GIGA LOGO
FOR IMMEDIATE RELEASE
FOR INFORMATION CONTACT:
Investors: Media:
Karen Vahouny David Kitchen
Qorvis Communications Director, Public Relations
[email protected] [email protected]
1 (703) 744-7809 1 (781) 792-2606
Giga Information Group
139 Main Street
Cambridge, MA 02142
www.gigaweb.com
1 (617) 949-4900
GIGA INFORMATION GROUP REPORTS THIRD
QUARTER FINANCIAL RESULTS
QUARTERLY NET LOSS PER SHARE DROPS FROM $0.44 TO $0.20;
COMPANY SETS ANOTHER QUARTERLY REVENUE RECORD
CAMBRIDGE, Mass. (October 18, 2000) -- Giga Information Group, Inc. (NASDAQ:
GIGX) today announced that revenues for the third quarter of 2000 increased 42%
compared to the same period last year, from $12.5 million to $17.7 million. The
Company posted a 54% drop in its net loss from $4.4 million, or $0.44 per share,
in the third quarter of last year to $2.0 million, or $0.20 per share, in the
third quarter of this year.
The revenue growth was primarily attributable to the continued success in the
sale of the Company's e-Business research, advisory and consulting services. The
50% reduction in operating losses, from $4.5 million in the third quarter of
1999 to $2.2 million in this year's third quarter, was due to the increase in
revenues and a significant decrease in expenses, primarily sales and marketing,
as a percentage of revenues.
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Robert Weiler, chairman and chief executive officer of Giga Information Group,
noted, "We made dramatic progress in expanding our research and advisory
services outside North America. The previously announced participation in
GigaGroup SA not only builds our Western European sales presence but also will
have a positive impact on our financial results. In addition to international
expansion, another priority has been to add strategic partners, and our
agreement with Nielsen//NetRatings is especially important in that it adds
Internet measurement data to our analysis offering--a service none of our direct
competitors offer."
The Company plans to hold an investor conference call at 10 a.m. Eastern
Daylight Time on Thursday, October 19, 2000, to review the third quarter
performance and future outlook. The investor call will be accessible via
webcast; click on the investor information section of the company's web site
(www.gigaweb.com).
THIRD QUARTER HIGHLIGHTS
o Participating in a new venture, GigaGroup SA, focused on expanding Giga's
research, analysis and consulting services in Belgium, France, Italy,
Luxemburg, the Netherlands, Portugal, Spain and Switzerland. Seven European
venture firms invested $4 million to fund the group, and Giga Information
Group has a 19.9% ownership.
o Entering the Japanese market through one agreement with a Japanese company
for Web site analysis services and another with a leading reseller of
high-end information products in the Asia-Pacific region.
o Teaming with Nielsen//NetRatings, which allows Giga to combine quantitative
Internet audience metrics with its Web assessment and benchmarking service,
Web Site ScoreCard.
o Signing a content partnership agreement with CNET's Enterprise channel,
packaging CNET's editorial coverage of business technology with commentary
from Giga's leading industry analysts.
o Achieving a client retention rate of 83% for the first nine months of 2000
compared to 75% in the same period of last year.
FIRST NINE MONTHS OF 2000
For the first nine months of 2000, revenues were $52 million versus $37.3
million for the comparable period of 1999--an increase of 39%.
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Cost of services as a percentage of revenues dropped from 53% in the first nine
months of 1999 to 46% in the same period of 2000. This, combined with revenue
growth, resulted in a 48% reduction in operating losses, from $14.1 million in
the first nine months of 1999 to $7.3 million in the comparable period of 2000.
The net loss dropped from $14.2 million, or $1.42 per share, in the first nine
months of last year, to $7.3 million, or $0.71 per share, in the same period
this year.
The Company also reported that its revenue run rate at September 30, 2000, was
$74.8 million versus $57.9 million at the end of the third quarter of 1999,
representing a 29% increase. Giga has defined revenue run rate as its Annualized
Value plus the previous 12 months' revenues from services not included in
Annualized Value, primarily events and Web Site ScoreCard. Annualized Value is
the cumulative annualized subscription value of Giga's advisory services and
ePractices contracts in effect at any given point in time.
FUTURE OUTLOOK
According to Weiler, the Company's priorities in the fourth quarter include
continuing to focus on signing additional partnership agreements, building
channels and sales outside North America, and improving the productivity of the
sales and marketing organizations.
"These, combined with ongoing cost structure adjustments such as the structure
of the GigaGroup SA operation, position Giga to reach our goal of operating
profitability in the fourth quarter of this year," he commented.
For fiscal 2001, the Company currently expects revenue growth between 20-30%
depending on the general growth rate of the IT Research Segment of the
Syndicated Research Market. The Company also expects to continue to grow
somewhat faster than the rate of growth of that segment of the market. Total
costs and expenses are expected to increase at approximately one-half the rate
of revenue growth, resulting in net income in each quarter of the year except
the second quarter. The Company's goal is to achieve net income per share of
between $0.05 to $0.10 and generate positive operating cash flow for the year,
assuming there are no extraordinary items.
The above forward-looking statements are based on current expectations and are
being provided so that the Company can discuss its future outlook during its
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upcoming investor conference call and with investors, potential investors, the
media, financial analysts and others. The statements are subject to the
paragraph at the end of this press release and assume that none of the factors
mentioned in that paragraph will have a negative impact on expected results.
ABOUT GIGA INFORMATION GROUP
Giga Information Group (NASDAQ: GIGX) provides objective research, advice and
continuous coaching on technology for e-Business. Giga's integrated suite of
offerings helps clients make strategic decisions about the technologies, people
and processes needed to excel in the new digital economy. Emphasizing close
interaction between analysts and clients, Giga delivers support with the speed
and scope necessary for e-Business.
Giga began providing services in April 1996 and now has a global client base
encompassing more than 1,200 organizations and over 120,000 licensed users. Its
enterprise clients include companies that use, sell and invest in technology.
Headquartered in Cambridge, Massachusetts, Giga has 10 other offices covering
the Americas and Europe. Giga is also represented by distributors in other areas
of the world. The Company's Web site can be accessed at http://www.gigaweb.com.
The Company's logo with the name Giga Information Group is a registered
trademark of Giga Information Group, Inc.
*****************************************
Statements that are not historical fact may be considered forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are not statements of historical facts, but
rather reflect Giga's current expectations concerning future events and results.
Giga generally uses the words "believes", "expects", "intends", "plans",
"anticipates", "likely", "will" and similar expressions to identify
forward-looking statements. Such forward looking statements, including those
concerning Giga's expectations, involve known and unknown risks, uncertainties
and other factors, some of which are beyond Giga's control, which may cause
Giga's actual results, performance or achievements, or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward looking statements. In evaluating such
statements as well as the future prospects of Giga, specific consideration
should be given to various factors including the following: Giga's prior losses
and anticipation of future losses; Giga's need to attract and retain qualified
personnel; Giga's dependence on sales and renewals of subscription-based
services; Giga's ability to achieve and sustain high renewal rates; Giga's
ability to manage and sustain growth; Giga's future capital needs and the risks
of working capital deficiency; Giga's dependence on key personnel; competition
from other companies including those with greater resources than Giga; the risks
associated with the development of new services and products; the potential for
significant fluctuations in quarterly operating results; continued market
acceptance of and demand for Giga services; uncertainties relating to
proprietary rights; Giga's dependence on the Internet infrastructure; the risk
of system failure; the risks related to content; the risks associated with
international operations; and other risks as detailed from time-to-time in the
Company's filings with the Securities and Exchange Commission. The Company
undertakes no obligation to update any forward-looking statements as a result of
new information, unanticipated events, or otherwise.
*****************************************
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GIGA INFORMATION GROUP, INC.
<TABLE>
<CAPTION>
CONSOLIDATED OPERATING RESULTS
(IN THOUSANDS, EXCEPT SHARE AND QUARTER ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
PER SHARE DATA) ------------------------------- -------------------------------
(UNAUDITED) (UNAUDITED)
2000 1999 2000 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Research, advisory and consulting $ 15,918 $ 11,819 $ 46,327 $ 33,186
Other, principally events 1,771 643 5,659 4,106
-------------- -------------- -------------- --------------
Total revenues 17,689 12,462 51,986 37,292
-------------- -------------- -------------- --------------
COSTS AND EXPENSES:
Cost of services 7,896 5,715 23,789 19,858
Sales and marketing 8,048 7,665 24,269 22,289
Research and development 631 801 1,940 1,452
General and administrative 2,605 2,266 7,242 6,508
Depreciation and amortization 732 490 2,035 1,309
-------------- -------------- -------------- --------------
Total costs and expenses 19,912 16,937 59,275 51,416
-------------- -------------- -------------- --------------
LOSS FROM OPERATIONS (2,223) (4,475) (7,289) (14,124)
-------------- -------------- -------------- --------------
INTEREST INCOME 40 143 224 607
INTEREST EXPENSE (97) 28 (57) 98
FOREIGN EXCHANGE GAIN/(LOSS) 58 (64) (272) (480)
-------------- -------------- -------------- --------------
LOSS FROM OPERATIONS BEFORE INCOME TAXES (2,028) (4,424) (7,280) (14,095)
INCOME TAX PROVISION/(BENEFIT) 1 10 (25) 62
-------------- -------------- -------------- --------------
NET LOSS $ (2,029) $ (4,434) $ (7,255) $ (14,157)
============== ============== ============== ==============
RESULTS PER COMMON SHARE:
HISTORICAL - BASIC AND DILUTED:
NET LOSS $ (0.20) $ (0.44) $ (0.71) $ (1.42)
============== ============== ============== ==============
WEIGHTED AVERAGE NUMBER OF SHARES 10,357,186 10,017,712 10,214,317 9,987,621
============== ============== ============== ==============
CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS, EXCEPT SHARE DATA) SEPTEMBER 30, DECEMBER 31,
2000 1999
----------------- -----------------
(UNAUDITED)
ASSETS
Cash, cash equivalents and marketable securities $ 1,692 $ 6,182
Accounts receivable, net 13,496 21,199
Total current assets 26,786 37,340
Property and equipment, net 5,896 6,188
Total assets 34,152 44,195
LIABILITIES AND STOCKHOLDERS' DEFICIT
Deferred revenues $ 33,173 $ 37,817
Debt, current portion - 527
Total current liabilities 44,361 50,012
Total liabilities 44,756 50,581
Total stockholders' deficit (10,604) (6,386)
Total liabilities and stockholders' deficit 34,152 44,195
COMMON STOCK ISSUED AND OUTSTANDING 10,385,873 10,043,401
</TABLE>
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