BETHESDA, MD; August 15, 2001 — e-centives, Inc. (SWX: ECEN), a leading developer of Internet direct marketing and distributed commerce infrastructure software and services, today announced financial results for the three and six month periods ended June 30, 2001.
For the quarter, the company posted a net loss of $11.0M or $.63 per diluted share on revenues of $1.4M which compares to a loss of $8.4M or $1.72 per diluted share on revenues of $2.2M for the three month period ended June 30, 2000. The company`s net loss for the quarter is less than its second quarter net loss guidance of $11.2M.
For the first six months of 2001, the company posted a net loss of $18.5M or $1.13 per diluted share on revenues of $3.2M which compares to a loss of $15.0M or $3.07 per diluted share on revenues of $3.2M for the six-month period ended June 30, 2000. The company`s net loss for the first half of 2001 met its net loss guidance of $18.5M.
The financial results include the impact of the recent acquisition of Inktomi`s Commerce Division, which closed on March 28, 2001.
Shares used to compute diluted net loss per common share increased from 4.9M at June 30, 2000 to 17.3M at June 30, 2001 primarily due to the Company`s initial public offering in October, 2000, which included the conversion of 6.4M preferred shares to common shares and the issuance of 3.7M common shares, in addition to the issuance of 2.2M shares pursuant to the acquisition of Inktomi`s Commerce Division.
"While the retraction in online advertising and technology infrastructure spending has impacted our revenues, we`re pleased with our cost control initiatives and the success of our European development efforts," commented Kamran Amjadi, e-centives, Inc.`s chairman and chief executive officer. "We are completely focused on bringing our expenses in line with the realities of the current marketplace while maintaining the integrity of our business lines which enable us to win biggers customers and contracts. We have great confidence in our technology and infrastructure platforms, our people and the opportunities available to us in an improved global economy."
Following the late March completion of the Commerce Division acquisition, in which the company gained approximately 70 new employees, e-centives embarked on a series of cost reduction initiatives, which included reducing staff by 62 positions (33% of its workforce) through layoffs and other workforce reductions over the past few months. The resulting severance costs are included in the respective quarterly results. "To ensure our continued success and to preserve our financial resources, we have taken a series of proactive expense reduction initiatives aimed at maximizing organizational efficiency and minimizing fixed contractual expenditures," added David Samuels, the company`s chief financial officer. "It is also important to note that the net loss figures for the second quarter 2001 do not fully reflect the effects of the expense reduction initiatives associated with the reductions in workforce, external advertising and other fixed obligation contracts."
2nd Quarter Highlights:
Integration of Commerce Division.
e-centives has fully integrated the operations of its Commerce Division, which it acquired from Inktomi Corporation on March 28, 2001. e-centives commenced leveraging the synergies between the two organizations and aims to further strengthen its position as a leading provider of specialized Internet infrastructure solutions, including direct marketing and distributed commerce. The company has also begun expansion of its European office and has already identified several promising new prospects and clients. e-centives operates the Commerce Division from its Bethesda headquarters and offices in Silicon Valley and London, England. See e-centives` Current Report on Form 8-K filed on April 11, 2001 for more information about this acquisition.
Awarded Vizzavi Contract.
The Company was selected to provide its powerful Internet and mobile commerce and merchandising services to Vizzavi`s portals across Europe. Vizzavi is the rapidly growing joint venture between Vodafone Group plc, the world`s largest mobile network operator, and Vivendi Universal, one of the world`s leading media companies. Based on this agreement, e-centives will deliver its Commerce Engine shopping system, including customized product search and merchandising, to complement Vizzavi`s established range of services and content. We believe that the Vizzavi relationship further solidifies e-centives` position as a leading provider of commerce software and services on a global scale and broadens the company`s reach across major international markets. e-centives will launch the shopping service on Vizzavi`s portals across Europe, starting with the United Kingdom this summer, followed by France, Holland and Germany.
Formed Network Partner Relationship with Classmates.com.
The Company entered into an agreement with Classmates.com, an online reunion destination site with 20 million members. The strategic alliance allows Classmates.com members to receive e-centives` targeted special offers and promotions based upon their interests, which will continue to drive member acquisition, participation and loyalty.
Increased Membership.
Due in part to its strategic Network Partner relationships, e-centives has seen a continued increase in its membership base, which has increased from approximately 7.5 million members at the end of the fourth quarter 2000, to 11.5 million members as of June 30, 2001, representing a 53% increase.
The Company will hold a live telephone conference call and audio Webcast at 6:00PM Zurich Time (12:00pm Eastern Time) today to review earnings results. The Webcast can be accessed by visiting www.e-centives.com/corp/investor. As an alternative, participants can dial 1.212.547.0140 or toll free 1.888.592.9608 to hear the live audio portion of the presentation. After dialing in, please wait for the conference coordinator and reference the password "e-centives."
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