Retek Reports First Quarter Results
Value of New Software License Contracts Signed Rises Sharply
Retek Reports First Quarter Results Value of New Software License Contracts Signed Rises Sharply
Minneapolis - April 22, 2003 - Retek Inc. (NASDAQ: RETK) today reported first quarter revenue of $37.6 million compared with $53.5 million in the year earlier quarter and $37.1 million in the fourth quarter of 2002. Software license revenue was $20.2 million in the first quarter of 2003 compared with $41.7 million in the first quarter of 2002 and $20.4 million in the fourth quarter of 2002. The value of software license contracts signed in the first quarter was $28.9 million compared with $11.1 million in the fourth quarter of 2002. Services revenue was $17.4 million in the first quarter of 2003 compared with $11.8 million in the first quarter of 2002 and $16.7 million in the fourth quarter of 2002.
On a GAAP basis, the Company reported a diluted net loss of $0.18 per share compared with a diluted net income of $0.03 per share in the first quarter of 2002 and a net loss of $0.61 per share in the fourth quarter of 2002. On an operational basis, which excludes non-cash expenses for stock-based compensation, amortization of intangibles, accelerated depreciation, CEO severance costs and non-operational accrual adjustments, the Company reported a net loss of $0.05 per share in the first quarter of 2003 compared with a net profit of $0.08 per share in the first quarter of 2002 and a net loss of $0.06 per share in the fourth quarter of 2002.
In the first quarter of 2003, the Company added four new customers, including Office Depot, the world`s largest seller of office products with sales of over $11 billion; Federated Department Stores, one of America`s largest department store retailers with sales of over $15 billion; Bombay Company, a rapidly growing retailer of home accessories, wall décor and furniture with sales of $500 million; and Leroy Merlin, one of Europe`s largest DIY and home improvement retailers with sales of over $3 billion.
Compared to the fourth quarter of 2002, software license margins improved due to a more favorable revenue mix while services margins declined slightly as utilization rates were impacted by skill imbalances.
Both sales and marketing and R&D expense declined compared to the fourth quarter of 2002 due to lower headcount. G&A expense rose due to approximately $0.7 million of severance costs associated with the departure of the Company`s previous CEO. Excluding that severance cost, total operating expenses declined compared with the fourth quarter of 2002.
As a result of strong software license contract signings and cash collection, many of the Company`s key financial metrics improved in the first quarter with deferred revenue increasing $3.4 million to $52.6 million and days sales outstanding falling to 91 days from 105 days in the fourth quarter of 2002. Cash flow from operations was $7.1 million and the Company`s cash and investment balance grew by over $6.0 million to $91.9 million.
Commenting on the results, Retek`s President and CEO Marty Leestma said, "In an exceptionally difficult business environment, the Company met its objectives. I am pleased by the total value of software contracts signed in the quarter and the addition of several outstanding new names to the customer base. I believe this reflects Retek`s leadership position in the industry and our ability to deliver truly scalable applications that meet the demands of the world`s leading retailers. Our competitive position is strong and we had several significant competitive wins in the quarter.
We still have work to do to return the Company to consistent profitability. Expense management will be a key focus and we expect to show continued progress in that area. We anticipate that the value of software license contracts signed will decline in the second quarter from the very strong levels we reported in the first quarter. It is normal for the value of contract signings to fluctuate from quarter to quarter and an anticipated decline in the second quarter is not necessarily reflective of a weakening of the business overall. We expect second quarter revenue to be in the range of $38.5 million to $40.0 million and the operational loss to be in the range of $0.02 to $0.04 per share."
Retek will webcast a conference call to review the results on April 22, 2003, at 11 am EDT. It will be available at www.retek.com (under Company - Investor Relations) or www.ccbn.com. The conference call will also be available via telephone, at (913) 981-5533. A replay of the conference call will be available on the Retek and CCBN websites and by telephone at (719) 457-0820 (conf ID #572514) beginning approximately two hours after the call is completed. This press release and additional financial information is available on Retek`s website, at www.retek.com, under "Company", then "Investor Relations."
About Retek Inc.
Retek Inc. (Nasdaq: RETK) is the leading provider of mission-critical software and services to the retail industry. Retek 10 integrates collaborative software with patented predictive technologies, consulting services, and the best practices of customers and partners to help retailers create, manage and fulfill consumer demand. Leading global retailers, including Tesco, Best Buy, Gap, Sainsbury`s, Eckerds and Selfridges use Retek solutions. Retek is a trademark of Retek Inc. Other names may be trademarks of their respective owners.
Forward-looking statements contained in this press release are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or future financial performance and may, in some cases, be identified by terminology such as "may", "will", "should", "expects", "intends", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "continue", or the negative of these terms or other comparable terminology. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, without limitation, fluctuations in our quarterly operating results, our restructuring plans and cost reduction measures failing to achieve the desired results, on-going litigation that may result in substantial costs and divert management`s attention and resources, the demand for and market acceptance of our software solutions, our ability to develop and market new products on a timely basis, general economic conditions in the retail industry and other risks and uncertainties that are described from time to time in the Company`s Annual Report on Form 10-K for year ended December 31,2002, and other reports filed with the Securities and Exchange Commission.
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