Centra (NASDAQ:CTRA)
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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.
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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
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