Lightbridge Announces First Quarter 2005 Financial Results

Lightbridge Announces First Quarter 2005 Financial Results

    Business Editors/High-Tech Editors

    BURLINGTON, Mass.--(BUSINESS WIRE)--April 27, 2005--

    Company Exceeds Revenue and EPS Guidance; Intelligent Network Solutions Business Being Sold For Over $17 Million to VeriSign, Inc.;
    Authorize.Net Adds Over 13,000 New Merchants

    Lightbridge, Inc. (NASDAQ: LTBG), a leading e-commerce, analytics and decisioning company, today reported financial results for the first quarter ended March 31, 2005.
    Revenue for the first quarter of 2005 was $30.6 million versus $29.6 million for the first quarter of 2004, an increase of 3%. Revenue performance was driven primarily by the inclusion of Authorize.Net in this quarter's results, offset by lower revenue from AT&T Wireless Services, Inc. and Lightbridge's exit from its Fraud Centurion and RMS product lines. Authorize.Net revenue for the first quarter of 2005 was a record $10.1 million, an increase of 20% over the $8.4 million reported in the first quarter of 2004 by InfoSpace, Inc., its former owner. Lightbridge acquired Authorize.Net Corporation on March 31, 2004.
    The Company reported a net loss of $0.7 million, or ($0.03) per diluted share during the first quarter of 2005, versus a net loss of $0.7 million, or ($0.03) per diluted share, for the comparable period of 2004. The results for the first quarter of 2005 include restructuring charges of $0.9 million. First quarter 2004 results included restructuring charges of $0.5 million.
    "Lightbridge had a solid performance this quarter, surpassing both revenue and EPS guidance. We continue to see strong demand and growth at Authorize.Net and are excited about our new product initiatives and partnerships. The addition of over 13,000 new merchants this quarter underscores the quality of our products and services as well as the exceptional reputation Authorize.Net enjoys in the e-commerce marketplace," said Bob Donahue, president and chief executive officer of Lightbridge, Inc.
    Donahue added, "As recently announced, we have taken several steps to support Lightbridge's growth and long-term vision, including selling the Intelligent Network Solutions (INS) business to VeriSign (announced on April 25, 2005), scaling back the Instant Conferencing business, and exploring strategic alternatives for the Telecom Decisioning Solutions business. We believe the outstanding performance of the Payment Processing business and our solid financial position, combined with success in divesting a non-core business, positions us for continued growth and value creation as we look ahead."
    Tim O'Brien, chief financial officer of Lightbridge, added, "We maintained our strong balance sheet and continued to reduce operating expenses with the closures of our Broomfield, Colorado call center and our Fremont, California Instant Conferencing facility, along with ongoing efforts to control costs."

    Select Highlights

--	A growing list of third party solution providers have integrated their products to the Authorize.Net Internet Protocol (IP) Payment Gateway including CoreSense, Kiosk Logix, Inc., and ZyXel
--	Authorize.Net announced completion of its Secure Virtual Point of Sale (VPoS) Beta, providing a secure, easy-to-implement, easy-to-use solution for "brick and mortar" retail merchants using the Authorize.Net Payment Gateway to transact over the Internet
--	Authorize.Net re-validated its compliance with Visa USA's CISP program and validated its compliance with security programs sponsored by MasterCard, Discover Card and Visa Canada
--	Dobson Communications extended its contract with Lightbridge to provide wireless application screening through December 2007

    Authorize.Net Metrics

    -- Added 13,980 new merchants in Q1 of 2005 with net new adds
    totaling 4,930

    -- 118,000 active merchants using Authorize.Net as of March 31,
    2005, up 22% over the prior year

    -- Transaction volumes increased to 55.9 million, a 25% growth
    over the comparable quarter last year

    -- Processed $5.2 billion of merchant transactions in the first
    quarter, up 38% year over year

    Cash and Short-term Investments

    At March 31, 2005, Lightbridge's cash and short-term investment position was $51.1 million, compared to $52.2 million at December 31, 2004. This includes funds due to merchants of $6.0 million compared to $5.6 million at December 31, 2004.

    Company Performance versus Previous Guidance - First Quarter 2005

    Lightbridge's revenue of $30.6 million was above the Company's previously issued guidance of $27.0 to $29.5 million for the first quarter of 2005. The Company's previous guidance included revenue expectations for Authorize.Net of $9.6 to $10.2 million, with actual results reported at $10.1 million.
    Lightbridge's loss per share of ($0.03) is better than its previously issued guidance of a loss per share range of ($0.10) to ($0.16) for the first quarter of 2005 due principally to higher revenue and lower than expected operating expenses.

    Company Guidance - Second Quarter 2005

    Lightbridge estimates total revenue, excluding INS, will be in the range of $24.5 to $26.5 million, with Authorize.Net expected to contribute in the range of $10.1 to $10.6 million. Excluding the expected gain on the sale of INS and its operating results through the date of closing, earnings per share is expected to be between a loss of ($0.05) and an income of $0.01.
    These expected results reflect lower revenue in the TDS segment due to the continuing decline in revenue from AT&T Wireless Services, Inc. In addition, the Company expects to close the sale of INS to VeriSign, Inc. in the second quarter. This business' operating results for the second quarter, and the expected gain on disposal, will be reflected as discontinued operations. Lightbridge does not expect to generate revenue from its Instant Conferencing business in the second quarter.
    The above targets represent the Company's guidance as of the date of this release.

    Conference Call Information

    Lightbridge will conduct a conference call today, Wednesday, April 27, 2005 at 5:00 pm (ET) to discuss the information contained in this news release. Investors wishing to listen to a webcast of the conference call should link to the "Investor Relations" section of www.lightbridge.com at least 15 minutes prior to the broadcast and follow the instructions provided to assure the necessary audio applications are downloaded and installed. The call will be available online at the Company's website for one week. The call can also be accessed live over the phone by dialing 888-802-8576 or for international callers by dialing 973-935-8515. The replay will be available one hour after the call and can be accessed by dialing 877-519-4471 or for international callers by dialing 973-341-3080. The passcode number is 5958258. The replay will be available until May 10, 2005.

    About Lightbridge

    Lightbridge, Inc. (NASDAQ:LTBG) is a leading e-commerce, analytics and decisioning company that businesses trust to manage customer transactions. Lightbridge adds value to fraud screening, credit qualification, and payment authorization. Lightbridge solutions leverage intelligent automated systems and human expertise, delivered primarily through the efficiencies and cost savings of an outsourced business model. Businesses use Lightbridge to make smarter decisions, deliver better services, provide secure payments, reduce costs and enhance the lifetime value of their customers. For more information, visit www.lightbridge.com.

    Note to Editors: LIGHTBRIDGE and AUTHORIZE.NET are registered trademarks and the Lightbridge logo and VIRTUAL POINT OF SALE are trademarks of Lightbridge, Inc. All other trademarks and registered trademarks are the properties of their respective owners.

    Forward-looking Statements

    Certain statements in this news release that are not historical facts, including, without limitation, those relating to the growth opportunities for the Company, the Company's focus, objectives, goals, plans and strategies for the future including, without limitation, the objectives of growth and value creation, managing costs and increasing shareholder value, and the second quarter of 2005 financial guidance are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, (i) dependence on a limited number of clients, (ii) the Company's revenue concentration in the wireless telecommunications business and the declining subscriber growth rate in that business, (iii) continuing rapid change in the telecommunications industry, payment processing industry, and other markets in which the Company does business that may affect both the Company and its clients, (iv) current and future economic conditions generally and particularly in the telecommunications and payment processing industry, (v) uncertainties about the Company's ability to execute on, and about the impact on the Company's business and operations of, its objectives, plans or strategies as a result of potential technological, market or competitive factors, or the acquisition of Authorize.Net, (vi) the impact of restructuring and other charges on the Company's business and operations, (vii) integration, employee retention, recognition of cost and other benefits and revenue synergies, and other risks associated with acquisitions including the acquisition of Authorize.Net, (viii) the industry risks associated with Authorize.Net's business and operations including, without limitation, illegal or improper uses of Authorize.Net's payment system, unauthorized intrusions and attacks on Authorize.Net's payment system that may impair the operation of its payment systems, changes in or failures to comply with credit card association rules, governmental regulation and the application of existing laws to Authorize.Net's business and dependence on relationships with third party payment processors, (ix) potential state, federal and international regulation of voice conferencing and related compliance and operating costs, regulatory assessments and potential suspensions of service pending compliance with such regulation (x) the impact of the divestiture of the Company's INS business on its business and operations, and (xi) the factors disclosed in the Company's filings with the U.S. Securities and Exchange Commission including, without limitation, its 2004 Annual Report on Form 10-K and most recent Quarterly Report on Form 10-Q. The Company undertakes no obligation to update any forward-looking statements.

Lightbridge, Inc. and Subsidiaries Unaudited, Condensed, Consolidated Income Statement

(in thousands, except per share data)

Quarter Ended ----------------------------------- March 31, December 31, March 31, 2005 2004 2004 ------------ ------------ ---------

Revenues $30,640 $32,472 $29,625

Cost of revenues 15,346 16,882 16,066 ------------ ---------- ---------

Gross profit 15,294 15,590 13,559 ------------ ---------- ---------

Operating expenses: Engineering and development costs 6,461 7,074 6,973 Sales and marketing 4,932 5,380 3,752 General and administrative 3,561 3,791 3,519 Restructuring costs 870 1,722 499 Purchased in-process research and development - - 679 Impairment of intangible assets - 2,263 - Gain on sale of Fraud Centurion assets - (2,673) - ------------ ---------- --------- Total operating expenses 15,824 17,557 15,422

Income (loss) from operations (530) (1,967) (1,863) ------------ ---------- ---------

Other income, net 278 212 352 ------------ ---------- ---------

Income (loss) before taxes (252) (1,755) (1,511)

Provision (benefit) for income taxes 440 7,921 (770) ------------ ---------- ---------

Net income (loss) $(692) $(9,676) $(741) ============ ========== =========

Basic and diluted weighted average shares 26,562 26,504 26,950 ============ ========== =========

Basic and diluted earnings (loss) per share $(0.03) $(0.37) $(0.03) ============ ========== =========

Lightbridge, Inc. and Subsidiaries Unaudited Segment Financial Information

(in thousands, except percentage amounts)

Quarter Ended ------------------------------------- March 31, December 31, March 31, 2005 2004 2004 ------------------------------------- Revenues: --------------------------------- TDS $17,073 $19,279 $23,809 Payment Processing 10,100 9,859 - INS 3,467 3,334 5,816 Instant Conferencing - - - ------------ ------------ ----------- Total revenues $30,640 $32,472 $29,625 ============ ============ ===========

Gross Profit (Loss): --------------------------------- TDS $5,872 $6,971 $10,434 Payment Processing 7,805 7,435 - INS 1,932 1,540 3,141 Instant Conferencing (315) (356) (16) ------------ ------------ ----------- Total gross profit (loss) $15,294 $15,590 $13,559 ============ ============ ===========

Gross Profit (Loss) %: --------------------------------- TDS 34.4% 36.2% 43.8% Payment Processing 77.3% 75.4% N/A INS 55.7% 46.2% 54.0% Instant Conferencing N/A N/A N/A ------------ ------------ ----------- Total gross profit (loss) % 49.9% 48.0% 45.8% ============ ============ ===========

Operating Income (Loss): --------------------------------- TDS $2,475 $2,708 $4,035 Payment Processing 2,097 2,022 (679) INS (529) (1,464) (37) Instant Conferencing (887) (1,266) (1,072) ------------ ------------ ----------- Sub-total -- Reportable segments 3,156 2,000 2,247 Reconciling items (1) (3,686) (3,967) (4,110) ------------ ------------ ----------- Consolidated total $(530) $(1,967) $(1,863) ============ ============ ===========

(1) -- Reconciling items from segment operating income to consolidated operating loss include the following:

Quarter Ended ------------------------------------- March 31, December 31, March 31, 2005 2004 2004 -------------------------------------

Restructuring costs $(870) $(1,722) $(499) Gain on sale of Fraud Centurion assets - 2,673 - Impairment of intangible assets - (2,263) - Unallocated corporate and centralized marketing, general and administrative expenses (2,816) (2,655) (3,611)

------------ ------------ ----------- Total $(3,686) $(3,967) $(4,110) ============ ============ ===========

Lightbridge, Inc. and Subsidiaries Unaudited, Condensed, Consolidated Balance Sheets

(in thousands)

March 31, December 31, 2005 2004 ------------------- Assets --------------------------------------------------

Current assets: Cash and cash equivalents $42,450 $39,636 Short-term investments 8,612 12,589 --------- --------- Total cash and short term investments 51,062 52,225

Accounts receivable, net 19,189 18,940 Other current assets 3,434 3,132 --------- --------- Total current assets 73,685 74,297

Property and equipment, net 15,654 16,978 Other assets, net 274 336 Goodwill 57,628 57,628 Intangible assets, net 20,539 21,247 --------- ---------

Total assets $167,780 $170,486 ========= =========

Liabilities and Stockholders' Equity --------------------------------------------------

Current liabilities: Accounts payable and accrued liabilities $14,210 $16,486 Deferred rent obligation 1,789 1,592 Deferred revenues 3,399 3,681 Funds due to merchants 6,033 5,558 Reserve for restructuring 2,925 3,383 --------- --------- Total current liabilities 28,356 30,700 Deferred rent, less current portion 2,464 2,709 Long-term liabilities 217 149 --------- --------- Total liabilities 31,037 33,558 --------- ---------

Commitments and contingencies

Stockholders' equity: Common stock 300 300 Additional paid-in capital 167,968 167,465 Warrants - 206 Currency Translation 26 (184) Retained earnings (10,764) (10,072) --------- --------- Total 157,530 157,715 Less: treasury stock, at cost (20,787) (20,787) --------- --------- Total stockholders' equity 136,743 136,928 --------- ---------

Total liabilities and stockholders' equity $167,780 $170,486 ========= =========

--30--MP/bo*

CONTACT: Lightbridge, Inc. Lynn Ricci, 781-359-4854 Director, Investor & Media Relations lricci@lightbridge.com

KEYWORD: MASSACHUSETTS INDUSTRY KEYWORD: SOFTWARE INTERNET E-COMMERCE EARNINGS CONFERENCE CALLS SOURCE: Lightbridge, Inc.

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