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 third quarter ended September 30,
2005.
Revenues for the third quarter were $9.4 million, compared with
$10.3 million in the second quarter of 2005, and $9.7 million in the
third quarter of 2004. Software license revenue for the third quarter
was $2.6 million, or 27 percent of total revenues, compared with $3.0
million in the second quarter of 2005, and $2.8 million in the third
quarter of 2004. Software services revenues were $2.5 million for the
third quarter, or 27 percent of total revenues, compared with $2.6
million in the second quarter of 2005 and $2.7 million in the same
period last year. Maintenance and professional services revenues were
$4.3 million in the third quarter, or 46 percent of total revenues,
compared with $4.7 million in the second quarter of 2005, and $4.2
million in the third quarter of 2004.
Net income for the third quarter improved to $795,000, or $0.03
per share. Expenses included a one-time charge of $310,000, or $0.01
per share, for merger-related costs associated with the prospective
business combination with Saba Software, Inc. This compares with net
income of $148,000, or $0.01 per share, in the second quarter of 2005,
and a net loss of $1.8 million, or $0.07 per share, for the third
quarter of 2004. Gross margin percentage for the third quarter of 2005
was 81.8 percent, compared with 82.5 percent in the second quarter of
2005.
Centra's cash, cash equivalents and short- and long-term
investments totaled $24.5 million as of September 30, 2005, compared
with $26.0 million as of June 30, 2005. The Company's days sales
outstanding (DSO) was 55 days at the end of the third quarter,
compared with 45 days at the end of the second quarter of 2005.
CEO Comments
"We were pleased with many aspects of our third quarter financial
results, especially the Company's continuing ability to generate
profits," said Leon Navickas, Centra's chairman and CEO. "In addition,
we sold four Enterprise Advantage contracts in the third quarter. This
expands the roster of customers who chose to standardize on our
collaborative learning system across their organization"
"Looking ahead, we are excited about our opportunity to combine
with Saba. This merger will create the largest enterprise learning
software company in the world, able to deliver the only comprehensive
blended learning solution to a growing market of Global 5000 customers
worldwide. In the meantime, Centra continues to focus on sustaining a
profitable, growing application software business and increasing
shareholder value with tight fiscal controls and solid business
execution," said Mr. Navickas.
Third Quarter Highlights
-- In October, Centra announced the signing of a definitive
merger agreement with Saba Software, Inc. According to the
agreement, Centra shareholders will receive a mix of cash and
stock. The consideration per share to be received by the
stockholders of Centra will be comprised of $0.663 in cash and
Saba stock at a fixed exchange ratio of 0.354 of a share of
Saba stock for each share of Centra stock. The merger is
expected to close in the first quarter of 2006.
-- Centra was honored with two prestigious industry awards.
Centra 7.5 won a Best of Show award from the TechLearn
organization. The awards, sponsored by Questex Media Group,
Inc., honor exhibitors and products with the best potential to
change the future of the learning and training industry. In
addition, Centra 7.5, was named a winner of the Human Resource
Executive Magazine Top Training Product of the Year Award for
2005. For this year's competition, editors of Human Resource
Executive Magazine selected five top products that clearly met
their stated criteria of innovation and value to the Human
Resource function.
-- Centra added 32 new customers in the third quarter, including
major accounts such as The Bank of Nova Scotia, Baylor Health
Care and PHH Corporation. The Company also expanded sales to
its installed base, including additional contracts with Blue
Cross/Blue Shield of Tennessee, Clark County School District
and NationsRent.
-- Over 1,000 attendees participated in a two-day Centra
eConference that focused on Winning Online Training
Strategies. The 2005 program featured a series of interactive
online presentations by leading research analysts and training
executives, including Century 21, DaimlerChrysler, and the
University of Missouri.
Third Quarter Conference Call
Centra will host a conference call on Thursday, November 3rd 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. Due to
the Company's proposed merger with Saba Software, Inc., Centra will
not be holding a Q&A session following the prepared remarks portion of
the conference call.
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 and uncertainties relating to the Company's announced plan to
combine with Saba Software, Inc., including but not limited to: the
possibility that the market for the sale of certain products and
services may not develop as expected; the possibility that the
proposed merger does not close; unanticipated delays in completing the
merger; the possibility that the parties will be unable to
successfully execute their integration strategies or achieve planned
synergies; the possibility that prior to the closing of the
transaction, the businesses of both Saba and Centra might suffer due
to customer uncertainty; unanticipated delays and difficulties in the
integration of the two companies' technologies; unanticipated costs
relating to the transaction and the integration of the two companies;
and other risks. These risk factors also include risks and
uncertainties relating to Centra's ongoing business, including
uncertainty about the Company's ability to successfully execute its
strategic plan and sustain profitability, the Company's ability to
control costs and 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 June 30, 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 September
31, 30,
2004 2005
Assets
Current assets
Cash, cash equivalents and short-term
investments $25,135 $24,536
Restricted cash 233 -
Accounts receivable, net 7,887 5,703
Prepaid expenses and other current assets 1,374 1,977
-------- ---------
Total current assets 34,629 32,216
Property and equipment, net 1,440 1,138
Long-term investments 743 -
Restricted cash 400 400
Other assets 16 15
-------- ---------
Total assets $37,228 $33,769
======== =========
Liabilities and stockholders' equity
Current liabilities
Current maturities of long-term debt $1,049 $759
Accounts payable 939 376
Accrued expenses 5,677 4,796
Deferred revenue 14,360 12,330
-------- ---------
Total current liabilities 22,025 18,261
Long-term debt, net of current maturities 1,012 784
Total stockholders' equity 14,191 14,724
-------- ---------
Total liabilities and stockholders' equity $37,228 $33,769
======== =========
CENTRA SOFTWARE, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2004 and 2005
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Nine Months
Ended September Ended September
30, 30,
2004 2005 2004 2005
Revenues
License $2,829 $2,564 $7,972 $7,654
Software services 2,670 2,502 7,671 7,874
Maintenance and professional
services 4,202 4,306 11,951 13,159
-------- ------- -------- -------
Total revenues 9,701 9,372 27,594 28,687
-------- ------- -------- -------
Cost of revenues
License 63 158 194 415
Amortization of acquired developed
technology - - 233 -
Software services 555 548 1,784 1,674
Maintenance and professional
services 1,208 1,003 3,244 3,253
-------- ------- -------- -------
Total cost of revenues 1,826 1,709 5,455 5,342
-------- ------- -------- -------
Gross profit 7,875 7,663 22,139 23,345
-------- ------- -------- -------
Operating expenses
Sales and marketing 4,763 3,060 16,815 10,487
Product development 2,313 2,134 7,889 6,716
General and administrative 2,443 1,838 6,583 6,553
Restructuring charges 241 - 788 -
-------- ------- -------- -------
Total operating expenses 9,760 7,032 32,075 23,756
-------- ------- -------- -------
Operating (loss) income (1,885) 631 (9,936) (411)
Other income, net 78 164 152 394
-------- ------- -------- -------
Net (loss) income $(1,807) $795 $(9,784) $(17)
======== ======= ======== =======
Net (loss) income per share, basic
and diluted $(0.07) $0.03 $(0.36) $-
Weighted average shares outstanding
Basic 27,410 27,951 27,299 27,844
Diluted 27,410 28,546 27,299 27,844
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