CTRA Centra Software (MM)

Centra Software, Inc. (NASDAQ: CTRA), a leading provider of software and services for online learning and training, today announced financial results for the second quarter ended June 30, 2005. Revenues for the second quarter were $10.3 million, up 14 percent from $9.0 million in the first quarter of 2005, and up 11 percent from $9.3 million in the second quarter of 2004. Software license revenue for the second quarter was $3.0 million, or 29 percent of total revenues, representing a 43 percent increase over $2.1 million in the first quarter of 2005, and a 15 percent increase over $2.6 million in the second quarter of 2004. Software services revenues were $2.6 million for the second quarter, or 25 percent of total revenues, which is a slight decrease from the first quarter of 2005 and equivalent to the same period last year. Maintenance and professional services revenues were $4.7 million in the second quarter, or 46 percent of total revenues, representing a 12 percent increase from the first quarter of 2005, and an 18 percent increase from the second quarter of 2004. Net income for the second quarter of 2005 was $148,000, or $0.01 per share, which includes a severance charge of $473,000 related to the departure of the Company's former CEO. This compares with a net loss of $960,000, or $0.03 per share, in the first quarter of 2005, and a net loss of $4.8 million, or $0.18 per share, for the second quarter of 2004. Gross margin percentage for the second quarter of 2005 improved by 280 basis points sequentially to 82.5 percent. Centra's cash, cash equivalents and short- and long-term investments totaled $26.0 million as of June 30, 2005, a decrease of $300,000 from the total at March 31, 2005 of $26.3 million. The Company's days sales outstanding (DSO) was 44 days at the end of the second quarter, compared with 47 days at the end of the first quarter of 2005. CEO Comments "We are very pleased with our second-quarter results," said Leon Navickas, Centra's chairman and CEO. "Revenues increased 14 percent sequentially, gross margins improved and we achieved profitability for the first time in Centra's history. In addition, we launched the next generation of our online learning and training solutions with the release of Centra 7.5. Simultaneously, we introduced new add-on modules that provide just-in-time learning support and enhanced reporting capabilities. We believe that these new products will enhance our competitive position." "Our goal going forward is to build a profitable, growing application software business and increase shareholder value. The key priority is an unwavering focus on operating margin expansion. We expect that revenues for 2005 will be slightly higher than revenues in 2004, and that we will improve operating margins year over year. In the next few quarters, our goal is to position the Company for higher revenue growth and continued operating margin expansion in 2006. We will also continue to evaluate a variety of other options to achieve greater scale and distribution capabilities," said Mr. Navickas. Second Quarter Highlights -- Centra added 26 new customers in the second quarter, including major accounts such as Bell South, the College for Financial Planning and Hilton Group. The Company also expanded sales to its installed base, including additional contracts with Aventis, Deutsche Telekom and Time Warner. -- At Centra Summit 2005, Centra's successful annual worldwide user conference, attendees from around the world were provided a first look at Centra's innovative 7.5 release and new add-on modules. -- Centra shipped Centra 7.5. This new release includes enhancements to Centra's core technology, Centra Live, with a next-generation client for real-time sessions, essential for traditional pre-go-live training and change management initiatives. -- The release of Centra 7.5 was coupled with the introduction of three new add-on modules, which provide significantly enhanced support for organizational acceptance of enterprise applications. Created to address the many challenges of application implementation, end-user adoption and user competency, these new add-on modules include a new performance support system, a sophisticated live help component for personalized, on-the-job learning and enhanced, custom reporting capabilities for program and progress measurement tied to enterprise applications. These modules may be purchased separately or bundled with Centra 7.5. Second Quarter Conference Call Centra will host a conference call on Thursday, August 4th at 10:00 a.m. EST to discuss these results in more detail. The call will be simultaneously Webcast over the Internet. To access the Webcast, go to the Company's Web site at www.centra.com/investorrelations. About Centra Online learning and training solutions from Centra create workforce efficiencies and enable organizations to share and exchange business-critical information with geographically distributed customers, partners, prospects and employees. Centra enables groups to work faster and more effectively by automating critical learning and training initiatives online through virtual classrooms, online meetings and Web conferences. From enterprise-application training and support to workforce development and more, Centra's software and services help organizations deliver critical information and skills to support their most challenging business initiatives. Currently available in nine languages, Centra solutions can be deployed as on-site software or through its ASP service. Organizations across every major industry and market sector choose Centra, including Wyndham International, Weyerhaeuser, Underwriters Laboratories, BMW and Stanford University. Headquartered in Lexington, Massachusetts, Centra serves a worldwide customer base throughout the Americas, Europe, Asia and Australia. For more information, visit www.centra.com. Safe Harbor Statement Regarding Forward-Looking Statements With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements about the beliefs and expectations of management regarding the Company's future performance, the Company's strategic initiatives, its ability to achieve and maintain a leadership position in conferencing and collaboration, demand for the Company's software services and management's goals and objectives regarding future results of operations. These statements reflect management's beliefs and expectations as of the date of this statement, and involve risk and uncertainties that may cause actual results, events and performance to differ materially. These risk factors include, but are not limited to, risks associated with the Company's ability to successfully execute its strategic plan, the effect of the Company's cost-cutting measures on its operations, uncertainty of market reaction to the Company's sales and marketing efforts, product demand for and market acceptance of the Centra 7.5 platform, the possibility of defects in our products, which could delay or prevent market acceptance of such products, the Company's ability to sell and deliver its online learning and training solutions, add-on modules and other future products, the effect of economic conditions generally on the market for IT spending and for the Company's products, the impact of competitive products and pricing, technological difficulties or other factors outside the control of the Company. There is no assurance that the Company will be able to implement its growth and operating plans as anticipated, or achieve its revenue and earnings goals. For a description of additional risks, and uncertainties, please refer to the Company's filings with the SEC, including its Annual Report on Form 10-K for the year ended December 31, 2004 and its Form 10-Q for the three months ended March 31, 2005, which are available at www.centra.com/investorrelations. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Centra is a registered trademark of Centra Software, Inc. All other trademarks referenced herein are the property of their respective owners. -0- *T CENTRA SOFTWARE, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (Amounts in thousands) (Unaudited) December 31, June 30, 2004 2005 Assets Current assets Cash, cash equivalents and short-term investments $ 25,135 $ 26,018 Restricted cash 233 233 Accounts receivable, net 7,887 5,127 Prepaid expenses and other current assets 1,374 1,641 --------- --------- Total current assets 34,629 33,019 Property and equipment, net 1,440 1,298 Long-term investments 743 - Restricted cash 400 400 Other assets 16 15 --------- --------- Total assets $ 37,228 $ 34,732 ========= ========= Liabilities and stockholders' equity Current liabilities Current maturities of long-term debt $ 1,049 $ 882 Accounts payable 939 959 Accrued expenses 5,677 4,757 Deferred revenue 14,360 13,372 --------- --------- Total current liabilities 22,025 19,970 Long-term debt, net of current maturities 1,012 879 Total stockholders' equity 14,191 13,883 --------- --------- Total liabilities and stockholders' equity $ 37,228 $ 34,732 ========= ========= CENTRA SOFTWARE, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS For the Three and Six Months Ended June 30, 2004 and 2005 (Amounts in thousands, except per share data) (Unaudited) Three Months Six Months ended June 30, ended June 30, 2004 2005 2004 2005 Revenues License $ 2,612 $ 3,018 $ 5,143 $ 5,090 Software services 2,630 2,637 5,001 5,372 Maintenance and professional services 4,015 4,651 7,749 8,853 ------- ------- ------- ------- Total revenues 9,257 10,306 17,893 19,315 ------- ------- ------- ------- Cost of revenues License 54 125 131 257 Amortization of acquired developed technology 58 - 233 - Software services 593 550 1,229 1,126 Maintenance and professional services 1,060 1,130 2,036 2,250 ------- ------- ------- ------- Total cost of revenues 1,765 1,805 3,629 3,633 ------- ------- ------- ------- Gross profit 7,492 8,501 14,264 15,682 ------- ------- ------- ------- Operating expenses Sales and marketing 6,897 3,859 12,052 7,427 Product development 2,817 2,262 5,576 4,582 General and administrative 2,162 2,394 4,140 4,715 Restructuring charges 547 - 547 - ------- ------- ------- ------- Total operating expenses 12,423 8,515 22,315 16,724 ------- ------- ------- ------- Operating loss (4,931) (14) (8,051) (1,042) Interest and other income, net 92 162 74 230 ------- ------- ------- ------- Net (loss) income $(4,839)$ 148 $(7,977)$ (812) ======= ======= ======= ======= Basic and diluted net (loss) income per share $ (0.18)$ 0.01 $ (0.29)$ (0.03) Weighted average shares outstanding Basic 27,335 27,856 27,243 27,789 Diluted 27,335 28,768 27,243 27,789 *T