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FrontRange Reports Sequential Increase in Revenues and Profits; Announces 5th Consecutive Quarter of Sequential Revenue and Profit GrowthPLEASANTON, Calif. --(Business Wire)-- March 4, 2005 -- Q3 FY 2005 License Revenues Increase Over 29% Over Prior Year; Profits Increase 50% Over Prior Year FrontRange Solutions, a global leader in service management, CRM, and voice application solutions for the small-to-medium enterprise (SME) and distributed enterprise markets, reported an increase in revenues and profits for the quarter ended January 31, 2005. License revenue increased 29% over the prior year, while total revenue for the quarter increased to $20.7 million, an increase of over 13% from the $18.3 million for the three months ended December 31, 2003. In addition to an increase in revenue, FrontRange also reported an operating profit of $2.3 million, an increase of 50% over the three months ended December 31, 2003. Michael McCloskey, CEO of FrontRange, said: "The results of the quarter reflect the progress we have made in reshaping FrontRange into a leading provider of service management, CRM, and voice applications. During the quarter, we have grown license revenues by 29%, operating profit by more than 50% and total revenues by 13% over the prior year. Our HEAT(R) and GoldMine(R) products continue to attract customers at a rapid clip, and our product and geographic expansions are providing future opportunities for growth." "I am very pleased with our 29% increase in license revenues over the prior year. License revenue growth is one of the most important measures of the health of a software company, and is a strong indication of the value we are delivering to our customers. Customers continue to be excited about our product roadmap enhancements, and the number of new products that we will be bringing to market during the next few quarters. Our commitment to the customer, combined with our stronger focus on going to market through our channel partners, has bolstered our ability to maintain and improve license sales," McCloskey stated. "Our business model performance continues to be strong, as evidenced by a 50% increase in operating income and a 65% increase in research and development. This increase in R&D is helping us to deliver new products and enhancements to market, as well as provide localized products for international markets," stated McCloskey. He added: "We continue to make progress on our product delivery plans, as evidenced by our new HEAT 8.3 release, which offers significant new functionality as well as full integration to our new ITIL modules. This approach allows our customers to retain the investment they have made, while providing significant additional functionality based on best practices." "We're also pleased to announce our new platform and ITSM application," continued McCloskey. "This new product is based upon the ITIL framework, and is being well received by our customers. Although only recently released late in our quarter, we have already won significant contracts from both current and new customers." John Hillyard, CFO of FrontRange, said: "I'm pleased to see our business strategy reflected in our financial model. Our channel strategy focus is resulting in higher overall revenues, increased investment in R&D is fueling the growth of our current and new product offerings, and increased sales and marketing efficiency are all contributing to FrontRange's improved financial performance." Highlights since our last financial release: -- FrontRange Continues Strong License Revenue Growth: License revenue grew sequentially for the fifth consecutive quarter, representing a 29% increase over the prior year. -- Customer Momentum Continues: FrontRange added 358 new customers during the period, including 237 new GoldMine Corporate Edition customers, 111 new customers for its HEAT product line, as well as five new IP Contact Center customers and five new customers for its IT Service Management (ITSM) product. This includes 202 new customers in North America, 120 in EMEA, and 36 in Asia Pacific. -- Customer Wins for the Period Include: -- North America -- ABB, NRT, Northern Pipeline, Thomason Hospital, Minolta, Army Medical Command, Medline Industries, FaceTime Communications, Indianapolis Power & Light, LA County Mental Health, Dye & Durham, El Pollo Loco, WorldPac, Gander Mountain -- Asia Pacific -- Australian Unity, Flight Centre Product Nation, MBF Cards Sdn Bhd, Indomobil Sukses International, Visy Board Pty Ltd, Leading Edge Group, SKYCITY Ltd, Computer Systems Advisors, JMT Network Services, Kotak Mahindra Bank Ltd -- EMEA -- Daimler Chrysler, LOT Polish Airlines, Datakraft, AKB Bank Elektronika, Siberia Avia Oil, Armena Mobile Provider, Telewest, Marlboro Sterling, Britvic, Business Intelligence Direct Ltd, LPT Ltd, O'Neill & Brennan, Marketsafe.com/Creditsafe, Urbium, Sasfin Bank, University of Cape Town, Dawn Wing Couriers, South Africa Endangered Wildlife Trust, Cotlands, South Africa Department of Housing -- Continued Expansion of International Operations: FrontRange continues to make significant investment in its geographic expansion plans, including its Latin American, Asian and European operations. This includes substantial new investment in personnel, product localizations and marketing initiatives. Several new languages were added during the quarter, including Russian, German, Polish, and Spanish. -- FrontRange CEO Named to Industry Leadership List: The December issue of CRM Magazine featured McCloskey in its annual article recognizing "dynamic leaders." CRM recognized him as "One to Watch" within the industry's "Influential Leader" category, a distinction that "reveals those who, by their words and actions, have made a significant impact either within their company or on the industry over the past year," according to the magazine's editors. -- Expanded Leadership Team: The addition of Jim O'Gara as Vice President, Worldwide Business Development for FrontRange shows the company's commitment to strengthening partner and strategic relationships. With over 28 years in sales, channel sales, alliance development and executive management positions, Jim joins FrontRange after leading channel and alliance efforts at Digital Equipment, Informix and AltaVista. -- FrontRange Partner Expansion Continues: FrontRange continued to successfully sign new partners during the quarter, expanding its market coverage. This includes partners in new market areas as well as new geographic locations such as Poland and Russia. -- GoldMine Receives CIS(R) magazine's 2004 Product of the Year Award: FrontRange's GoldMine solution is a recipient of a 2004 Product of the Year Award presented by Technology Marketing Corporation (TMC(R))'s Customer Inter@ction Solutions(R) magazine (www.cismag.com), a preeminent publication in the CRM, call center and teleservices industries since 1982. -- FrontRange Launches New ITIL-Compatible ITSM 5.0: FrontRange ITSM modules are designed to improve the performance of IT and support organizations for new customers as well as offer increased functionality for HEAT customers. Built on the Microsoft(R) .NET platform, the solution offers advanced technology capabilities, and is the most integrated solution adopting IT Infrastructure Library (ITIL(R)) best practice standards in the marketplace. Seven ITIL-compatible modules that are launched from a single common architecture means that all applications work from a single database and can easily exchange information -- simplifying reporting and integration across all levels of the business. The eight service management modules that comprise the new ITSM product are: -- Incident Management -- Problem Management -- Change Management -- Release Management -- Availability Management -- Configuration Management -- Service Level Management -- Self Service -- New HEAT 8.3 delivers enhanced support for IT Best Practices and ITIL Compatibility: HEAT 8.3 allows customers to provide top quality stand-alone service management and also to integrate easily with modules from the new FrontRange ITSM solution at a customer's pace. The integration capability of HEAT 8.3, which also is built on the Microsoft .NET platform, means more than 8,000 customers worldwide already using the FrontRange HEAT product line can extend their current functionality by adding the new ITIL based ITSM modules with no change to their current environments. Available to current users and new customers immediately, HEAT 8.3 is a low-risk way to adopt ITIL processes readily and rapidly, resulting in standardized processes that increase efficiency and lower service desk costs. -0- *T FrontRange Solutions Combined Operating Group P&L's(a) $'s in Thousands Nov 04 - Jan 05 Oct 03 - Dec 03 PY Var ----------------------------------------------- $ % $ % $ % ----------------------------------------------- License Revenue 9,005 43.5% 6,963 38.1% 2,041 29.3% Services Revenue 1,778 8.6% 2,066 11.3% (288)-13.9% Maintenance Revenue 9,918 47.9% 9,241 50.6% 678 7.3% ----------------------------------------------- Total Revenue 20,701 100.0% 18,270 100.0% 2,431 13.3% ----------------------------------------------- Product Costs 933 10.4% 1,239 17.8% 305 24.6% Services Costs 1,506 84.7% 1,431 69.3% (74) -5.2% Maintenance Costs 1,791 18.1% 1,639 17.7% (153) -9.3% ----------------------------------------------- Total Cost of Sales 4,230 20.4% 4,309 23.6% 78 1.8% ----------------------------------------------- % Gross margin 79.6% 76.4% Sales 5,745 27.8% 5,276 28.9% (469) -8.9% Marketing 2,014 9.7% 2,628 14.4% 613 23.3% R&D 4,254 20.5% 2,576 14.1% (1,678)-65.1% G&A 2,177 10.5% 1,962 10.7% (215)-11.0% ----------------------------------------------- Total Operating Costs 14,190 68.5% 12,441 68.1% (1,749)-14.1% ----------------------------------------------- Operating Profit 2,281 11.0% 1,520 8.3% 761 -50.0% Jul 03 - Oct 03 - Jan 04 - Sep 03 Dec 03 Mar 04 1Q04 2Q04 3Q04 ------ ------ ------ $ % $ % $ % ----------- ----------- ----------- License Revenue 5,972 35.5% 6,963 38.1% 7,554 39.9% ----- ----- ----- Services Revenue 2,175 12.9% 2,066 11.3% 1,979 10.5% Maintenance Revenue 8,672 51.6% 9,241 50.6% 9,382 49.6% ----- ----- ----- Total Revenue 16,819 100.0% 18,270 100.0% 18,915 100.0% ------ ------ ------ Sequential Qtr Growth 8.6% 3.5% Product Costs 1,107 18.5% 1,239 17.8% 1,015 13.4% Services Costs 1,444 66.4% 1,431 69.3% 1,451 73.3% Maintenance Costs 1,642 18.9% 1,639 17.7% 1,834 19.5% ----- ----- ----- Total Cost of Sales 4,193 24.9% 4,309 23.6% 4,300 22.7% ----- ----- ----- % Gross margin 75.1% 76.4% 77.3% Sales 5,625 33.4% 5,276 28.9% 4,965 26.2% Marketing 3,207 19.1% 2,628 14.4% 3,011 15.9% R&D 2,511 14.9% 2,576 14.1% 2,817 14.9% G&A 2,079 12.4% 1,962 10.7% 2,019 10.7% ----- ----- ----- Total Operating Costs 13,422 79.8% 12,441 68.1% 12,811 67.7% ------ ------ ------ Operating Profit (796) -4.7% 1,520 8.3% 1,803 9.5% Apr 04 - Aug 04 - Nov 04 - Jun 04 Oct 04 Jan 05 4Q04 2Q05 3Q05 ------ ------ ------ $ % $ % $ % ----------- ----------- ----------- License Revenue 8,457 42.6% 8,680 43.0% 9,005 43.5% ----- ----- ----- Services Revenue 2,026 10.2% 1,784 8.8% 1,778 8.6% Maintenance Revenue 9,384 47.2% 9,699 48.1% 9,918 47.9% ----- ----- ----- Total Revenue 19,866 100.0% 20,163 100.0% 20,701 100.0% ------ ------ ------ Sequential Qtr Growth 5.0% 1.5% 2.7% Product Costs 862 10.2% 1,043 12.0% 933 10.4% Services Costs 1,569 77.5% 1,493 83.7% 1,506 84.7% Maintenance Costs 1,772 18.9% 1,854 19.1% 1,791 18.1% ----- ----- ----- Total Cost of Sales 4,203 21.2% 4,390 21.8% 4,230 20.4% ----- ----- ----- % Gross margin 78.8% 78.2% 79.6% Sales 6,126 30.8% 5,318 26.4% 5,745 27.8% Marketing 2,016 10.1% 2,645 13.1% 2,014 9.7% R&D 3,422 17.2% 3,430 17.0% 4,254 20.5% G&A 2,041 10.3% 2,236 11.1% 2,177 10.5% ----- ----- ----- Total Operating Costs 13,605 68.5% 13,629 67.6% 14,190 68.5% ------ ------ ------ Operating Profit 2,058 10.4% 2,144 10.6% 2,281 11.0% *T (a) Excludes immaterial holding company expenses. About FrontRange Solutions FrontRange Solutions develops award-winning software and solutions used by more than 130,000 companies and over 1.2 million users worldwide to manage a wide variety of business relationships and provide exceptional service. FrontRange product families, designed specifically for small-to-medium enterprise (SME) and distributed enterprise organizations include: GoldMine(R) for business relationship management, team-based contact management and sales forces automation solutions; IT Service Management with HEAT(R) and ITIL standards-based modules for complete service management; and IP Contact Center for reduced telephony costs and increased agent productivity, streamlined customer service and communications; and Infrastructure Management, which provides the ability to optimize the full lifecycle of a company's assets. Customers representing 44 percent of the Fortune 100 and 76 percent of the FTSE 100, include Coca-Cola, Shell Oil, Prudential Securities, Electricite de France, Mack Trucks, Campbell Soup, Avaya, Bechtel Corp, Bank of America, and Turner News Network. For more information, call 800-776-7889 or visit www.frontrange.com. GoldMine, HEAT and other FrontRange Solutions products, brands and trademarks are property of FrontRange Solutions USA Inc. and/or its affiliates in the United States and/or other countries. Other products, brands and trademarks are property of their respective owners/companies. |
