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Cushing Energy Income Fund New | NYSE:SRF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 4.12 | 0 | 00:00:00 |
RNS Number:5321P Surfcontrol PLC 09 September 2003 SurfControl announces record results for the fourth quarter and full year ending June 30 2003 Annual revenue growth of 35% and improved forward revenue visibility for FY04 London, England (September 9, 2003) - SurfControl plc (London:SRF, Nasdaq Europe:SRFC), the world's Number One Web and E-mail filtering company, today reported its un-audited results for the fourth quarter and full year ending June 30, 2003. Highlights: - Record quarter invoicing: Q4 $30.0m or 43% year on year growth - $73.2m annual revenues in line with 35% year on year growth expectations - EBITDA for the year up from $1.7m to $11.0m - First full year of pre tax profit of $8.9m - Record levels of operating cash flow at $8.2m in Q4 and closing cash of $61.7m - Significant improvement in forward revenue visibility with deferred revenue increasing 60% year on year - Continued growth in new customers with over 1,700 signed in Q4. New customers include Zippo, Reebok, CSC, Motorola and Sodexho - Business generated by the channel exceeds 50% for the first time, at 53% in Q4 - Board restructuring to oversee the next phase of the Company's growth Year to Year to Q4 FY Q4 FY date date 2003 2002 FY03 and Q4 2003 % % 30/06/03 30/06/02 change change $m $m $m $m Revenue 73.2 54.2 35% 20.4 15.6 30% Gross margin 99% 99% 99% 99% EBITDA 11.0 1.7 3.2 1.4 PBT/ (LBT) 8.9 (69.4) 2.7 (15.1) Basic EPS (per share 20.9 (225.9) 6.7 (47.1) in US cents) S&M spend as % of 54% 61% 55% 58% overall rev. Indirect invoicing % 49% 36% 53% 36% Non US revenue % 28% 25% 30% 25% Deferred revenue 54.3 33.9 60% 54.3 33.9 60% balance Operating Cash Flow 24.1 11.7 8.2 4.7 Cash balances 61.7 35.5 61.7 35.5 Invoicing 92.1 65.2 41% 30.0 20.9 43% --------------- ------ --------- ------ ------- -------- ------ Commenting on the results, Steve Purdham, CEO said, "The results for this year are an outstanding achievement and reflect the investment we made in laying the foundation for growth in the early years of the business. They are also testament to the strength of the Company, its brand, its customers and its people and proof of the continued demand for filtering tools to enable companies to stop unwanted content. This has enabled SurfControl to generate record levels of revenue, profits and importantly, cash which will be used to fund expansion, corporate investment and acquisition opportunities. The Internet has changed the way we live and work. Never before has so much information, in the form of Internet content, been available to us so easily and so quickly. Unfortunately, unwanted content, such as pornography, viruses, Spam and junk e-mail, has come along for the ride, and threatens corporate productivity, resources, liability and security. SurfControl helps businesses stop this unwanted content. Our highly sophisticated Content Filters understand Internet content, and are able to filter out unwanted material, so that customers can get to what they want, when they want it." Commenting on future trading, Steve Purdham continued, "Going forward, the explosive growth in unwanted content, in all its forms, provides a wealth of opportunity both in terms of selling our existing product range into new customers and developing new products to manage digital content, wherever and however it is transmitted. It is a competitive market and budgetary controls are still tight, but our drive is aimed at improving all aspects of our business to keep us ahead of our peers. With high levels of deferred revenue providing good forward revenue visibility, and with trading to date progressing according to management expectations, we look forward to FY 04 with our usual cautious optimism and expect a satisfactory outcome for the year." For further information: SurfControl plc +44 (0)1260 296 200 Steve Purdham , Chief Executive Officer steve.purdham@surfcontrol.com Simon Wilson, Chief Financial Officer simon.wilson@surfcontrol.com Tom Moriarty, SVP Corporate Communications tom.moriarty@surfcontrol.com ICIS +44 (0)207 628 1114 Caroline Evans-Jones carolineejones@icisnet.com Fourth quarter and full year financial highlights: Revenues for the quarter increased 30% to $20.4m compared to $15.6m for the fourth quarter last year. Revenues for the year ended June 30, 2003 increased 35% to $73.2m from $54.2m in the prior year. License revenue represented 27% of total revenue in the quarter and for the year as a whole (Q3 FY 03: 24%) (Q4 FY 02: 29%). US revenues represented 70% of overall revenues in the fourth quarter (72% for the year ended June 30, 2003), down four percentage points from the same quarter last year as a result of higher growth rates in the UK and Rest of the World regions. Corporate revenues represented 85% of overall revenues in the fourth quarter (84% for the year ended June 30, 2003), up two percentage points from the same quarter last year as a result of higher growth rates in corporate sales compared to Education sales. EBITDA for the quarter increased 121% to $3.2m compared to $1.4m for the fourth quarter last year. EBITDA for the year ended June 30, 2003 increased 547% to $11.0m from $1.7m in the prior year. This significant increase in profitability, as measured by EBITDA, is a direct consequence of the achievement of cost efficiencies, as revenues continue to grow at a higher rate than costs. Profit before tax for the quarter was $2.7m (2002 Q4: loss of $15.1m) and $8.9m for the year ended June 30, 2003 (2002: loss of $69.4m). The slight decline in sequential pre-tax profit of $0.2m (2003 Q3: $2.9m) was primarily a result of higher commission costs in our peak fourth quarter invoicing period and a stock option charge reflecting the increase in the stock price during the fourth quarter. The effective tax rate for the fourth quarter and year ended June 30, 2003 is 25%, which produced profit after tax of $2.1m in the fourth quarter (2002 Q4: loss of $14.3m) and $6.4m for the year ended June 30, 2003 (2002: loss of $68.4m). Basic earnings per share were 6.7 cents in the fourth quarter (2002 Q4: loss of 47.1 cents) and 20.9 cents per share for the year ended June 30, 2003 (2002: loss of 225.9 cents). Overall Group invoicing in the quarter was $30.0m representing a 43% annual increase over the same period last year. Invoicing for the year ended June 30, 2003 was $92.1m representing a 41% annual increase. This outstanding fourth quarter performance represents a continuation of the historical seasonal trend of high Q4 invoicing followed by a sequential decline in Q1. In FY 03 the sequential decline from Q4 02 to Q1 03 in invoicing was 24%. As these seasonal trends have become more pronounced over time, it is expected that Q1 invoicing in FY 04 will decline sequentially by up to 30%, before resuming growth in Q2 04. However, due to the Company's conservative revenue recognition policy, it is expected that revenues in Q1 04 will be sequentially flat or slightly decline, also consistent with historical trends. A portion of the Q4 and annual FY 03 increases in invoicing is due to a higher proportion of longer-term contracts. In the fourth quarter the average contract length was 1.6 years compared to 1.2 years in the fourth quarter last year. The average US Corporate invoice value increased to $7,200 in the quarter (2002 Q4: $5,200), and the average US Education invoice value increased to $5,900 (2002 Q4: $3,900). These increases reflect both the increase in average contract length as well as increased sales of bundled products. Sales of bundled filtering products were 17% of invoicing in the quarter. Sales to new customers represented 42% of invoicing, new sales to existing customers 11%, renewals, 41%, and OEM/home sales 6%. The record fourth quarter in invoicing drove a significant increase in deferred revenue to $54.3m representing a 60% year on year increase (2002 Q4: $33.9m) and a 23% sequential increase (2003 Q3: $43.9m). This progress in deferred revenue growth continues to increase both short and long term forward revenue visibility with $37.5m, or 69% of total deferred revenue, due to fall into revenue within the next 12 months. This represents approximately 41% of the mid range of current analyst expectations for revenue for the 12-month period ended June 30, 2004. Also reflective of the record invoicing, the Company continued to maintain the trend of generating significant cash from operations with $8.2m generated during the quarter (2002 Q4: $4.7m) and $24.1m for the year ended June 30, 2003 (2002: $11.7m). Total cash balances as at June 30, 2003 were $61.7m. Days Sales Outstanding (DSO), based on invoicing, remained within the target range of 45 - 50 days. The indirect channel contribution in the quarter increased to 53% (2002 Q4: 36%) and for the first time, exceeded management's target of 50%. During the quarter, the Company added 1,753 new customers including two new OEM contracts. The OEM order book of OEM contractual commitments decreased to $1.9m and OEM revenue increased slightly to $1.2m (2003 Q3: $1.1m). Customer renewal rates vary across sales channels, customer segments, product life cycles, and geographic regions. During the quarter renewal rates across these various areas, calculated on a customer count basis, ranged from 70 - 75%. Full-time Equivalent (FTE) headcount increased to 435 from 432 in the sequential quarter (2002 Q4: 397). Corporate Highlights Expanding and growing market * Spam Spam fever has gripped the world both in terms of the amount being generated and the numbers of companies aiming to prevent it. The market opportunity has therefore increased significantly, with the latest forecasts indicating a CAGR of 53% in the growth of the e-mail scanning market over the next 5 years (Janney Montgomery Scott: 2003). Given our leading position in the market, we fully expect to benefit from this growth. The technologies to fight SPAM range from the many SPAM blockers to fully automated intelligent Content Filters, such as the type produced by SurfControl. However, due to the level of sophistication and functionality needed to fight SPAM, the days of simple SPAM blockers are numbered and Content Filters such as SurfControl's Email Filter are in a strong position to capitalise upon the overall demand to stop SPAM. A further and perhaps more important driver for increased demand for SurfControl's technologies lies in the territory 'Beyond SPAM'. Spam is just one aspect of e-mail usage and even when the problem is managed, such varied issues of liability, friendly Spam, hostile jokes, confidentiality, non-compliant email and "bandwidth hogs" still need to be addressed. SurfControl's ability to provide filtering software that manages all aspects of e-mail usage means that this market opportunity is further enhanced. Our focus is to be THE Spam filter for the enterprise. * Web filtering Whilst the market has now accepted the use of filtering as standard practice, there still remains a vast market opportunity as organisations adopt enterprise-wide web filtering practices. Latest figures suggest a growth rate of 27% CAGR (IDC: 2003) for a market in which we have a leading position. The combination of e-mail and web filtering constitutes the content security market, in which SurfControl occupies the Number One position, with 13% of the market (IDC: 2003). * Evolution of Filtering Historically people have looked at web filtering or email filtering as separate markets. However, this is continuing to evolve, with filtering, i.e. Stopping Unwanted Content, becoming the focus. There will continue to be increasing focus on the overall Content Security market, which is set to grow at a CAGR of 31% and is estimated to be worth almost $2bn by 2007. Due to the significant investment in filtering R&D, our ability to deliver filtering solutions rather than point products will increase over time. Competition There have been a number of competitive developments in the market throughout the year, with many companies moving into the filtering market, either through partnerships or by acquisition. Such developments are serving to increase the level of demand within the market and focus customers' attention on finding the best products available to solve the current Spam problem - inevitably leading customers to us. In addition, we are seeing a trend towards the provision of a complete suite of network security products which will be a driver to further market consolidation as companies acquire those products that they do not already have in their product suite. In this way, the market is evolving with acquisition opportunities increasingly presenting themselves. With its market leading position, SurfControl is well placed to take full advantage of consolidation opportunities created in this dynamically changing market place where it is believed to be of overall value to our future growth and profitability. Products and R&D This year has seen the Company make great progress in the advancement of content filtering technology. We improved both our web and e-mail filtering technologies, enhanced the artificial intelligence that complements them and launched new products to address the Instant Messaging and Peer-To-Peer networking market. In particular, we have made it easier for users to operate our software by making significant improvements to the user interface. Most recently, we announced that our suite of filtering products, containing: Web, E-mail and Instant Message (IM) Filters, won 'Editor's Choice' in the latest issue of Personal Computer World magazine which undertook a comparative review of the best filtering suites from all the popular vendors. SurfControl's solutions outperformed all competitive products to clinch the title. The key to our success has always been our ability to anticipate concrete demand for a particular solution and then to provide a market-leading product to meet this demand. We are therefore, as ever, investing in the development of future products to address evolving markets. It is clear that going forward we are going to see a much greater increase in the amount of information that is accessed or sent from beyond traditional corporate boundaries and also from more non-PC platforms. In medium to large Enterprises (> 100 employees), it is expected that the number of Internet enabled business seats is set to rise from 81m in 2000 to 200m seats by 2006. Also Small Businesses (
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