SoftNet Systems, Inc. Reports Third Quarter Fiscal 2000 Results;
Company reports $8.6 MM in Revenue; Revenues Up
407% Over Previous Quarter and Up 551% Over Previous Year
SAN FRANCISCO--(BUSINESS WIRE)--Aug. 11, 2000--SoftNet Systems, Inc.
(Nasdaq:SOFN) today announced that revenue for its third quarter fiscal year
2000 ended June 30, 2000, was $8.6 million compared to $1.7 million for the
second quarter of this year, a 407% increase, and compared to $1.3 million for
the same quarter last year, a 551% increase. Net loss per share for the quarter
was $1.02 compared to $0.93 recorded the previous quarter. Net loss per share,
adjusted to exclude amortization and compensation expenses related to stock
options ("adjusted loss per share"), was $0.70, compared to $0.66 in the second
quarter of this year. Excluding results of the SoftNet Zone wireless business,
which is in the start-up phase, the adjusted loss per share improved to $0.59.
SoftNet's chairman and chief executive officer, Dr. Lawrence Brilliant, said,
"This has been a busy and productive quarter for the company. We've continued to
transform SoftNet into a global broadband Internet service leader leveraging our
Internet-over-cable experience into satellite and wireless sectors. With a great
deal of outstanding effort from all of our employees, as well as with support
from key partners, we've experienced revenue growth and gross margin
improvements in all three of our businesses. This is the first quarter that all
three of our operating companies have positive gross profits."
Through the nine months ended June 30, 2000, total revenue reached $11.5
million, an increase of 314% over revenue of $2.8 million in the same period
last year. The net loss per share for the nine months year-to-date was $3.02
compared to a net loss per share of $3.07 the same period last year. The
adjusted loss per share for the first nine months of the fiscal year was $2.06
versus $2.22 last year.
SoftNet's chief financial officer, Markus Rohrbasser, said, "With regards to ISP
Channel, we are managing for profitability and we are no longer managing for
growth. SoftNet's growth potential is in its SoftNet Zone wireless local area
network offering to be launched later this year in airports across the nation.
ISP Channel is on track to improve its financial performance in the coming
months."
Results for the ISP Channel, Intellicom and SoftNet Zone are Reported Below.
ISP Channel, SoftNet's wholly owned cable modem service subsidiary had net sales
of $1.7 million during the quarter ended June 30, 2000, compared to $1.3 million
in the previous quarter. Gross profit for the third quarter was $461 thousand
versus $306 thousand in the second quarter of fiscal year 2000. Net losses for
ISP Channel in the third quarter, before compensation expense related to stock
options, were $14.5 million, an increase of $600 thousand from $13.9 million
reported in the second quarter due to increased depreciation and amortization.
ISP Channel recorded an EBITDA loss for the quarter at $9.7 million compared to
$10.4 million in the prior quarter. On a stand-alone basis, adjusted loss per
share due to the ISP Channel was $0.51 for the third quarter of fiscal 2000
compared to $0.56 in the prior quarter.
For the nine months ended June 30, 2000, ISP Channel had net sales of $4.0
million, up 133% from $1.7 million in the same period last year. Gross profit
was $853 thousand compared to a gross loss of $136 million last year. Net
losses, before compensation expense related to stock options, for the nine
months were $39.4 million, an increase of $24.8 million from net losses of $14.6
million reported in the same period last year because we had been accelerating
the growth of the business. On a stand-alone basis, adjusted loss per share due
to the ISP Channel was $1.61 for the first nine months of fiscal 2000 compared
to $1.29 in the prior year.
ISP Channel closed out the third quarter with more than 21,000 cable modem
customers and cumulative installed cable systems (head-ends) of 88 compared to
79 last quarter and only 42 systems a year ago; current customer count today
exceeds 24,500 cable modem customers and the company is on target to exceed the
30,000 cable modem customers projected by the fiscal year ending September 30,
2000.
Intellicom, SoftNet's wholly owned two-way broadband Internet VSAT (very small
aperture terminal) satellite subsidiary had record net sales of $6.0 million
during the quarter ended June 30, 2000 compared with $354 thousand in the
previous quarter. This growth was primarily due to sales of equipment to Tricom,
SA during the third quarter.
Gross profit for the quarter was $621 thousand, compared to the previous
quarter's gross loss of $648 thousand. Net losses, before compensation expense
related to stock options, for Intellicom decreased to $2.9 million in the
quarter from $3.1 million in the previous quarter. EBITDA for the quarter was a
loss of $2.2 million compared to an EBITDA loss of $2.4 million in the second
quarter. On a stand-alone basis, adjusted loss per share due to Intellicom was
$0.09 for the quarter compared to $0.10 last quarter.
For the nine months ended June 30, 2000, Intellicom had net sales of $6.6
million, up 519% from $1.1 million in the same period last year. For the nine
month period, net losses, before compensation expense related to stock options,
were $8.3 million, an increase of $6.3 million from $2.0 million reported in the
same period last year. On a stand-alone basis, adjusted loss per share due to
Intellicom was $0.29 for the first nine months of fiscal 2000 compared to $0.09
in the prior year period.
Fiscal third quarter results include the first two months of its newly acquired
Laptop Lane Limited; the transaction closed in April 2000. Laptop Lane is part
of SoftNet Zone, the company's wireless broadband solution for business
travelers. SoftNet Zone garnered net sales for the third quarter of $902
thousand and a gross profit of $561 thousand. Net losses for the quarter were
$3.7 million due to increased business and development costs as the company
continued to expand its broadband focus with the creation of SoftNet Zone. On a
stand-alone basis, adjusted loss per share for the SoftNet Zone was $0.11 for
the quarter.
Currently, SoftNet Zone wireless LANs (local area networks) are operational in
two Canadian airports and one California hotel, while Laptop Lane's 18 mobile
computing retail storefront properties are operational in 12 airports across the
country.
Total stockholders' equity was $296.9 million, with assets of $336.9 million and
liabilities of $40.0 million. Assets include cash and short-term investments
($196.8 million), equity investments in several Internet companies, as well as
other property and equipment, intangibles, and other assets.
This news release and reference points to remarks on the third quarter financial
results contained herein can be found on the press release section of the
SoftNet Systems' Internet web site www.softnet.com.
About SoftNet Systems, Inc.
SoftNet Systems, Inc. (Nasdaq:SOFN) is a leading global broadband Internet
services company.
SoftNet's Intellicom subsidiary combines broadband Internet services with
sophisticated two-way satellite technology to deliver a complete end-to-end
solution for ISPs, schools, government institutions and businesses. Intellicom
utilizes state-of-the-art wireless technologies, broadband delivery, data-push,
caching and multicasting services to build the Invisible Internet and provide
the only viable total solution for interactive, on demand, multimedia content
delivery.
SoftNet is also a majority owner and operator of SoftNet Zone, designed to bring
broadband Internet services to such locations worldwide as airports, hotels, and
convention centers frequented by mobile computing professionals. SoftNet Zone
equity partners include CMGI, Compaq and Delta Air Lines. SoftNet Zone
technology partners include Nokia and Cisco. Today, SoftNet Zone's airport
storefront property, Laptop Lane, is launched commercially in many U.S.-based
international airports with contracts for many more in the near term.
SoftNet is also known for its leading-edge entry into the cable Internet access
business through its ISP Channel. ISP Channel currently services thousands of
cable customers nationwide with two-way broadband data services.
For further information about SoftNet Systems, Inc. and its subsidiaries, please
visit, or call 415/365-2500.
<PAGE>
SOFTNET SYSTEMS, INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
Net sales $ 8,574 $ 1,317 $ 11,541 $ 2,788
Cost of sales 6,931 1,460 10,474 2,758
-------- -------- -------- --------
Gross profit (loss) 1,643 (143) 1,067 30
-------- -------- -------- --------
Operating expenses:
Selling and marketing 6,919 4,197 18,991 8,567
Engineering 6,222 1,856 15,478 3,325
General and
administrative 5,596 2,439 12,586 6,616
Depreciation 3,565 938 8,484 2,140
Amortization 3,117 872 5,509 1,597
Compensation expense
related to stock options 5,039 5,680 16,318 6,721
-------- -------- -------- --------
Total operating expenses 30,458 15,982 77,366 28,966
-------- -------- -------- --------
Loss from continuing
operations before
other income
(expense), income
taxes and discontinued
operations (28,815) (16,125) (76,299) (28,936)
Other income (expense)
Interest expense (381) (2,453) (1,159) (3,580)
Interest income 3,331 1,336 8,894 1,576
Other (125) (1,373) (162) (1,405)
-------- -------- -------- --------
Loss from continuing
operations before
income taxes and
discontinued operations (25,990) (18,615) (68,726) (32,345)
Income taxes -- -- -- --
Loss from continuing
operations (25,990) (18,615) (68,726) (32,345)
Loss from discontinued
operations -- (15) -- (399)
-------- -------- -------- --------
Net loss (25,990) (18,630) (68,726) (32,744)
Preferred dividends -- (59) -- (473)
-------- -------- -------- --------
Net loss applicable
to common shares $ (25,990) $ (18,689) $ (68,726) $ (33,217)
======== ======== ======== ========
Basic and diluted loss per share:
Continuing operations $ (1.02) $ (1.26) $ (3.02) $ (2.99)
Discontinued operations -- -- -- (0.04)
Preferred dividends -- (0.01) -- (0.04)
-------- -------- -------- --------
Net loss applicable
to common shares $ (1.02) $ (1.27) $ (3.02) $ (3.07)
======== ======== ======== ========
Loss from continuing
operations excluding
amortization expense and
compensation expense
related to stock
options $ (0.70) $ (0.82) $ (2.06) $ (2.22)
======== ======== ======== ========
Shares used to compute
basic and diluted
loss per share 25,368 14,764 22,742 10,806
======== ======== ======== ========
SOFTNET SYSTEMS, INC. AND SUBSIDIARIES
Summary Metrics
June 30, March 31, June 30,
--------- --------- ---------
2000 2000 1999
--------- --------- ---------
Summary Metrics:
Employees 468 307 179
ISP Channel:
Cable affiliates 49 44 40
Contracted homes passed
(in millions) 2.4 2.4 1.8
Marketable homes passed
(in thousands) 910 765 449
Cumulative cable systems
(head-ends) installed 88 79 42
Cable modem customers 21,016 16,027 4,044
Intellicom:
Very small aperture
terminals (VSATs) installed 88 82 73
SoftNet Zone:
Airports 12 N/A N/A
Airport Store Sites 18 N/A N/A
Workstations 144 N/A N/A
Customers
(May 2000 and
June 2000 only) 40,845 N/A N/A
Minutes Charged
(May 2000 and
June 2000 only) 1,114,431 N/A N/A
This press release contains forward-looking statements concerning
the company's anticipated future operating results, future revenues and earnings
or adequacy of future cash flow. (These forward-looking statements include, but
are not limited to, statements containing the words "expect," "believe," "will,"
"may," "should," "project," "estimate," and like expressions, and the negative
thereof.) These statements, including the risks attendant to a growing business
in a new industry as well as those risks described in the company's Quarterly or
Annual Report.
CONTACT: SoftNet Systems, Inc.
Jody P. Flynn, 415/365-2510 (MEDIA)
[email protected]
Gloria Parrish, 415/365-2514 (MEDIA)
[email protected]
or
Cindy Wyrick, 415/343-2325 (INVESTOR)
[email protected]
KEYWORD: CALIFORNIA INTERNATIONAL CANADA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS RETAIL TELECOMMUNICATIONS
INTERNET NETWORKING PRODUCT EARNINGS
