GIGA INFORMATION GROUP
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YOUR E-BUSINESS ADVISOR
FOR IMMEDIATE RELEASE
FOR INFORMATION CONTACT:
Investors: Media:
Karen Vahouny David Kitchen
The Poretz Group Director, Public Relations
[email protected] [email protected]
1 (703) 506-1778 1 (781) 792-2606
Giga Information Group
139 Main Street
Cambridge, MA 02142
www.gigaweb.com
1 (617) 949-4900
GIGA INFORMATION GROUP REPORTS SECOND
QUARTER FINANCIAL RESULTS
QUARTERLY NET LOSS PER SHARE DROPS FROM $0.61 TO $0.27;
COMPANY SETS ANOTHER QUARTERLY REVENUE RECORD WITH $17.5 MILLION
CAMBRIDGE, Mass. (July 19, 2000) -- Giga Information Group, Inc. (NASDAQ: GIGX)
today announced that revenues for the second quarter of 2000 had increased 35%
compared to the same period last year, with a 52% drop in operating losses. The
Company's net loss in the second quarter of 2000 was $2.8 million, or $0.27 per
share, versus $6.1 million, or $0.61 per share, in the same quarter of last
year.
Continued, strong growth of the Company's e-Business research, advisory and
consulting services resulted in the rise in sales, from $12.9 million in the
second quarter of 1999 to $17.5 million in the same quarter of 2000. Operating
losses were cut by more than half, from $6.1 million to $3.0 million, a
reflection of both the revenue increase and the significant drop in the cost of
services, which shrank from 62% of sales in the second quarter of 1999 to 49% of
sales in the comparable quarter of this year.
According to Robert Weiler, chairman and chief executive officer of Giga
Information Group, "Our financial performance is especially significant
considering that the second quarter had included expenses from our two annual
customer events, GigaWorld and GigaWorld Europe. We expect that our revenue and
operating loss trends will continue to reflect growth in new customers and
continued cost containment, both necessary to achieve our goal of operating
profitability in the fourth quarter of 2000."
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Weiler adds, "In addition to the expanding roster of strategic partners, which
is a major part of our strategy, I'm bullish about our international growth
prospects. The GigaWorld Europe attendance far surpassed our plans, and there is
accelerating interest from European companies in Giga's research and consulting
services."
The Company plans to hold an investor conference call at 10 a.m. Eastern
Daylight Time on Thursday, July 20, 2000, to discuss the second quarter
performance. The investor call will be accessible via webcast; click on the
investor information section of the company's web site (www.gigaweb.com).
SECOND QUARTER HIGHLIGHTS
o Hosting the Company's two premier customer events, GigaWorld in May in
Boca Raton, Florida, and GigaWorld Europe in June in Interlaken,
Switzerland, in which senior executives from leading e-Businesses profiled
trends and opportunities.
o Adding Dr. Jean-Michel Six as vice president-International to lead the
company's international expansion efforts, and promoting Lloyd Bunting to
vice president of North American sales, with a focus on continuing to
strengthen the U.S. sales organization.
o Continuing to broaden its research distribution with strategic alliances
and partners. New partners included Standard Media International,
Screaming Media, Publications Resource Group, Inc. and Watch IT.
o Achieving a client retention rate of 83% compared to 68% in the same
quarter of last year.
o The number of total clients grew from 996 in the second quarter of 1999 to
1,219 in this year's second quarter.
FIRST HALF OF 2000
For the first six months of 2000, revenues were $34.3 million versus $24.8
million for the comparable period of 1999. This represents an increase of 38%.
Cost of services as a percentage of sales dropped from 57% in the first half of
1999 to 46% in the same period of 2000. This, combined with revenue growth, led
to a reduction in operating losses, from $9.6 million in the first six months of
1999 to $5.1 million in the comparable period of 2000. The net loss dropped from
$9.7 million, or $0.98 per share, in the first half of last year to $5.2
million, or $0.52 per share, in the first half of this year.
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The Company also reported that its revenue run rate at June 30, 2000, was $71.1
million versus $56.2 million at the end of the second quarter of 1999,
representing a 27% 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.
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.
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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 PER SHARE DATA) QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------------------- -------------------------------
(UNAUDITED) (UNAUDITED)
2000 1999 2000 1999
--------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Research, advisory and consulting $ 15,533 $ 10,979 $ 30,409 $ 21,367
Other, principally events 1,925 1,911 3,888 3,463
--------------- ---------------- --------------- -------------
Total revenues 17,458 12,890 34,297 24,830
--------------- ---------------- --------------- -------------
COSTS AND EXPENSES:
Cost of services 8,597 7,976 15,893 14,143
Sales and marketing 8,549 8,069 16,221 14,624
Research and development 486 397 1,029 651
General and administrative 2,122 2,124 4,917 4,242
Depreciation and amortization 658 440 1,303 819
--------------- ---------------- --------------- -------------
Total costs and expenses 20,412 19,006 39,363 34,479
--------------- ---------------- --------------- -------------
LOSS FROM OPERATIONS (2,954) (6,116) (5,066) (9,649)
--------------- ---------------- --------------- -------------
INTEREST INCOME 76 210 184 464
INTEREST EXPENSE (17) (33) (40) (70)
FOREIGN EXCHANGE GAIN/(LOSS) 133 (172) (330) (416)
--------------- ---------------- --------------- -------------
LOSS FROM OPERATIONS BEFORE INCOME TAXES (2,762) (6,111) (5,252) (9,671)
INCOME TAX PROVISION/(BENEFIT) 1 10 (26) 52
--------------- ---------------- --------------- -------------
NET LOSS $ (2,763) $ (6,121) $ (5,226) $ (9,723)
=============== ================ =============== =============
RESULTS PER COMMON SHARE:
HISTORICAL - BASIC AND DILUTED:
NET LOSS $ (0.27) $ (0.61) $ (0.52) $ (0.98)
=============== ================ =============== =============
WEIGHTED AVERAGE NUMBER OF SHARES 10,177,443 9,988,216 10,142,097 9,972,176
=============== ================ =============== =============
CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS, EXCEPT SHARE DATA) JUNE 30, DECEMBER 31,
2000 1999
------------------- ------------------
(UNAUDITED)
ASSETS
Cash, cash equivalents and marketable securities $ 4,731 $ 6,182
Accounts receivable, net 14,685 21,199
Total current assets 28,544 37,529
Property and equipment, net 6,096 6,188
Total assets 35,112 44,195
LIABILITIES AND STOCKHOLDERS' DEFICIT
Deferred revenues $ 35,150 $ 37,817
Debt, current portion 276 527
Total current liabilities 45,179 50,012
Total liabilities 45,522 50,581
Total stockholders' deficit (10,410) (6,386)
Total liabilities and stockholders' deficit 35,112 44,195
COMMON STOCK ISSUED AND OUTSTANDING 10,221,596 10,043,401
</TABLE>
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