Business Services Industry
Retek Reports Second Quarter Results; Software License Revenue Increases 45%
Business Wire, July 17, 2002
Business Editors
Retek Inc. today reported second quarter revenues of $60.8 million, up 39% from the year earlier quarter and up 14% from the first quarter of 2002. Software license revenue was $45.7 million, a 45% increase from the second quarter of 2001 and up 10% from the first quarter of 2002. The Company earned $0.04 per share on a GAAP basis compared with a loss of $0.02 per share in the year earlier quarter and a profit of $0.03 in the first quarter of 2002. Operational earnings, which exclude non-cash charges for stock based compensation and amortization of intangibles were $0.10 per share compared with $0.02 per share in the second quarter of 2001 and $0.08 per share in the first quarter of 2002.
In the second quarter, the Company added seven new customers including FEMSA, a $5 billion company that operates Mexico's largest convenience store chain; Pier One, a $1.5 billion specialty retailer of home furnishings and gifts; CVS, a $22 billion pharmacy chain, and Ahlens AB, Sweden's largest department store retailer. The Company also signed significant follow-on deals with several key customers including Best Buy, Galeries Lafayette, and Tesco. The additional deal with Tesco greatly expands that retailer's commitment to Retek's footprint and provides for broader product access and expanded geographic coverage.
At the end of the second quarter, cash rose to $99 million and DSO declined to 64 days, below the Company's targeted range of 70-90 days. Retek previously announced that, due to delays in signing a number of deals late in the second quarter, it was revising guidance for 2002. The revised guidance calls for full year revenue of $215 to $230 million and operational earnings of $0.25 to $0.30 per share.
Commenting on the second quarter results, Steve Ladwig, President and CEO of Retek said, "Our second quarter results were good and reflect continued momentum in adding new customers as well as expanding relationships with our existing customer base. While we fell short of our target for software license sales, we do not believe this represents a dramatic change in the fundamentals of our market. Rather, we believe customers are being deliberate in evaluating all major capital expenditures including technology investments. Given the strong returns generated by Retek applications, we believe we can continue to be successful in this market. The entire Company is focused on executing against the revised plan and re-accelerating our growth going forward."
Trademarks
Retek and retail.com are trademarks of Retek Inc. Other names may be trademarks of their respective owners. Forward-looking statements contained in this press release are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such factors are described from time to time in the company's Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission.
Retek Inc.
Consolidated Statements of Operations
(Unaudited, in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Revenue:
License and maintenance $45,711 $31,586 $87,443 $57,821
Services and other 15,045 12,055 26,860 22,845
-------- -------- -------- --------
Total revenue 60,756 43,641 114,303 80,666
Cost of revenue:
License and maintenance 10,300 8,191 19,887 15,585
Services and other 10,632 8,884 19,304 16,783
-------- -------- -------- --------
Total cost of revenue 20,932 17,075 39,191 32,368
-------- -------- -------- --------
Gross profit 39,824 26,566 75,112 48,298
Operating expenses:
Research and development 13,573 9,589 25,592 19,218
Sales and marketing 14,175 12,675 27,496 24,427
General and
administrative 4,316 3,207 7,890 6,296
-------- -------- -------- --------
Total operating
expenses, excluding
non-cash charges 32,064 25,471 60,978 49,941
-------- -------- -------- --------
Operating income (loss),
excluding non-cash
charges 7,760 1,095 14,134 (1,643)
Acquisition and
compensation non-cash
charges 4,398 4,654 8,465 8,327
-------- -------- -------- --------
Operating income (loss) 3,362 (3,559) 5,669 (9,970)
Other income, net 828 363 1,217 547
-------- -------- -------- --------
Income (loss) before
income tax provision
(benefit) 4,190 (3,196) 6,886 (9,423)
Income tax provision
(benefit) 1,953 (2,098) 3,018 (1,504)
-------- -------- -------- --------
Net income (loss) $2,237 $(1,098) $3,868 $(7,919)
======== ======== ======== ========
Basic net income (loss)
per common share $0.04 $(0.02) $0.07 $(0.16)
Weighted average shares
used in computing basic
net income (loss) per
common share 52,384 49,240 52,490 48,889
Diluted net income (loss)
per share $0.04 $(0.02) $0.07 $(0.16)
Weighted average shares
used in computing diluted
net income (loss) per
share 54,934 49,240 55,248 48,889
Reconciliation to Operational EPS:
Operating income (loss) $3,362 $(3,559) $5,669 $(9,970)
Acquisition and
compensation non-cash
charges 4,398 4,654 8,465 8,327
Other income, net 828 363 1,217 547
-------- -------- -------- --------
Net operational income
(loss) before income tax
(benefit) 8,588 1,458 15,351 (1,096)
Operational tax provision
(benefit) 3,221 547 5,757 (411)
-------- -------- -------- --------
Operational income (loss) $5,367 $911 $9,594 $(685)
======== ======== ======== ========
Basic net income (loss)
per share, operational $0.10 $0.02 $0.18 $(0.01)
Shares used in computing
basic operational net
income (loss) per share 52,384 49,240 52,490 48,889
Diluted net income (loss)
per share, operational $0.10 $0.02 $0.17 $(0.01)
Shares used in computing
diluted operational net
income (loss) per share 54,934 49,240 55,248 48,889
Retek Inc.
Consolidated Condensed Balance Sheet
(Unaudited, in thousands)
June 30, Dec. 31,
Assets 2002 2001
--------- ---------
Cash, cash equivalents and investments $98,659 $85,617
Accounts receivable, net 43,435 41,409
Deferred income taxes 75,037 74,227
Other assets 7,949 12,241
Property and equipment, net 26,523 29,641
Intangible assets, net 57,862 56,235
-------- --------
Total assets $309,465 $299,370
======== ========
Liabilities and Stockholders' Equity
Accounts payable $9,202 $10,735
Accrued liabilities 13,577 14,167
Deferred revenue 61,937 70,709
Notes payable 198 236
-------- --------
Total liabilities 84,914 95,847
Stockholders' equity
Total stockholders' equity 224,551 203,523
-------- --------
Total liabilities and stockholders' equity $309,465 $299,370
======== ========
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