Applix, Inc. (NASDAQ: APLX), a global provider of Business Intelligence (BI) and Business Performance Management (BPM) software solutions, today reported that revenue for the quarter ended December 31, 2003 was $8.16 million, compared to $9.83 million in the fourth quarter of 2002. For comparison purposes, revenue for the year ago quarter included $3.71 million from the Company's customer relationship management (CRM) business, which was sold during the first quarter of 2003. Reported revenue for the fourth quarter of 2003 consists exclusively of revenue derived from the analytics business (BI and BPM software), representing a 33.3% increase from the same period last year. Analytics license revenue for the fourth quarter of 2003 was $4.77 million, compared to $3.27 million for the same period a year ago.
For the past four quarters, the Company has generated sequential growth in both total analytics revenue, as well as analytics license revenue. Total analytics revenue increased from $5.58 million in the first quarter to $5.94 million in the second quarter to $6.42 million in the third quarter to $8.16 million in the fourth quarter, increases of 6.5%, 8.1% and 27.1%, respectively. Analytics license revenue increased from $2.44 million in the first quarter to $2.66 million in the second quarter to $3.11 million for the third quarter to $4.77 million for the fourth quarter, increases of 9.0%, 16.9% and 53.3%, respectively.
The net loss for the fourth quarter of 2003 was $2.67 million, or $0.21 per basic and diluted share, compared to a net loss of $2.95 million, or $0.24 per basic and diluted share, for the year ago period. Included in the results for the fourth quarter of 2003 was a restructuring charge, totaling $3.24 million, or $0.25 per basic and diluted share, related to the renegotiation of the Company's Westborough, Mass. office lease to reduce space and on-going rent, which will result in an annual savings of approximately $900,000.
David C. Mahoney, President and Chief Executive Officer of Applix, said, "As Applix continued through its transition to a pure-play BI and BPM company, we made excellent progress last quarter, aided by several key customer wins and a full quarter of revenues from our highly successful TM1 Web product. We are continuing to compete effectively in our space, winning new customers with our core analytics software, as well as expanding our product relationships with existing customers. We believe that our performance this quarter provides further evidence that demand for the feature-rich, rapidly deployed and easily integrated BI software we provide, in concert with our expanding base of partners, is growing among a wide variety of companies around the world. We are particularly enthusiastic about the prospects for penetration among the mid-market to Global 2000 companies we target where their return on investment in our software is clear and speedy. As we move into 2004, we are confident that Applix will reach the 'steady state' business model, operationally and financially, we having been working toward over the past 12 months that will enable us to generate sustainable profitability."
Gross margin for the fourth quarter of 2004 improved to 77.1% from 76.8% in the third quarter of 2003 and from 68.0% for the fourth quarter 2002. The improvement in gross margin was attributable to the higher percentage of license revenues, offset by the additional write-offs of approximately $250,000 in previously capitalized software development costs. On an annualized basis, gross margin benefited from the reduction of lower margin services revenue and the related cost of that revenue associated with the Company's CRM business sold in the first quarter of 2003.
Total operating expenses for the quarter ended December 31, 2003 totaled $9.16 million compared to $9.55 million in the year ago period. The fourth quarter this year included the real estate restructuring charge of $3.24 million and approximately $85,000 in legal costs associated with the previously-announced investigation by the Securities & Exchange Commission following two financial restatements.
Results for the Year Ended December 31, 2003
Revenue for 2003 was $27.36 million, compared to $36.60 million in 2002. For comparison purposes, revenue for the 2002 period included $15.38 million from the Company's CRM business, sold during the first quarter of 2003. Reported revenue for 2003 included $26.10 million in analytics revenues, compared to $21.22 million in 2002, reflecting a 23.0% increase in analytics revenues from last year.
The net loss for 2003, which includes a $7.91 million gain from the sale of the CRM business as well as the $3.24 million real estate restructuring charge, totaled $10,000, compared to a net loss of $5.77 million, or $0.47 per basic and diluted share, for the year ago period.
Fourth Quarter Business Highlights
Applix's flagship product, TM1, was named the best-performing analytics engine in The OLAP Survey 3 by independent analyst and OLAP (online analytical processing) authority Nigel Pendse. Applix continued to build its customer base with companies that are realizing measurable benefits of employing real-time analytics for forecasting, planning and consolidations. During the quarter, Airbus SAS, Credit Suisse Asset Management, Eli Lilly, NCP (National Car Parks), South African Airways and Sun Life are just a few examples of the global leaders who selected the Company's TM1 BI platform. The Company continued to expand its worldwide distribution channel by signing 22 partners during the fourth quarter, including CorpSoft Nordic, KnowledgeLab Software and Lynx Consulting. For the third consecutive year, Applix has been selected by the readers of DM Review magazine as a leading provider of business intelligence solutions. Applix's ranking in the 2003 DM Review 100 moved up more than 30 places from its 2002 position, making Applix one of the companies with greatest ranking improvement on the list. Applix named analytics visionary Manny Perez to the position of Chief Technology Officer. Perez will play a key role in determining the technology direction and architecture of the company's award-winning BI and BPM products. Milt Alpern, Chief Financial Officer of Applix, commented, "We were able to show significant improvement from a financial standpoint this quarter, including strong revenue growth and positive cash flow generation, while we also benefited from favorable foreign currency exchange rates. The restructuring measures we took this year will enable the company to save approximately $900,000 in annual rent expense going forward, thus enabling us to invest prudently in revenue-enhancing areas of our business without impeding our ability to achieve the profitable business model we are targeting."
Fourth Quarter Financial Highlights
Cash and cash equivalents totaled $9.24 million at 12/31/03; subsequent to year-end, the Company made a $3 million payment to its landlord in connection with its real estate restructuring. The Company generated positive cash flow during the quarter of approximately $150,000 as compared to burning approximately $600,000 during the third quarter. Days sales outstanding was 63 days at 12/31/03 up from 48 days at 9/30/03, which was unusually low. Average license deal size remained constant at $25,000 - $35,000 and the number of +$100,000 transactions increased to four. Following the close of the quarter, Applix agreed on the terms for a $2 million line of credit for working capital purposes and $1 million line of credit for equipment financing with Silicon Valley Bank, subject to the Bank's final credit approval.
Business and Financial Outlook for 2004
The Company is currently targeting total revenues of $30-33 million in 2004. The Company is targeting break-even results for the first quarter, followed by steadily improving profit in the following quarters in 2004.
Investor Conference Call and Webcast
The senior management of Applix will host a conference call and Webcast to discuss the fourth quarter results tomorrow morning, Friday, February 6, 2004 at 8:30 am EST. To access the call, please dial 1-800-901-5213, using the confirmation code 26063351. Internationally, the call may be accessed by dialing 1-617-786-2962, using the same confirmation code. To listen via live audio Webcast, please visit the Company's website, www.applix.com at least ten minutes prior to the start of the call. The Webcast will be available as a replay starting one hour after the call is completed at the same location.
For the past four quarters, the Company has generated sequential growth in both total analytics revenue, as well as analytics license revenue. Total analytics revenue increased from $5.58 million in the first quarter to $5.94 million in the second quarter to $6.42 million in the third quarter to $8.16 million in the fourth quarter, increases of 6.5%, 8.1% and 27.1%, respectively. Analytics license revenue increased from $2.44 million in the first quarter to $2.66 million in the second quarter to $3.11 million for the third quarter to $4.77 million for the fourth quarter, increases of 9.0%, 16.9% and 53.3%, respectively.
The net loss for the fourth quarter of 2003 was $2.67 million, or $0.21 per basic and diluted share, compared to a net loss of $2.95 million, or $0.24 per basic and diluted share, for the year ago period. Included in the results for the fourth quarter of 2003 was a restructuring charge, totaling $3.24 million, or $0.25 per basic and diluted share, related to the renegotiation of the Company's Westborough, Mass. office lease to reduce space and on-going rent, which will result in an annual savings of approximately $900,000.
David C. Mahoney, President and Chief Executive Officer of Applix, said, "As Applix continued through its transition to a pure-play BI and BPM company, we made excellent progress last quarter, aided by several key customer wins and a full quarter of revenues from our highly successful TM1 Web product. We are continuing to compete effectively in our space, winning new customers with our core analytics software, as well as expanding our product relationships with existing customers. We believe that our performance this quarter provides further evidence that demand for the feature-rich, rapidly deployed and easily integrated BI software we provide, in concert with our expanding base of partners, is growing among a wide variety of companies around the world. We are particularly enthusiastic about the prospects for penetration among the mid-market to Global 2000 companies we target where their return on investment in our software is clear and speedy. As we move into 2004, we are confident that Applix will reach the 'steady state' business model, operationally and financially, we having been working toward over the past 12 months that will enable us to generate sustainable profitability."
Gross margin for the fourth quarter of 2004 improved to 77.1% from 76.8% in the third quarter of 2003 and from 68.0% for the fourth quarter 2002. The improvement in gross margin was attributable to the higher percentage of license revenues, offset by the additional write-offs of approximately $250,000 in previously capitalized software development costs. On an annualized basis, gross margin benefited from the reduction of lower margin services revenue and the related cost of that revenue associated with the Company's CRM business sold in the first quarter of 2003.
Total operating expenses for the quarter ended December 31, 2003 totaled $9.16 million compared to $9.55 million in the year ago period. The fourth quarter this year included the real estate restructuring charge of $3.24 million and approximately $85,000 in legal costs associated with the previously-announced investigation by the Securities & Exchange Commission following two financial restatements.
Results for the Year Ended December 31, 2003
Revenue for 2003 was $27.36 million, compared to $36.60 million in 2002. For comparison purposes, revenue for the 2002 period included $15.38 million from the Company's CRM business, sold during the first quarter of 2003. Reported revenue for 2003 included $26.10 million in analytics revenues, compared to $21.22 million in 2002, reflecting a 23.0% increase in analytics revenues from last year.
The net loss for 2003, which includes a $7.91 million gain from the sale of the CRM business as well as the $3.24 million real estate restructuring charge, totaled $10,000, compared to a net loss of $5.77 million, or $0.47 per basic and diluted share, for the year ago period.
Fourth Quarter Business Highlights
Applix's flagship product, TM1, was named the best-performing analytics engine in The OLAP Survey 3 by independent analyst and OLAP (online analytical processing) authority Nigel Pendse. Applix continued to build its customer base with companies that are realizing measurable benefits of employing real-time analytics for forecasting, planning and consolidations. During the quarter, Airbus SAS, Credit Suisse Asset Management, Eli Lilly, NCP (National Car Parks), South African Airways and Sun Life are just a few examples of the global leaders who selected the Company's TM1 BI platform. The Company continued to expand its worldwide distribution channel by signing 22 partners during the fourth quarter, including CorpSoft Nordic, KnowledgeLab Software and Lynx Consulting. For the third consecutive year, Applix has been selected by the readers of DM Review magazine as a leading provider of business intelligence solutions. Applix's ranking in the 2003 DM Review 100 moved up more than 30 places from its 2002 position, making Applix one of the companies with greatest ranking improvement on the list. Applix named analytics visionary Manny Perez to the position of Chief Technology Officer. Perez will play a key role in determining the technology direction and architecture of the company's award-winning BI and BPM products. Milt Alpern, Chief Financial Officer of Applix, commented, "We were able to show significant improvement from a financial standpoint this quarter, including strong revenue growth and positive cash flow generation, while we also benefited from favorable foreign currency exchange rates. The restructuring measures we took this year will enable the company to save approximately $900,000 in annual rent expense going forward, thus enabling us to invest prudently in revenue-enhancing areas of our business without impeding our ability to achieve the profitable business model we are targeting."
Fourth Quarter Financial Highlights
Cash and cash equivalents totaled $9.24 million at 12/31/03; subsequent to year-end, the Company made a $3 million payment to its landlord in connection with its real estate restructuring. The Company generated positive cash flow during the quarter of approximately $150,000 as compared to burning approximately $600,000 during the third quarter. Days sales outstanding was 63 days at 12/31/03 up from 48 days at 9/30/03, which was unusually low. Average license deal size remained constant at $25,000 - $35,000 and the number of +$100,000 transactions increased to four. Following the close of the quarter, Applix agreed on the terms for a $2 million line of credit for working capital purposes and $1 million line of credit for equipment financing with Silicon Valley Bank, subject to the Bank's final credit approval.
Business and Financial Outlook for 2004
The Company is currently targeting total revenues of $30-33 million in 2004. The Company is targeting break-even results for the first quarter, followed by steadily improving profit in the following quarters in 2004.
Investor Conference Call and Webcast
The senior management of Applix will host a conference call and Webcast to discuss the fourth quarter results tomorrow morning, Friday, February 6, 2004 at 8:30 am EST. To access the call, please dial 1-800-901-5213, using the confirmation code 26063351. Internationally, the call may be accessed by dialing 1-617-786-2962, using the same confirmation code. To listen via live audio Webcast, please visit the Company's website, www.applix.com at least ten minutes prior to the start of the call. The Webcast will be available as a replay starting one hour after the call is completed at the same location.
