Exchange Applications, Inc. reports revenues of $15.8 million for first quarter 2001; beats consensus EPS by 4 cents
Company to hold conference call and Webcast for investors at 8:00am Eastern today
Boston, Mass. – Apr 27, 2001 – Exchange Applications, Inc., now doing business as XchangeTM, Inc. (Nasdaq:EXAP), today announced its financial results for the first quarter 2001.
Xchange’s total revenue for the first quarter of 2001 was $15.8 million, an increase of 10 percent over the fourth quarter of 2000. Software revenue of $9.0 million comprised 57 percent of total revenue for the quarter, and increased 6 percent over the fourth quarter of 2000. The Company reported a pro forma net loss of $0.16 per share, as compared to pro forma net loss of $0.18 per share in Q4 2000.
During the first quarter, Xchange secured funding of approximately $11.2 million in a combination of debt and equity financing from Insight Capital Partners. In addition, as of April 2001, Xchange closed on its $5 million credit facility from Silicon Valley Bank. As reported in Xchange’s Annual Report Form 10-K, Insight Capital also provided to Xchange undertakings for additional capital, if required, subject to certain conditions.
"We are pleased to report that Xchange was able to deliver solid financial results in the first quarter. We generated revenues in line with expectations and, as a result of our continued focus on cost containment, narrowed our losses more than expected," said Andrew Frawley, CEO and Chairman of Xchange, Inc. "Our solutions are an important strategic investment for companies, particularly in times of economic uncertainty when it becomes even more critical for companies to grow customer value and build loyal relationships that drive the bottom line, and this was reflected in our performance in the first quarter."
Increasing Client Base and Partner Relationships in 1Q 2001
Xchange continued the growth of its world-class client base throughout the quarter. New and existing clients purchasing additional solutions from Xchange in the first quarter included ABN/AMRO, Ask Jeeves UK, Direct Line, Humana, Metropolitan Bank and Trust, Standard Bank of South Africa, Union Planters Bank. Xchange closed the quarter with approximately 290 customers in 33 countries.
New and expanded partners in Q1 2001 included IBM, Carreker Corporation, Fair Isaac and ESI. The expanded relationship with IBM makes Xchange one of the founding companies in IBM’s latest alliance initiative, among IBM`s most aggressive go-to-market relationships with leading independent software vendors, focused on targeted sales opportunities. In addition, Xchange made noteworthy progress with existing partners, including the successful training of a significant number of Cap Gemini Ernst & Young consultants as systems integrators.
Xchange’s strategic alliance with Carreker Corporation, a leading provider of e-finance enabling solutions for the financial industry, made Carreker the exclusive provider of Xchange EnAct to the banking industry. The alliance secured the majority of Xchange’s expected revenue from this product line for the year, positions Xchange EnAct for greater penetration into the banking vertical, creates a powerful banking channel for the rest of the Xchange 7™ suite, and permits Xchange to market EnAct to other verticals.
Xchange delivers Enhanced Solution Offering, Management Additions and expanded International Presence in High Growth Region for CRM
Building on the key tenets of focus, innovation and growth, Xchange has taken several steps in 2001 to maintain its leadership position with its core solutions, while increasing its overall leadership and growth in the strategic CRM space. These include:
Launching the latest generation of its CRM solution suite, Xchange 7. The seamlessly integrated, Web-based solution is comprised of five components, Xchange AnalyticsTM, Xchange CampaignTM, Xchange eMessagingTM, Xchange EnActTM and Xchange Real TimeTM, and acts as "the brains" behind a leading edge CRM infrastructure. The suite offers a combination of methodology and enabling technology that makes every single customer interaction an opportunity to intelligently grow the value of that customer to an organization. With Xchange Real Time, companies can leverage existing investments by integrating existing CRM systems that sit in disparate customer channels, thereby driving their CRM effectiveness without being forced to scrap existing infrastructure. Xchange believes that the market’s trend away from siloed customer interaction strategies to multi-channel, value-based customer interaction strategies, and increased emphasis on behavioral change consulting throughout an organization to make CRM succeed, plays directly to the unique strengths of Xchange 7.
Recruiting two CRM industry heavywieghts to its management team. David Rubinstein, who led Cambridge Technology Partners’ (CTP) North American CRM practice, and formerly served as executive vice president of the Convergent Group, was appointed senior vice president of Client Services and Alliances. He will oversee the Company’s alliance strategy with world class partners, a critical component of Xchange’s growth strategy, and ensure the highest levels of support and service for the Company’s clients. Jim Goldfinger, formerly of PeopleSoft, has been appointed senior vice president and general manager of Xchange’s new CVM Business Unit, designed to leverage the growth of Xchange Real Time and Xchange EnAct.
Expanding its significant presence overseas with new offices in Singapore and South Korea. According to a recent Gartner Dataquest report, CRM software license revenue in the Asia Pacific region, excluding Japan, grew more than 150 percent in 2000 to $118 million. This was the largest percentage growth of any region in the world and it is expected to continue. This growth was also reflected in Xchange’s business, as the company signed four deals for software licenses in the region in Q1 ’01, bringing the total number of customers in the region to 24 spanning seven countries. International revenue for Q1 ’01 was 19% of total revenue for the quarter.
Xchange remains committed to breakeven by 4Q01
Frawley continued, "We remain committed to reaching breakeven by Q4 2001 and are taking strong measures to limit costs and conserve capital."
Today, the Company announced that it has eliminated 72 positions across its operations, representing approximately 15% of the total employee base. To cover the costs associated with the job reduction, Xchange will be taking a one-time cash charge of approximately $750 thousand representing cash severance to terminated employees. Additionally, the company is currently evaluating the appropriateness of additional non-cash impairment charges for certain of its long-term assets as a result of this restructuring.
"While these decisions are never easy, we feel it is in the best interest of the Company to reach profitability as quickly as possible," Frawley concluded.
Conference Call and Webcast at 8:00 am today
Xchange will host a public conference call and Webcast for investors at 8:00 am Eastern today. To access the call, please dial (888) 209-3788 from the U.S. or 212-271-4811 internationally. A live webcast of the call will also be available on the Company’s web site (http://www.xchange.com/ir). To listen, please register at the site at least 15 minutes prior to the call. The webcast will be archived on the site. A telephone replay of the call will be available for seven days beginning at 10:00 a.m. Eastern Time, April 27, and can be accessed by dialing (800) 633-8284 from the U.S. or (858) 812-6440 internationally, using reservation # 18417454.
About Xchange, Inc.
Exchange Applications, Inc., now doing business as Xchange, Inc., helps companies focus their resources on customers who represent the best long-term profitability. Xchange delivers results by instilling a profit-focused discipline in the organization, coordinating all touch points and creating a personalized dialogue with the most valuable customers. These solutions are impacting the bottom line at approximately 290 client sites worldwide, including Citigroup, DaimlerChrysler and Vodafone.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: In addition to historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties, including the statements relating to current expectations for current and future periods. The Company`s actual results could differ materially from those discussed in such forward-looking statements, based on a variety of factors, including the adequacy of estimated expense accruals and reserves and the effect of the expansion of the Company’s business on its operating cash flow; as well as factors affecting future performance, including the fact that the Company`s markets are characterized by rapidly changing technology, evolving industry standards and frequent introductions of new products and enhancements; the fact that the market for customer optimization software is new and emerging; the fact that the Company relies heavily on indirect distribution channels for sales of its software; the unpredictability of the timing of customer orders; a highly competitive market for the Company`s products and the unpredictability of whether its solutions will be accepted by new customers; the fact that the Company relies heavily on growth from international operations; the Company’s ability to attract and retain skilled personnel; whether the Company will be able to efficiently integrate acquisitions; and the Company’s ability to raise additional capital in volatile capital markets, in particular given its current operating losses. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the company`s filings with the Securities and Exchange Commission, including but not limited to the company`s Annual Report on Form 10-K filed, April 17, 2001 and recent registration statements filings on Form S-3. The Company disclaims any obligation to update these statements for subsequent developments.
Xchange, Xchange 7, Xchange EnAct, Xchange Real Time and PlanetXchange are trademarks of Exchange Applications, Inc. All other trademarks contained herein are the property of their respective owners.
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