CallWave Reports Record First Quarter 2005 Financial Results
Company Posts Revenue Growth of 27% and Net Income Growth of 26%
SANTA BARBARA, Calif., Nov. 1 /PRNewswire-FirstCall/ -- CallWave, Inc. (NASDAQ:CALL), a leading provider of VoIP enhanced services, today reported
financial results for the three-month period ended September 30, 2004.
For the first quarter of fiscal 2005, CallWave reported total revenue of $11.0
million, an increase of 27% over $8.7 million reported in the first quarter of
fiscal 2004.
Net income for the first quarter of 2005 was $2.9 million, or $0.17 per diluted
share. This compares to net income of $2.3 million, or $0.15 per diluted share
in the prior year and net income of $2.4 million, or $0.14 per diluted share in
the prior quarter. On an assumed fully-taxed basis, assuming a 38% tax rate,
net income for the first quarter of 2005 would have been $1.8 million, or $0.10
per diluted share.
In the first quarter of 2005, the company continued to post strong gross
margins of 71% and operating margins of 25%. CallWave generated $3.2 million
in cash from operations and, following the close of the quarter, received net
proceeds from its initial public offering of $37.2 million.
At September 30, 2004, CallWave had 823,000 paying subscribers, an increase of
26,000 from the prior quarter. For the first time, the Company reported that
some of its paid subscribers had more than one telephone number issued by or
being managed by CallWave, bringing total paid line count at the close of the
quarter to 922,000, an increase of 41,000 from the previous quarter.
"We are pleased with our overall results for the first quarter, reporting our
11th consecutive quarter of growth and profitability," commented David
Hofstatter, president and CEO of CallWave. "This was an active and important
quarter for CallWave. We launched a major new product, monetized previously
free features, and meaningfully increased our subscriber counts, exceeding our
expectations. At the same time, we conducted a successful initial public
offering, elevating our profile with customers and partners. Our financial and
operating success in the quarter sets the stage for what we believe will be
long-term growth and profitability," concluded Mr. Hofstatter.
"During the quarter subscriber growth was generated from a diverse set of
channels. These channels include web traffic which we drive through focused
Internet advertising, affiliate networks, and search engines. We also continue
to have remarkable success with word of mouth from existing customers," said
Mr. Hofstatter. "We rolled out the first phase of our local phone number
offering to visitors to our website under our Level 3 agreement. With the
introduction of this service, we have increased the conversion rate of visitors
to free trial customers and early data indicates that this service has also
increased the conversion rate of free to paid subscribers.
"We expect to continue to report solid results as our business grows both
organically and through the development of additional indirect relationships. We expect to rapidly develop, test and deploy features to meet the needs of our
mainstream customer base and expand our relationships with third parties that
enable us to reach a wider range of subscribers," commented Mr. Hofstatter.
Conference Call Details The CallWave First Quarter 2005 teleconference and webcast is scheduled to
begin at 5:00 p.m. Eastern Time, on Monday, November 1, 2004. To access the
live Webcast, please visit the investor relations section of the Company's
website http://www.callwave.com/ at least 30 minutes prior to the scheduled
time to download any necessary audio or plug-in software. An audio replay of
the call will also be available to investors beginning at 7:00 p.m. ET on
November 1, 2004, through November 15, 2004, by dialing (800) 405-2236 and
entering the passcode 11012359.
About CallWave CallWave is a leader in VoIP enhanced services. The company provides VoIP
application services on a subscription basis that add features and
functionality to the telecommunications services used in mainstream homes and
small offices. CallWave's proprietary VoIP software allows subscribers to get
more out of their existing networks -- landline, mobile, and IP -- by adding
software-based call-handling features, and by bridging all three networks to
help subscribers get their important calls. Founded in 1998, CallWave is
headquartered in Santa Barbara, California. For further information, please
visit http://www.callwave.com/.
Safe Harbor Statement Except for the historical statements contained herein, the foregoing release
contains forward-looking statements, including statements regarding, among
other matters, our future financial performance, including expected revenues
and earnings per share for the second quarter of 2005. These forward-looking
statements are subject to risks and uncertainties, and actual results could
differ materially due to several factors, including but not limited to the
ability to forecast consumer behavior and recognize or respond to emerging
trends, changing preferences or competitive factors, the market acceptance of
our new products and product enhancements, claims regarding alleged
infringement of third parties' intellectual property rights, the ability to
maintain or expand our customer and partner relationships and other risks and
uncertainties. Please consult the various reports and documents filed by
CallWave with the U.S. Securities and Exchange Commission, including but not
limited to CallWave's prospectus on Form S-1 for factors potentially affecting
the Company's future financial results. All forward-looking statements are
made as of the date hereof and CallWave disclaims any responsibility to update
or revise any forward-looking statement provided in this news release. The
results for the first quarter of fiscal 2005 are not necessarily indicative of
CallWave's operating results for any future periods.
CallWave is a registered trademark of CallWave, Inc. All other trademarks are
the property of their respective holders.
This press release includes a financial measure defined as a non-GAAP financial
measure by the Securities and Exchange Commission: fully-taxed net income.
This measure may be different from non-GAAP financial measures used by other
companies. The presentation of this financial information is not intended to
be considered in isolation or as a substitute for the financial information
prepared and presented in accordance with generally accepted accounting
principles.
CALLWAVE, INC. CONSOLIDATED BALANCE SHEETS
(in thousands) As of As of
June 30, 2004 September 30, 2004
(unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $6,187 $4,815
Marketable Securities 7,003 10,000
Restricted Cash 335 335
Accounts Receivable; net of
allowance for doubtful accounts
of $402 and $380 3,690 4,258
IPO Proceeds Receivable -- 37,200
Prepaid Income Tax -- 58
Other Current Assets 153 235
Total Current Assets 17,368 56,901 Property and Equipment, net 1,743 1,708
Deferred Tax Asset 1,664 1,179
Other Assets 853 163
Total Assets $21,628 $59,951 LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $1,245 $1,203
Accrued Payroll 758 625
Deferred Revenues 2,401 2,347
Income Taxes Payable 1,158 377
Other Current Liabilities 543 1,114
Total Current Liabilities 6,105 5,666 Commitments and Contingencies Stockholders' Equity:
Convertible Preferred Stock 28,761 --
Common Stock 3,998 69,089
Deferred Compensation (303) (772)
Accumulated Deficit (16,933) (14,032)
Total Stockholders' Equity 15,523 54,285
Total Liabilities and Stockholders'
Equity $21,628 $59,951
CALLWAVE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data) For the Quarter Ending September 30,
2003 2004 Revenues $8,697 $11,045
Cost of Sales 2,724 3,202
Gross Profit 5,973 7,843 Operating Expenses:
Sales and Marketing 1,212 2,116
Research and Development 1,260 1,668
General and Administrative 1,218 1,276
Total operating expenses 3,690 5,060 Operating income 2,283 2,783 Interest Income (expense), net 12 52
Income before income taxes 2,295 2,835 Income tax expense (benefit) 1 (66)
Net income $2,294 $2,901 Net income per share:
Basic $0.41 $0.44
Diluted 0.15 0.17 Weighted-average common shares
outstanding:
Basic 5,571 6,540
Diluted 15,216 17,365
DATASOURCE: CallWave, Inc.
CONTACT: Investors, Erica Abrams, , or Christy Ryan Swildens, , both of The Blueshirt Group, +1-415-217-7722, for CallWave Web site: http://www.callwave.com/
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