Financial: Wall Data Q2 Results; New Internet Products and Existing Businesses Combine for 25% Revenue Growth - Company Financial Information

Edge: Work-Group Computing Report, Nov 23, 1998

Wall Data Inc. (Nasdaq:WALL) Thursday announced results for the second fiscal quarter ended October 31, 1998.

Revenues grew by 25% over the same period a year ago to $37.4 million and net income increased to $2.0 million, or $0.20 per share, excluding a restructuring charge, compared to a net loss of $0.3 million, or $0.03 per share, during the same period a year ago.

Revenues from the Company's Cyberprise Internet products were $5.2 million in the second full quarter of sales. Since July 31, 1998, the Company has expanded its Cyberprise product line with the release of Cyberprise Server, Departmental Edition; Cyberprise Server and Host for HP-UX; Cyberprise Host Java Beans; and RUMBA, Cyberprise Edition. Revenues from the Company's RUMBA and ONESTEP businesses grew by 8% to $32.2 million compared to the prior year. Cash and cash equivalents increased $2 million during the quarter to $64.4 million.

In light of the current economic conditions in the Asia-Pacific and Latin American markets, the Company is restructuring its operations in this area and recorded a $2.4 million charge, or $0.19 per share after tax.

"With the addition of our newly released Internet products, Cyberprise revenues grew by 49% over the previous quarter," said John Wall, Chief Executive Officer. "Our customers are looking to Wall Data for Internet solutions to reach previously inaccessible user groups. Our Cyberprise products, combined with the resources of our growing Cyberprise Partner Network, are allowing our customers to take advantage of previous investments in information technologies and expand their business systems to the Internet. We are still in the early stages of the Cyberprise business and I am very encouraged by customer acceptance."

"While maintaining our high levels of customer service and establishing the Cyberprise brand in the Asia-Pacific and Latin American markets, our restructuring of these operations will reduce future operating costs and bring our cost structure in line with the revenue opportunities in these markets during their expected economic recovery," added Wall.

Revenues for the six months ended October 31, 1998, increased by 22% to $77.8 million over the same period a year ago and included $8.7 million of Cyberprise revenues. Revenues from the Company's RUMBA and ONESTEP businesses grew by 9% to $69.1 million compared to the prior year. Exclusive of non-recurring charges in both years, net income for the six months ended October 31, 1998, increased to $4.2 million, or $0.42 per share, compared to $1.2 million, or $0.13 per share, during the same period a year ago, representing a 256% increase.

Including the after-tax effect of restructuring and non-recurring charges, net income for the second quarter and the six months ended October 31, 1998, was $86,000, or $0.01 per share, and $2.3 million, or $0.23 per share, respectively, compared to net losses of $0.3 million, or $0.03 per share, and net losses of $5.5 million, or $0.59 per share, during the same periods a year ago.

Wall Data is a leading, worldwide provider of Internet Information Systems that allow organizations to deliver and extend their enterprise applications and information to employees, partners and customers through a browser. The Cyberprise family of products and services builds on Wall Data's 15 years of mission-critical software experience highlighted by the award-winning RUMBA product suite.

Wall Data has worldwide headquarters in Kirkland, Washington, and 70 offices throughout the world. FMI: http://www.walldata.com.

                    WALL DATA INCORPORATED
                CONSOLIDATED INCOME STATEMENTS
                         (unaudited)
           (In thousands, except per-share amounts)

                              Three months          Six months
                                ended                 ended
                                Oct 31,               Oct 31,
                            1998      1997        1998     1997

Net revenues
  License fees           $ 29,802  $ 23,901    $ 62,524 $ 52,143
  Services                  7,552     6,042      15,240   11,468
                           ------    ------      ------   ------
  Total net revenues       37,354    29,943      77,764   63,611
Cost of revenues
  License fees              5,025     4,998      10,555   10,488
  Services                  3,004     1,869       5,959    3,840
                           ------    ------      ------   ------
  Total cost of revenues    8,029     6,867      16,514   14,328
                           ------    ------      ------   ------
 Gross margin              29,325    23,076      61,250   49,283
 Operating expenses:
  Product development       5,103     4,928      10,255    9,722
  Sales and marketing      18,884    16,877      38,741   33,149
  General and administrative3,322     2,703       7,409    6,366
  Amortization or intangibles
   from acquisitions          531        91       1,050      182
  Restructuring charges     2,405        --       2,405       --
  Other non-recurring expenses --        --          --   10,747
                           ------    ------      ------   ------
  Total operating expenses 30,245    24,599      59,860   60,166
                           ------    ------      ------   ------
Operating income (loss)      (920)   (1,523)      1,390  (10,883)
Other income, net           1,027     1,043       1,444    2,003
                           ------    ------      ------   ------
Income (loss) before
 income taxes                 107      (480)      2,834   (8,880)
Provision for income taxes     21      (184)        565   (3,394)
                           ------    ------      ------   ------
Net income (loss)            $ 86    $ (296)    $ 2,269 $ (5,486)
                           ------    ------      ------   ------
Net income:
 Basic earnings (loss)
  per share                $ 0.01   $ (0.03)     $ 0.23  $ (0.59)
                           ------    ------      ------   ------
 Diluted earnings (loss)
  per share                $ 0.01   $ (0.03)     $ 0.23  $ (0.59)
                           ------    ------      ------   ------
Shares used to calculate
 earnings per share:
   Basic                    9,952     9,295       9,929    9,304
                           ------    ------      ------   ------
   Diluted                 10,019     9,295       9,992    9,304
                           ------    ------      ------   ------

                    WALL DATA INCORPORATED
                 CONSOLIDATED BALANCE SHEETS
                        (In thousands)

 ASSETS
                                Oct 31, 1998   Apr 30, 1998
                                 (unaudited)

 Current assets:
  Cash and cash equivalents       $ 64,372      $ 57,490
  Accounts receivable               31,378        33,534
  Inventories                          868           952
  Deferred income taxes              5,709         5,701
  Other current assets               3,398         2,847
                                   -------       -------
      Total current assets         105,725       100,524
  Fixed assets, net                 10,560        10,665
 Deferred income taxes                 467           458
 Long-term investments               2,146         2,965
 Intangible assets related to
  acquisitions                      17,335        16,551
 Other assets                        6,074         9,042
                                   -------       -------
                                 $ 142,307     $ 140,205
                                   -------       -------


LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities
  Accounts payable                 $ 7,874       $ 8,382
  Accrued expenses                  15,841        17,063
  Income taxes payable               3,147         3,583
  Deferred revenues                 15,374        15,019
                                   -------       -------
      Total current liabilities     42,236        44,047
                                   -------       -------

 Deferred income taxes               3,283         3,390
                                   -------       -------
 Shareholders' equity:
   Preferred stock                      --            --
   Common stock                     59,387        58,882
   Retained earnings                35,575        33,306
   Accumulated other comprehensive
    income                           1,826           580
                                   -------       -------
   Total shareholders' equity       96,788        92,768
                                   -------       -------
                                 $ 142,307     $ 140,205
                                   -------       -------