Hyperion Reports Record Revenues in Fiscal Third Quarter; Software License Revenues Increase 30 Percent - Company Financial Information

Edge: Work-Group Computing Report, May 1, 2000

Hyperion (Nasdaq:HYSL), a global leader in business analysis software, Tuesday announced financial results for its fiscal 2000 third quarter and nine-month period ended March 31, 2000. License Revenues Grow $14 Million

For the third quarter, Hyperion reported record revenues of $125.8 million, a $24-million or 24- percent increase from $101.6 million reported for the same quarter a year ago. Software license revenues increased $14.2 million or 30 percent to $62.2 million from $48.0 million for the same period last year, while maintenance and services revenues increased by $10 million or 19 percent to $63.6 million compared with $53.6 million for the third quarter in fiscal 1999.

Excluding a one-time charge to operations of $2.1 million, net income for the third quarter increased by $5.3 million year-over-year to $7.9 million, or $0.23 per diluted share, compared with net income of $2.6 million, or $0.08 per diluted share, for the same quarter last year. Including the one-time charge, the company's net income for the third quarter more-than-doubled to $6.6 million, or $0.19 per diluted share.

Total operating expenses, including cost of revenues, increased approximately 19 percent to $117.3 million from $98.7 million year-over-year. As anticipated, the company increased its investment in Hyperion Essbase OLAP Server technology and new product development efforts to fuel the company's expansion into e-customer relationship management (e-CRM) analysis and other rapidly growing market segments, accelerated recruiting and training within the sales organization, and continued several new marketing initiatives. Additionally, the company recorded a one-time charge to operations of approximately $2.1 million associated with costs to restructure its European operations and outsource its North America-based accounting department. This charge is comprised primarily of severance costs.

Net profit margins have been steadily increasing over the past several quarters. Year-over-year, excluding a restructuring charge, net profit margins increased from 2.5% to 6.3% of revenue.

With approximately $288 million in cash and short-term investments at March 31, 2000, Hyperion has substantial financial strength to fund its current growth strategy through internal development and acquisitions as appropriate.

For the first nine months of fiscal 2000, the company's revenues increased by $35.3 million or 11 percent to $348.8 million compared with $313.5 million for the same nine-month period in fiscal 1999. Net income for the nine-month period ended March 31, 2000 grew to $19.7 million, or $0.62 per diluted share, compared with net income of $1.3 million, or $0.04 per diluted share, for the same period a year ago. Results for the year-ago period reflect a non-recurring charge of 21.8 million for merger-related costs. New Strategies Yielding Results: Shipped New Products, Expanded Partnership Network

"We are very pleased to report accelerated license revenue growth, which validates the strategies we are executing," said Jeff Rodek, chairman and chief executive officer of Hyperion. "We are especially pleased with the growth of Hyperion Essbase. Many partners and customers are investing in Hyperion Essbase OLAP Server as a strategic platform on which to build specific applications to understand and optimize all parts of their business, including a growing number for e-CRM analysis.

"Through our recently expanded relationship with IBM, they will ship Hyperion Essbase with every copy of DB2 Universal Database 7, providing customers with sophisticated analysis, broad application support, and a level of interactive performance beyond what traditional decision support systems can deliver," continued Mr. Rodek. "According to IBM, there are approximately 40 million DB2 users at 300,000 companies worldwide. This agreement represents a great opportunity to for us to expand our current Hyperion Essbase customer base from approximately 3,000 organizations today."

Additionally, we are accelerating our product development efforts to deliver more applications built on Hyperion Essbase that meet the needs of those customers and partners who want a more packaged solution. We are also very pleased with the quality of the partnerships we established this quarter -- such as Engage and WebTrends -- and we will continue to leverage the strength of our expanding partnership network.

"At the end of the quarter, we began shipping Hyperion Essbase OLAP Server 6, an enhanced, more robust and scaleable version of our market-leading online analytical processing server," stated Stephen Imbler, Hyperion's president and chief operating officer. "Additionally, we shipped our first e-CRM analysis product, Hyperion Customer Interaction Center, targeting the explosive e-CRM market. This robust solution complements operational CRM, automated call distribution, and computer telephony integration systems, helping organizations transform transactional CRM data into strategic, actionable information."