Widerthan (NASDAQ:WTHN)
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Full Year 2005 Revenues Grow to $101 Million, an Increase of 61% Year-Over- Year; Fourth Quarter Revenues Grow to $31 Million, an Increase of 35% Year-Over-Year
SEOUL, South Korea, March 16 /PRNewswire-FirstCall/ -- WiderThan Co., Ltd. (NASDAQ:WTHN), a leading global provider of integrated mobile entertainment solutions for wireless carriers, today reported financial results for the fourth quarter and fiscal year ended December 31, 2005 and issued financial guidance for the first quarter of 2006.
Fourth quarter 2005 revenues were $31.2 million, an increase of 35.3% over the $23.1 million recorded in the fourth quarter of 2004. US GAAP net income for the fourth quarter was $2.7 million, or $0.14 per diluted American Depositary Share (ADS), compared to $2.2 million in the prior year period, or $0.13 per diluted ADS. Included in the fourth quarter 2005 results was a non- cash, stock-based compensation charge of $0.6 million, compared to a charge of $0.2 million in the prior year period. Adjusted net income, which excludes non-cash stock compensation expense, was $3.3 million, or $0.26 per diluted ADS, in the fourth quarter 2005, compared to an adjusted net income of $2.4 million, or $0.23 per diluted ADS, in the prior year period.
For the fiscal year ended December 31, 2005, revenues increased 61.4% to $101.4 million from $62.8 million during fiscal year 2004. Fiscal year 2005 US GAAP net income was $8.6 million, or $0.49 per diluted ADS, compared to $3.9 million for fiscal year 2004, or $0.26 per diluted ADS. These results include a non-cash, stock-based compensation charge of $3.2 million compared to a charge of $3.0 million in the prior year. Adjusted net income, which excludes non-cash stock compensation expense, for the year was $11.8 million, or $1.06 per diluted ADS, compared to an adjusted net income of $7.0 million, or $0.68 per diluted ADS, for fiscal year 2004.
Commenting on the year, Sang Jun Park, WiderThan's Chief Executive Officer, said, "WiderThan extended its wireless entertainment leadership by delivering innovative services to support ringback tones (RBT), Music on Demand (MoD), text messaging and mobile games. We also completed our initial public offering (IPO), providing flexibility to execute our strategic objectives, and, thanks to our strong momentum, our revenues exceeded $100 million for the first time."
F. Terry Kremian, WiderThan's Global President, said, "WiderThan made substantial operational progress during 2005. We created WiderThan Americas, which significantly increases our ability to deliver industry-leading mobile entertainment solutions and services. We also won several new customers across the globe for ringback tones, including Hutchison 3 in the UK, TMN in Portugal, and Excelcom in Indonesia. These new customers build on our industry-leading ringback tone franchise, which provides services to carriers including SK Telecom, T-Mobile USA and Verizon Wireless." Mr. Kremian continued, "In Korea, we launched a leading-edge MoD service with SK Telecom, which has been rapidly embraced by consumers. Lastly, our mobile games business has quietly but steadily taken off internationally, securing distribution through major carriers in both the U.S. and the Asia-Pacific region."
Cash, cash equivalents and short-term financial instruments on December 31, 2005, totaled $86.0 million. During 2005, WiderThan generated approximately $10.9 million in cash from operations.
Hoseok Kim, WiderThan's Chief Financial Officer, commented on the company's finances, saying, "Carrier application services are providing us with stable, recurring revenues and have become, as planned, the largest portion of our business. With the completion of our IPO in the fourth quarter, WiderThan is adequately capitalized and ready to execute our strategic objectives."
First Quarter 2006 Outlook
For the first time, WiderThan is issuing financial guidance for the first quarter of 2006 based on information as of March 15, 2006. This guidance assumes that our major currency exchange rates remain constant.
First Quarter 2006
Net Revenues $26.0-$29.0 million
US GAAP Net Income $1.6-$2.0 million
Adjusted Net Income $2.4-$2.8 million
Presentation, Conference Call and Web Cast
On Thursday, March 16, 2006 at 4:15 p.m. Eastern Standard Time WiderThan will post a prerecorded presentation and transcript to its web site at http://ir.widerthan.com/ that will review 2005 fourth quarter and full year results. 45 minutes later, at 5:00 p.m. Eastern Standard Time, WiderThan management will host a live Q&A conference call to enable analysts and investors to ask management any questions they may have. The Q&A session will also be available via web cast at http://ir.widerthan.com/ in listen-only mode. Those wishing to participate should use the following numbers to dial into the Q&A session:
Calling from the United States or Canada: 800-706-7741
Calling from other countries: 617-614-3471
Pass code: 18908453
An online replay of the presentation and Q&A web cast will be available at http://ir.widerthan.com/ following the completion of the live call and will remain available for at least 90 days.
Non-GAAP Measures
To supplement WiderThan's consolidated financial statements presented in accordance with generally accepted accounting principles in the Unites States, or US GAAP, WiderThan uses non-GAAP measures of certain components of financial performance, including adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted net income, which are adjusted from results based on US GAAP to exclude certain expenses. These non- GAAP results provide useful information to both management and investors by excluding certain expenses that may not be indicative of core operating results. These measures should be considered in addition to results prepared in accordance with US GAAP, but should not be considered a substitute for, or superior to, US GAAP results. The non-GAAP measures included in this press release have been reconciled to the nearest US GAAP measure.
These non-GAAP measures exclude the following items from the Company's statement of operations:
* Non-cash stock-based compensation expense, depreciation and amortization
expense
About WiderThan
WiderThan is a leading provider of integrated mobile entertainment solutions for wireless carriers. Our applications, content and services enable wireless carriers to a broad range of mobile entertainment, such as ringback tones, music-on-demand, mobile games, ringtones, messaging and information services, to their subscribers. WiderThan currently provides mobile entertainment solutions to more than 45 wireless carriers in over 20 countries, including SK Telecom in Korea, Cingular Wireless, Sprint Nextel, T- Mobile USA and Verizon Wireless in the United States, Bharti Airtel in India and Globe Telecom in the Philippines.
Forward-Looking and Cautionary Statements
Any statements in this announcement about the future expectations, plans or prospects of WiderThan, including statements containing the words "believe," "plan," "anticipate," "expect," "estimate," "will" and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including factors described in WiderThan's registration statement on Form F-1. These factors include the fluctuations of revenues and earnings, our reliance on SK Telecom to generate a majority of revenues and as a partner to develop and test services, the fact that the markets in which we operate are highly competitive, the challenges of global expansion, the lack of any contractual obligation for our carrier customers to use our services, the fact that a substantial portion of our revenues are subject to pricing decisions of carrier customers, the consolidation among our potential customer base, the dynamics of the wireless carrier markets in which our largest potential customers compete with one another, the fact that our carrier customers could begin developing and/or providing some or all of our carrier application services on their own, our dependence on ringback tone service for a significant portion of our revenue, potential increases in royalty rates payable to music label companies, currency exchange rate fluctuations, maintaining an effective system of internal controls and complying with regulations required by the telecom industry and in Korea. The forward- looking statements included in this announcement represent WiderThan's view as of the date of this release. WiderThan anticipates that subsequent events and developments may cause WiderThan's views to change. However, WiderThan disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this document. These forward-looking statements should not be relied upon as representing WiderThan's views as of any date subsequent to the date of this announcement.
WiderThan Co., Ltd.
Condensed Consolidated Statements of Operations (unaudited)
(In thousands of US dollars, except share and per share information)
Three Months Ended Twelve Months Ended
12/31/04 12/31/05 12/31/04 12/31/05
Revenues
Service revenues
Carrier application
services $9,251 $17,627 $24,670 $61,211
Content services 6,866 4,358 18,176 18,228
Professional and
other services 2,177 2,726 9,423 9,149
Total service
revenues 18,294 24,711 52,269 88,588
System sales 4,785 6,526 10,563 12,829
Total revenues $23,079 $31,237 $62,832 $101,417
Costs and expenses
Cost of service
revenues (exclusive
of depreciation and
amortization, as
shown below) 7,080 10,217 22,585 33,541
Cost of system sales
(exclusive of
depreciation and
amortization, as
shown below) 2,953 3,835 7,813 7,914
Depreciation and
amortization 883 1,163 2,490 4,269
Selling and marketing 1,411 1,172 2,601 4,711
General and
administrative 4,580 7,559 14,355 24,250
Research and
development 2,092 3,207 3,760 12,016
Stock compensation
(Note A) 216 805 3,029 3,363
Total costs and
expenses $19,215 $27,958 $56,633 $90,064
Operating income $3,864 $3,279 $6,199 $11,353
Other income
Interest income 81 151 367 445
Foreign exchange
gain, net (609) (139) (574) (19)
Investment income,
net - 361 - 361
Total other income $(528) $373 $(207) $787
Income before taxes,
minority interest and
earnings from equity
method investment 3,336 3,652 5,992 12,140
Income taxes 1,261 1,234 2,156 3,791
Income before minority
interest and earnings
from equity method
investment 2,075 2,418 3,836 8,349
Minority Interest - 206 - 153
Gain (loss) from equity
method investment 83 53 113 75
Net income $2,158 $2,677 $3,949 $8,577
Accretion of preferred
shares (288) (371) (505) (1,355)
Amounts allocated to
participating
preferred shareholders (507) (529) (770) (1,807)
Net income attributable
to common shares $1,363 $1,777 $2,674 $5,415
Earning per share -
basic $0.13 $0.14 $0.26 $0.49
Earning per share -
diluted $0.13 $0.14 $0.26 $0.49
Weighted average number
of shares - basic 10,500,000 12,320,977 10,293,151 10,958,986
Weighted average number
of shares - diluted 10,500,000 12,509,359 10,326,993 11,081,085
Note A: The following stock compensation expenses resulting from our stock
options, ESOA and VSO are not included in the following expense
categories:
Three Months Ended Twelve Months Ended
12/31/04 12/31/05 12/31/04 12/31/05
Cost of service
revenues $15 $85 $1,024 $286
Cost of system sales 12 4 326 22
General and
administrative 59 641 1,041 2,546
Research and
development 130 75 638 509
Total $216 $805 $3,029 $3,363
WiderThan Co., Ltd.
Condensed Consolidated Balance Sheet (unaudited)
(In thousands of US dollars)
12/31/2005
Assets
Current assets
Cash and cash equivalents $71,171
Restricted cash -
Short-term financial instrument 14,851
Accounts receivable, net 34,924
Deferred costs 5,589
Other current assets 2,745
Total current assets 129,280
Property, plant and equipment, net 10,346
Goodwill 18,673
Other non-current assets 10,034
Total assets $168,333
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable 22,636
Short-term debt -
Deferred income 6,614
Accrued expenses 6,099
Taxes payable 2,620
Other current liabilities 3,753
Cash Appreciation Right
liability 1,210
Total current
liabilities 42,932
Other non-current liabilities
Long-term deferred Revenues 3,158
Other non-current liabilities 1,247
Total liabilities $47,337
Commitments and contingencies
Minority interest $(133)
Stockholders' equity
Common stock : $500 par value;
authorized 30 million shares,
issued and outstanding
19.8 million shares in 2005. $8,871
Additional paid-in capital 88,454
Retained earnings 17,805
Accumulated other comprehensive
income 5,999
Total stockholders'
equity 121,129
Total liabilities and
stockholders' equity $168,333
WiderThan Co., Ltd.
Condensed Consolidated Statement of Cash Flows (unaudited)
(In thousands of US dollars)
Three Months Twelve Months
Ended Ended
December 31, December 31,
2005 2005
Cash flows from operating activities:
Net income $2,677 $8,577
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,163 4,269
Stock compensation expenses 805 3,363
Minority interest (206) (153)
Foreign exchange translation
loss, net 141 19
Equity in gain of related equity
investment (53) (75)
Provision for severance benefits 299 1,141
Change in operating assets and
liabilities:
Increase in accounts receivable (9,323) (15,494)
Decrease (increase) in deferred
costs 7,376 (4,385)
Increase in other assets (5,827) (5,670)
Increase in trade accounts
payable 6,067 10,853
Increase in deferred income 1,851 5,165
Decrease in accrued expenses (804) (1,180)
Increase (decrease) in taxes
payable 742 (511)
Payment of severance benefits (905) (1,107)
Increase in other liabilities 5,733 6,068
Net cash provided by
operating activities $9,736 $10,880
Cash flows from investing activities:
Increase in short-term financial
instruments, net (14,851) (12,920)
Purchase of property, plant and
equipment (1,815) (6,214)
Proceeds from sales of property,
plant and equipment 198 252
Sale of Preferred C 8,207 8,207
Refund of purchase consideration - 190
Increase in restricted cash 8,069 -
Net cash used in investing
activities $(192) $(10,485)
Cash flows from financing activities:
Issuance of common stock, net 52,361 52,361
Repayment of short-term debt (9,209) -
Issuance of preferred stock - 469
Increase (decrease) in minority
interest (847) 153
Net cash provided by
financing activities $42,305 $52,983
Effect of exchange rate changes on
cash and cash equivalents 469 (24)
Net increase in cash and cash
equivalents 52,318 53,354
Cash and cash equivalents:
Beginning of year 18,853 17,817
End of period $71,171 $71,171
WiderThan Co., Ltd.
Reconciliation of Non GAAP Measures to GAAP (unaudited)
(In thousands of US dollars, except share and per share information)
Three Months Ended Twelve Months Ended
12/31/04 12/31/05 12/31/04 12/31/05
Reconciliation to adjusted
EBITDA:
Net income $2,158 $2,677 $3,949 $8,577
(Gain) loss from equity
method investment (83) (53) (113) (75)
Minority Interest - (206) - (153)
Income taxes 1,261 1,234 2,156 3,791
Total other (income)
loss 528 (373) 207 (787)
Depreciation and
amortization 883 1,163 2,490 4,269
Stock compensation
(Note A) 216 626 3,029 3,184
Adjusted EBITDA $4,963 $5,068 $11,718 $18,806
Three Months Ended Twelve Months Ended
12/31/04 12/31/05 12/31/04 12/31/05
Reconciliation to adjusted
net income:
Net income $2,158 $2,677 $3,949 $8,577
Stock compensation
(Note A) 216 626 3,029 3,184
Adjusted net income $2,374 $3,303 $6,978 $11,761
Adjusted net income per
share - diluted $0.23 $0.26 $0.68 $1.06
Weighted average number
of shares - diluted 10,500,000 12,509,359 10,326,993 11,081,085
Note A: Cash stock compensation expense of $179,000 is excluded from this
line item in 2005.
WiderThan Co., Ltd.
Selected Operational Data for Carrier Application Services
As of and for the As of and for the
year ended year ended
December 31, December 31,
2004 2005
Ringback tones:
Number of carriers (1) 5 6
Number of accessible subscribers (2)
(in millions) 102.3 118.5
Number of ringback tone subscribers
(3) (in millions) 9.6 14.3
Inter-carrier messaging:
Number of carriers (1) 18 27
Number of messages delivered (4)
(in billions) 5.9 17.3
Music-on-demand:
Number of carriers (1) 1 1
Number of accessible subscribers (2)
(in millions) 18.8 19.4
Notes:
(1) Represents the aggregate number of carriers with which the relevant
service was in operation during the relevant period.
(2) Represents the approximate aggregate number of our carriers customers'
wireless subscribers at the end of the relevant period as reported
publicly by our carrier customers.
(3) Represents the aggregate number of subscribers to the ringback tone
service provided by our carrier customers during the relevant period.
(4) Represents the aggregate number of messages delivered by means of our
inter-carrier messaging service on behalf of our carrier customers
during the relevant period.
WiderThan Co., Ltd.
Geographic Revenue Distribution
Three Months Twelve Months
Ended Ended
December 31, December 31,
2004 2004
Korea 77% 82%
America 18% 14%
Asia (ex-Korea) 5% 3%
EMEA 0% 1%
Three Months Twelve Months
Ended Ended
December 31, December 31,
2005 2005
Korea 58% 65%
America 24% 23%
Asia (ex-Korea) 15% 10%
EMEA 3% 2%
DATASOURCE: WiderThan Co., Ltd.
CONTACT: Investors: Tania Almond of WiderThan, +1-571-521-1080,
Web site: http://www.widerthan.com/