Seagull Software (AEX: SEAGULL), a leading provider of software products for connecting legacy applications to Internet architectures, today announced that revenue for the nine-month period ended 31 January 2006 was $20.3 million, an increase of 16% as compared to $17.5 million for the corresponding period in the previous financial year. On a pro forma basis net income for the nine-month period ended 31 January 2006 was $310K, as compared with a loss of $2.8 million for the corresponding period last year. On a pro forma basis earnings per share were $0.03, as compared to a loss of $0.34 per share for the corresponding period last year. Cash increased from $5.2 million at the end of Q2 FY06 to $6.1 million at the end of Q3 FY06.
"To provide a consistent basis for comparison against performance for the same period last year, we are also providing pro forma results that exclude $182K in deferred stock compensation costs resulting from compliance with IAS, and $563K in intangible asset amortization costs associated with the acquisition of SofTouch in April 2005 and Oak Grove in July 2005," commented Mory Motabar, Seagull Software Chief Financial Officer.
On an International Accounting Standards (IAS) basis, the Company reported a net loss of $435K for the nine-month period ended 31 January 2006; including deferred stock compensation costs and amortization of intangible assets.
"Seagull Software has achieved continued revenue growth on both a year-over-year and quarterly basis," said Don Addington, Seagull Software CEO and President. "We've added 117 new customers to the installed base this year, not counting the customers who joined as a result of our acquisitions. We're pleased to report that license revenue has increased 20 percent year-over-year, which drives ongoing consulting and maintenance revenues."
Gross margin for the nine-month period increased from $13.3 million or 76% of total revenues to $16.4 million or 81% of total revenues.
For the nine-month period, total operating expense was $17.2 million as compared with $16.1 million in the corresponding period of the previous financial year, with most of the additional cost resulting from headcount increases associated with the SofTouch and Oak Grove acquisitions.
Quarterly Results
For the quarter ended 31 January 2006, the Company achieved revenue of $6.8 million, an increase of 8% as compared to revenue of $6.3 million for the corresponding quarter in the previous financial year (Q3 FY05). On a pro forma basis net loss for the quarter was $263K, as compared to Q3 FY05 net income of $46K. On an IAS basis net loss for the quarter was $536K, as compared to Q3 FY05 net income of $30K.
Gross margin for Q3 FY06 was $5.3 million or 79% of total revenues, as compared with gross margin of $4.9 million or 78% of total revenues for the corresponding quarter in the previous year.
Total operating expenses related to sales & marketing, research & development and administrative functions were $5.9 million, as compared with $4.9 million reported for the same period in the previous financial year. Sales & marketing expenses increased from $2.9 million to $3.4 million, reflecting headcount increases and investment in the development of a new corporate Web site. Research & development costs increased from $1 million to $1.4 million due primarily to amortization of intellectual property and additional operating costs associated with the SofTouch and Oak Grove acquisitions.
Q3 Business Highlights
During Q3 FY06, 31 new customers joined the Seagull Software installed base. The Company closed new and follow-on transactions with customers such as Sandia National Laboratories, LiquidLogic, Legal and General Group PLC, SMABTP, Kabel Baden and Regiopolitie.
Other highlights include:
-- The Technology Association of Georgia (TAG) announced Seagull Software
as one of the Top 40 Innovative Technology Companies in Georgia for
2006. The Top 40 candidates are outstanding examples of the breadth of
exciting technologies that are being developed and commercialized in
Georgia. The Innovators were chosen based on degree of innovation;
scope and financial impact of innovation; likelihood of success; and
promotion of Georgia's innovative efforts nationally and
internationally.
-- LegaSuite Integration Engine Earns IBM ServerProven Status. In January
we announced that LegaSuite(R) Integration Engine has achieved IBM
ServerProven validation, joining previously-validated products
BlueZone(TM) terminal emulator and J Walk(R) and WinJa(R) (now known as
LegaSuite GUI). LegaSuite Integration Engine runs on IBM eServer
zSeries, xSeries and iSeries systems. The IBM ServerProven status
requires verification from our customers that LegaSuite Integration
Engine is in production use on IBM platforms. Our customers use
LegaSuite Integration Engine on all three IBM eServer platforms to
transform legacy applications into Web services for SOA.
-- LegaSuite for CICS(TM) Announced. In December, the industry's most
flexible and comprehensive solution for transforming CICS applications
into SOA assets was announced. Among its many unique features,
LegaSuite for CICS supports multiple run-time architectures from one
development effort and offers integrated Business Process Management
(BPM) workflow capabilities. Customers can implement LegaSuite with no
changes to their CICS applications, and with little or no coding.
-- CEO Named to Technology Association of Georgia Board. Don Addington,
President and CEO was appointed to Technology Association of Georgia's
(TAG) board of directors in November. As a board member, Mr. Addington
will participate in a statewide initiative to expanding the size,
achievements and influence of Georgia's technology sector. TAG's 2100
plus members act as a primary catalyst in fostering a rich environment
for economic development within Georgia's technology community.
Participation also puts the Seagull Software brand in front of the
State's most prominent CIO's, who are potential purchasers of the
Company's technology.
-- Seagull Software Joins Consortium Responding to EU Commission Tender.
In November, Seagull Software submitted a research project to the EU
Commission. Using procedural models, methods and tools, the project
entitled Stepwise Migration of Legacy Systems to Service Oriented
Systems --"SAMSON"-- aims to assist the conversion of rigid corporate
IT systems to flexible service-oriented architectures (SOA) that are
easily tailored to changing business procedures. The consortium
includes such companies as HP, Intesi, and Q-Sphere as well as the
Universities of Vienna and Stuttgart and research institutes in
Slovenia and Lithuania.
-- Partner Agreement with Kapow Technologies. Kapow Technologies, a leader
in Web integration, announced in November that the companies have
entered into a partnering agreement under which Seagull Software will
market and sell the Kapow Web Integration platform in conjunction with
its LegaSuite(R) platform. With the addition of the Kapow Web
Integration Platform, Seagull Software now offers the option of
integrating with any application or information accessible through a
Web browser, thus expanding the company's offerings to meet all of an
enterprise's SOA integration needs.
The Company plans to publish fourth quarter and annual financials for the Financial Year ending 30 April 2006 in June.
About Seagull Software
Seagull Software specializes in technology that transforms "legacy" applications into SOA-compliant Web services, helping enterprises achieve exponentially faster IT support for business change, governance and compliance. Our LegaSuite(R) software platform includes integration, GUI, BPM and terminal emulation technology. With LegaSuite, customers connect legacy applications on IBM mainframe, ICL mainframe, iSeries, UNIX/VT and Windows client/server platforms to the Web, to other middleware and to newer- generations of applications such as portals, CRM and SCM. LegaSuite is based on open standards including Web services, XML, J2EE and .NET. Powerful and innovative tools require no coding, which means rapid results, reduced risk and no maintenance burden. Committed to providing the best customer experience in the industry, Seagull Software's technology is in use in more than 8,000 business and government organizations worldwide, and by millions of end users. Seagull Software has direct operations in the United States, the Netherlands, UK, France, Germany and Australia, supplemented by distributors serving approximately 30 additional countries. For more information, visit http://www.seagullsoftware.com .
Forward-Looking Information: All statements in this press release which address operating performance, events or developments that we expect or anticipate will occur in the future, including statements expressing general optimism about future operating results and non-historical information, are forward-looking statements. These forward-looking statements are, and will be, based on management's then-current views and assumptions regarding future events and operating performance. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, including, but not necessarily limited to management's ability to manage growth, and hire and retain qualified employees; unpredictable customer demand; intense competition; rapid technological change; unpredictable market acceptance of new products; and market instability and/or reduction in software purchasing caused by exceptional circumstances
Seagull Holding N.V.
Consolidated Statement of Operations - Pro Forma
(in thousands of US Dollars
except share data) 9 Month Period 9 Month Period
Ended 31 Jan Ended 31 Jan
2006 2005
REVENUES
License revenue 8,622 7,186
Maintenance and service revenue 11,713 10,295
20,335 17,481
COST OF REVENUES
Cost of license revenue 45 45
Cost of maintenance and service revenue 3,888 4,084
3,933 4,129
GROSS MARGIN 16,402 13,352
OPERATING EXPENSES
Sales and marketing 9,817 8,408
Research and development 3,544 3,476
General and administrative 3,143 3,105
Restructuring expense - 1,093
16,504 16,082
INCOME (LOSS) FROM OPERATIONS (102) (2,730)
Financial income and expense (net) 159 41
Exchange gain (loss) 154 (77)
INCOME (LOSS) BEFORE INCOME TAX 211 (2,766)
Income tax (99) 13
NET INCOME (LOSS) 310 (2,779)
NET INCOME (LOSS) PER SHARE
Basic 0.03 (0.34)
Diluted 0.03 (0.32)
AVERAGE NUMBER OF SHARES
Basic 8,812,243 8,234,591
Diluted 9,649,751 8,929,878
Note: Pro forma financials exclude (1) deferred stock compensation and (2)
amortization of intangible assets associated with the April 2005
acquisition of SofTouch Systems and the July 2005 acquisition of Oak
Grove Systems.
Seagull Holding N.V.
Consolidated Statement of Operations - IAS
(in thousands of US Dollars
except share data) 9 Month Period 9 Month Period
Ended 31 Jan Ended 31 Jan
2006 2005
REVENUES
License revenue 8,622 7,186
Maintenance and service revenue 11,713 10,295
20,335 17,481
COST OF REVENUES
Cost of license revenue 45 45
Cost of maintenance and service revenue 3,900 4,090
3,945 4,135
GROSS MARGIN 16,390 13,346
OPERATING EXPENSES
Sales and marketing 9,887 8,415
Research and development 4,132 3,482
General and administrative 3,218 3,126
Restructuring expense - 1,094
17,237 16,117
INCOME (LOSS) FROM OPERATIONS (847) (2,771)
Financial income and expense (net) 159 41
Exchange gain (loss) 154 (77)
INCOME (LOSS) BEFORE INCOME TAX (534) (2,807)
Income tax (99) 13
NET INCOME (LOSS) (435) (2,820)
NET INCOME (LOSS) PER SHARE
Basic (0.05) (0.34)
Diluted (0.05) (0.32)
AVERAGE NUMBER OF SHARES
Basic 8,812,243 8,234,591
Diluted 9,649,751 8,929,878
Seagull Holding N.V.
Consolidated Balance Sheet - IAS
(in thousands of US Dollars) 31 Jan 2006 30 Apr 2005
ASSETS
Non-current assets
Property, plant and equipment 626 786
Intangible assets 5,472 4,956
Deferred tax 1,063 1,063
7,161 6,805
Current assets
Cash and cash equivalents 6,093 6,912
Trade receivables 3,362 3,676
Prepaid expenses 725 652
Other receivables 543 833
10,723 12,073
TOTAL ASSETS 17,884 18,878
EQUITY AND LIABILITIES
Equity attributable to shareholders
Issued capital 324 337
Reserves 6,260 5,957
6,584 6,294
Non-Current Liabilities
Long-Term Liabilities 969 1,429
Current liabilities
Accounts payable 572 1,053
Payroll accruals 1,008 1,334
Corporation taxes - 18
Other current liabilities 1,959 2,014
Deferred revenues 6,792 6,736
10,331 11,155
TOTAL EQUITY AND LIABILITIES 17,884 18,878
Seagull Holding N.V.
Consolidated Statement of Cash Flow - IAS
(in thousands of US Dollars) 9 Month Period
Ended
31 Jan 2006
CASH FLOW FROM OPERATIONS
Net income (loss) (435)
Adjustments to reconcile net income/loss to
net cash provided by operating activities:
Depreciation and amortization 903
Stock options 182
Movement in working capital:
Trade receivables 179
Prepaid expenses (96)
Other receivables 242
Accounts payable (456)
Payroll accruals (281)
Corporation taxes (16)
Deferred revenue 185
Other current liabilities 55
Deferred Tax -
Translation difference (169)
293
CASH FLOW FROM INVESTING ACTIVITIES
Tangible assets (160)
Intangible assets (1,104)
Translation difference 30
(1,234)
Long-term loan (490)
Cash receipts on issue of shares (net of expenses) 746
256
Effect of exchange rate on cash (134)
Total net cash flow (819)
Opening balance cash and cash equivalents 6,912
Closing balance cash and cash equivalents 6,093