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For immediate release
CENTRINITY REPORTS RECORD REVENUE, PRODUCT MILESTONES IN THIRD QUARTER
Markham, ON — August 22, 2000 — Centrinity Inc., a world leader in the development and marketing of unified communications and collaborative groupware technologies, today reported record revenue of $3.7 million for third quarter of fiscal 2000.
"The third quarter of fiscal 2000 was one of tremendous progress for Centrinity," said President and CEO, Myles McGovern. "Not only did we gain well-deserved visibility from a new listing on The Toronto Stock Exchange, being recognized as an industry leader by IDC, and exciting new product launches, but we exceeded even our own expectations with record revenue growth and order volume."
"We also reached important milestones on the product front during the quarter," Mr. McGovern continued. "These included being recognized by International Data Corporation for our product leadership in Integrated Collaborative Environments, and the launch of two exciting new products: an enhanced version of FirstClass Gold and our revolutionary unified communications solution, FirstClass Unified Messaging (UM), a telephony-grade, fully unified technology that allows users to directly capture, consolidate, sort, and prioritize messages from any source - email, voice, or fax - anytime, anywhere, from any device. FirstClass UM is already being well received by the market. New contracts signed during the quarter included two orders from each of Canada and the U.S. for FirstClass UM, which we began shipping at the
end of June."
Revenue for the three months ended June 30, 2000 rose 97% to $3.7 million - nearly double the 1.9 million generated in the same quarter last year after accounting for the June 1999 acquisition of the SoftArc group on a pro forma basis, and up 48% from $2.5 million last quarter. Strong growth was mainly attributable to escalating global demand for Centrinity's state-of-the-art solutions and initial success in upgrading existing customers to their new FirstClass Gold solution - an advanced communication, collaborative learning, and calendaring software for building online educational communities. Since the beginning of this fiscal year, Centrinity has successfully upgraded approximately one million users to FirstClass Gold, representing more than 20% of their entire installed base.
While Centrinity continued to exhibit robust revenue growth in the third quarter, losses rose due to development and marketing costs associated with the introduction of FirstClass UM and the enhanced version of FirstClass Gold. At the same time, Centrinity deployed the capital invested by shareholders through the $25 million special warrant financing in February 2000.
Operating expenses, excluding direct cost of sales and amortization, were $6.9 million compared to $3.3 million on a pro forma basis in the same quarter last year. In the second quarter of this year, these expenses were $3.7 million. Recruitment investments accounted for most of the increases in research and development expenditures, recruitment and public relations investments accounted for those in sales and marketing, while the necessary expansion of office facilities led to the increase in administrative expenses. Also, $0.8 million of third quarter operating expenses of FC Sweden AB, Centrinity's Scandinavian acquisition made late in the second quarter, contributed to the increase.
Loss before amortization of goodwill or other intangibles was $3.7 million as compared to $1.6 million in the second quarter. The net loss for the quarter was $5.5 million, or $0.28 per share, versus $3.2 million, or $0.16 cents per share, in the previous quarter. In the third quarter of fiscal 1999, the net loss was $1.0 million, or $0.10 per share. The net loss in the third quarter of fiscal 1999 would have been approximately the same had the SoftArc acquisition been included in the results on a pro forma basis.
For the first nine months of fiscal 2000, net losses were $10.8 million, or $0.63 per share, compared to $2.0 million, or $0.19 per share, in the first of nine months of fiscal 1999 (excluding any pro forma adjustment for the SoftArc acquisition).
Third Quarter Highlights
• FirstClass UM was sold to British Columbia's Richmond School District to support 2,400 district employees and 24,000 students at 55 locations.
• Centrinity entered a strategic partnership with MorningStar Systems, Inc., a leading collaborative knowledge management consulting firm and an Open Text Corporation Affinity Partner, and GemStone Systems, Inc., a provider of advanced, integrated platforms for B2B Internet applications, to build a dynamic new B2B Internet service.
• FirstClass Intranet Server software was ranked in the leadership quadrant of the IDC Grid for Integrated Collaborative Environment Software, alongside prominent names such as Lotus Domino/Notes and Microsoft Exchange.
• Centrinity acquired the rights to database integration software that enables FirstClass users to quickly create online information systems with customized access to existing databases.
• Centrinity shares commenced trading on The Toronto Stock Exchange.
• Centrinity launched an enhanced version of FirstClass Gold that includes Windows 2000 compatibility; an IP Notifier that alerts users to incoming mail; support for Palm Computing connected organizers; and a fully licensed version of FirstClass Rapid Application Developer, a database development and integration tool.
• A group of rural hospitals and health care facilities in Texas chose FirstClass Intranet Server Gold as their primary collaborative communications software for Telemedicine - a project to improve access to health care in approximately 200 remote locations across Texas.
• FirstClass UM was sold to Lester B. Pearson School Board, the largest English language board in Quebec with 27,000 students in 43 elementary and 16 high schools.
Highlights Subsequent to Quarter End
• Centrinity signed a 3-year contract valued at more than $1 million to upgrade the FirstClass Gold solution we provide to SkoleKom, the Danish National Conferencing Service, whose current base of 260,000 users may expand to as many as three million by 2003.
• Albert Lin, Principal and Senior Portfolio Manager for The Abernathy Group, a leader in technology equities, joined Centrinity's Board of Directors.
• Centrinity strengthened its senior management team with the appointment of former investment banker Richard LePage as Executive Vice President and Chief Financial Officer, and technology industry veteran Barry Singer as Vice President, Corporate Development.
• The fourth quarter of fiscal 2000 is off to a strong start with the signing of the highly promising SkoleKom contract, part of more than $4.6 million in recent new business.
Outlook
Mr. McGovern said "With the full development of our Unified Communications product now complete, and shipments underway, we are very strongly positioned to be a leader in the UC market. Our FirstClass UM goes well beyond unified messaging, with its carrier-grade scalability and reliability."
"Our planned product and marketing development activities, particularly the official launch of FirstClass UM through telcos (incumbent, second generation and wireless), cablecos, internet and application service providers and system integrators in September will continue to positively impact Centrinity's bottom line."
"The strength of our product and marketing plans, and the strong upward trend in worldwide demand for Centrinity's solutions, should all contribute to significant revenue growth and profitability as we fully the exploit UC opportunity. Furthermore, our new recurring revenue model, which is based on ongoing licensing fees rather than one-time sales, will improve the stability and predictability of future earnings."
"Centrinity is clearly a high growth company in a high growth market. With our TSE listing, the recognized leadership of our products, our growing customer base, and our success in attracting talented new members to our management team, we are better positioned than ever to both shape and dominate our marketplace."
Conference Call Reminder
Centrinity will hold a conference call today, Tuesday, August 22, 2000, to discuss third quarter financial results for the three months ended June 30, 2000 and to provide updates on operating progress.
The call begins at 11:00 a.m. (eastern) and can be accessed by calling 1-888-674-1998. A telephone postview service will also be in place from approximately one hour after the conference ends until midnight (eastern) Tuesday, August 29. It can be accessed by calling 1-800-558-5253 and entering reservation number 1611 6633.
About Centrinity Inc.
Serving over 6 million users in more than 8,000 organizations in 55 countries, Centrinity is a high growth software company with technological leadership in the burgeoning global market for unified messaging solutions and related network-based collaboration tools. The Company’s products include FirstClass Intranet Server Gold, FirstClass Collaborative Classroom Gold and Zebu, which are widely used in commercial and education markets. Centrinity Inc. is listed under the symbol "CTI" on The Toronto Stock Exchange. Centrinity’s corporate website is located at http://www.centrinity.com
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For more information, contact:
Myles M. McGovern
President & CEO, Centrinity Inc.
Toll Free: 1.800.763.8272
Phone: 905.415.7000
For investor information, contact:
Natasha A. Sorobey
Corporate Secretary, Centrinity Inc.
Toll Free: 1.888.448.4424
Phone: 403.203.4748
This news release may include statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. The company cautions that actual performance will be affected by a number of factors, many of which are beyond its control. Future events and results may vary substantially from what the company currently foresees.
FirstClass is a registered trademark of SoftArc, a wholly owned subsidiary of Centrinity Inc. Centrinity, the Centrinity logo and Zebu are trademarks of Centrinity Inc. All other trademarks are the property of their respective owners.
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