Solid cash position; strong progress in government market
Mississauga, Ontario (June 11, 2003) – Certicom Corp. (TSX: CIC), a leading provider of wireless security solutions, today announced results for the fourth quarter and its fiscal year, ended April 30, 2003. All figures are in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP).
Certicom reported fourth quarter revenues of $2.4 million, an increase of 16% from the third quarter. This sequential increase is primarily attributed to the reorganization of the global sales force late in the second quarter of fiscal 2003. The sales force was reorganized to improve Certicom’s focus on customer needs and penetrating target markets. Revenues in the fourth quarter of fiscal 2002 were $3.8 million.
“Although the selling environment continues to be challenging, we are pleased with our progress on a number of fronts and are confident in the steps being taken towards achieving long-term profitable growth,” said Ian McKinnon, President and Chief Executive Officer. “The reorganization of our sales force had a positive impact on fourth quarter revenue, and we are confident that Certicom has a strong team in place heading into fiscal 2004. In addition, Certicom has reached a significant milestone in our corporate strategy with the achievement of FIPS certification for our GSE products. This designation, together with our recent National Security Agency (NSA) agreement, positions us well within the government market.”
“ While our revenue performance in fiscal 2003 was disappointing, we have considerably strengthened our financial foundation,” said Hervé Séguin, Chief Financial Officer. “We cut operating expenses by 64% and reduced the EBITDA loss by 87% from fiscal 2002. As well, we significantly slowed the cash burn rate and do not expect to require additional financing in the next fiscal year.”
Fourth Quarter Financial Review
Operating expenses, including cost of sales and excluding depreciation and amortization, totaled $3.2 million during the quarter, in line with previously provided guidance of $3.1 million to $3.3 million and the same as operating expenses in the third quarter. This compares with operating expenses of $6.3 million (excluding depreciation and amortization and goodwill impairment and restructuring and other costs) in the same quarter last year, which represents a decrease of 49%.
The earnings before interest, taxes, depreciation and amortization (EBITDA) loss for the quarter was $0.8 million compared with $2.5 million (excluding goodwill impairment and restructuring and other costs) in the same quarter last year, a decrease of 67%.
Net loss for the quarter was $2.0 million, or $0.06 per share, compared with a net loss of $27.8 million, or $0.88 per share, in the same period last year.
Cash and cash equivalents, marketable securities and restricted cash (collectively, “Cash”) totaled $8.8 million. Cash at the end of the third quarter was $10.9 million while cash at April 30, 2002 totaled $17.1 million.
Fiscal 2003 Financial Review
For fiscal 2003, Certicom reported revenues of $10.4 million, down 15% from $12.3 million in the same period last year. Operating expenses, including cost of sales and excluding depreciation and amortization, decreased 64% to $13.6 million from $37.9 million (excluding goodwill impairment and restructuring and other costs) a year ago. The EBITDA loss for the year was $3.2 million, compared with $25.6 million (excluding goodwill impairment and restructuring and other costs) in fiscal 2002, which represents a decrease of 87%. The company posted a net loss of $4.9 million, or $0.15 per share, for fiscal 2003, compared with a net loss of $88.4 million, or $2.82 per share, in fiscal 2002.
“During the year, we continued to expand our blue-chip customer base, announcing agreements with Texas Instruments and Sony Ericsson, among others,” said Mr. McKinnon. “We also launched the Certicom Partner Network, which simplifies the delivery of complete security solutions to enterprises, governments and other markets. In addition, we are partnered with the three leading developers of operating systems for handheld devices --- Microsoft, Palm and Symbian.”
“We believe that these successes reflect the confidence of the marketplace in our product and service offering. Although the selling environment currently remains challenging, our long-term market outlook remains positive.”
Fourth Quarter Operational Highlights
Certicom announced it was selected by the National Security Agency (NSA) to research and develop advanced security technology and tools for protecting classified information. This contract puts Certicom at the forefront of cryptographic development within both the government and defense sectors.
Subsequent to quarter end, Security Builder® GSE by Certicom, the company’s core developer toolkit for constrained devices, received the Federal Information Processing Standards (FIPS) 140-2 certification for Windows and Windows CE. Security Builder® GSE, which is the first solution to receive the designation for use on both PC-based and wireless operating systems, is the core cryptographic module for all Certicom Security Applications. As a result, movianVPN™ GSE, movianCrypt™ GSE and movianMail™ GSE now meet these stringent government security requirements.
In addition, Certicom recently announced its support of EDS’ Extended Connected Office (ECO) offering, a fully managed enterprise mobility solution, by providing movianVPN™, an award-winning virtual private network (VPN) client for wireless handhelds. The relationship enables mobile users to have the same range of enterprise applications, high availability and security on their mobile data device as they currently have through a managed desktop environment.
Certicom also recently announced that it has partnered with NetScreen Technologies Inc., in the NetScreen Global Security Alliance. As a member, movianVPN™ by Certicom has been tested and certified for interoperability and functionality with NetScreen’s integrated firewall and VPN security solutions. The combined Certicom/NetScreen solution allows corporations to extend existing NetScreen VPN infrastructures to support wireless devices.
Due to the unpredictable economic environment, Certicom no longer provides quarterly guidance for revenue and cash but continues to provide guidance for operating expenses. First quarter fiscal 2004 operating expenses, including cost of sales, are expected to range from $2.8 million to $3.1 million.
Management will host a conference call to discuss Certicom’s performance and outlook, starting at 5 p.m. (ET) (2 p.m. PT), today, June 11, 2003. The call may be accessed at: 1-800-814-4861 or 416-640-4127. It will also be webcast with supporting slides and subsequently archived at http://www.certicom.com. To listen to the webcast, participants will require Windows Media Player™ which can be downloaded via Certicom’s website, prior to accessing the event. A taped rebroadcast will be available from June 11 at 7 p.m. (ET) until June 18 at 11:59 p.m. (ET). For access, please call 1-877-289-8525 or 416-640-1917 and enter the passcode 21004243.
Condensed Consolidated Statements of Operations
Condensed Consolidated Balance Sheet
Condensed Consolidated Statement of Cash Flows
Certicom is a leading provider of wireless security solutions, enabling developers, governments and enterprises to add strong security to their devices, networks and applications. Designed for constrained devices, Certicom’s patented technologies are unsurpassed in delivering the strongest cryptography with the smallest impact on performance and usability. Certicom products are currently licensed to more than 300 customers including Texas Instruments, Palm, Research In Motion, Cisco Systems, Oracle and Motorola. Founded in 1985, Certicom is headquartered in Mississauga, ON, Canada, with offices in Ottawa, ON; Herndon, VA; San Mateo, CA; and London, England. Visit www.certicom.com.
Certicom, Security Builder, SSL Plus, Trustpoint, WTLS Plus, movian and movianVPN are trademarks or registered trademarks of Certicom Corp. All other companies and products listed herein are trademarks or registered trademarks of their respective holders.
Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, those relating to our ability to successfully integrate newly-hired professionals into the management team, the ability to realize anticipated cost savings from our consolidation initiatives, the acceptance of mobile and wireless devices and the continued growth of e-commerce and m-commerce, the continued commitment to new security investments on the part of the U.S., Canadian and other governments and government agencies, the continued acceptance by our customers of our subscription license model, our ability to implement our restructuring initiatives and our ability to realize resulting cost savings, the increase of the demand for mutual authentication in m-commerce transactions, the acceptance of Elliptic Curve Cryptography (ECC) technology as an industry standard, the market acceptance of our principal products and sales of our customer’s products, the impact of competitive products and technologies, the possibility of our products infringing patents and other intellectual property of fourth parties, and costs of product development. Certicom will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect Certicom’s financial results is included in the documents Certicom files from time to time with Canadian securities regulatory authorities.
For further information, please contact:
|Investors and Financial Analysts||Media:|
|Hervé Séguin||Brendan Ziolo|
|Chief Financial Officer||Director of Marketing|
|Certicom Corp.||Certicom Corp.|
|(905) 501-3827||(613) 254-9267|