marketing 12,136 6,285 29,891 18,389
General and administrative 2,119 977 5,001 2,562
-------- -------- -------- --------
Total operating expenses 18,071 9,656 44,878 27,427
-------- -------- -------- --------
Operating income 3,843 985 9,319 566
Other income, net 891 769 2,001 1,382
-------- -------- -------- --------
Income before provision
for income taxes 4,734 1,754 11,320 1,948
Provision for income taxes 240 -- 573 --
-------- -------- -------- --------
Net income $ 4,494 $ 1,754 $ 10,747 $ 1,948
======== ======== ======== ========
Basic earnings per share $ 0.06 $ 0.02 $ 0.14 $ 0.03
======== ======== ======== ========
Diluted earnings per share $ 0.05 $ 0.02 $ 0.13 $ 0.03
======== ======== ======== ========
Shares used in computing:
Basic earnings per share 76,335 72,792 75,306 68,772
======== ======== ======== ========
Diluted earnings per share 86,649 80,166 84,753 75,642
======== ======== ======== ========
Comprehensive income:
Net income $ 4,494 $ 1,754 $ 10,747 $ 1,948
Other comprehensive income, net of tax:
Unrealized long-term investment
gains (losses) (2,102) -- 7,943 --
-------- -------- -------- --------
Total comprehensive income $ 2,392 $ 1,754 $ 18,690 $ 1,948
======== ======== ======== ========
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
4
<PAGE>
<TABLE>
BROADVISION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,747 $ 1,948
Adjustments to reconcile net income to net cash
provided by (used for) operating activities:
Depreciation and amortization 2,994 2,074
Amortization of deferred compensation 248 269
Allowance for doubtful accounts and returns 433 403
Revenue recognized from non-monetary transactions -- (2,917)
Amortization of prepaid royalties 250 167
Changes in operating assets and liabilities:
Accounts receivable (8,163) (2,442)
Prepaids and other (429) (995)
Accounts payable and accrued expenses 5,587 1,018
Unearned revenue and deferred maintenance 7,241 237
-------- --------
Net cash provided by (used for) operating activities 18,908 (238)
Cash flows from investing activities:
Additions to property and equipment (7,790) (2,932)
Purchase of long-term investments (750) (1,500)
Other assets (2,618) (161)
Purchase of short-term investments (24,201) --
Maturity of short-term investments -- 796
-------- --------
Net cash used for investing activities (35,359) (3,797)
Cash flows from financing activities:
Net change in restricted cash -- 1,400
Proceeds from issuance of common stock, net 7,993 55,947
Proceeds from borrowings, net 2,535 958
Capital lease payments (632) (633)
-------- --------
Net cash provided by financing activities 9,896 57,672
Net (decrease) increase in cash and cash equivalents (6,555) 53,637
Cash and cash equivalents at beginning of period 61,878 8,277
-------- --------
Cash and cash equivalents at end of period $ 55,323 $ 61,914
======== ========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 267 $ 294
======== ========
Cash paid for income taxes $ 511 $ 159
======== ========
Non-cash investing and financing activities:
Unrealized gain on long-term investments (net of taxes of $5,295) $ 7,943 $ --
======== ========
Contributed capital - Income tax benefits from stock option exercises $ 13,330 $ --
======== ========
Other current and noncurrent assets acquired in non-monetary transaction $ -- $ 5,275
======== ========
Unearned revenue and deferred maintenance - non-monetary transaction $ -- $ 2,358
======== ========
Acquisition of equipment under capital lease $ -- $ 247
======== ========
Deferred compensation forfeited due to voluntary terminations $ -- $ 693
======== ========
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
5
<PAGE>
BROADVISION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Summary of Significant Accounting Policies
Nature of Business - BroadVision, Inc. ("BroadVision" or the "Company")
develops, markets and supports application software solutions for one-to-one
relationship management across the extended enterprise. These solutions enable
businesses to use the Internet as a platform to conduct electronic commerce,
offer online customer self-service and support, deliver targeted information and
provide online financial services. Each of these capabilities can be provided to
all constituents of the extended enterprise, including customers, suppliers,
partners, distributors and employees.
Basis of Presentation - The accompanying consolidated financial statements
include the accounts of BroadVision and its wholly owned subsidiaries. They have
been prepared in accordance with the established guidelines for interim
financial information as provided by the instructions to Form 10-Q and Article
10 of Regulation S-X. All significant intercompany transactions have been
eliminated in consolidation. The financial results and related information as of
September 30, 1999 and for the three and nine months ended September 30, 1999
and 1998 are unaudited. The balance sheet at December 31, 1998, has been derived
from the audited consolidated financial statements at that date but does not
necessarily reflect all of the informational disclosures previously reported in
accordance with Generally Accepted Accounting Principles. In the Company's
opinion, the consolidated financial statements presented herein include all
necessary adjustments, consisting of normal recurring adjustments, to fairly
state the Company's financial position, results of operations, and cash flows
for the periods indicated. The accompanying consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included with the Company's Form 10-K and other documents that
have been filed with the Securities and Exchange Commission. The results of the
Company's operations for the interim periods presented are not necessarily
indicative of operating results for the full fiscal year or any future interim
periods.
Stock Split - The Company's Board of Directors declared a three-for-one common
stock split in the form of a stock dividend for Stockholders of record as of
October 11, 1999. The stock dividend payment date was October 25, 1999 and the
Company's common stock traded ex-dividend starting October 26, 1999, reflecting
the three-for-one stock split. The accompanying consolidated financial
statements and related financial information contained herein have been
retroactively restated to give effect for the three-for-one stock split.
<TABLE>
Net Loss Per Share - Statement of Financial Accounting Standard ("SFAS") No.
128, Earnings Per Share, requires the presentation of basic and diluted earnings
per share. Earnings per share is calculated by dividing net income applicable to
common stockholders by the weighted-average number of shares outstanding for the
period. Basic earnings per share are determined solely on common shares;
whereas, diluted earnings per share includes common equivalent shares, as
determined under the treasury stock method. The following table sets forth basic
and diluted earnings per share computational data for the periods presented (in
thousands, except per share amounts):
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $ 4,494 $ 1,754 $10,747 $ 1,948
======= ======= ======= =======
Weighted-average common shares outstanding
utilized for basic earnings per share 76,335 72,792 75,306 68,772
Weighted-average common equivalent shares outstanding:
Employee common stock options 10,242 7,308 9,362 6,816
Common stock warrants 72 66 85 54
------- ------- ------- -------
Total weighted-average common and common
equivalent shares outstanding utilized
for diluted earnings per share 86,649 80,166 84,753 75,642
======= ======= ======= =======
Basic earnings per share $ 0.06 $ 0.02 $ 0.14 $ 0.03
======= ======= ======= =======
Diluted earnings per share $ 0.05 $ 0.02 $ 0.13 $ 0.03
======= ======= ======= =======
</TABLE>
6
<PAGE>
New Accounting Pronouncements - The Financial Accounting Standards Board
("FASB") issued SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended by SFAS No. 137. SFAS No. 133 addresses the accounting
for derivative instruments, including certain derivative instruments embedded in
other contracts. Under SFAS No. 133, entities are required to record and carry
all derivative instruments at fair value as either assets or liabilities. The
accounting for changes in fair value (i.e., gains or losses) of a derivative
instrument depends on whether it qualifies as part of a hedging relationship,
has been so designated as such and the underlying reason for holding it. The
Company must adopt SFAS No. 133, as amended, by January 1, 2001, and does not
expect such adoption will have any material effect on its financial statements.
In December 1998, the Accounting Standards Executive Committee
("AcSEC") of the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-9 Software Revenue Recognition, With Respect to
Certain Transactions, which requires recognition of revenue using the "residual
method" in a multiple-element arrangement when fair value does not exist for one
or more of the delivered elements in the arrangement. Under the "residual
method", the total fair value of the undelivered elements is deferred and
subsequently recognized in accordance with SOP 97-2. The Company will adopt SOP
98-9 on January 1, 2000. The Company does not expect a material change to its
revenue accounting as a result of the provisions of SOP 98-9.
Note 2. Selective Balance Sheet Detail
Property and equipment consisted of the following (in thousands):
September 30, December 31,
1999 1998
-------- --------
Furniture and fixtures $ 1,218 $ 1,001
Computers and software 16,108 8,662
Leasehold improvements 3,852 3,725
-------- --------
21,178 13,388
Less accumulated depreciation and
amortization (8,348) (5,354)
-------- --------
$ 12,830 $ 8,034
======== ========
Accrued expenses consisted of the following (in thousands):
September 30, December 31,
1999 1998
------ ------
Employee benefits $1,129 $ 678
Commissions and bonuses 2,991 2,013
Taxes payable 1,674 785
Royalties payable 639 138
Other 1,728 1,319
------ ------
$8,161 $4,933
====== ======
Note 3. Commercial Credit Facilities
The Company has outstanding borrowings with a commercial lender
totaling $6.0 million as of September 30, 1999 and a revolving line of credit
that provides for up to $5.0 million of additional borrowings based on eligible
accounts receivable (no outstanding borrowings as of September 30, 1999). As of
September 30, 1999, the Company had total outstanding commitments of $2.8
million in the form of standby letters of credit under its revolving line of
credit.
The Company's credit facilities include covenants that impose certain
restrictions on the payment of dividends and other distributions and require the
Company to maintain monthly financial covenants, including a minimum quick
ratio, tangible net worth ratio and minimum cash reserves. The minimum cash
reserves covenant is replaced with a "minimum debt service coverage ratio" upon
six consecutive quarters of profitability. Borrowings are collateralized by a
security interest in substantially all of the Company's owned assets. As of
September 30, 1999, the Company was in compliance with its commercial credit
facility covenants.
7
<PAGE>
Note 4. Geographic, Segment and Significant Customer Information
The Company adopted the provisions of SFAS No. 131, Disclosure about
Segments of an Enterprise and Related Information, during 1998. SFAS No. 131
establishes standards for the reporting by public business enterprises of
information about operating segments, products and services, geographic areas,
and major customers. The methodology for determining what information is
reported is based on the organization of operating segments and the related
information that the Chief Operating Decision Maker ("CODM") uses for
operational decisions and financial performance assessments. The Company's Chief
Executive Officer ("CEO") is considered its CODM. The CEO reviews financial
information presented on a consolidated basis accompanied by disaggregated
information for products and services and revenues by geographic region for
purposes of making operating decisions and assessing financial performance.
<TABLE>
The Company sells its products and provides services worldwide through
a direct sales force, independent distributors, value-added resellers, and
system integrators. It currently operates in three primary regions, the
Americas, which includes North and South America; Europe, which includes Eastern
and Western Europe and the Middle East; and Asia/Pacific, which includes the
Pacific Rim and the Far East. Disaggregated financial information regarding the
Company's products and services and revenues by geographic region is as follows
(in thousands):
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Software licenses:
One-To-One Enterprise $ 2,965 $ 6,491 $ 7,602 $17,494
One-To-One WebApps 15,989 2,667 39,619 6,964
Services 7,260 2,894 16,323 7,160
Maintenance 3,617 1,379 8,227 3,276
------- ------- ------- -------
Total Revenues $29,831 $13,431 $71,771 $34,894
======= ======= ======= =======
Revenues:
Americas $20,266 $ 7,790 $50,012 $19,605
Europe 7,807 4,668 15,444 11,471
Asia/Pacific 1,758 973 6,315 3,818
------- ------- ------- -------
Total Company $29,831 $13,431 $71,771 $34,894
======= ======= ======= =======
</TABLE>
September 30, December 31,
1999 1998
-------- --------
Identifiable assets:
Americas $153,154 $ 99,343
Europe 2,808 1,754
Asia/Pacific 567 465
-------- --------
Total Company $156,529 $101,562
======== ========
During the three months ended September 30, 1999, and the three and
nine months ended September 30, 1998, no single customer accounted for more than
10% of the Company's total revenues. During the nine months ended September 30,
1999, one customer accounted for 11% of the Company's total revenues.
Note 5. Subsequent Events
On October 5, 1999, the Company's Board of Directors increased the
authorized shares of common stock and convertible preferred stock to 500 million
and 10 million, respectively. In addition, the Board of Directors increased the
aggregate number of shares of common stock available to be issued under the
Company's Equity Incentive Plan by 3 million shares.
During November 1999, the Company completed a follow on common stock
offering and issued 3.1 million shares for net proceeds to the Company of
approximately $209.4 million. In connection with the stock offering, the Company
has been listed on the Neuer Markt segment of the Frankfurt Stock Exchange under
the symbol "BDN".
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY FROM
THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED HEREIN WITH THIS
QUARTERLY REPORT ON FORM 10-Q, THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AND
OTHER DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY SUCH
FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE SUCH STATEMENTS ARE MADE.
OVERVIEW
BroadVision develops, markets and supports application software
solutions for one-to-one relationship management across the extended enterprise.
These solutions enable businesses to use the Internet as a platform to conduct
electronic commerce, offer online customer self-service and support, deliver
targeted information and provide online financial services. Each of these
capabilities can be provided to all constituents of the extended enterprise,
including: customers, suppliers, partners, distributors and employees.
The BroadVision One-To-One product suite allows business to tailor
their Web site content to the needs and interests of individual users by
personalizing each visit on a real-time basis. BroadVision's applications
interactively capture Web site visitor profile information, organize the
enterprise's content, target that content to each visitor based on easily
constructed business rules, and execute transactions. BroadVision believes the
benefits of these applications include enhanced customer satisfaction and
loyalty, increased business volume, greater brand awareness, reduced costs to
service customers and to execute transactions, and enhance employee
productivity.
The Company's core product, BroadVision One-To-One Enterprise, was
first made commercially available in December 1995. A complementary family of
targeted application products was first introduced as early as 1997. These
complementary application products (BroadVision One-To-One Retail Commerce,
BroadVision One-To-One Business Commerce, BroadVision One-To-One Financial, and
BroadVision One-To-One Knowledge) are built upon and tightly integrated with the
Company's core technology and provide specifically enhanced functionality for
the distinct customer requirements involved in managing one-to-one relationships
within business-to-consumer, business-to-business, financial services, and
knowledge management. BroadVision intends to remain nimble and flexible in
developing other packaged application products in the general area of one-to-one
relationship management in response to market opportunities that may arise.
The Company sells its products and services worldwide through direct
sales forces, independent distributors, resellers, and system integrators. It
also has a global network of strategic business relationships with key industry
platform and Web developer partners. The Company also engages in strategic
business alliances to assist in the marketing, selling and developing of
customer applications.
The Company places a strategic emphasis on developing technology
alliances in order to ensure that its products are based on industry standards
and that it is positioned to take advantage of current and emerging
technologies. The benefits of this approach include enabling the Company to
focus on its core competencies while reducing time to market and simplifying the
task of designing and developing applications for itself and its customers.
9
<PAGE>
RESULTS OF OPERATIONS
Revenues
The Company's revenues are derived from software license fees and fees
charged for its services. The Company recognizes software license revenues when
a non-cancelable license agreement has been signed and the customer acknowledges
an unconditional obligation to pay, the software product has been delivered,
there are no uncertainties surrounding product acceptance, the fees are fixed
and determinable, and collection is considered probable. Software license
revenues, in general, are recognized upon consummation of the sale.
The Company's professional services include its Strategic Services
Group, its Interactive Services Group, its Content and Creative Services Group,
its Education Services Group, and its Technical Support Group. Consulting
related services are typically recognized as services are performed. Maintenance
fees relating to technical support and upgrades are recognized ratably over the
contracted period.
<TABLE>
Total Company revenues increased 122% during the quarter ended
September 30, 1999 to $29.8 million as compared to $13.4 million for the quarter
ended September 30, 1998. For the nine months ended September 30, 1999, total
Company revenues increased 106% to $71.8 million as compared to $34.9 million
for the comparable period during 1998. A summary of the Company's revenues by
geographic region is as follows:
<CAPTION>
(In thousands) Software % Services % Total %
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended:
September 30, 1999
Americas $11,610 61% $ 8,656 80% $20,266 68%
Europe 6,063 32 1,744 16 7,807 26
Asia/Pacific 1,281 7 477 4 1,758 6
------- ------- ------- ------- ------- -------
Total $18,954 100% $10,877 100% $29,831 100%
======= ======= ======= ======= ======= =======
September 30, 1998
Americas $ 4,777 52% $ 3,013 71% $ 7,790 58%
Europe 3,897 43 771 18 4,668 35
Asia/Pacific 484 5 489 11 973 7
------- ------- ------- ------- ------- -------
Total $ 9,158 100% $ 4,273 100% $13,431 100%
======= ======= ======= ======= ======= =======
Nine Months Ended:
September 30, 1999
Americas $31,229 66% $18,783 77% $50,012 70%
Europe 10,893 23 4,551 18 15,444 21
Asia/Pacific 5,099 11 1,216 5 6,315 9
------- ------- ------- ------- ------- -------
Total $47,221 100% $24,550 100% $71,771 100%
======= ======= ======= ======= ======= =======
September 30, 1998
Americas $12,278 50% $ 7,327 70% $19,605 56%
Europe 9,628 39 1,843 18 11,471 33
Asia/Pacific 2,549 11 1,269 12 3,818 11
------- ------- ------- ------- ------- -------
Total $24,455 100% $10,439 100% $34,894 100%
======= ======= ======= ======= ======= =======
</TABLE>
Software product license revenues increased 107% during the quarter
ended September 30, 1999 to $19.0 million as compared to $9.2 million for the
quarter ended September 30, 1998. For the nine months ended September 30, 1999,
license revenues increased 93% to $47.2 million as compared to $24.5 million for
the comparable period during 1998.
10
<PAGE>
The increase in software license revenues is attributable to continued
strong demand for the Company's core competencies and technologies within a
growing market using the Internet for commerce and communication; the Company's
expanding range of products; the continually increasing levels of application
functionality within its products; the Company's strategic focus of leveraging
its partner relationships; and to a lesser extent, product pricing increases
that were effective October 1, 1998. As a result, the Company is attracting new
customers and our existing customer base is generating additional revenues
through increased use of established web sites as well as the introduction of
additional web sites within an existing customer's organization.
During the quarter ended September 30, 1999, the Company signed
approximately 56 new end user customers and 16 new partners which compares to
approximately 19 new end user customers and 10 new partners during the quarter
ended September 30, 1998. As of September 30, 1999, Broadvision had licensed
over 335 end user customers and 115 partners, which compares with over 195 end
user customers and 75 partners as of December 31, 1998 and 165 end user
customers and 65 partners as of September 30, 1998.
To date the Company has achieved good market acceptance for its
products and has experienced continued revenue growth. The Company anticipates
that international revenues will continue to account for a significant amount of
total revenues, and management expects to continue to commit significant time
and financial resources to the maintenance and ongoing development of direct and
indirect international sales and support channels.
The Company's Asia/Pacific operations have experienced reduced growth
rates over recent years as a result of the generally weak economic conditions of
that region. As a result, the Company expects that any significant growth in
international revenues will most likely come from European operations. There can
be no assurance, however, that the Company will be able to maintain or continue
to increase international or domestic market acceptance for its family of
products.
Total services revenues increased 155% during the quarter ended
September 30, 1999 to $10.9 million as compared to $4.3 million for the quarter
ended September 30, 1998. For the nine months ended September 30, 1999, services
revenues increased 135% to $24.6 million as compared to $10.4 million for the
comparable period during 1998.
The increase in professional services revenue is a result of the
Company's increased business volumes and a higher level of customer support
revenues derived from a larger installed customer base. The Company continues to
maintain its emphasis on leveraging its partner integrator relationships and has
continued to add internal headcount within its professional services
organizations to support the higher business volumes. Increasingly sophisticated
and customer-specific use of the Company's products has recently caused
accelerated demand for our professional services. However, our strategy of
developing business alliances with system integrators and other third-party
professional services organizations to support our products may in the future
result in a decline in professional services revenues as a percentage of total
revenues. Maintenance revenues continue to increase and were $8.2 million for
the nine months ended September 30, 1999, as compared to $3.3 million for the
nine months ended September 30, 1998.
Cost of Revenues
Cost of license revenues include royalties payable to third parties for
software that is either embedded in, or bundled and sold with, the Company's
products; commissioned agent fees paid to distributors; and the costs of product
media, duplication, packaging and other associated manufacturing costs.
11
<PAGE>
Cost of services consists primarily of employee-related costs,
third-party consultant fees incurred on consulting projects, post-contract
customer support, and instructional training services.
<TABLE>
A summary of the cost of revenues for the periods presented is as
follows:
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
---------------------------------------- ----------------------------------------
(In thousands) 1999 % 1998 % 1999 % 1998 %
------- ---- ------- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cost of software licenses [1] $ 676 3.6% $ 237 2.6% $ 2,460 5.2% $ 637 2.6%
Cost of services [2] 7,241 66.6% 2,553 59.7% 15,114 61.6% 6,264 60.0%
------- ------- ------- -------
Total cost of revenues [3] $ 7,917 26.5% $ 2,790 20.8% $17,574 24.5% $ 6,901 19.8%
======= ======= ======= =======
<FN>
[1] - Percentage is calculated based on total software license revenues for the period indicated
[2] - Percentage is calculated based on total services revenues for the period indicated
[3] - Percentage is calculated based on total revenues for the period indicated
</FN>
</TABLE>
Cost of software licenses increased 185% during the quarter ended
September 30, 1999 to $676,000 as compared to $237,000 for the quarter ended
September 30, 1998. For the nine months ended September 30, 1999, cost of
software licenses increased 286% to $2.5 million as compared to $637,000 for the
comparable period during 1998.
The increases in cost of software licenses, in both absolute dollar and
relative percentage terms, is primarily a result of the increased business
volumes and the mix of Company proprietary software in relation to third party
vendor software that is bundled and sold with the Company's products. The higher
third party software sales add incremental revenues to the Company's product
sales but carry a higher cost of license factor in the form of royalties.
Although aggregate costs were higher, royalty costs for third party software
embedded in the Company's product decreased on a percentage basis as a result of
the Company renegotiating a previously existing percentage based royalty
arrangement into a prepaid fixed fee royalty for a period that has been extended
through 2004.
Cost of services increased 184% during the quarter ended September 30,
1999 to $7.2 million as compared to $2.6 million for the quarter ended September
30, 1998. For the nine months ended September 30, 1999, cost of services
increased 141% to $15.1 million as compared to $6.3 million for the comparable
period during 1998.
The increase in cost of services in absolute dollar terms is a result
of expanded business volumes as evidenced by increased services revenues.
Overall costs increased as a result of additions to the Company's professional
services staff and the employment of outside consultants to meet short-term
consulting arrangements. The increase in cost of services as a percent of
services revenues is a result of the effect of assimilating higher numbers of
new internal consulting staff and higher utilization of outside consultants in
relation to the extent previously utilized during the prior period.
Operating Expenses
Research and development expenses consist primarily of salaries,
employee-related benefit costs, and consulting fees incurred in association with
the development of the Company's products. Costs incurred for the research and
development of new software products are expensed as incurred until such time
that technological feasibility, in the form of a working model, is established
at which time such costs are capitalized subject to recoverability. The costs
incurred by the Company subsequent to the establishment of a working model but
prior to general release have not been significant. To date, the Company has not
capitalized any software development costs.
12
<PAGE>
<TABLE>
Sales and marketing expenses consist primarily of salaries,
employee-related benefit costs, commissions and other incentive compensation,
travel and entertainment, and marketing program related expenditures such as
collateral materials, trade shows, public relations, and creative services.
General and administrative expenses consist primarily of salaries,
employee-related benefit costs, and professional service fees.
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
----------------------------------------- -----------------------------------------
(In thousands) 1999 % [1] 1998 % [1] 1999 % [1] 1998 % [1]
------- ---- ------- ---- ------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Research and Development $ 3,816 12.8% $ 2,394 17.8% $ 9,986 13.9% $ 6,476 18.6%
Sales and Marketing 12,136 40.7 6,285 46.8 29,891 41.6 18,389 52.7
General and Administrative 2,119 7.1 977 7.3 5,001 7.0 2,562 7.3
------- ---- ------- ---- ------- ---- ------- ----
Total Operating Expenses $18,071 60.6% $ 9,656 71.9% $44,878 62.5% $27,427 78.6%
======= ==== ======= ==== ======= ==== ======= ====
<FN>
[1] - Expressed as a percent of total revenues for the period indicated
</FN>
</TABLE>
Research and development expenses increased 59% during the quarter
ended September 30, 1999 to $3.8 million as compared to $2.4 million for the
quarter ended September 30, 1998. For the nine months ended September 30, 1999,
research and development expenses increased 54% to $10.0 million as compared to
$6.5 million for the comparable period during 1998. The increase in research and
development expenses in absolute dollar terms is primarily attributable to
personnel costs for added headcount within those operations involved in the
enhancement of existing applications and the development of the Company's next
generation of products. Research and development expenses, as a percentage of
total revenues, decreased because revenues have increased at a higher rate
relative to expenses. The Company expects research and development expenses will
continue to increase in absolute dollar terms.
Sales and marketing expenses increased 93% during the quarter ended
September 30, 1999 to $12.1 million as compared to $6.3 million for the quarter
ended September 30, 1998. For the nine months ended September 30, 1999, sales
and marketing expenses increased 63% to $29.9 million as compared to $18.4
million for the comparable period during 1998. The increases in sales and
marketing expenses in absolute dollar terms reflect the cost of hiring
additional sales and marketing personnel, increased commission payments
resulting from higher revenues, developing and expanding sales distribution
channels, and expanding promotional activities and marketing related programs.
Sales and marketing expenses, as a percentage of total revenues, decreased
because revenues have increased at a higher rate relative to expenses. The
Company expects sales and marketing expenses will continue to increase in
absolute dollar terms.
General and administrative expenses increased 117% during the quarter
ended September 30, 1999 to $2.1 million as compared to $977,000 for the quarter
ended September 30, 1998. For the nine months ended September 30, 1999, general
and administrative expenses increased 95% to $5.0 million as compared to $2.6
million for the comparable period during 1998. The increase in general and
administrative expenses in absolute dollar terms is attributable to additional
administrative and management personnel, higher professional services fees and
additional infrastructure to support the expansion of the Company's operations.
General and administrative expenses, as a percentage of total revenues,
decreased because revenues have increased at a higher rate relative to expenses.
The Company expects general and administrative expenses will continue to
increase in absolute dollar terms.
Income Taxes
During the quarter ended September 30, 1999, the Company's provision
for income taxes was $240,000 for an effective tax rate of approximately 5%. Due
to the Company's continuing trend of positive earnings, the Company reversed a
portion of its valuation allowance against the previously established deferred
tax assets for which realization is considered more likely than not. As a
result, the Company's effective tax rate differs from the statutory rate.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
September 30, December 31,
(In thousands) 1999 1998
---- ----
Cash, cash equivalents and
liquid short-term
investments $79,524 $61,878
======= =======
Working capital $77,204 $64,320
======= =======
Working capital ratio 3.6:1 4.9:1
======= =======
At September 30, 1999, the Company had $79.5 million of cash, cash
equivalents and liquid short-term investments, which represents an increase of
$17.6 million as compared to December 31, 1998. The Company currently has no
significant capital commitments other than obligations under operating leases,
commitments of $2.8 million in the form of standby letters of credit and $6.0
million of outstanding term debt under its existing credit facilities with a
commercial bank.
The Company has funded its operations by cash generated from
operations, the private placement of common and preferred stock and public
offerings of its common stock. Through May 1996, private placements provided net
proceeds totaling $15.5 million and public stock offerings netted proceeds for
the Company of $20.7 million and $53.7 million in June 1996 and March 1998,
respectively.
During November 1999, the Company completed a follow on common stock
offering and issued 3.1 million shares for net proceeds to the Company of
approximately $209.4 million. In connection with the stock offering, the Company
has been listed on the Neuer Markt segment of the Frankfurt Stock Exchange under
the symbol "BDN".
Cash provided by and used for operating activities was $18.9 million
and $238,000, respectively, for the nine months ended September 30, 1999 and
1998. Cash used for investing activities was $35.4 million and $3.8 million for
the nine months ended September 30, 1999 and 1998, respectively, and was
primarily for capital expenditures and purchase of short-term investments. Cash
provided by financing activities was $9.9 million and $57.7 million for the nine
months ended September 30, 1999 and 1998, respectively, and consists primarily
of proceeds from the issuance of common stock.
The Company believes that its available cash and short-term investment
resources, cash generated from operations and amounts available under its
commercial credit facilities will be sufficient to meet its expected working
capital and capital expenditure requirements for at least the next 12 months.
This estimate is a forward-looking statement that involves risks and
uncertainties, and actual results may vary as a result of a number of factors,
including those discussed under "Risk Factors" and elsewhere herein.
The Company may need to raise additional funds in order to support more
rapid expansion, develop new or enhanced services, respond to competitive
pressures, acquire complementary businesses or technologies, or respond to
unanticipated requirements. If additional funds are raised through the issuance
of equity securities, the percentage ownership of the stockholders of the
Company will be reduced, stockholders may experience additional dilution, or
such equity securities may have rights, preferences, or privileges senior to
those of the holders of the Company's common stock. There can be no assurance
that additional financing will be available on acceptable terms, if at all. If
adequate funds are not available or are not available on acceptable terms, the
Company may be unable to develop or enhance its products, take advantage of
future opportunities, or respond to competitive pressures or unanticipated
requirements, which could have a material adverse effect on the Company's
business, financial condition, and operating results.
14
<PAGE>
FACTORS AFFECTING QUARTERLY OPERATING RESULTS
The Company expects to experience significant fluctuations in quarterly
operating results that may be caused by many factors including, but not limited
to, those discussed below and herein with this quarterly report on Form 10-Q, as
contained in the Company's annual report on Form 10-K under the caption "Risk
Factors" and elsewhere therein, and as disclosed in other documents filed with
the Securities and Exchange Commission. Significant fluctuations in future
quarterly operating results may be caused by many factors including, among
others, the timing of introductions or enhancements of products and services by
the Company or its competitors, market acceptance of new products, the mix of
the Company's products sold, changes in pricing policies by the Company or its
competitors, changes in the Company's sales incentive plans, budgeting cycles of
its customers, customer order deferrals in anticipation of new products or
enhancements by the Company or its competitors, nonrenewal of service agreements
(which generally automatically renew for one year terms unless earlier
terminated by either party upon 90-days notice), product life cycles, changes in
strategy, seasonal trends, the mix of distribution channels through which the
Company's products are sold, the mix of international and domestic sales, the
rate at which new sales people become productive, changes in the level of
operating expenses to support projected growth, and general economic conditions.
The Company anticipates that a significant portion of its revenues will be
derived from a limited number of orders, and the timing of receipt and
fulfillment of any such orders is expected to cause fluctuations in the
Company's operating results, particularly on a quarterly basis. The Company
anticipates that it will make the major portion of each quarter's deliveries
near the end of each quarter and, as a result, short delays in delivery of
products at the end of a quarter could adversely affect operating results for
that quarter.
Due to the foregoing factors, quarterly revenues and operating results
are difficult to forecast, and the Company believes that period-to-period
comparisons of its operating results will not necessarily be meaningful and
should not be relied upon as any indication of future performance. It is likely
that the Company's future quarterly operating results from time to time will not
meet the expectations of market analysts or investors, which may have an adverse
effect on the price of the Company's Common Stock. The Company anticipates that
its operating expenses will continue to be substantial in relation to total
revenues as it continues the development of its technology, increases its sales
and marketing activities, and creates and expands its distribution channels.
Some of these risks and uncertainties relate to the new and rapidly evolving
nature of the markets in which the Company operates. These related market risks
include, among other things, the early stage of the developing online commerce
market, the dependence of online commerce on the development of the Internet and
its related infrastructure, the uncertainty pertaining to widespread adoption of
online commerce, and the risk of government regulation of the Internet. Other
risks and uncertainties facing the Company relate to the Company's ability to,
among other things, successfully implement its marketing strategies, respond to
competitive developments, continue to develop and upgrade its products and
technologies more rapidly than its competitors, and commercialize its products
and services by incorporating these enhanced technologies. There can be no
assurance that the Company will succeed in addressing any or all of these risks.
A more complete description of these and other risks relating to the Company's
business is set forth in the Company's annual report on Form 10-K under the
caption "Risk Factors" and elsewhere therein and other documents filed with the
Securities and Exchange Commission.
Year 2000 Compliance
Background and Risks - Many currently installed computer systems and software
and devices with imbedded technology are coded to two digits for time sensitive
dating purposes. Beginning with the year 2000, these date code fields will need
to be four digit functional in order to distinguish between 21st century dates
and 20th century dates. For example, computer programs that have date sensitive
software may incorrectly recognize a date using "00" as the year 1900 rather
than the year 2000. As a result, computer systems, software products and devices
with imbedded technology used by many companies
15
<PAGE>
may need to be upgraded to comply with such "Year 2000" requirements. This type
of Year 2000 error could potentially cause system failures or miscalculations
that could disrupt operations, including among other things a temporary
inability to process transactions, issue invoices or engage in similar normal
business activities. Although the Company believes that its products are Year
2000 compliant, undetected Year 2000 error or defects could result in delay or
loss of revenue, diversion of development resources, damage to the Company's
reputation and increased service and warranty costs. The Company believes that
the purchasing patterns of customers could potentially be affected by Year 2000
issues as companies expend significant resources to correct or patch their
current software systems for Year 2000 compliance. These expenditures may result
in reduced funds available to purchase software products such as those offered
by the Company. In addition, even if the Company's products are Year 2000
compliant, other systems or software used by the Company's customers may not be
Year 2000 compliant. The failure of noncompliant third-party software or systems
could affect the perceived performance of the Company's products.
State of Readiness - The Company uses various financial and managerial
information systems within its operations in the United States, Europe and Asia,
which the Company believes to be or will be Year 2000 compliant by the end of
1999. As part of its normal course of business, the Company analyzes its
information system requirements in relation to its business operating goals and
strategic objectives and is implementing new systems during 1999 that will be
Year 2000 compliant. The Company has also analyzed its other systems and its
material suppliers and vendors for Year 2000 issues which it believes to be or
will be Year 2000 compliant by the end of 1999. Such other systems include
non-information technology systems and services utilized by the Company in its
business operations, such as power, telecommunications, security and general
facilities.
Costs for Year 2000 Compliance - Costs that may be incurred by the Company
pertaining to Year 2000 compliance issues include identification, assessment,
remediation and testing efforts, as well as potential costs to be incurred by
the Company with respect to Year 2000 issues of third parties. To date, the
costs incurred by the Company directly related to Year 2000 issues have been
minimal, even in cases where non-compliant information technology systems were
redeployed or replaced.
Contingency Plans - The Company has a contingency plan for handling Year 2000
problems that are not detected and corrected prior to their occurrence and
continues to assess its Year 2000 exposure areas in order to determine what
additional steps, beyond those identified by the Company's internal review to
date, are advisable. The Company's contingency plan includes adequate internal
resources that would be available to analyze, assess and direct remediation
efforts to address potential issues, back up systems that do not rely on
computers, and alternative sources of supply. The Company presently believes
that the Year 2000 issue will not pose significant operational problems for the
Company. However, any failure of the Company to adequately address any
unforeseen Year 2000 issue could adversely affect the Company's business,
financial condition, and results of operations. In addition, if all of the Year
2000 issues are not properly identified, or adequate assessment, remediation and
testing are not effected timely with respect to Year 2000 problems that are
identified, there can be no assurance that the Year 2000 issue would not have a
material adverse impact on the Company's results of operations or adversely
affect the Company's relationships with customers, vendors, partners or others.
Additionally, there can be no assurance that the Year 2000 issues of other
entities will not have a material adverse impact on the Company's systems or
results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's market risk exposure for interest rate changes relates
primarily to its investment portfolio. The Company has not invested in
derivative financial instruments as of September 30, 1999. The Company places
its investment portfolio in high quality instruments and the amount of credit
exposure to any one issue, issuer and type of instrument is limited. The Company
does not expect any material loss with respect to its investment portfolio. The
Company's investment portfolio holdings as of
16
<PAGE>
September 30, 1999 were analyzed to determine their sensitivity to interest rate
changes. As part of our sensitivity analysis, we assumed an adverse change in
interest rates of between 50 and 250 basis points and the expected effect was
not material. The Company is also subject to market risk relating to equity
price changes concerning its long-term investment holdings, which consist of
marketable and non-marketable equity securities. As of September 30, 1999, the
Company's long-term investment holdings had a carrying value of $25.5 million, a
historical cost of value of $9.1 million and associated unrealized gains of
$16.4 million.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 11, 1998, BroadVision filed a lawsuit against Art
Technology Group, Inc. ("ATG") in the Northern District of California. The
complaint alleges that ATG is infringing BroadVision's U.S. Patent No. 5,710,887
and seeks injunctive relief and unspecified damages. On February 3, 1999, ATG
filed an answer and counterclaim against BroadVision in which ATG seeks
declaratory judgment for non-interference and declaratory judgment for
invalidity of the patent. Trial is set for October 16, 2000.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) A Special Meeting of Stockholders of the Company was held on September
29, 1999.
(b) Not applicable
(c) The matters voted upon and the voting of the stockholders with respect
thereto are as follows:
(i) To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the authorized number
of shares of Common Stock to 500,000,000 shares and Preferred
Stock to 10,000,000 shares:
(ii)
For: 13,347,559 Against: 4,087,046
Abstain: 10,524 Broker Non-Vote: 6,600
(iii) To approve the Company's Equity Incentive Plan, as amended, to
increase the aggregate number of shares of Common Stock
authorized for issuance under such plan by 3,000,000 shares:
(iv)
For: 12,479,569 Against: 4,951,681
Abstain: 20,479 Broker Non-Vote 0
17
<PAGE>
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Item Description
---- -----------
3.1 Certificate of Amendment of Amended and Restated Certificate
of Incorporation
10.1* Equity Incentive Plan as amended September 29, 1999
27.1 Financial Data Schedule
* Filed as 5 an exhibit to the Company's Proxy Statement filed on September
13, 1999 and incorporated herein by reference .
SIGNATURES
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.
BROADVISION, INC
Date: November 12, 1999 /s/ Pehong Chen
--------------------- -----------------------------------------
Pehong Chen
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 12, 1999 /s/ Randall C. Bolten
--------------------- -----------------------------------------
Randall C. Bolten
Vice President, Operations and Chief
Financial Officer (Principal Financial
and Accounting Officer)
18
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
- ------- -----------
3.1 Certificate of Amendment of Amended and Restated Certificate of
Incorporation
10.1* Equity Incentive Plan as amended September 29, 1999
27.1 Financial Data Schedule
* Filed as an exhibit to the Company's Proxy Statement filed on September
13, 1999 and incorporated herein by reference .
19
EXHIBIT 3.1
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
BROADVISION, INC.
BroadVision, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: The name of the Corporation is BroadVision, Inc.
SECOND: The date on which the Certificate of Incorporation of the
Corporation was originally filed with the Secretary of State of the State of
Delaware is May 13, 1993.
THIRD: The Board of Directors of the Corporation, acting in accordance
with the provisions of Sections 141 and 242 of the General Corporation Law of
the State of Delaware, adopted resolutions amending its Certificate of
Incorporation as follows:
The first paragraph of Article IV shall be amended and
restated to read in its entirety as follows:
"IV.
A. The total number of shares of all classes of stock which
the corporation has the authority to issue is Five Hundred Ten Million
(510,000,000) shares, consisting of two classes: Five Hundred Million
(500,000,000) shares of Common Stock, $0.0001 par value per share, and
Ten Million (10,000,000) shares of Preferred Stock, $0.0001 par value
per share."
FOURTH: Thereafter pursuant to a resolution of the Board of Directors,
this Certificate of Amendment was submitted to the stockholders of the
Corporation for their approval, and was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
IN WITNESS WHEREOF, BroadVision, Inc. has caused this Certificate of
Amendment of Certificate of Incorporation to be signed by its President and
attested to by its Secretary this 5th day of October, 1999.
BROADVISION, INC.
By: /s/ Pehong Chen
----------------------------------------------------
Pehong Chen, President and Chief Executive Officer
ATTEST:
/s/ Kenneth L. Guernsey
- ------------------------------
Kenneth L. Guernsey, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
BROADVISION INC.'S FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1999 AS REPORTED IN ITS FORM 10-Q FOR THE PERIOD THEN ENDED AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 24,312
<ALLOWANCES> (1,221)
<INVENTORY> 0
<CURRENT-ASSETS> 106,607
<PP&E> 21,178
<DEPRECIATION> (8,348)
<TOTAL-ASSETS> 148,493
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 120,092
<OTHER-SE> 10,834
<TOTAL-LIABILITY-AND-EQUITY> 148,493
<SALES> 47,221
<TOTAL-REVENUES> 71,771
<CGS> 2,460
<TOTAL-COSTS> 17,574
<OTHER-EXPENSES> 44,878
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,001
<INCOME-PRETAX> 11,320
<INCOME-TAX> 573
<INCOME-CONTINUING> 10,747
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,747
<EPS-BASIC> 0.14
<EPS-DILUTED> 0.13
</TABLE>
