Webhire Announces Third Quarter Results; Cash Burn Reduced Significantly as Breakeven Draws Near

Business Wire, July 31, 2001

Business/Technology Editors

LEXINGTON, Mass.--(BUSINESS WIRE)--July 31, 2001

Webhire Inc. (Nasdaq:HIRE), the #1 choice in recruiting solutions, today reported its financial results for the period ended June 30, 2001.

Fiscal third quarter Internet Services revenues were $3.1 million, compared with $2.8 million during the third quarter of 2000, an 11% increase. During the third quarter, Internet Services revenue represented 58% of the Company's total revenue, up from 48% during the comparable third quarter period in fiscal year 2000. For the comparable nine month period, Internet Services revenue increased by 41% to $9.7 million, compared to $6.9 million for the same period in fiscal year 2000. On a fiscal year-to-date basis, Internet Services revenue represented 57% of the Company's total revenue, nearly double the 37% figure for last year's comparable nine-month period.

Total Webhire revenues for the fiscal third quarter of 2001 were $5.3 million, compared with $5.8 million the third quarter of 2000. For the comparable nine month period, total Webhire revenues were $17.0 million, compared with $18.6 million in fiscal year 2000.

Before adjusting for the Company's one-for-five stock split that was effective on June 18, 2001, the third quarter net loss, excluding amortization and stock-based consideration, was ($0.03) per share, compared with a year-ago net loss, excluding amortization and stock-based consideration, of ($0.60) per share. The third quarter total net loss was $1.8 million or ($0.08) per share. This smaller total net loss was a significant improvement over the total net loss of $9.9 million or ($0.68) per share in the comparable period last year. Excluding amortization and stock-based consideration, the net loss for the nine months ending June 30, 2001 was $5.9 million or ($0.27) per share compared with a net loss of $19.6 million or ($1.35) per share in fiscal year 2000. For the nine month period, the total net loss was $10.4 million or ($0.47) per share, compared with a total net loss of $27.7 million or ($1.91) per share for the nine month period last year.

"We continue on track to our profitability goal and are managing our operating expenses in line with our subscription revenues," said Marty Fahey, Webhire President and CEO. "In less than a year, we have achieved tremendous scale improvements in our third-generation ASP product line: our gross margins are now at 27.1% compared to a negative 4.4% in last year's third quarter. These results show how our substantial technology investments are paying off and demonstrate why, in an uncertain economic climate, Webhire continues to be the right choice for companies who want to measure and improve their recruiting and staffing ROI."

Post-Split Results

The following results have been adjusted for the Company's one-for-five stock split, which was effective on June 18, 2001. The 2001 third quarter net loss of $1.8 million was equal to a per share loss of ($0.39), compared to the net loss of $9.9 million or ($3.39) per share in the same period last year. The third quarter net loss, excluding amortization and stock-based consideration, was ($0.17) per share, compared with a year-ago net loss, excluding amortization and stock-based consideration, of ($2.99) per share. For the nine month period, the net loss of $10.4 million was equal to ($2.35) per share, compared with the net loss of $27.7 million or ($9.54) per share for the nine month period last year. Excluding amortization and stock-based consideration, the net loss for the nine months ending June 30, 2001 was $5.9 million or ($1.33) per share compared with a net loss of $19.6 million or ($6.74) per share in fiscal year 2000.

Accomplishments

During the third quarter, the Company announced a significant upgrade to its Webhire Recruiter product line; introduced a new UK version of Webhire Recruiter; signed its first UK-based Webhire Recruiter customer; and completed the upgrade and migration of all of its Webhire Recruiter customers in North America to its third-generation ASP product platform. The Company also signed a major new business partnership with Headhunter.net and now offers search access to the Headhunter.net resume database directly from its Webhire Recruiter service.

Also in the quarter, the Company continued to add new subscribers from all industries and geographies. Some of the new subscribers added during the quarter include: Campbell-Ewald Advertising Company; Children's Hospital Medical Center (Cincinnati); Zurich Scudder Investments; ISO New England; DUSA Pharmaceuticals, Inc.; ePeople, Inc; SpeechWorks, Inc.; MedUnite; Altrio Communications; Stratem Computing Group; MEGTEC Systems; Dominica Management, Inc.; Hynix Semiconductor America Inc; and ICMA Retirement Corporation.

2001 Outlook

In the fiscal fourth quarter of 2001, the Company expects that total revenues will range between $4.6 million to $5.0 million. Gross margin percentages will increase as the revenue mix continues to shift toward the Company's Internet products and as cost saving efforts continue to be implemented. The Company also expects that total fourth quarter spending on Sales & Marketing, Research & Development and G&A will approximate third quarter dollar levels. The Company projects that the net loss per share for the fourth quarter, excluding amortization of acquired technologies and intangible assets, will remain at the third quarter level of ($0.03), before adjusting for the June 25, 2001 stock split. The post-split net loss per share, excluding amortization of acquired technologies and intangible assets, should approximate ($0.17).