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Tumbleweed Press Releases
Tumbleweed Announces Results for First Quarter of
2004
Revenue Increases 75%; Operations Generate $1.5 Million of Cash REDWOOD CITY, CA – April 26, 2004 – Tumbleweed® Communications Corp. (Nasdaq: TMWD), a leading provider of Secure Internet Messaging products for enterprises and government agencies, today reported results for the first quarter ended March 31, 2004. Financial Results Tumbleweed reported Q1-04 revenue of $10.1 million, up 75% from $5.8 million in Q1-03; a net loss of $531,000, compared to a net loss $2.5 million in Q1-03; and pro forma net income, which excludes certain items as described below, of $134,000, compared to a pro forma net loss of $2.4 million in Q1-03. Net loss per share was $(0.01). Pro forma net income per share was $0.00. Cash balances were $23.4 million as of March 31, 2004, a decrease of $2.0 million from December 31, 2003 reflecting the net cash payment of approximately $3.3 million related to the acquisition of Corvigo, Inc. “We are pleased to report another quarter of revenue growth and positive cash-flow from operations,” said Jeffrey C. Smith, Chief Executive Officer of Tumbleweed. “The first quarter was eventful for us as we further enhanced our suite of secure messaging products with the addition of a Linux-based anti-spam appliance due to the Corvigo acquisition. We believe we are increasingly well positioned in the Secure Internet Messaging market and we are optimistic about our growth opportunities for the remainder of the year.” “The financial results for the first quarter were consistent with our stated goals for revenue, operating results, cash, and earnings per share,” said Tim Conley, Chief Financial Officer of Tumbleweed. “Operations produced positive cash flow of $1.5 million in the quarter, our accounts receivable collection improved to result in 75 days sales outstanding, and deferred revenue increased $900,000.” New Customer Wins In the first quarter, Tumbleweed signed 300 customer contracts including 55 with new customers. Additionally, more than 100 customers entered into contracts for repeat business, exclusive of maintenance renewals that were also strong. Tumbleweed now has over 900 enterprise customers. Reflecting the company’s continued focus on high-growth markets, revenue contribution of Tumbleweed’s core email security and anti-spam products increased as a percentage of overall revenue versus the fourth quarter of 2003. Financial Services Several leading financial institutions did business with Tumbleweed in the quarter, including American Express Business Services, Northern Trust, Imperial Capital Bank, Premier West Bank, Banco Comercial Portuguese and Star One Credit Union. Healthcare and Pharmaceuticals During the first quarter, Tumbleweed expanded its business in the healthcare market, including licenses with Merck & Co., UCSF Medical Center, Highmark Inc., Manor Care Inc., Health Net, Aventis Pharmaceutical, Harriman Jones Medical Group, Medical Center of Central Georgia, Quintiles Transnational and ImClone Systems. Other Industries Tumbleweed expanded its business in other industries during the quarter, signing significant contracts with IBM, ADP, the United States Marine Corps, the United States Department of Energy, the College Board, John Marshall Law School, Delco Remy, Magazine Publishers of America, SureWest Communications, PaperPak USA, the State of Iowa Dept of Human Services, SAIC, NTT Information Sharing, BACS, and the Executive Office of the President of the United States. Corvigo Acquisition On March 18th, Tumbleweed acquired Corvigo, the best-of-breed Linux-based anti-spam appliance vendor, headquartered in Palo Alto, California. Corvigo’s MailGate product is a secure Linux-based appliance that, according to InfoWorld magazine, offers industry-leading spam capture along with ease-of-use. Corvigo also brings to Tumbleweed an established network of resellers to address the small and mid-tier market demand for anti-spam solutions. Expanding Distribution Tumbleweed’s channel of Value Added Resellers is picking up momentum. Already twenty-five strong, Tumbleweed announced plans to significantly expand its reseller program and continue to attract the top security experts and distributors. “Our reseller channel is strategic to our business,” said Jeffrey C. Smith. “We are investing significant marketing and sales resources in 2004 to grow our distribution capability.” In the quarter, Tumbleweed expanded its global presence by acquiring its European distributor, Incubator. This brings Tumbleweed a strong European presence for both sales and support of Tumbleweed products. Market Trends and Product News Demand for anti-spam solutions continues to be strong, particularly in small and mid-tier enterprises. The acquisition of Corvigo gives Tumbleweed a “best-of-breed” anti-spam appliance product family at a price-point and ease-of-use that is ideal for the small and mid-tier market. With the addition of the Corvigo MailGate appliance, Tumbleweed can now offer the enterprise a two-tier defense against Email threats. By combining the MailGate appliance with the Email Firewall, Tumbleweed now offers enterprises the most complete and effective multi-tier email security suite on the market. Email “phishing” fraud continues to be a growing problem. Tumbleweed’s Message Protection Lab has found that phishing attacks on the Internet are growing at a rate of 40% to 50% every month. Tumbleweed shipped the Tumbleweed Email Authentication Engine in March, allowing enterprises to have a turn-key defense against phishing attacks and email fraud. “Email Authentication is the long-term solution to a myriad of email security threats, including spam, phishing attacks, and even viruses,” said John Thielens, Chief Technology Officer, Tumbleweed. “The Email Authentication Engine gives customers a simple, turn-key defense against all such threats, while providing support for all leading Email authentication standards including SPF and S/MIME.” Patents Tumbleweed settled the lawsuit it brought against Ticketmaster and entered into four new patent license agreements in the first quarter, which brought the total of Tumbleweed patent licensees to eighteen. In addition, the company acquired from Entrust U.S. Patent No. 6,393,568, titled “Encryption and Decryption System and Method with Content Analysis Provision.” “We continue to focus our patent enforcement strategy on business competitors,” said Bernard J. "Barney" Cassidy, General Counsel of Tumbleweed. Tumbleweed Outlook for the Second Quarter of 2004
“As previously announced, we expect the Corvigo merger to be accretive in the back-half of the year,” said Tim Conley. “In Q2 we will focus on integrating the businesses and investing in our distribution capabilities.” Conference Call Information Tumbleweed will host a conference call with the investment community at 2:00 PM PDT/5:00 PM EDT today to discuss these results. The call can be accessed by dialing (800) 267-9517 and giving the conference name, "Tumbleweed.” This call will be made available to all interested parties via a live webcast on Tumbleweed's website at www.tumbleweed.com, under Company heading, Investor Relations. A replay of the conference call will be available on the Tumbleweed website, www.tumbleweed.com, or by telephone commencing two hours after the call and for the following five business days by dialing (800) 642-1687 and entering the following reservation number: 6655675. Pro Forma Information The pro forma financial information included in this press release is
not prepared in accordance with generally accepted accounting principals
(“GAAP”) as it excludes merger-related and other costs, amortization
of intangible assets and stock-based compensation. Management believes
that the presentation of non-GAAP pro forma information may provide useful
information to investors because Tumbleweed has historically provided
this information and understands that some investors consider it useful
in evaluating Tumbleweed’s expenses. Management also uses this pro
forma information, along with GAAP information, in evaluating Tumbleweed’s
expenses. The pro forma operating results are presented for supplemental
informational purposes only for understanding Tumbleweed's operating results.
The pro forma results should not be considered a substitute for financial
information presented in accordance with generally accepted accounting
principles, and may be different from pro forma measures used by other
companies. A reconciliation between net income (loss) on a GAAP basis
and pro forma net income (loss) is provided in the attached financial
statements. Tumbleweed is a leading provider of secure Internet communication software and appliances for enterprises and government agencies. By making Internet communications secure, reliable and automated, Tumbleweed's anti-spam email firewall, secure file transfer, secure email, and identity validation solutions help customers significantly reduce the cost of doing business. Tumbleweed products are used to communicate with millions of end-users and tens of thousands of corporations. Tumbleweed has more than 900 enterprise customers, including ABN Amro, Bank of America Securities, Catholic Healthcare West, JP Morgan Chase & Co., The Regence Group (Blue Cross/Blue Shield), Society for Worldwide Interbank Financial Telecommunication (SWIFT), St. Luke's Episcopal Healthcare System, the US Food and Drug Administration, and the US Navy and Marine Corps. Tumbleweed Communications was founded in 1993 and is headquartered in Redwood City, California. For additional information about Tumbleweed go to www.tumbleweed.com or call 650-216-2000. Tumbleweed cautions that forward-looking statements contained in this press release are based on current plans and expectations, and that a number of factors could cause the actual results to differ materially from the guidance given at this time. These factors are described in the Safe Harbor statement below. Except for the historical
information contained herein,
the matters discussed in this press release may constitute
forward-looking statements that involve risks and uncertainties
that could cause actual
results to differ materially from those projected, particularly
with respect to Tumbleweed’s financial outlook and projections,
including revenue, loss and cash balances for the second quarter and for
pro forma profitability
and GAAP net loss thereafter. Tumbleweed’s markets and leadership
in those markets, as well as its products, services, and
future success. In some cases, forward-looking statements can be identified
by terminology
such as “may,” “will,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and
similar expressions. For further cautions about the risks
of investing in Tumbleweed, we refer you to the documents Tumbleweed files
from time
to time with the Securities and Exchange Commission, particularly
Tumbleweed’s
Form 10-K filed March 15, 2004. For further information, please contact: MKR Group LLC Tim Conley |
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