Continued revenue growth from existing and new customers
MISSISSAUGA, ON, Nov. 15 /CNW/ - Hostopia.com Inc. (TSX: H), a leading
provider of web services that enable small and medium-sized businesses to
establish and maintain an internet presence, today reported its financial
results for its second quarter ended September 30, 2006. All figures are in
U.S. dollars unless otherwise stated.
"We had a very successful second quarter and are very excited about our
continued progress on a number of fronts," said Colin Campbell, Chief
Executive Officer. "During the quarter we entered into agreements with a
number of new customers. We also made great progress developing search engine
optimization, enhanced site creation software, and collaborative e-mail
services. In addition, we recently launched Website Experts our website design
service," Mr. Campbell added.
"We are also thrilled that on November 10, subsequent to the end of the
quarter, Hostopia became a public company. The net proceeds from our IPO will
allow us to invest in technology and geographic expansion to further
accelerate the growth of our web hosting and application services."
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Business Highlights
- Quarterly revenue increases 29% year over year (96.7% monthly
recurring revenue)
- 26th quarter of consecutive revenue growth
- End-user growth of 32% quarterly year over year to over 237,000
- Signed 16 new customer contracts including Aliant, McLeod and Talk
Talk
- Subsequent to quarter end signed a new customer contract in the U.K.
with BT (British Telecommunications PLC)
- Completed CDN$25,200,000 initial public offering, on November 10,
2006
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"Business is showing significant momentum and we are excited by our
recent customer wins. In particular, our recent win with BT represents a
significant opportunity to establish ourselves in the U.K. market," said Mr.
Campbell. "During the second quarter we began investing in our technology
infrastructure and services in order to be in a position to rapidly deploy our
services to these new customers."
Financial Results
Revenues increased 29% or $1.3 million to $5.6 million in the three
months ended September 30, 2006 compared to the same period last year. This
growth in revenues was due to a 32% or 57,900 increase in the number of
end-users hosted and serviced since September 30, 2005. At September 30, 2006,
the company had approximately 237,000 end-users utilizing its services. Growth
in end-users has come from both existing customers that added new end-users,
as well as the acquisition of new customers and their end-users.
Basic and diluted net income per common share for the second quarter was
$0.10 and $0.07 respectively, compared to $0.13 and $0.08 for the same period
last year. For the six months ended September 30, 2006, basic and diluted net
income per common share was $0.21 and $0.15 respectively, compared to $0.21
and $0.14 for the six months ended September 30, 2005. Earnings were slightly
lower year over year as a result of the investment required to prepare the
business for our new customer additions and higher research and development
expenses related to the development of new web services and enhanced software
and service offerings.
Conference Call Information
Hostopia will hold its second quarter conference call on Wednesday,
November 15, 2006, at 8.30 a.m. ET. Colin Campbell, Chief Executive Officer
and Michael Mugan, Chief Financial Officer, will discuss financial results and
performance for the three months ended September 30, 2006.
To access the call, please dial 416-915-5762 or 1-800-733-7571. The
conference call will also be accessible via webcast at:
http://events.onlinebroadcasting.com/hostopia/111506/index.php
A replay of the conference call will be available as of 10.30 a.m. ET,
November 15, 2006 until midnight, November 22, 2006. To access the replay,
call 416-640-1917 or 1-877-289-8525, followed by passcode 21209768 followed by
the number sign.
About Hostopia.com Inc.
Hostopia is a leading provider of web services that enable small and
medium-sized businesses to establish and maintain an internet presence. The
company's customers are communication services providers, including
telecommunication carriers, cable companies, internet service providers,
domain registrars, and web hosting service providers. Hostopia's customers
purchase its web services on a wholesale basis and resell these services under
their own brands to small and medium-sized businesses. The company provides
customers with the technology, infrastructure, and support services to enable
them to offer web services, while saving them research and development as well
as capital and operating costs typically associated with the design,
development, and delivery of web services.
Forward-Looking Statements
This press release includes certain "forward-looking statements" and
forward-looking information that are subject to risks, uncertainties and other
factors that could cause actual results or outcomes to differ materially from
those contemplated by the forward-looking statements. These forward-looking
statements and forward-looking information include, but are not limited to,
plans, objectives, expectations and intentions and other statements contained
in this press release that are not historical facts and statements identified
by words such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "estimates" or words of similar meaning. Our actual results could
differ materially from those anticipated in these forward-looking statements
and forward-looking information upon completion of the review of our third
quarter results by our independent registered public accounting firm. These
statements are based on our current beliefs or expectations and there are a
number of important factors that could cause the actual results or outcomes to
differ materially from those indicated by these forward-looking statements,
including without limitation, our ability to maintain our sales efficiency,
our ability to maintain our existing, and develop new, strategic
relationships, the number of our net subscriber additions, our monthly
customer turnover and our ability to successfully integrate recently acquired
businesses and operations and those risks set forth under the caption "Risk
Factors" in Hostopia's Quarterly Report on Form 10-Q for the year quarter
ended September 30, 2006, as filed with the Securities and Exchange
Commission. These filings are available on a Website maintained by the
Securities and Exchange Commission at www.sec.gov. Hostopia does not undertake
any obligation to update any forward-looking statements contained in this
document as a result of new information, future events or otherwise.
Financial Highlights
The following is a summary of financial data provided in the company's
Quarterly Report on Form 10-Q for the three and six months ended September 30,
2006. Please refer to this filed document for a more complete explanation of
the company's results.
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Hostopia.com Inc.
Consolidated Balance Sheets
(Expressed in U.S. dollars)
-------------------------------------------------------------------------
September 30, March 31,
2006 2006
-------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 2,387,093 $ 3,038,217
Trade accounts receivable, net of
allowance for doubtful accounts of
$106,362 (March 31, 2006 - $48,650) 1,395,276 1,568,103
Deferred tax assets - 83,000
Prepaid expenses 380,485 268,969
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Total current assets 4,162,854 4,958,289
Property and equipment, net of
accumulated amortization of $5,109,254
(March 31, 2006 - $4,273,828) 3,310,037 3,173,715
Other assets 61,821 60,699
Intangible assets, net of accumulated
amortization of $1,184,317
(March 31, 2006 - $842,272) 2,012,575 1,608,605
Deferred tax assets 669,000 481,000
Deferred initial public offering costs 1,202,400 -
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Total assets $ 11,418,687 $ 10,282,308
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 463,962 $ 272,456
Accrued liabilities 717,147 511,525
Payroll and other taxes payable 7,943 25,881
Income taxes payable 24,000 155,000
Current portion of deferred lease
inducements 79,900 79,900
Deferred revenue 904,511 923,206
Current portion of long-term liability
(note 4) 260,000 260,000
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Total current liabilities 2,457,463 2,227,968
Deferred lease inducements 271,808 298,538
Long-term liability (note 4) 146,350 243,639
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Total liabilities 2,875,621 2,770,145
Series A redeemable, convertible
preferred shares: (note 6)
Authorized:
10,000,000 Series A redeemable,
convertible preferred shares
Issued and outstanding:
2,127,658 Series A preferred shares,
redeemable at $2.35 per share 5,228,763 5,170,448
Stockholders' equity:
Capital stock:
Authorized:
30,000,000 common shares, par
value $0.0001
Issued and outstanding:
4,032,873 common shares 216,362 216,362
Additional paid-in capital 3,412,119 3,384,339
Deferred stock-based compensation - (26,179)
Accumulated other comprehensive loss (43,881) (43,881)
Deficit (270,297) (1,188,926)
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Total stockholders' equity 3,314,303 2,341,715
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Total liabilities and stockholders' equity $ 11,418,687 $ 10,282,308
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Hostopia.com Inc.
Consolidated Statements of Operations
(Expressed in U.S. dollars - except per share amounts)
(Unaudited)
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Three months ended Six months ended
September 30, September 30,
2006 2005 2006 2005
-------------------------------------------------------------------------
Revenues:
Webhosting and
applications
services $ 5,406,362 $ 4,176,633 $ 10,625,782 $ 8,088,799
Other services 179,141 143,371 361,257 302,371
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Total revenues 5,585,503 4,320,004 10,987,039 8,391,170
Cost of revenues:
Webhosting and
applications
services 637,908 414,578 1,200,680 800,311
Other services 84,387 49,203 169,103 107,401
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Total cost of
revenues 722,295 463,781 1,369,783 907,712
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Gross profit 4,863,208 3,856,223 9,617,256 7,483,458
Expenses:
Sales and
marketing(a) 1,144,907 904,950 2,347,257 1,956,962
Research and
development(a) 782,499 498,043 1,494,984 987,261
Project
management(a) 423,339 328,592 839,797 642,304
Technical
support(a) 794,331 529,076 1,473,207 1,030,242
General and
administrative(a) 431,362 353,480 822,681 686,036
Amortization of
intangible
assets 183,623 67,646 342,045 126,429
Amortization of
property and
equipment 452,683 333,723 850,943 667,458
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4,212,744 3,015,510 8,170,914 6,096,692
-------------------------------------------------------------------------
Income before the
undernoted 650,464 840,713 1,446,342 1,386,766
Interest income 18,170 4,454 39,699 8,601
Interest expense (4,206) (4,566) (8,412) (4,566)
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13,964 (112) 31,287 4,035
-------------------------------------------------------------------------
Income before
income taxes 664,428 840,601 1,477,629 1,390,801
Income taxes
(recovery):
Current 341,000 303,000 747,000 490,000
Deferred (117,000) - (148,000) -
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224,000 303,000 559,000 490,000
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Net income $ 440,428 $ 537,601 $ 918,629 $ 900,801
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Net income per
share (note 5)
Basic $ 0.10 $ 0.13 $ 0.21 $ 0.21
Diluted 0.07 0.08 0.15 0.14
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-------------------------------------------------------------------------
Weighted average
number of common
shares
outstanding:
Basic 4,032,406 4,032,336 4,032,371 4,032,336
Diluted 6,310,070 6,658,253 6,310,035 6,648,562
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(a) Stock-based
compensation
is included
in operating
expenses as
follows:
Sales and
marketing $ 31,970 $ 4,989 $ 66,285 $ 9,978
Research
and
development 5,163 - 10,606 -
Project
management 2,819 - 5,855 -
Technical
support 4,294 - 8,838 -
General and
administr-
ative 9,130 - 18,891 -
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$ 53,376 $ 4,989 $ 110,475 $ 9,978
Hostopia.com Inc.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)
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Six months ended
September 30,
2006 2005
-------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 918,629 $ 900,801
Items which do not involve cash:
Amortization 1,192,988 793,887
Stock-based compensation 110,475 9,978
Non-cash interest 8,412 -
Deferred income taxes (105,000) 440,000
Deferred lease inducements (26,730) 10,504
Change in operating assets and liabilities:
Trade accounts receivable 172,827 (1,111,405)
Prepaid expenses (111,516) 21,409
Other assets - (13,234)
Accounts payable 191,506 (73,402)
Accrued liabilities 205,622 78,156
Payroll taxes and other taxes payable (17,938) 680
Income taxes payable (131,000) -
Deferred revenue (18,695) 34,724
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Cash flows from operating activities 2,389,580 1,092,098
Cash flows from financing activities:
Issue of common shares on exercise of
stock options 1,799 -
Repayment of long-term liability (105,701) -
Deferred initial public offering costs (1,202,400) -
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Cash flows used in financing activities (1,306,302) -
Cash flows from investing activities:
Acquisition of property and equipment (987,263) (821,881)
Acquisition of intangible assets (746,015) (189,699)
-----------------------------------------------------------------------
Cash flows used in investing activities (1,733,278) (1,011,580)
Effect of currency translation on cash balances (1,124) -
-------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents (651,124) 80,518
Cash and cash equivalents, beginning of period 3,038,217 1,897,230
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 2,387,093 $ 1,977,748
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental cash flow information:
Interest $ - $ 4,566
Income taxes paid 795,000 -
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%SEDAR: 00023928E
