Revenues Increased 85%; Operating Loss Narrowed
SOUTHBOROUGH, Mass. - November 1, 2000 - ViryaNet (NASDAQ: VRYA)today reported revenues of $7.5M for the third fiscal quarter, ended September 30, 2000. This is an increase of 85% from the $4.0M recorded for the same quarter in 1999, and up 19% compared to the second quarter of 2000.
For the quarter ended September 30, 2000, ViryaNet recorded a net operating loss, before amortization of deferred stock compensation, of $2.0M, compared to a loss of $4.3M for the same quarter in 1999, and a loss of $2.6M in the second quarter of 2000.
For the quarter ended September 30, 2000, the Company's adjusted net loss, excluding a one-time non-cash charge related to the beneficial conversion feature of convertible debentures and amortization of deferred stock compensation, was $2.1M, or $0.42 per share, compared to an adjusted net loss of $4.3M or $1.60 per share in the same quarter in 1999, and an adjusted net loss of $2.7M or $1.00 per share in
the second quarter of 2000. Net loss for the third quarter of 2000, including the above non-cash charges, was $19.1M or $3.83 per share.
ViryaNet today also indicated, that based upon information now available to the Company, it believes that estimated earnings per share for the third quarter, published by securities analysts and available from reporting services with respect to third quarter results, were based on calculations utilizing an estimated weighted average number of shares, which were substantially higher than the actual weighted
average number of shares. If the actual weighted average number of shares were used, the Company believes that the range of published estimates for the earnings per share, before the one-time charge and amortization of deferred compensation, would have reflected an estimated loss per share of $0.51-$0.53 rather than the $0.10-$0.21 range that appeared in the analysts' reports available to the Company.
For the quarter ended September 30, 2000, software license revenues were $4.5M, an increase of 259% compared to the same quarter in 1999, and an increase of 20% compared to the second quarter of 2000. Maintenance and services revenues were $3.0M, an increase of 6% compared to the third quarter of 1999, and an increase of 18% compared to the second quarter of 2000.
"Our results reflect continued strong demand for our solutions, particularly from the telco/broadband sector," stated Samuel HaCohen, ViryaNet's Chairman and CEO. "Our wireless workforce management solution has been well-received by these organizations that must connect, manage, and automate the activities of their mobile workforces in real-time."
Other Accomplishments
"During the quarter, we also released a major upgrade of our Service Hub solution, which received the 'Best of Show' award at the Field Service Solutions 2000 exposition and conference in August, " said HaCohen. "We signed new contracts with a number of companies, including Citizens Communications, Picus Communications, and BGE HOME. Revenue from repeat customers, such as NTL, which
upgraded to our Service Hub solution, also contributed to the success of the quarter.
"The introduction of Service Hub and our focus on wireless workforce management also has led to a shift in the mix between license revenues and professional services revenues, with licenses accounting for 60% of total revenues for the third quarter of this year, compared with only 31% in the third quarter of 1999. Another factor contributing to the higher percentage of license revenues is the
Company's relationships with marketing partners, since more implementations are managed by the system integrator partners.
"In addition to relationships with partners such as Cap Gemini Ernst & Young, Akili, and Omron Alphatec, we recently have entered into a letter of understanding with Aether Systems, a provider of wireless and mobile data products and services," continued HaCohen. "We intend to collaborate with Aether to deliver our wireless workforce management solutions using an application service
provider (ASP) business model in conjunction with Aether."
As a result of its initial public offering of 4.0M shares on September 19, 2000, the Company ended the third quarter with $34.5M in cash and cash equivalents.
Weighted Average Number of Shares
The Company believes that the weighted average number of shares used in the reports published by analysts to calculate the estimated earnings per share for the third quarter of 2000 ranged between 12.3 million shares to 25.6 million shares, while the actual weighted average number of shares is approximately 5.0 million. The Company believes that the difference between the weighted average number of shares
included in the analysts' reports and the actual weighted average number of shares included in the Company's Statement of Operations for the third quarter of 2000 is at least partially due to the method by which certain Ordinary shares that were issued at the time of the initial public offering were included in the computation of the weighted average number of shares. We believe that the estimates as published by the analysts were based on a pro-forma formula that assumed that the
Ordinary shares issued at the time of the initial public offering, due to the conversion of preferred shares and convertible debentures, were outstanding since July 1, 2000 or some other date prior to the date of the Company's initial public offering. In the calculation of the basic and diluted net loss per share presented in the consolidated statement of operations for the third quarter of 2000, these Ordinary shares are only included from September 19, 2000, the date of the initial public
offering. This difference applies to the earnings per share formula only, and we believe that it has no bearing on the analysts' estimates with regard to the operating results of the Company for the third quarter of 2000 or with regard to the outstanding number of Ordinary shares as of September 30, 2000.
About ViryaNet
ViryaNet Inc. (Nasdaq: VRYA) is a provider of wireless workforce management solutions for field service communities. These solutions unite on a wireless Internet platform the many participants in a field service community involved in the delivery of service, and support mobile field engineers using wireless devices, such as PDAs, two-way pagers, and WAP-enabled cell phones. The Company's solutions for
wireless workforce management enable a field service organization to expertly schedule, monitor, report, and measure field service activity, meeting and exceeding installation, preventative maintenance, and break-fix obligations.
ViryaNet's professional services team and implementation partners enable implementation of the Company's solutions for wireless workforce management.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding ViryaNet's expectations, beliefs, intentions, strategic partnerships, mix of revenues, or
strategies regarding the future. All forward-looking statements included in this document are based upon information available to ViryaNet Inc. as of the date hereof, and ViryaNet Inc. assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to ViryaNet's business are set forth in ViryaNet's Form F-1, as
amended and declared effective by the Securities and Exchange Commission on September 19, 2000, and the other reports filed from time to time with the Securities and Exchange Commission.