02.03.2005 22:47:00

Convera Reports Fourth Quarter and Full-Year Results

Convera Reports Fourth Quarter and Full-Year Results


    Business Editors/Technology Writers

    VIENNA, Va.--(BUSINESS WIRE)--March 2, 2005--Convera Corporation (NASDAQ:CNVR), a leading provider of search and categorization software for enterprises and government agencies, today announced financial results for the three-month period and fiscal year (fiscal year 2005) ended January 31, 2005.
    Revenue for the fourth quarter of fiscal 2005 totaled $6.3 million, a 6% increase from the comparable period of fiscal 2004, while full-year revenue totaled $25.7 million versus $29.3 million for the prior fiscal year period. Gross profit for the three-month and twelve-month periods ended January 31, 2005 totaled $5.2 million and $19.0 million, respectively, compared to $4.0 million and $20.7 million for the three and twelve-month periods, respectively, ended January 31, 2004. Consequently, gross margins for the three-month and twelve-month periods ended January 31, 2005 were 83% and 74%, respectively, while gross margins for the comparable periods of the prior fiscal year were 67% and 71%, respectively.
    The net loss for the quarter ended January 31, 2005 was $3.5 million (inclusive of $426,000 in net restructuring charges incurred in December 2004) or $0.09 per share, compared to a net loss of $3.7 million, or $0.11 per share, for the comparable quarter of fiscal 2004. The net loss for the fiscal year ended January 31, 2005 was $19.8 million (inclusive of $944,000 in net restructuring charges incurred in the latter half of the fiscal year), or $0.56 per share, compared to a net loss of $18.1 million, (inclusive of $621,000 in restructuring charges) or $0.57 per share for the fiscal year ended January 31, 2004.
    Cash and investments as of January 31, 2005 totaled $17.8 million.
    Commenting on the Company's results, Patrick C. Condo, President and Chief Executive Officer, Convera stated, "This past year was one of transition for Convera. We embarked upon a development initiative aimed at extending our technology to the World Wide Web, effected a realignment of our core software operations (including the elimination of approximately $22 million in annualized expenses), and redirected our primary selling efforts towards the emerging government sector. Entering fiscal 2006, we believe we are well positioned to deliver improved bottom-line performance, in concert with continued technology advancements from our Web indexing initiative, as well as RetreivalWare(R), our core software offering."
    On February 2, 2005 the Company announced that its advanced development effort focused on applying portions of the Company's existing technology to searching and indexing contextually relevant information from the World Wide Web attained a development milestone by indexing more than 1 billion documents. The Company further announced that it expects to launch a service offering during the next two quarters. Capital outlays to date, in connection with this proposed service offering, remain limited to equipment, personnel and general operating costs, which are expected to increase as the indexing initiative progresses. The Company continues to assess future capital requirements for this Web indexing initiative and may elect to seek additional funding sources over the coming quarters.
    The attached financial information compares the results of operations for the three-month and twelve-month periods ended January 31, 2005 to the same periods in 2004 and the balance sheet as of January 31, 2005 to the balance sheet as of January 31, 2004.

    About Convera

    Convera is a leading provider of mission-critical enterprise search and categorization solutions. Convera's RetrievalWare solutions maximize return on investment in vast stores of unstructured information by providing highly scalable, fast, accurate and secure search across more than 200 forms of text, video, image and audio information, in more than 45 languages. More than 900 customers in 33 countries rely on Convera's search solutions to power a broad range of applications including enterprise portals, knowledge management, intelligence gathering, profiling, corporate policy compliance, regulatory compliance, customer service and more. For more information, contact Convera at 800-788-7758, via e-mail at info@convera.com or on the Web at www.convera.com

    This release, including any statements from Convera personnel, contains statements about Convera's future expectations, performance, plans, and prospects, as well as assumptions about future events. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties, including without limitation, business and economic conditions and trends; continued success in technological advances and development including the Web initiative; possible disruption in commercial activities caused by terrorist activity and armed conflict, such as changes in logistics and security arrangements; reduced customer demand relative to expectations; competitive factors; and other risk factors listed from time to time in the company's SEC reports. Actual results may differ materially from our expectations as the result of these and other important factors relating to Convera's business and product development efforts, which are further described in Convera's filings with the Securities and Exchange Commission. These filings can be obtained from the SEC's website located at www.sec.gov. Any forward-looking statements are based on information available to Convera on the date of this release, and Convera assumes no obligation to update such statements. The Convera design logo and the following are worldwide trademarks of Convera: Convera(TM), RetrievalWare(R), and Screening Room(R). The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

The condensed, consolidated statements of operations for the Company appear below and are presented in accordance with accounting principles generally accepted in the United States. All amounts, except per share amounts, are expressed in thousands of U.S. dollars.

Three Months Ended Twelve Months Ended January 31, January 31, 2005 2004 2005 2004 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) Revenues: License $ 3,263 $ 3,225 $ 14,360 $ 18,322 Services 849 932 3,746 4,338 Maintenance 2,219 1,824 7,592 6,591 ----------------------- ----------------------- Total revenues 6,331 5,981 25,698 29,251 ----------------------- -----------------------

Cost of Revenues: License 14 501 1,658 1,822 Services 741 961 3,332 4,715 Maintenance 332 533 1,718 2,033 ----------------------- ----------------------- Total cost of revenues 1,087 1,995 6,708 8,570 ----------------------- -----------------------

Gross Margin 5,244 3,986 18,990 20,681 ----------------------- -----------------------

Operating Expenses: Sales and marketing 2,230 4,416 14,476 18,124 Research and product development 3,490 2,586 13,801 11,981 General and administrative 2,655 3,133 9,764 10,564 Restructuring charge 426 - 944 621 ----------------------- ----------------------- Total operating expenses 8,801 10,135 38,985 41,290 ----------------------- -----------------------

Operating Loss (3,557) (6,149) (19,995) (20,609)

Other Income, net 63 2,405 175 2,550 ----------------------- -----------------------

Net Loss $ (3,494) $ (3,744) $ (19,820) $ (18,059) ======================= =======================

Net loss per common share - basic & diluted $ (0.09) $ (0.11) $ (0.56) $ (0.57) ======================= ======================= Weighted-average number of common shares outstanding - basic & diluted 37,899 33,821 35,433 31,486

The condensed, consolidated balance sheets for the Company appear below and are presented in accordance with accounting principles generally accepted in the United States. All amounts are expressed in thousands of U.S. dollars.

ASSETS January 31, January 31, 2005 2004 ----------- ----------- (unaudited) Current Assets Cash and cash equivalents $ 17,766 $ 30,530 Short term investments 71 71 Accounts receivable, net 6,530 5,464 Prepaid expenses and other 2,390 2,536 ----------------------- Total current assets 26,757 38,601

Other assets, net 6,696 3,984 Goodwill 2,275 2,275 Other intangible assets 566 835 -----------------------

Total Assets $ 36,294 $ 45,695 =======================

LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $ 1,967 $ 2,615 Accrued expenses 3,529 4,093 Accrued bonuses 526 745 Deferred revenues 4,288 3,720 Restructuring reserve 835 620 ----------------------- 11,145 11,793

Restructuring reserve, net of current portion - 887 Other long-term liabilities - 1,647 ----------------------- Total long-term liabilities - 2,534 -----------------------

Total Liabilities 11,145 14,327 -----------------------

Shareholders' Equity 25,149 31,368

Total Liabilities & Shareholders' Equity $ 36,294 $ 45,695 =======================

--30--RM/ph*

CONTACT: Convera John R. Polchin, 703-761-3700 jpolchin@convera.com

KEYWORD: VIRGINIA INDUSTRY KEYWORD: HARDWARE SOFTWARE INTERNET E-COMMERCE EARNINGS SOURCE: Convera

Copyright Business Wire 2005

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