Centra Reports 2002 Fourth-Quarter and Year-End Results
LEXINGTON, Mass. (January 30, 2003) – Centra Software, Inc. (NASDAQ: CTRA), a leading provider of application software and services for real-time enterprise collaboration (RTEC), today announced results for the fourth quarter and for the year ended December 31, 2002. Highlights for the quarter included:
* Revenues increased 14 percent over third quarter revenues of $9.3 million
* Gross margins improved to 81.5 percent
* Strong year-end balance sheet with cash, cash equivalents, and short-term investments of
* 62 new customer account wins including Bull, California State University, Danish Defense Agency, LSI Logic, and Waters Corporation, bringing total corporate accounts to 1,026
* Continued expansion of sales and distribution channels with new VAR and OEM agreements signed during the quarter
Commenting on the results, chairman and chief executive officer Leon Navickas said, “We are pleased with Centra’s significant achievements during this strong fourth quarter. The company has entered 2003 with renewed momentum. During Q4, Centra built on its solid footprint of accounts with leading Fortune 1000 companies, delivered new award-winning products and services, expanded sales and distribution channels to address opportunities in the broader real-time enterprise collaboration market, and is now on track to achieve profitability in the second half of 2003.”
Navickas continued, “Our installed base of more than 1,000 corporate accounts, government agencies and universities is rapidly expanding the use of Centra’s real-time collaboration application software and services into additional new business initiatives beyond eLearning. Our ability to propagate software licenses, subscriptions, and new modules across key vertical markets coupled with Centra’s flexibility of deployment, either behind the firewall or as an ASP service, strongly positions the company for continued growth in 2003.” Management Succession Plans Centra also announced today plans to initiate the search process for a new president and chief executive officer to lead Centra in the next phase of the company’s growth and evolution. Commenting on the succession plans, Navickas said, “Both Tony Mark, Centra’s president and COO, and I look forward to recruiting an outstanding candidate to lead our organization, building on our solid foundation to create a large and profitable application software business in the years ahead – to ensure the best outcome for our employees, customers, and shareholders. Tony and I remain committed & enthused about managing the company through the search and transition to maintain the momentum we have created today.”
Revenues for the fourth quarter were $9.3 million, an increase of 14 percent over third-quarter revenues of $8.1 million and compared with revenues of $11.0 million for the fourth quarter of 2001. Centra saw improvements both in its international business, with increases in orders from Europe, Australia, and the Asia Pacific region and in its average transaction value size for software license sales. Software license revenue in the fourth quarter of 2002, which represented 49 percent of total revenue in the quarter, was $4.5 million, a 33 percent sequential increase over the third quarter of 2002. Gross margins improved by 210 basis points to 81.5 percent in the fourth quarter of 2002 compared to gross margins of 79.4 percent in the third quarter of 2002.
Net loss for the fourth quarter, calculated in accordance with generally accepted accounting principles (GAAP), was $8.9 million, or $0.34 per share, compared with a net loss of $2.6 million, or $0.10 per share, for the fourth quarter last year. The write down of goodwill during the fourth quarter of 2002 accounted for $5.9 million, or $0.23 per share of the net loss and net loss per share, respectively, during the quarter.
On a pro forma basis, excluding non-cash stock-based compensation expense, amortization of intangible assets and the write down of goodwill due to impairment, net loss for the fourth quarter of 2002 was $2.7 million, or $0.10 per share, compared to a pro forma net loss of $1.9 million, or $0.08 per share reported in the fourth quarter of 2001. This was a sequential improvement over the pro forma net loss of $3.2 million or $0.12 per share in the third quarter of 2002.
On the balance sheet, Centra’s cash, cash equivalents, and short-term investments totaled $38.2 million at December 31, 2002, compared to $40.1 million at the end of the previous quarter. Deferred revenue, driven by an increased demand for our applications delivered on a subscription basis (ASP), increased during the fourth quarter of 2002 by $1.6 million to a record $10.3 million at December 31, 2002.
Fourth-quarter 2002 Operational Highlights
* Centra continued to expand its distribution channels, signing VAR agreements with Select and Vedere. In addition, Centra entered into a strategic OEM agreement with SiteScape(r) Inc., a leading provider of Web-based collaboration software and services. Under the agreement, SiteScape will integrate real-time collaboration capabilities from Centra into its product portfolio, enabling users to host and record live online meetings from within the context of their enterprise collaboration environment. The integrated collaboration product will be marketed under the name Forum eMeeting.
* Centra bolstered its management team to improve global sales and marketing capabilities. Paul Daly joined the company as senior vice president of Worldwide Sales and Marketing in September. He announced the appointment of two software industry veterans to his senior management team. David Anderson was named vice president of Sales and Service Operations for Europe, the Middle East and Africa (EMEA), and Marni Hoyle was appointed vice president of Corporate Marketing. These executives bring more than 50 years of combined enterprise application software business experience – from companies such as Oracle, Baan and Lotus – to the Centra management team.
* Centra expanded its products and services with a new release of its application suite along with complimentary packaged and professional services. Also included in this release was an array of workflow modules for marketing and sales, augmenting the company’s strength in collaborative learning, aimed to streamline the administration and delivery of large-scale Web marketing events.
* To ensure the highest quality service and address the needs of a growing international customer base, Centra expanded its Global Collaboration Network (GCN) in the fourth quarter, adding local service hubs in Hong Kong, China (PRC) and Sydney, Australia. The GCN enables international and multi-national customers to leverage a global network of CentraOne(tm) servers to deliver Centra’s collaborative applications closer to the users on the edges of the Internet.
In early December, Centra signed its 1,000th customer account. Waters Corporation (NYSE:WAT), a leading provider of instrumentation, software, and services to the healthcare industry, adopted CentraOne to power its real-time enterprise. This milestone highlights Centra’s renewed momentum and industry leadership across a diverse set of industries and geographies. Waters will use the CentraOne collaboration platform to facilitate internal communications, global training, and more efficient marketing programs. Other new accounts signed during the fourth quarter include Bull, Benjamin Moore, California State University, Danish Defense Agency, Fiserv, Humboldt Bank, LSI Logic, and Organon.
* Centra ranked 33rd on the 2002 Deloitte & Touche Technology Fast 500, a listing of the 500 fastest growing technology companies in North America. Rankings are based on percentage revenue growth over five years from 1997-2001. Centra grew 13,435 percent during this period.
Centra signed 251 new accounts during 2002, and recorded revenues of $33.4 million. On a pro forma basis, excluding non-cash stock-based compensation expense, a one-time non-operating charge for loss on investment, the write-off of acquired in-process research and development, amortization of goodwill and other intangible assets, the write-off of goodwill due to impairment, terminated merger-related transaction costs, restructuring charges and loss on investment, the pro forma net loss for the full year ended 2002 was $13.5 million, or $0.53 per share, compared to a pro forma net loss of $11.5 million, or $0.47 per share reported in 2001. Net loss for the year ended December 31, 2002 on a GAAP basis was $22.5 million, or $0.88 per share, compared with a net loss of $16.7 million, or $0.68 per share, for the same period last year.
In conjunction with this release, Centra will host a conference call on Thursday, January 30, 2003 at 10:00 a.m. EST. The call will be simultaneously Webcast over the Internet. To access the Webcast, go to the company’s Website at www.centra.com/investorrelations.
Leading with an undisputed track record of helping more than 3 million licensed users to increase revenue and improve overall business performance, Centra enables global corporations, government agencies, and universities to drive greater productivity and lower costs through the industry’s most extensible application software for real-time enterprise collaboration. Today more than 1000 organizations across every industry and market sector choose Centra, including Cadbury Schweppes, Citigroup, AT&T, Procter & Gamble, McKesson, Nationwide Insurance, Sysco, and Stanford University. Centra’s products are bolstered by a vital ecosystem of strategic partners, including Deloitte Consulting, EDS, Microsoft, Siebel, Cisco, and Oracle. Headquartered in Boston, Centra services a world-wide customer base throughout the Americas, Europe, Asia and Australia. For more information, visit http://www.centra.com.
Safe Harbor Statement
With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements concerning the Company’s ability to maintain a leadership position in collaborative eLearning, its ability to successfully address the broader real-time communication and collaboration arena and management’s expectations regarding future results of operations. These statements involve risk and uncertainties that affect the matters therein, and cause actual results, events and performance to differ materially. These risk factors include, but are not limited to, the Company’s dependence on its senior management team and its ability to identify and recruit senior management personnel with sufficient qualifications and capabilities to replace its current president and its current chief executive officer, the results of future research, uncertainty of product demand and market acceptance for the Company’s current and future products, the effect of economic conditions, the impact of competitive products and pricing, the Company’s ability to manage and integrate the operation of the business of MindLever.com, Inc., acquired on April 30, 2001, technological difficulties and/or other factors outside the control of the Company. There is no assurance that the Company will be able to implement its operating plans as anticipated or achieve projected revenue and earnings goals. For a description of additional risks, and uncertainties, please refer to the Company’s filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2001 and its Form 10-Q for the three months ended September 30, 2002, which are available at www.centra.com/investorrelations. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Centra Software, Inc.
430 Bedford Street
Lexington, MA 02420