Virage Reports Improved Fiscal Q2 Results
SAN MATEO, Calif. - October 17, 2002 - Virage, Inc. [NASDAQ: VRGE], a leading provider of video and rich media communication software, today reported operating results for its second fiscal quarter ended September 30, 2002.
Total revenues for the Company's second fiscal quarter increased slightly to $3.3 million, versus total revenues of $3.2 million in the prior quarter ended June 30, 2002. Gross profit increased to 63 percent of total revenues during the second quarter, up from 58 percent of total revenues in the prior quarter. Pro forma net loss was $4.3 million, or $0.21 per share, for the second quarter, in comparison to $5.1 million, or $0.25 per share, in the prior quarter. Including non-cash, stock-based charges in accordance with generally accepted accounting principles (GAAP), net loss was $4.7 million, or $0.23 per share, for the second quarter in comparison to a net loss of $5.5 million, or $0.27 per share, in the prior quarter.
For the six months ended September 30, 2002, total revenues were $6.5 million and pro forma net loss was $9.4 million, or $0.45 per share. Including non-cash, stock-based charges in accordance with GAAP, net loss was $10.2 million, or $0.49 per share, for the six months ended September 30, 2002.
"I'm pleased with the progress we made in our business this past quarter," said Paul G. Lego, chairman and CEO of Virage. "As a result of improvements in our corporate and government business, our bookings increased to the highest level in the past year. In addition, we have reduced overall expenses for the fifth quarter in a row and significantly reduced cash usage from the preceding quarter. Given this progress, I'm cautiously optimistic that our business has turned the corner."
Cash and short-term investments totaled $21.6 million as of September 30, 2002 versus $25.5 million as of June 30, 2002. Accounts receivable totaled $2.0 million, representing 56 days sales outstanding. The company had no debt as of September 30, 2002.
"We are encouraged by the revenues that our new products are generating, particularly in the corporate marketplace," said Scott Gawel, vice president of Finance at Virage. "The average deal size for our solutions was about twice that of sales involving only platform products. We believe that this increased momentum for our solutions, combined with recent expense reductions, strengthens our business position."
Other Second Quarter Highlights
New and Repeat Customers
During the second quarter, Virage added 15 new customers worldwide. In the U.S., first-time customers included the Chicago Board Options Exchange, Empire Blue Cross Blue Shield, Sandia National Labs, and the United Nations. New international customers in the second quarter included Asahi Broadcasting in Japan, Enel.it in Italy, and University of Montreal. Virage also generated significant repeat business from existing customers including Cisco, Citigroup, Discovery Channel, KLA-Tencor, National Library of Medicine, PBS, UBS Warburg, and Lawrence Berkeley National Laboratory. Additionally, in the second quarter, Virage received follow-on orders from multiple classified U.S. government customers.
Virage made several customer-related announcements in Q2, including:
The Office of Information Technology (OIT) at Princeton University deployed Virage software to support a variety of streaming media applications.
Leading Canadian websites for CTV (Canadian Television), Discovery Channel Canada, and the Report on Business Television selected Virage VS Publishing™ software to support the delivery of up-to-the-minute news and entertainment content.
C-SPAN is using VS Publishing software to publish the Booknotes television program onto Booknotes.org.
Thomas Cook TV deployed Virage's production software solution to produce content more quickly to increase the amount of travel and holiday footage digitally stored.
New Product Introductions
In the second quarter, Virage announced and shipped several new products, including:
VS Webcasting™ 2.0, the first comprehensive software solution that allows enterprises to efficiently manage the entire workflow related to producing live, rebroadcast, and on-demand webcast events.
VS Publishing 2.0, the industry's first software product for automated packaging, distribution and publishing of video and rich media content to the Internet and corporate Intranets. The new software is designed to support new business opportunities involving advertising, subscription services and content syndication.
German, Japanese and simplified Chinese versions of the Virage platform products including VideoLogger® 5.0 and the Virage Solution Server™ 4.0.
Oracle9i database versions of the Company's video and rich media applications. As a result, Virage customers can store, manage and publish video and other rich media assets on an Oracle® database technology just as they do with other mission critical information.
Business Outlook
"We expect the current difficult business climate to continue. Despite this challenge, we anticipate that the strength of our corporate and government business will enable us to generate modest revenue growth this current quarter," said Lego. "We believe this revenue growth, combined with recent additional expense reductions, will allow us to further reduce our net loss and cash usage this quarter. During this time, we expect to continue to strengthen our leadership position by focusing our product development efforts and carefully managing costs."
Virage Second Quarter Webcast
Virage management will host a webcast to discuss second quarter financial performance, operating and strategic developments and forward-looking guidance at 3:00 p.m. Pacific Time (6:00 p.m. Eastern Time) today, Thursday, October 17, 2002. The webcast will be available live at http://investor.virage.com and will be available for replay at the same URL through November 29, 2002.
Forward-Looking Statements
This press release contains forward-looking statements, including statements about our future sales growth, net loss, cash usage and market leadership. Our forward-looking statements are based on currently available information, which management has assessed, but which is subject to rapid change due to risks and uncertainties that affect our business, including the unpredictability of future revenues due to limited visibility into future demand; the current uncertainty in our marketplace, which may impact expected demand, customer selection criteria and sales cycle; variability in the amount and timing of expenses and cash usage; our ability to execute on service and software deliverables; slower economic growth; increased competition; and other factors beyond our control. Our forward-looking statements should be considered in the context of these and other risk factors disclosed from time to time in the company's filings with the Securities and Exchange Commission, including our annual report on Form 10-K and Form 10-Q filings.
Pro Forma Operating Results
Our pro forma operating results included in this press release represent our operating results for the respective periods presented excluding the impact of certain non-cash, stock-based charges. Such presentation is not in accordance with generally accepted accounting principles. Pro forma net loss for the three months ended September 30, 2002 and June 30, 2002 excludes non-cash, stock-based charges of $463,000 and $383,000, respectively. Pro forma net loss for the six months ended September 30, 2002 excludes non-cash, stock-based charges of $846,000.
About Virage
Established in 1995, Virage is a leading provider of video and rich media communication software. Virage builds integrated rich media business solutions for corporations, media & entertainment companies, universities and government agencies worldwide. Headquartered in San Mateo, California, Virage has offices throughout the United States and Europe.
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Virage and VideoLogger are registered trademarks of Virage, Inc. The Virage logo, Virage Solution Server, VS Publishing and VS Webcasting are trademarks of Virage, Inc. Other company product and service names may be trademarks or service marks of others, and are hereby acknowledged.
For the Earnings press release and financial statements, please go to: http:// investor.virage.com/news.
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