NEW YORK, Nov. 1, 2007 (PRIME NEWSWIRE) -- deltathree, Inc. (Nasdaq:DDDC), a leading provider of Voice over Internet Protocol (VoIP) hosted communications solutions for service providers, resellers and end-users worldwide, today announced financial results for the third quarter 2007 ended September 30, 2007.
Third Quarter 2007 Highlights
* deltathree joip-powered Panasonic GLOBARANGE hybrid VoIP phones
begin sales in the United States, Austria, Canada, Germany,
Ireland, Spain and the United Kingdom.
* RCN Corporation selects deltathree's award winning,
private-label, Hosted Consumer VoIP Solution to expand its
U.S. phone service to new areas in New York, Boston, Chicago,
Eastern Pennsylvania and metro Washington, D.C.
* Market America and Yor.com among customers implementing
deltathree's Hosted Consumer VoIP Solution during the third
quarter.
* deltathree collaborates with XO Communications to offer
expanded DID coverage and faster local number portability
services in the U.S. for deltathree's Hosted Consumer
VoIP Solution.
* Deloitte & Touche USA LLP names deltathree to its prestigious
New York Technology Fast 50 program.
* Electronic House magazine names the joip-powered Panasonic
GLOBARANGE hybrid cordless phone a winner of its 2007 Product
of the Year award as one of its best home enhancements for 2007.
Revenues for the third quarter of 2007 totaled $7.3 million, a decrease of $1.2 million from the $8.5 million reported for the third quarter of 2006. Service provider and reseller revenues accounted for approximately 86.4% of total revenues during the third quarter with 12.2% driven by consumer VoIP revenues and 1.4% related to other business activities.
deltathree reported a GAAP net loss for the third quarter of 2007 of $2.1 million or $(0.06) per share as compared to GAAP net income of $30,000 or $0.00 per share in the third quarter of 2006.
Gross margin for the third quarter of 2007 was 27% compared with a gross margin of 38% for the third quarter of 2006.
deltathree reported an adjusted EBITDA loss for the third quarter of 2007 of $1.2 million, or a loss of $(0.04) per share, as compared to adjusted EBITDA positive results of $409,000 or $0.01 per share in the third quarter of 2006.
deltathree defines adjusted EBITDA as earnings before non-cash stock-based compensation, interest, taxes, depreciation and amortization. The company uses adjusted EBITDA as a measure of the company's operating trends. Investors are cautioned that adjusted EBITDA is not a measure of liquidity or of financial performance under Generally Accepted Accounting Principles (GAAP). The adjusted EBITDA numbers presented may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. Consistent with Regulation G under the U.S. federal securities laws, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measure, and this reconciliation is located under the heading "Reconciliation of Non-GAAP Financial Information to GAAP" following the Condensed Consolidated Statements of Operations included in this press release.
As of September 30, 2007, deltathree held approximately $10.4 million in cash, cash equivalents, short and long-term investments as well as restricted cash with no outstanding debt.
deltathree Operational Review
Shimmy Zimels, President and Chief Executive Officer of deltathree, stated, "The third quarter of 2007 was highlighted by several new Hosted Consumer VoIP Solution wins and deployments as well as the formal launch of sales for the deltathree joip-powered line of Panasonic GLOBARANGE hybrid VoIP phones in seven major geographic markets worldwide. While our top and bottom line financial performance reflect the results of a challenging quarter, we believe that our recent customer wins and product launches, combined with our continued investment in key products and new service enhancements, reflect a range of targeted actions aimed at realigning the company's underlying financial performance and setting the foundation for growth in 2008. Parallel to this, we are also focusing the company more efficiently around our core VoIP business and undertaking a range of additional operational efficiency measures designed to help ensure that our overall business is scaled appropriately to our current level of sales."
Conference Call Details
The deltathree third quarter 2007 earnings conference call will be webcast live at 10:00 a.m. ET / 7:00 a.m. PT today, November 1, 2007. Investors are invited to listen to the live call by dialing 1-800-230-1093 in the North America or by dialing 1-612-332-0630 when calling internationally. Investors worldwide can also listen to the call live via deltathree's Website, http://www.deltathree.com. Please go to the Website at least 15 minutes early to register, download, and install any necessary audio software. A replay of the call will also be available through the deltathree corporate Website.
Adjusted EBITDA Financial Disclosure
Investors are cautioned that the adjusted EBITDA, or earnings before non-cash stock-based compensation, interest, taxes, depreciation and amortization, information contained in this press release and the attached financial information is not a financial measure under generally accepted accounting principles. In addition, it should not be construed as an alternative to any other measures of performance determined in accordance with generally accepted accounting principles, or as an indicator of the company's operating performance, liquidity or cash flows generated by operating, investing and financing activities, as there may be significant factors or trends that it fails to address. Adjusted EBITDA financial information is presented because deltathree believes that it is helpful to some investors as one measure of the company's operations. deltathree cautions investors that non-GAAP financial information such as adjusted EBITDA, by its nature, departs from traditional accounting conventions; accordingly, its use can make it difficult to compare deltathree's results with the results from other reporting periods and with the results of other companies.
About deltathree
Founded in 1996, deltathree, Inc. is a leading provider of integrated Voice over Internet Protocol (VoIP) telephony services, products, hosted solutions and infrastructure. deltathree offers high quality Internet telephony solutions that are viable and cost-effective alternatives to traditional telephone services. Supporting hundreds of thousands of active users around the world, deltathree serves customers through its two primary distribution channels: the Service Provider/Reseller channel and the direct-to-consumer channel. deltathree's advanced solutions offer service providers and resellers a full spectrum of private label VoIP products and services, as well as a back-office suite of services. Utilizing advanced Session Initiation Protocol (SIP) technology, deltathree provides all the components to support a complete VoIP service deployment. deltathree's Consumer Group consists of the award-winning iConnectHere direct-to-consumer offering and joip, the newly formed consumer brand that powers the VoIP service of Panasonic's GLOBARANGE hybrid phone.
For more information about deltathree please visit our website: www.deltathree.com
For more information about joip, visit our web site at www.joip.com
Except for historical matters contained herein, the matters discussed in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that these forward-looking statements reflect numerous assumptions and involve risks and uncertainties that may affect deltathree's business and prospects and cause actual results to differ materially from these forward-looking statements, including expectations relating to our acquisition of the assets from Go2Call and expected synergies. Among the factors that could cause actual results to differ are: our failure to successfully integrate Go2Call assets and certain personnel into our business and achieve expected synergies; our failure to retain key customers and to retain certain personnel; uncertainty of our future profitability; our ability to expand our revenues from multiple sources and customer bases; our ability to obtain additional capital to finance operations and grow our business; decreasing rates of all related telecommunications services, which could prevent our future profitability; our limited operating history; our acquisition activity could disrupt our ongoing business; the public's acceptance of VoIP telephony, and the level and rate of customer acceptance of our new products and services; the competitive environment of Internet telephony and our ability to compete effectively; fluctuations in our quarterly financial results; our ability to handle a large number of simultaneous calls; our ability to maintain and operate our computer and communications systems, without interruptions or security breaches; our ability to operate in international markets; our ability to retain key personnel to support our products and ongoing operations; our ability to provide quality and reliable service, which is in part dependent upon the proper functioning of equipment owned and operated by third parties; the uncertainty of future governmental regulation; the need for ongoing product and service development in an environment of rapid technological change; and other risk factors contained in deltathree's periodic reports on file with the SEC and available on the Internet at http://www.sec.gov. Except as required under the federal securities laws and the rules and regulations of the SEC, deltathree does not have any intention or obligation to update publicly any forward-looking statements after the distribution of this news release, whether as a result of new information, future events, changes in assumptions, or otherwise.
DELTATHREE, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ in thousands)
As of As of
September December
30, 31,
-------- --------
2007 2006
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 1,556 $ 3,790
Restricted cash and short-term investments 7,790 12,067
Accounts receivable, net 1,098 1,286
Prepaid expenses and other current assets 525 444
Inventory 294 155
-------- --------
Total current assets 11,263 17,742
-------- --------
Restricted cash and long-term investments 1,085 1,085
-------- --------
Property and equipment, net 3,126 3,458
-------- --------
Intangible assets, net 6,716 --
-------- --------
Deposits 113 110
-------- --------
Total assets $ 22,303 $ 22,395
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,548 $ 2,916
Deferred revenues 665 1,099
Other current liabilities 1,715 1,545
-------- --------
Total current liabilities 4,928 5,560
-------- --------
Long-term liabilities:
Severance pay obligations 333 217
-------- --------
Total liabilities 5,261 5,777
-------- --------
Stockholders' equity:
Class A common stock, $0.001 par value;
authorized 75,000,000 shares; issued and
outstanding: 32,795,045 at September 30, 2007;
29,808,214 at December 31, 2006 33 30
Additional paid-in capital 172,611 168,030
Accumulated deficit (155,602) (151,442)
-------- --------
Total stockholders' equity 17,042 16,618
-------- --------
Total liabilities and stockholders' equity $ 22,303 $ 22,395
======== ========
DELTATHREE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
($ in thousands, except share and per share data)
Three Months Ended Nine Months ended
------------------------ ------------------------
September 30, September 30,
------------- -------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Revenues $ 7,260 $ 8,537 $ 23,174 $ 29,252
Costs and
operating
expenses:
Cost of revenues 5,284 5,331 16,111 18,691
Research and
development
expenses 1,154 961 3,397 3,085
Selling and
marketing
expenses 1,267 1,276 3,812 3,749
General and
administrative
expenses 902 693 2,163 2,357
Depreciation and
amortization 783 389 2,125 1,139
----------- ----------- ----------- -----------
Total costs
and operating
expenses 9,390 8,650 27,608 29,021
----------- ----------- ----------- -----------
(Loss) Income
from operations (2,130) (113) (4,434) 231
Interest income, net 97 162 392 439
----------- ----------- ----------- -----------
Net (loss) income
before taxes (2,033) 49 (4,042) 670
Income taxes 91 19 118 56
Net (loss) income $ (2,124) $ 30 $ (4,160) $ 614
Basic net (loss)
income per share $ (0.06) $ 0.00 $ (0.13) $ 0.02
Diluted net
(loss) income
per share $ (0.06) $ 0.00 $ (0.13) $ 0.02
Basic weighted
average number
of shares
outstanding 32,795,045 29,788,403 32,288,240 29,759,374
=========== =========== =========== ===========
Diluted weighted
average number
of shares
outstanding 32,795,045 29,907,650 32,288,240 30,236,097
=========== =========== =========== ===========
DELTATHREE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in thousands)
Nine months ended
September 30,
------------------
2007 2006
------------------
Cash flows from operating activities:
(Loss) income for the period $(4,160) $ 614
Adjustments to reconcile (loss) income
for the period to net cash (used in) provided
by operating activities:
Depreciation of property and equipment 1,159 1,139
Amortization of intangible assets 966 --
Capital gain, net -- (1)
Stock based compensation 354 377
Provision for losses on accounts receivable 56 --
Increase in liability for severance pay 116 48
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 132 (584)
(Increase) decrease in prepaid expenses and other
current assets (81) 160
(Increase) decrease in inventory (139) 43
(Decrease) in accounts payable (860) (790)
(Decrease) increase in deferred revenues (1,058) 1,186
Increase (decrease) in other current liabilities 170 (387)
------- -------
815 1,191
------- -------
Net cash (used in) provided by operating
activities (3,345) 1,805
------- -------
Cash flows from investing activities:
Purchase of property and equipment (681) (554)
Proceeds from disposal of property and equipment -- 1
Increase in deposits (3) (4)
Decrease (increase) in short-term investments 4,277 (1,914)
Long-term investments, net -- 131
Purchase of Go2Call operations, net (2,509) --
------- -------
Net cash provided by (used in) investing
activities 1,084 (2,340)
------- -------
Cash flows from financing activities:
Proceeds from exercise of employee options 27 68
------- -------
Net cash provided by financing activities 27 68
------- -------
Decrease in cash and cash equivalents (2,234) (467)
Cash and cash equivalents at beginning of period 3,790 3,847
------- -------
Cash and cash equivalents at end of the period $ 1,556 $ 3,380
======= =======
Nine months ended
September 30,
------------------
2007 2006
---- ----
Supplemental schedule of cash flow information:
Cash paid for:
Taxes $ 44 $ 56
Supplemental schedule of non cash investing
and financing activities:
Acquisition of fixed assets on credit $ 125 $ 8
Cancellation of treasury stock $ -- $ 210
Supplemental schedule of acquisition of Go2Call
Fixed assets $ 51
Intangible asset $ 7,652
Accounts payable $ (367)
Deferred revenues $ (624)
Stock issuance $(4,203)
-------
Total $ 2,509
=======
DELTATHREE, INC. RECONCILIATION
OF NON-GAAP FINANCIAL INFORMATION TO GAAP
($ in thousands, except share and per share data)
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Net (loss) profit $ (2,124)$ 30 $ (4,160)$ 614
=========== =========== =========== ===========
Depreciation and
amortization $ 783 $ 389 $ 2,125 $ 1,139
Stock based
compensation $ 164 $ 133 $ 354 $ 377
Interest income $ 97 $ 162 $ 392 $ 439
Taxes $ 91 $ 19 $ 118 $ 56
----------- ----------- ----------- -----------
Adjusted EBITDA $ (1,183)$ 409 $ (1,955)$ 1,747
=========== =========== =========== ===========
Basic adjusted EBITDA
per share $ (0.04)$ 0.01 $ (0.06)$ 0.06
=========== =========== =========== ===========
Diluted adjusted
EBITDA per share $ (0.04)$ 0.01 $ (0.06)$ 0.06
=========== =========== =========== ===========
Basic weighted average
number of shares
outstanding 32,795,045 29,788,403 32,288,240 29,759,374
=========== =========== =========== ===========
Diluted weighted
average number of
shares outstanding 32,795,045 29,907,650 32,288,240 30,236,097
=========== =========== =========== ===========
Adjusted EBITDA (earnings before non-cash stock-based compensation, interest, taxes, depreciation and amortization)