Plato Learning (MM) (NASDAQ:TUTR)
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PLATO Learning, Inc. (NASDAQ:TUTR), a leading provider of K–adult
computer-based and e-learning solutions, announced today that it expects
orders for the fourth quarter ended October 31, 2006, to total
approximately $25.5 million, versus $33.1 million for the fourth quarter
of 2005. As a result of fewer orders and a shift in order mix to
subscription versus perpetual license fee products, revenues for the
fourth quarter 2006 are expected to total approximately $22.5 million to
$23.5 million, versus $33.7 million in the fourth quarter of 2005.
Net loss for the quarter is expected to be between ($2.0) million and
($3.0) million, compared to net earnings of $2.2 million in the fourth
quarter of 2005, excluding asset impairment, restructuring and other
charges in both periods. Last year’s reported
net loss for the fourth quarter was ($13.9) million, including $16.1
million of asset impairment, restructuring and other charges.
The company’s cash and marketable securities
position remained strong and is expected to grow from the end of third
quarter 2006 to approximately $33.0 million. Deferred revenue is also
expected to grow to $42.0 million to $43.0 million, compared to $39.1
million at the end third quarter this year and $40.4 million at year-end
2005, reflecting the shift from perpetual license fee to subscription
orders.
The Company’s previous guidance for the fourth
quarter was order growth over the fourth quarter 2005, revenues of $24.0
million to $29.0 million, a range of $1.5 million net earnings to a net
loss of ($2.5) million, and growth in cash and marketable securities and
deferred revenue over the amounts at the end of fiscal third quarter
2006.
Mike Morache, President and CEO said, “The
size of our sales pipeline throughout the quarter was sufficient to
achieve an increase in orders over last year’s
fourth quarter and, in fact, was larger than the third quarter 2006
pipeline, which generated over $34.0 million of orders. We fell short of
our expectations due to the length of time required to close
transactions, caused by greater than anticipated effects of several key
factors. Much of the business moved to future periods and our pipeline
remains strong going into fiscal 2007.”
The key factors that affected orders during fourth quarter more than
anticipated were as follows:
1) The number of large orders declined causing the average value of
orders to decrease. Lower price points for subscription products versus
perpetual license products were not offset by greater transaction volume
and multi-year agreements, which did occur in third quarter 2006.
2) Straight CurveTM Mathematics was introduced
in third quarter with very positive reviews; however, the release did
not align well with schools’ buying cycles
and required new selling techniques for the sales force, both of which
affected sales more than anticipated.
3) The new online management system, the PLATO Learning EnvironmentTM,
was introduced late in the third quarter. Though early acceptance was
strong, some current customers delayed their purchasing decisions to
wait for additional features, scheduled to be released in the next
several months. This resulted in both an accelerated decline in
perpetual license sales and lower than anticipated subscription sales.
4) The new sales organization continued to mature, but was not able to
close the number of forecasted transactions that a more experienced
organization would have closed; therefore, transactions were deferred to
future periods.
“As I’ve discussed
in the past, we are going through simultaneous transitions that are
essential for future growth, including replacing legacy products,
introducing new product lines and platforms, entering new market
segments, converting from a perpetual license to a subscription based
business model, and establishing a new sales organization. These
transitions will result in variable financial results during the
transition period, but we firmly believe in our strategy and capability
for long-term success. To that end, we will continue to aggressively
invest in our product development strategy,”
said Morache.
“Given our current level of performance, we
are taking actions to further reduce the operating costs of the business
until we see sustained improvements in orders and sales productivity.
The sales force has been re-aligned and reduced to put more focus on the
highest potential geographic markets, and the inside sales function has
been assigned the territories where the potential is less concentrated.
The realignment and the availability of our new products for the prime
selling season in 2007 are expected to drive strong order growth in
fiscal year 2007 over 2006,” said Morache.
Final revenues and operating results for the fourth quarter will be
announced on December 12, 2006, following completion of the Company’s
regular quarterly closing and analysis procedures and audit by the
Company’s independent auditors. Final results
could vary from those currently projected. The company also expects to
provide guidance for fiscal year 2007 at that time.
Conference Call
A conference call to discuss this announcement is scheduled for today at
3:45 p.m. CST (Central Standard Time). The dial-in number for this call
is 1-888-230-1059 in the U.S. and Canada, and 1-612-332-0630
internationally. Please call 10 minutes prior to the start of the call
and inform the operator you are participating in PLATO Learning’s
call. Should you be unable to attend the live conference call, a
recording will be available to you from 7:15 p.m. CST on November 9,
2006, until midnight on November 16, 2006. To access the recording, call
1-800-475-6701 in the U.S. and Canada and 1-320-365-3844
internationally. At the prompt, enter pass code number 848128.
Additionally, investors have the opportunity to listen to the conference
call over the Internet through PLATO Learning’s
web site at http://www.plato.com/aboutus/investor_calls.asp.
About PLATO Learning
PLATO Learning is a leading provider of computer-based and e-learning
instruction for kindergarten through adult learners, offering curricula
in reading, writing, math, science, social studies, and life and job
skills. The Company also offers innovative online assessment and
accountability solutions and standards-based professional development
services. With over 6,000 hours of objective-based, problem-solving
courseware, plus assessment, alignment and curriculum management tools,
we create standards-based curricula that facilitate learning and school
improvement.
PLATO Learning is a publicly held company traded as TUTR on the NASDAQ.
PLATO Learning educational software delivered via networks, CD-ROM, the
Internet, and private intranets, is primarily marketed to K–12
schools and colleges. The Company also sells to job training programs,
correctional institutions, military education programs, corporations,
and individuals.
PLATO Learning is headquartered at 10801 Nesbitt Avenue South,
Bloomington, Minnesota 55437, 952. 832.1000 or 800.869.2000. The Company
has offices throughout North American and Puerto Rico, as well as
international distributors in the United Kingdom and South Africa. For
more information, please visit http://www.plato.com.
This announcement includes forward-looking statements. PLATO Learning
has based these forward-looking statements on its current expectations
and projections about future events. Although PLATO Learning
believes that its assumptions made in connection with the
forward-looking statements are reasonable, no assurances can be given
that its assumptions and expectations will prove to have been correct.
These forward-looking statements are subject to various risks,
uncertainties and assumptions. PLATO Learning undertakes no obligation
to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise. Any
forward looking statements made are subject to the risks and
uncertainties as those described in the Company's Annual Report on Form
10-K for the year ended October 31, 2005. Actual results may differ
materially from anticipated results.
PLATO® is a registered trademark of PLATO
Learning, Inc. PLATO Learning and Straight Curve are trademarks of PLATO
Learning, Inc. PLATO Inc. is a PLATO Learning, Inc., company.
PLATO Learning, Inc. (NASDAQ:TUTR), a leading provider of K-adult
computer-based and e-learning solutions, announced today that it
expects orders for the fourth quarter ended October 31, 2006, to total
approximately $25.5 million, versus $33.1 million for the fourth
quarter of 2005. As a result of fewer orders and a shift in order mix
to subscription versus perpetual license fee products, revenues for
the fourth quarter 2006 are expected to total approximately $22.5
million to $23.5 million, versus $33.7 million in the fourth quarter
of 2005.
Net loss for the quarter is expected to be between ($2.0) million
and ($3.0) million, compared to net earnings of $2.2 million in the
fourth quarter of 2005, excluding asset impairment, restructuring and
other charges in both periods. Last year's reported net loss for the
fourth quarter was ($13.9) million, including $16.1 million of asset
impairment, restructuring and other charges.
The company's cash and marketable securities position remained
strong and is expected to grow from the end of third quarter 2006 to
approximately $33.0 million. Deferred revenue is also expected to grow
to $42.0 million to $43.0 million, compared to $39.1 million at the
end third quarter this year and $40.4 million at year-end 2005,
reflecting the shift from perpetual license fee to subscription
orders.
The Company's previous guidance for the fourth quarter was order
growth over the fourth quarter 2005, revenues of $24.0 million to
$29.0 million, a range of $1.5 million net earnings to a net loss of
($2.5) million, and growth in cash and marketable securities and
deferred revenue over the amounts at the end of fiscal third quarter
2006.
Mike Morache, President and CEO said, "The size of our sales
pipeline throughout the quarter was sufficient to achieve an increase
in orders over last year's fourth quarter and, in fact, was larger
than the third quarter 2006 pipeline, which generated over $34.0
million of orders. We fell short of our expectations due to the length
of time required to close transactions, caused by greater than
anticipated effects of several key factors. Much of the business moved
to future periods and our pipeline remains strong going into fiscal
2007."
The key factors that affected orders during fourth quarter more
than anticipated were as follows:
1) The number of large orders declined causing the average value
of orders to decrease. Lower price points for subscription products
versus perpetual license products were not offset by greater
transaction volume and multi-year agreements, which did occur in third
quarter 2006.
2) Straight Curve(TM) Mathematics was introduced in third quarter
with very positive reviews; however, the release did not align well
with schools' buying cycles and required new selling techniques for
the sales force, both of which affected sales more than anticipated.
3) The new online management system, the PLATO Learning
Environment(TM), was introduced late in the third quarter. Though
early acceptance was strong, some current customers delayed their
purchasing decisions to wait for additional features, scheduled to be
released in the next several months. This resulted in both an
accelerated decline in perpetual license sales and lower than
anticipated subscription sales.
4) The new sales organization continued to mature, but was not
able to close the number of forecasted transactions that a more
experienced organization would have closed; therefore, transactions
were deferred to future periods.
"As I've discussed in the past, we are going through simultaneous
transitions that are essential for future growth, including replacing
legacy products, introducing new product lines and platforms, entering
new market segments, converting from a perpetual license to a
subscription based business model, and establishing a new sales
organization. These transitions will result in variable financial
results during the transition period, but we firmly believe in our
strategy and capability for long-term success. To that end, we will
continue to aggressively invest in our product development strategy,"
said Morache.
"Given our current level of performance, we are taking actions to
further reduce the operating costs of the business until we see
sustained improvements in orders and sales productivity. The sales
force has been re-aligned and reduced to put more focus on the highest
potential geographic markets, and the inside sales function has been
assigned the territories where the potential is less concentrated. The
realignment and the availability of our new products for the prime
selling season in 2007 are expected to drive strong order growth in
fiscal year 2007 over 2006," said Morache.
Final revenues and operating results for the fourth quarter will
be announced on December 12, 2006, following completion of the
Company's regular quarterly closing and analysis procedures and audit
by the Company's independent auditors. Final results could vary from
those currently projected. The company also expects to provide
guidance for fiscal year 2007 at that time.
Conference Call
A conference call to discuss this announcement is scheduled for
today at 3:45 p.m. CST (Central Standard Time). The dial-in number for
this call is 1-888-230-1059 in the U.S. and Canada, and 1-612-332-0630
internationally. Please call 10 minutes prior to the start of the call
and inform the operator you are participating in PLATO Learning's
call. Should you be unable to attend the live conference call, a
recording will be available to you from 7:15 p.m. CST on November 9,
2006, until midnight on November 16, 2006. To access the recording,
call 1-800-475-6701 in the U.S. and Canada and 1-320-365-3844
internationally. At the prompt, enter pass code number 848128.
Additionally, investors have the opportunity to listen to the
conference call over the Internet through PLATO Learning's web site at
http://www.plato.com/aboutus/investor_calls.asp.
About PLATO Learning
PLATO Learning is a leading provider of computer-based and
e-learning instruction for kindergarten through adult learners,
offering curricula in reading, writing, math, science, social studies,
and life and job skills. The Company also offers innovative online
assessment and accountability solutions and standards-based
professional development services. With over 6,000 hours of
objective-based, problem-solving courseware, plus assessment,
alignment and curriculum management tools, we create standards-based
curricula that facilitate learning and school improvement.
PLATO Learning is a publicly held company traded as TUTR on the
NASDAQ. PLATO Learning educational software delivered via networks,
CD-ROM, the Internet, and private intranets, is primarily marketed to
K-12 schools and colleges. The Company also sells to job training
programs, correctional institutions, military education programs,
corporations, and individuals.
PLATO Learning is headquartered at 10801 Nesbitt Avenue South,
Bloomington, Minnesota 55437, 952. 832.1000 or 800.869.2000. The
Company has offices throughout North American and Puerto Rico, as well
as international distributors in the United Kingdom and South Africa.
For more information, please visit http://www.plato.com.
This announcement includes forward-looking statements. PLATO
Learning has based these forward-looking statements on its current
expectations and projections about future events. Although PLATO
Learning believes that its assumptions made in connection with the
forward-looking statements are reasonable, no assurances can be given
that its assumptions and expectations will prove to have been correct.
These forward-looking statements are subject to various risks,
uncertainties and assumptions. PLATO Learning undertakes no obligation
to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Any
forward looking statements made are subject to the risks and
uncertainties as those described in the Company's Annual Report on
Form 10-K for the year ended October 31, 2005. Actual results may
differ materially from anticipated results.
PLATO(R) is a registered trademark of PLATO Learning, Inc. PLATO
Learning and Straight Curve are trademarks of PLATO Learning, Inc.
PLATO Inc. is a PLATO Learning, Inc., company.