SAN MATEO, Calif., Oct. 17, 2002 (PRIMEZONE) -- Virage, Inc. (Nasdaq:VRGE), a leading provider of video and rich media communication software, today reported operating results for its second fiscal quarter ended September 30, 2002.
Total revenues for the Company's second fiscal quarter increased slightly to $3.3 million, versus total revenues of $3.2 million in the prior quarter ended June 30, 2002. Gross profit increased to 63 percent of total revenues during the second quarter, up from 58 percent of total revenues in the prior quarter. Pro forma net loss was $4.3 million, or $0.21 per share, for the second quarter, in comparison to $5.1 million, or $0.25 per share, in the prior quarter. Including non-cash, stock-based charges in accordance with generally accepted accounting principles (GAAP), net loss was $4.7 million, or $0.23 per share, for the second quarter in comparison to a net loss of $5.5 million, or $0.27 per share, in the prior quarter.
For the six months ended September 30, 2002, total revenues were $6.5 million and pro forma net loss was $9.4 million, or $0.45 per share. Including non-cash, stock-based charges in accordance with GAAP, net loss was $10.2 million, or $0.49 per share, for the six months ended September 30, 2002.
"I'm pleased with the progress we made in our business this past quarter," said Paul G. Lego, chairman and CEO of Virage. "As a result of improvements in our corporate and government business, our bookings increased to the highest level in the past year. In addition, we have reduced overall expenses for the fifth quarter in a row and significantly reduced cash usage from the preceding quarter. Given this progress, I'm cautiously optimistic that our business has turned the corner."
Cash and short-term investments totaled $21.6 million as of September 30, 2002 versus $25.5 million as of June 30, 2002. Accounts receivable totaled $2.0 million, representing 56 days sales outstanding. The company had no debt as of September 30, 2002.
"We are encouraged by the revenues that our new products are generating, particularly in the corporate marketplace," said Scott Gawel, vice president of Finance at Virage. "The average deal size for our solutions was about twice that of sales involving only platform products. We believe that this increased momentum for our solutions, combined with recent expense reductions, strengthens our business position."
Other Second Quarter Highlights
New and Repeat Customers
During the second quarter, Virage added 15 new customers worldwide. In the U.S., first-time customers included the Chicago Board Options Exchange, Empire Blue Cross Blue Shield, Sandia National Labs, and the United Nations. New international customers in the second quarter included Asahi Broadcasting in Japan, Enel.it in Italy, and University of Montreal. Virage also generated significant repeat business from existing customers including Cisco, Citigroup, Discovery Channel, KLA-Tencor, National Library of Medicine, PBS, UBS Warburg, and Lawrence Berkeley National Laboratory. Additionally, in the second quarter, Virage received follow-on orders from multiple classified U.S. government customers.
Virage made several customer-related announcements in Q2, including:
-- The Office of Information Technology (OIT) at Princeton University deployed Virage software to support a variety of streaming media applications.
-- Leading Canadian websites for CTV (Canadian Television), Discovery Channel Canada, and the Report on Business Television selected Virage VS Publishing(tm) software to support the delivery of up-to-the-minute news and entertainment content.
-- C-SPAN is using VS Publishing software to publish the Booknotes television program onto Booknotes.org.
-- Thomas Cook TV deployed Virage's production software solution to produce content more quickly to increase the amount of travel and holiday footage digitally stored.
New Product Introductions
In the second quarter, Virage announced and shipped several new products, including:
-- VS Webcasting(tm) 2.0, the first comprehensive software solution that allows enterprises to efficiently manage the entire workflow related to producing live, rebroadcast, and on-demand webcast events.
-- VS Publishing 2.0, the industry's first software product for automated packaging, distribution and publishing of video and rich media content to the Internet and corporate Intranets. The new software is designed to support new business opportunities involving advertising, subscription services and content syndication.
-- German, Japanese and simplified Chinese versions of the Virage platform products including VideoLogger(r) 5.0 and the Virage Solution Server(tm) 4.0.
-- Oracle9i database versions of the Company's video and rich media applications. As a result, Virage customers can store, manage and publish video and other rich media assets on an Oracle(r) database technology just as they do with other mission critical information.
Business Outlook
"We expect the current difficult business climate to continue. Despite this challenge, we anticipate that the strength of our corporate and government business will enable us to generate modest revenue growth this current quarter," said Lego. "We believe this revenue growth, combined with recent additional expense reductions, will allow us to further reduce our net loss and cash usage this quarter. During this time, we expect to continue to strengthen our leadership position by focusing our product development efforts and carefully managing costs."
Virage Second Quarter Webcast
Virage management will host a webcast to discuss second quarter financial performance, operating and strategic developments and forward-looking guidance at 3:00 p.m. Pacific Time (6:00 p.m. Eastern Time) today, Thursday, October 17, 2002. The webcast will be available live at http://investor.virage.com and will be available for replay at the same URL through November 29, 2002.
Forward-Looking Statements
This press release contains forward-looking statements, including statements about our future sales growth, net loss, cash usage and market leadership. Our forward-looking statements are based on currently available information, which management has assessed, but which is subject to rapid change due to risks and uncertainties that affect our business, including the unpredictability of future revenues due to limited visibility into future demand; the current uncertainty in our marketplace, which may impact expected demand, customer selection criteria and sales cycle; variability in the amount and timing of expenses and cash usage; our ability to execute on service and software deliverables; slower economic growth; increased competition; and other factors beyond our control. Our forward-looking statements should be considered in the context of these and other risk factors disclosed from time to time in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and Form 10-Q filings.
Pro Forma Operating Results
Our pro forma operating results included in this press release represent our operating results for the respective periods presented excluding the impact of certain non-cash, stock-based charges. Such presentation is not in accordance with generally accepted accounting principles. Pro forma net loss for the three months ended September 30, 2002 and June 30, 2002 excludes non-cash, stock-based charges of $463,000 and $383,000, respectively. Pro forma net loss for the six months ended September 30, 2002 excludes non-cash, stock-based charges of $846,000.
About Virage
Established in 1995, Virage is a leading provider of video and rich media communication software. Virage builds integrated rich media business solutions for corporations, media & entertainment companies, universities and government agencies worldwide. Headquartered in San Mateo, California, Virage has offices throughout the United States and Europe.
Virage and VideoLogger are registered trademarks of Virage, Inc. The Virage logo, Virage Solution Server, VS Publishing and VS Webcasting are trademarks of Virage, Inc. Other company product and service names may be trademarks or service marks of others, and are hereby acknowledged.
Virage, Inc.
Pro Forma Condensed Consolidated Statements of Operations(1)
In thousands, except per share data
(unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
------------------- -------------------
2002 2001 2002 2001
-------- -------- -------- --------
Revenues:
License revenues $ 1,673 $ 2,932 $ 3,284 $ 4,814
Service revenues(2) 1,604 1,879 3,228 4,142
Other revenues -- 151 -- 212
-------- -------- -------- --------
Total revenues
excluding non-cash,
stock-based charges 3,277 4,962 6,512 9,168
Cost of revenues:
License revenues 160 178 347 332
Service revenues(3) 1,050 2,396 2,200 4,919
Other revenues -- 91 -- 148
-------- -------- -------- --------
Total cost of revenues
excluding non-cash,
stock-based charges 1,210 2,665 2,547 5,399
-------- -------- -------- --------
Gross profit excluding
non-cash, stock-based
charges 2,067 2,297 3,965 3,769
Operating expenses:
Research and
development(4) 2,444 2,317 4,826 4,790
Sales and marketing(5) 2,972 4,263 6,654 8,494
General and
administrative 1,069 1,330 2,211 2,662
-------- -------- -------- --------
Total operating
expenses excluding
non-cash, stock-
based charges 6,485 7,910 13,691 15,946
-------- -------- -------- --------
Loss from operations
excluding non-cash,
stock-based charges (4,418) (5,613) (9,726) (12,177)
Interest and other
income, net 138 412 328 980
-------- -------- -------- --------
Net loss excluding
non-cash, stock-
based charges $ (4,280) $ (5,201) $ (9,398) $(11,197)
======== ======== ======== ========
Pro forma net loss
per share $ (0.21) $ (0.26) $ (0.45) $ (0.55)
======== ======== ======== ========
Shares used in pro
forma per share
amounts 20,773 20,247 20,730 20,190
======== ======== ======== ========
(1) These pro forma condensed consolidated statements of
operations for the three and six months ended September 30, 2002
and 2001 are for illustrative purposes only and are not prepared
in accordance with generally accepted accounting principles. The
pro forma statements for the three months ended September 30,
2002 and 2001 present the operating results of the Company
excluding non-cash, stock-based charges of (2) none and $216 for
service revenues, (3) $9 and $9 for cost of service revenues, (4)
none and $27 for research and development, (5) $90 and $160 for
sales and marketing, and $364 and $756 for stock-based
compensation ($463 and $1,168 in total), respectively.
In addition, the pro forma statements for the six months ended
September 30, 2002 and 2001 exclude non-cash, stock-based charges
of (2) none and $432 for service revenues, (3) $18 and $18 for
cost of service revenues, (4) none and $27 for research and
development, (5) $93 and $368 for sales and marketing, and $735
and $1,538 for stock-based compensation ($846 and $2,383 in
total), respectively.
Virage, Inc.
Condensed Consolidated Statements of Operations
In thousands, except per share data
(unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
------------------- -------------------
2002 2001 2002 2001
-------- -------- -------- --------
Revenues:
License revenues $ 1,673 $ 2,932 $ 3,284 $ 4,814
Service revenues 1,604 1,663 3,228 3,710
Other revenues -- 151 -- 212
-------- -------- -------- --------
Total revenues 3,277 4,746 6,512 8,736
Cost of revenues:
License revenues 160 178 347 332
Service revenues 1,059 2,405 2,218 4,937
Other revenues -- 91 -- 148
-------- -------- -------- --------
Total cost of revenues 1,219 2,674 2,565 5,417
-------- -------- -------- --------
Gross profit 2,058 2,072 3,947 3,319
Operating expenses:
Research and development 2,444 2,344 4,826 4,817
Sales and marketing 3,062 4,423 6,747 8,862
General and
administrative 1,069 1,330 2,211 2,662
Stock-based compensation 364 756 735 1,538
-------- -------- -------- --------
Total operating
expenses 6,939 8,853 14,519 17,879
-------- -------- -------- --------
Loss from operations (4,881) (6,781) (10,572) (14,560)
Interest and other
income, net 138 412 328 980
-------- -------- -------- --------
Net loss $ (4,743) $ (6,369) $(10,244) $(13,580)
======== ======== ======== ========
Basic and diluted
net loss per share $ (0.23) $ (0.31) $ (0.49) $ (0.67)
======== ======== ======== ========
Shares used in
per share amounts 20,773 20,247 20,730 20,190
======== ======== ======== ========
Virage, Inc.
Condensed Consolidated Balance Sheets
In thousands
(unaudited)
September 30, March 31,
2002 2002
------- -------
ASSETS
Current assets:
Cash, cash equivalents and
short-term investments $21,641 $30,694
Accounts receivable, net 2,013 2,366
Prepaid expenses and other
current assets 795 220
------- -------
Total current assets 24,449 33,280
Property and equipment, net 2,493 3,701
Other assets 2,400 2,571
------- -------
Total assets $29,342 $39,552
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 636 $ 831
Accrued payroll and related expenses 2,023 2,376
Accrued expenses 2,360 2,946
Deferred revenue 3,112 3,050
------- -------
Total current liabilities 8,131 9,203
Deferred rent 358 290
Stockholders' equity:
Common stock 21 21
Additional paid-in capital 121,332 121,387
Deferred compensation (1,332) (2,425)
Accumulated deficit (99,168) (88,924)
------- -------
Total stockholders' equity 20,853 30,059
------- -------
Total liabilities and
stockholders' equity $29,342 $39,552
======= =======