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Southborough, Mass. - May 5, 2005 -ViryaNet (NasdaqSC: VRYA), a leading provider of integrated mobile and Web-based software applications for workforce management and field service delivery, today announced financial results for its fourth quarter and full-year 2004. The results for the full-year 2004 have been affected by the restatement that was previously announced by the Company on March 17, 2005 and the related changes in the Company's accounting for revenue
recognition. All references to the results for 2003 are as restated.
For the fiscal year 2004, total revenues were $11.9M, compared to $12.0M in fiscal year 2003. The net loss for fiscal year 2004 was $4.2M, or $0.85 per basic and diluted share, compared to a net loss of $1.7M, or $0.55 per basic and diluted share for fiscal year 2003. The results for the fiscal year 2004 include the affect of the restatement on certain software license transactions recorded during 2003, whereby approximately $0.5M of revenue related to 2003 transactions that was
previously restated from 2003 has been recorded as revenue at the time payment was collected in 2004. In addition, approximately $1.5M of revenue previously recorded in Q3 2004 has been deferred in light of the related changes in the accounting for revenue recognition, and will be recorded as revenue when payment is collected.
Total revenues for the fourth quarter, ended December 31, 2004, were $2.1M, a 29% decrease from $3.0M recorded for the fourth quarter of 2003.
For the fourth quarter of 2004, the Company reported a net loss of $2.2 million, or $0.41 per basic and diluted share, compared to a net loss of $0.4M, or $0.11 per basic and diluted share for the fourth quarter of 2003.
Software license revenues for the fourth quarter of 2004 decreased to $0.1M, 91% lower than the $1.0M recorded for the fourth quarter of 2003. Software license revenues comprised 4% of total revenue for the fourth quarter of 2004, compared to 34% for the fourth quarter of 2003.
The Company reported a gross profit of $0.4M for the fourth quarter of 2004, or 17% of total revenues, compared to a gross profit of $1.5M, or 49% of total revenues for the fourth quarter of 2003.
The Company's cash position on December 31, 2004 was $2.9M, compared to $3.2M on September 30, 2004. The Company's short and long-term bank debt position on December 31, 2004 was $2.8M, compared to $1.7M on September 30, 2004. During the fourth quarter of 2004, the Company increased its short-term debt with Bank Hapoalim by $1.4M, and paid its quarterly long-term loan payment of $0.3M.
The Days of Sales Outstanding (DSO) at the end of the fourth quarter of 2004 was 62 days.
"ViryaNet's fiscal year 2004 was a challenging year with disappointing financial results," stated Paul V. Brooks, president and CEO, ViryaNet. "These results were impacted, particularly in the fourth quarter, by longer than-expected sales processes, variability in the timing of the closing of deals, and the effect of the deferral of certain revenues, as mentioned above.
"The year in general, however, was also marked with accomplishments. There are three areas that deserve focus: our strategic activities, our marketplace, and our operations.
"Concerning our strategic activities, the addition of Utility Partners was the most significant area of progress. With this acquisition, ViryaNet added a considerable number of existing customers and an employee base skilled with utilities knowledge and product development expertise. These additions give us an excellent foundation for growing our business and improving our product functionality for all of our target markets.
"Our marketplace is demanding. In every sales situation, we face the challenges of tight customer budgets, knowledgeable and justifiably demanding customer executives, and aggressive competitors. In that environment, we made progress in several key areas.
- Our market share in the North American utility industry was increased both by the Utility Partners' existing customer base and with significant new-license contracts, including ones with the Las Vegas Valley Water District, Jackson Energy Authority and Duquesne Light Company.
- We expanded our activity in the Asia/Pacific region with the addition of two new resellers and a new center of excellence.
- In the telecommunications marketplace, a sector that continues to be very important to us, we won new deals, including Birch Telecom and Penn Telecom.
- We completed our implementation at Publix, which established our product leadership in the retail/grocery market with our facilities management solution.
"All of these position us well for the coming year, as has been seen with our early 2005 successes.
"Regarding our operations, we've restructured key areas within our management organization. The new organization clarifies management accountability in all aspects of Company. We are revamping many of our processes, and we expect that this will positively impact our performance. Utilizing both the ViryaNet and Utility Partners development staffs, we shipped product releases of both Service Hub and WorkUP in 2004, and have already shipped another new release in 2005.
"In 2005, we will continue with our strategies to expand our market share worldwide, with the help of increasingly capable partners. Our primary areas of industry focus will continue to be utilities, telecommunications, and retail/grocery. Operationally, we will focus on improved project results and the implementation of our product development roadmap. Our commitment is to deliver the highest quality, most functionally rich mobile workforce management solutions in the
world."
2004 Accomplishments
2004 saw significant accomplishments, including:
New Sales
Either through its direct sales force or through the efforts of partnerships, ViryaNet welcomed several new customers, including: Singapore Power, EDS, the Las Vegas Valley Water District, Jackson Energy Authority, Birch Telecom, and Penn Telecom. In addition, several UP customers, including Central Maine Power, Aquila, Montana-Dakota Utilities, Co., and Teresan, purchased new licenses.
New Partnerships
The Company expanded its partnership network and extended its distribution capabilities in the Asia Pacific region by forging strategic relationships with eWise, located in Australia; Freewill, located in Thailand; and Power Automation, located in Singapore.
UP Acquisition
On July 29, 2004, the Company acquired Utility Partners, Inc. of Tampa, Florida, a mobile workforce management company with approximately 20 customers. ViryaNet worked diligently during the balance of the year to integrate staff and operations, roll out a comprehensive product integration plan, and increase its concentration of sales and marketing efforts in the utility market segment while continuing to focus on the immediate and long-term needs of UP's installed base of
customers.
Customer Implementations
Several of ViryaNet's customers rolled out ViryaNet Service Hub, including: Publix Supermarkets, Spencer Technologies, LoJack, EDS, News America Marketing, Frontier Communications, Louisville Water, Orange, Aquila, MUD, Duquesne, MDU, and Dominion Resources.
Leadership
The Company appointed Paul V. Brooks as its new president and CEO. Mr. Brooks brings 25 years of senior management and leadership experience to the company, serving in past executive positions at Utility Partners, Inc., Pivotal, Inc., and IBM Corporation.
Product and Solutions
In addition to issuing several product releases during the year that improved the functionality, multilingual capabilities, and usability of Service Hub, the Company's R&D organization delivered a J2EE-compliant version of the product, as well as upgraded the product to the latest version of Mapquest, a high-performance mapping, routing, geocoding, and spatial searching engine, which drives the location component of ViryaNet Service Hub. The ViryaNet R&D organization also
embarked on a major initiative to combine the code lines from Utility Partners WorkUP product with ViryaNet Service Hub. The resulting product, to be completed in 2006, will offer rich functionality and an evolutionary migration path, serving all of the Company's target industries.
Q1 2005 Earnings Advisory
The Company expects that the changes made should result in improved financial and operational performance beginning with the first quarter of 2005. The Company expects to issue its financial results for the first quarter of 2005 on May 31, 2005.