Phone.com Q1 Results - Company Financial Information

Cambridge Telcom Report, Nov 1, 1999

Phone.com, Inc. (Nasdaq: PHCM), a leading provider of software that enables the delivery of Internet-based services to mass-market wireless telephones, today announced first quarter results for the three months ended September 30, 1999.

First quarter revenues increased 27 percent to $8.5 million, from $6.7 million in the fourth quarter of fiscal 1999 and up 525 percent from $1.4 million in the same period a year earlier. Deferred revenues increased during the first quarter to $38.4 million, up from $36.8 million at the prior fiscal year end.

The company incurred a net loss in the fiscal first quarter as it continued to aggressively execute its strategy through significant investments in research and development and sales and marketing activities. The net loss for the first fiscal quarter of 2000 was $4.9 million, or $0.16 loss per diluted share based on 31 million weighted average shares outstanding, compared to a net loss of $6.8 million, or $0.62 loss per diluted share for the fourth quarter of fiscal 1999 and a net loss of $3.9 million or $0.71 loss per diluted share for the same period a year earlier.

As of September 30, 1999, the company had cash and short-term investments of $117.8 million, total assets of $136.8 million and stockholders' equity of $87.6 million.

"During the first quarter, we continued to focus on rapid acceleration of our business in all of our core markets around the world," said Alain Rossmann, chairman and chief executive officer. "Once our recently announced acquisition of APiON Limited is completed, we will have commercial relationships with 44 network operators around the world."

"The launch in September 1999 by Sprint PCS Wireless Web Services based on our products was the major highlight of the quarter," said Alan Black, chief financial officer. "We are also excited by the positive response from network operators to our new product and service offerings announced during the quarter. Those include our mobile management architecture announced with Bell Atlantic Mobile and Motorola in July and our MyPhone portal service offering announced in September 1999."

Phone.com, Inc. is a leading provider of software and services that enable the delivery of Internet-based services to mass-market wireless telephones. Using its software, wireless subscribers have access to Internet- and corporate intranet-based services, including e-mail, news, stocks, weather, travel and sports. In addition, subscribers have access via their wireless telephones to network operators' intranet-based telephone services, which may include over-the-air activation, call management, billing history information, pricing plan subscription and voice message management. Phone.com is headquartered in Silicon Valley, California and has regional offices in London and Tokyo. Visit http://www.phone.com for more information.

             PHONE.COM, INC. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (In  thousands, except per share data)

                                               Three months ended
                                           September    September
                                                 30            30
                                               1998          1999

Revenues:
License                                        $202        $5,262
Maintenance and support services              1,005         2,465
Consulting services                             161           820
  Total revenues                              1,368         8,547

Cost of revenues:
License                                          62           228
Maintenance and support services                433         1,585
Consulting services                              58           537
  Total cost of revenues                        553         2,350
  Gross profit                                  815         6,197

    Operating expenses:
Research and development                      2,446         5,469
Sales and marketing                           1,801         4,925
General and administrative                      623         1,938
Stock-based compensation                        249           212
  Total operating expenses                    5,119        12,544
  Operating loss                            (4,304)       (6,347)

Interest income, net                            415         1,498
  Loss before income taxes                  (3,889)       (4,849)

Income taxes                                     61            89
  Net loss                                 $(3,950)      $(4,938)

 Basic and diluted net loss per share       $(0.71)       $(0.16)

    Shares used in computing basic
and diluted net loss per share                5,539        30,966

             PHONE.COM, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands)

                                          June 30    September 30
         Assets                               1999          1999

Current assets:
Cash, cash equivalents
 and short-term investments                $113,086      $117,808
Accounts receivable                          20,474        10,474
Prepaid expenses and other current assets       865         1,070

  Total current assets                      134,425       129,352

 Property and equipment, net                  3,014         5,944
 Deposits and other assets                    1,494         1,525

                                           $138,933      $136,821
    Liabilities and Stockholders' Equity

    Current liabilities:
Current portion of equipment loan
 and capital lease obligations                 $424          $424
Accounts payable                              1,749         2,216
Accrued liabilities                           7,173         7,781
Deferred revenue                             36,797        38,442

  Total current liabilities                  46,143        48,863

    Equipment loan and capital lease
obligations, less current portion               498           387

Total liabilities                            46,641        49,250

    Stockholders' equity:
  Total stockholders' equity                 92,292        87,571
                                           $138,933      $136,821