The Descartes Systems Group Inc.
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Descartes Announces Record License and Network Revenue In Second Quarter
Strong Business Momentum Continues
WATERLOO, Ontario--(BUSINESS WIRE)--Aug. 22, 2000-- The Descartes Systems Group Inc. (NASDAQ:DSGX - news; TSE:DSG. - news), a leading provider of Internet logistics solutions, announced today its Fiscal 2001 second quarter results (Q2 FY01) for the period ended July 31, 2000.
All dollar amounts are expressed in US currency and are reported in accordance with United States generally accepted accounting principles (US GAAP).
License and network revenue increased to $11 million in Q2 FY01, up 191% from $3.8 million in the second quarter of Fiscal 2000 (Q2 FY00) and representing a sequential increase of 25% over license and network revenue of $8.8 million in the first quarter of Fiscal 2001 (Q1 FY01). Excluding the legacy direct store delivery operations spun off to Endgame Systems, Inc. in March 2000, license and network revenue increased by $8.2 million or 296% over Q2 FY00.
Revenue for Q2 FY01 reached $14.6 million, up 50% from revenue of $9.8 million in Q2 FY00. Excluding the legacy direct store delivery operations spun off to Endgame Systems, Inc. in March 2000, revenue increased by $8.9 million or 158% over Q2 FY00.
Net loss before acquisition-related charges for the quarter was $961,000 or ($.02) per share compared to a net loss in Q2 FY00 of $6.1 million or ($.17) per share and a net loss in Q1 FY01 of $2.0 million or ($.05) per share. Net loss for the quarter was $4.5 million or ($.10) per share compared to a net loss in Q2 FY00 of $6.5 million or ($.18) per share.
The company had net cash and short-term investments at the end of the quarter of $132 million.
``We are extremely pleased with our financial performance this quarter, exceeding our expectations on a number of fronts, including exhibiting continued strong growth in license and network revenues and strong operating performance,'' said Peter Schwartz, Chairman and CEO of Descartes. ``In addition, our strategic alliance with Ariba reflects our market prominence and first mover advantage in Internet logistics. All in all, we enter the third quarter with tremendous business momentum.''
Second Quarter Highlights
Accelerated Momentum with Global Deals
Descartes gained significant momentum with global deals in the second quarter of Fiscal 2001, establishing major relationships with organizations around the world and significantly seeding the Global Logistics Network. Hansol CSN, owner and operator of Korea's largest logistics portal and online shopping mall, and ATR Korea, a provider of advanced technologies and resources for logistics, banking, ASPs and networks, both intend to work together with Descartes to create a federated logistics network of Korean national interest. The network will include Hansol's over 120 forwarders, 1000 member trucks, 14 distribution centers, and major ocean and air carrier relationships. Konsortium Logistik Berhad, Malaysia's leading 3PL, will extend the reach of the Global Logistics Network into Malaysia via Descartes, offering virtual 3PL services to its customer base, including Malaysian car manufacturer PROTON and the country's oil company, PETRONAS. Vanda Systems & Communications Holdings Limited (``Vanda'') (Stock code: 757), greater China's largest systems integrator, will use Descartes technology to provide focused Internet logistics solutions online via its newly formed subsidiary, DigiLogistics.com. Vanda's customer base in China and Hong Kong includes China's leading banking, postal, airline and retail organizations.
Major players reinforced the rapid adoption of Descartes' DeliveryNet solution in the Internet grocery industry in the second quarter of Fiscal 2001. John Lewis Partnership (JLP), a dominant grocer in the UK with over 133 stores, will expand its Waitrose grocery business to new areas in the UK through its investment in Descartes customer LM Solutions (LMS). Major U.S. grocers including H-E-B were also announced adopting the home delivery and consumer direct solution.
The list of new customers announced this quarter includes Ship.com, Online Delivery Networks, Lasership.com, The Poi Company, jennysmarket.com, and LazyGrocer.com.
In addition, Foster's Brewing Group, Australia's largest manufacturer and distributor of premium branded adult beverages, went live with Descartes' DeliveryNet solution. Foster's has completed the first phase in its plan to become a Total Service Provider to the leisure and hospitality industry in Australia and New Zealand. The company is now processing a significant volume of transactions over the Global Logistics Network.
Alliances
Descartes announced a major strategic alliance with Ariba, Inc. in the second quarter of Fiscal 2001. The alliance brings together the buyers, suppliers and marketplaces of the Ariba B2B Commerce Platform with the carriers, logistics service providers, and transportation exchanges within Descartes' customer base and across the Global Logistics Network. Ariba will provide integrated B2B commerce solutions to buyers, suppliers and marketplaces, automating the B2B commerce process from order placement through delivery and payment. Ariba B2B Commerce Platform users will have access to Descartes' DeliveryNet solution through the Ariba Commerce Services Network. Ariba and Descartes will also engage in joint sales, marketing and next-generation network services development.
Descartes also announced major alliances with: Qualcomm to deliver a joint solution that will enable private fleets, less-than-truckload carriers (LTL) and metropolitan fleet owners to reduce operating costs, improve communications between dispatchers and drivers, and increase revenues and customer satisfaction; and Versatile to provide the industry's first end-to-end order scheduling, wireless dispatch and delivery management system for home delivery and consumer direct. The first customer to license the combined solution is H-E-B.
The relationship between Descartes and Cap Gemini-Ernst & Young gained momentum this quarter, with training and a number of engagements taking place in both Europe and North America.
About Descartes
Descartes is a leading provider of end-to-end logistics solutions that facilitate B2B e-commerce. Descartes' e-fulfillment software and exchange solutions enable companies to create high-speed, high-performance fulfillment networks called DeliveryNets. DeliveryNet solutions empower organizations to deliver reliable, responsive customer service in a profitable manner and to create innovative new products and services.
DeliveryNet solutions leverage the Internet-based Global Logistics Network, an open, worldwide network of shippers, receivers, carriers, logistics service providers, e-marketplaces, vertical portals, and transportation exchanges. The result is a global e-fulfillment information infrastructure that provides cost savings and revenue opportunities for businesses that need to manage physical product movement.
Descartes products are licensed today by more than 850 companies in 35 vertical industries in over 50 countries worldwide. For more information about Descartes, visit www.descartes.com.
All registered and unregistered trademarks mentioned in this release are the property of their respective owners.
This release contains statements relating to expected financial
performance, including expected profitability, market and customer
dynamics, future operating strategy, revenue and expense growth,
revenue composition and other matters that constitute forward-looking
statements that involve risks and uncertainties. The Company's actual
results may differ from the results discussed in the forward-looking
statements. Factors that may cause such a difference include, but are
not limited to: risks associated with uncertainty and unanticipated
delays in closing customer orders; uncertainty associated with the
shift from enterprise applications to e-business markets; dependence
on and increasing use of the Internet and the growth of electronic
commerce, risks associated with acceptance of licensing models for
electronic commerce market, competition or consolidation within the
industry; management of growth; the Company's dependence on certain
industries, markets and clients; the Company's dependence on key
personnel, proprietary technology and a limited number of products;
acquisitions; software defects; the ability to enhance current
products and to introduce new products in a timely fashion at
competitive prices; third party claims of infringement; reliance on
third party licenses; limited profitability; lengthy sales and
implementation cycles and increasing size of orders; and the potential
volatility of share prices; potential fluctuations in quarterly
results; the need to enhance management systems; currency risk; and
international sales; and other factors discussed in the section
entitled, ``Risk Factors'' in documents filed with the Securities and
Exchange Commission, the Ontario Securities Commission and other
securities commissions across Canada.
THE DESCARTES SYSTEMS GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS US GAAP
(in thousands) (IN US$)
---------------------------------------------------------------
July 31, July 31,
2000 1999
---------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 40,533 $ 11,661
Short-term investments 91,653 8,428
Accounts receivable - trade 16,023 16,539
Accounts receivable - other 4,659 526
Prepaid expenses and deferred charges 2,130 4,726
---------------------------------------------------------------
154,998 41,880
---------------------------------------------------------------
CAPITAL ASSETS, net 6,404 5,085
LONG-TERM INVESTMENTS 5,000 -
INTANGIBLE ASSETS, net 61,619 5,626
---------------------------------------------------------------
$ 228,021 $ 52,591
===============================================================
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness $ - $ 1,780
Accounts payable 7,923 3,846
Accrued liabilities 7,404 6,558
Deferred revenue 11,418 4,601
---------------------------------------------------------------
26,745 16,785
CONVERTIBLE DEBENTURES 71,646 -
---------------------------------------------------------------
98,391 16,785
STOCKHOLDERS' EQUITY
Common shares 241,442 112,833
Additional paid-in capital 3,126 3,126
Unearned deferred compensation (271) (509)
Accumulated other comprehensive loss (302) (798)
Deficit (114,365) (78,846)
---------------------------------------------------------------
129,630 35,806
---------------------------------------------------------------
$ 228,021 $ 52,591
=================================================================
THE DESCARTES SYSTEMS GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
---------------------------------------------------------------
Three Months Ended
July 31
2000 1999
---------------------------------------------------------------
REVENUE
License and network $10,958 $3,766
Services 3,641 5,651
Hardware 11 341
----------------------------------------------------------------
Total revenue 14,610 9,758
----------------------------------------------------------------
COSTS AND EXPENSES
Cost of license, network and hardware 2,084 656
Cost of services 2,934 5,403
Sales and marketing 5,657 4,857
Research and development 3,616 3,722
General and administration 1,971 1,378
Amortization of intangibles 3,559 352
Purchased in-process research & development - -
---------------------------------------------------------------
Total costs and expenses 19,821 16,368
---------------------------------------------------------------
LOSS FROM OPERATIONS (5,211) (6,610)
OTHER INCOME (EXPENSE)
Interest expense (444) (113)
Interest revenue 1,301 242
---------------------------------------------------------------
857 129
---------------------------------------------------------------
LOSS BEFORE INCOME TAXES (4,354) (6,481)
INCOME TAXES
Current 166 -
Deferred - -
---------------------------------------------------------------
166 -
----------------------------------------------------------------
NET LOSS $(4,520) $(6,481)
---------------------------------------------------------------
NET LOSS PER SHARE
BASIC AND DILUTED $ (0.10) $ (0.18)
---------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC AND DILUTED 43,322,247 36,423,472
---------------------------------------------------------------
Excluding acquisition-related expenses:
NET LOSS $ (961) $ (6,129)
---------------------------------------------------------------
NET LOSS PER SHARE
BASIC AND DILUTED $ (0.02) $ (0.17)
---------------------------------------------------------------
THE DESCARTES SYSTEMS GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS US GAAP
(in thousands, except share and per share data) (IN US$)
---------------------------------------------------------------
Six Months Ended
July 31
2000 1999
---------------------------------------------------------------
REVENUE
License and network $19,741 $ 7,428
Services 8,209 11,323
Hardware 221 2,258
----------------------------------------------------------------
Total revenue 28,171 21,009
---------------------------------------------------------------
COSTS AND EXPENSES
Cost of license, network and hardware 3,821 2,644
Cost of services 6,694 11,012
Sales and marketing 10,252 11,095
Research and development 8,089 7,422
General and administration 3,686 2,755
Amortization of intangibles 5,986 704
Purchased in-process research &
development 19,033 -
---------------------------------------------------------------
Total costs and expenses 57,561 35,632
---------------------------------------------------------------
LOSS FROM OPERATIONS (29,390) (14,623)
OTHER INCOME (EXPENSE)
Interest expense (508) (214)
Interest revenue 2,042 565
---------------------------------------------------------------
1,534 351
---------------------------------------------------------------
LOSS BEFORE INCOME TAXES (27,856) (14,272)
INCOME TAXES
Current 166 -
Deferred - -
---------------------------------------------------------------
166 -
---------------------------------------------------------------
NET LOSS $(28,022) $(14,272)
---------------------------------------------------------------
NET LOSS PER SHARE
BASIC AND DILUTED $ (0.66) $ (0.39)
---------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC AND DILUTED 42,592,083 36,415,818
---------------------------------------------------------------
Excluding acquisition-related expenses:
NET LOSS $(3,003) $(13,568)
---------------------------------------------------------------
NET LOSS PER SHARE
BASIC AND DILUTED $ (0.07) $ (0.37)
---------------------------------------------------------------
Contact:
Paul Laufert
Descartes Systems Group
519/746-6114 ext. 2265
E-mail:plaufert@descartes.com
or
Annette Van Gerwen
Descartes Systems Group
519/746-6114 ext. 2208
E-mail: avangerwen@descartes.com