WALTHAM, Mass. — October 28, 2002 — Lionbridge Technologies, Inc. (Nasdaq: LIOX) today announced financial results for the quarter ended September 30, 2002.
Financial highlights for the quarter include:
- Revenues of $33.9 million, an increase of 15% compared to revenue of $29.5 million for the second quarter of 2002 and an increase of more than 30% compared to revenue of $25.9 million for the third quarter of 2001. This also represents an increase over previously provided Company guidance.
- Earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.8 million and a net loss of $246,000 on a GAAP basis. The Company also reported a net loss of $0.01 per share based on 31.7 million weighted average common shares outstanding. This compares to a net loss of $0.25 per share for the third quarter of 2001, based on 30.8 million weighted average common shares outstanding.
- During the quarter, Lionbridge acquired eTesting Labs, a small subsidiary of Ziff Davis Media that provides a range of usability and performance testing services that complement the Company's VeriTest testing and certification offerings.
- Excluding losses related to the eTesting Labs acquisition, the Company reported EBITDA of $2.1 million and positive net income of $234,000 or $0.01 per diluted share.
"Our Q3 results demonstrate that Lionbridge has hit an inflection point of growth and profitability. Our strong year-on-year and quarter-on-quarter organic growth is coming from customers in both the technology and non-technology segments," said Rory Cowan, CEO, Lionbridge. "We are hitting the numbers we gave over a year ago and we are doing it the old-fashioned way - by reducing costs and increasing revenues. Our ability to deliver on these expectations shows the resilience of our business model and proves that Lionbridge has become the partner of choice for multilingual business process outsourcing."
Lionbridge continued to grow revenue from its top customers. During the quarter, revenue from the Company's top ten customers grew 23% compared to the prior quarter. The Company's strong recurring revenue was complemented by several new contracts from leading global companies.
"While the losses associated with the eTesting Labs acquisition were not in our plans or projections for the second half of this year, the acquisition presented an immediate, high-value opportunity for us to enhance our VeriTest business in growth areas such as usability and performance testing. As we have done with other small acquisitions, we expect to get eTesting Labs integrated into our core business quickly."
Lionbridge also strengthened its fiscal 2002 revenue guidance by stating that it expects revenue in the upper range of the $115 -120 million guidance it previously provided, with estimated $5-7 million of operating EBITDA. The Company also confirmed its plan for operating profitability, excluding losses related to the eTesting Labs acquisition, in the second half of 2002. The Company also stated that it has increased confidence in its 2003 revenue guidance of approximately $130 million, which would yield EBITDA in the $12 million range and GAAP net income of approximately $5 million.
The Company will host a conference call today at 4:00 pm ET regarding the content of this release as well as the Company's overall outlook going forward. The conference call will be carried live on the Internet. Instructions for listening to the call over the Internet are available on the Investor's page of the Lionbridge web site at www.lionbridge.com/webcast/Oct28. A replay will be available at this location for a week.
About Lionbridge
Lionbridge Technologies, Inc. provides solutions for worldwide deployment of technology and content to Global 2000 companies in the technology, life sciences and financial services industries. Lionbridge testing and compatibility services, globalization solutions, and multilingual content management technologies help clients reduce cost, speed time to market, and ensure the integrity of global brands. Based in Waltham, Mass., Lionbridge maintains facilities in Ireland, The Netherlands, France, Germany, China, South Korea, Japan, Brazil and the United States. To learn more, visit www.lionbridge.com.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including those statements relating to expected growth, net income, revenue, results and performance for the fourth quarter, the current fiscal year and 2003 as well as Lionbridge's ability to integrate the eTesting Labs business into Lionbridge's operations. Lionbridge's actual experience may differ materially from those discussed in the forward-looking statements. Factors that might cause such a difference include the termination of customer contracts prior to the end of their term; Lionbridge's dependence on clients' product releases to generate revenues; the loss of a major client or customer; the size, timing and recognition of revenue from major clients; Lionbridge's ability to raise additional capital; customer delays or postponements of services; the impact of foreign currency fluctuations on its operating results and revenue growth; risks associated with management of growth; market acceptance of new service offerings; the failure to keep pace with the rapidly changing requirements of its clients; Lionbridge's ability to attract and retain key personnel; Lionbridge being held liable for defects or errors in its solutions; one or more of Lionbridge's multi-year outsourcing relationships may be unprofitable; political, economic and business fluctuations in international markets; as well as risks of additional downturns in conditions generally, and in the information technology and software industries specifically, and risks associated with competition and competitive pricing pressures; and Lionbridge's ability to forecast revenue and operating results. For a more detailed description of the risk factors associated with Lionbridge, please refer to Lionbridge's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2002 and the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2002.
LIONBRIDGE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
Revenue $ 33,911 $ 25,924 $ 88,283 $ 75,897
Cost of revenue 20,247 16,580 53,567 48,080
Gross profit 13,664 9,344 34,716 27,817
Operating expenses:
Sales and marketing 3,197 2,827 8,394 8,774
General and
administrative 8,701 9,800 24,146 26,651
Research and development 268 580 967 1,818
Amortization of
acquisition-related
intangible assets 115 1,518 412 4,816
Merger, restructuring
and other charges --- 340 --- 2,553
Stock-based compensation 179 128 674 441
Total operating
expenses 12,460 15,193 34,593 45,053
Profit (loss) from
operations 1,204 (5,849) 123 (17,236)
Interest expense 946 1,128 2,766 2,235
Other expense, net 311 390 829 910
Loss before income
taxes (53) (7,367) (3,472) (20,381)
Provision for income
taxes 193 195 14 427
Net loss $(246) $ (7,562) $ (3,486) $(20,808)
Basic and diluted
net loss per share $(0.01) $(0.25) $(0.11) $(0.72)
Shares used in
computing basic and
diluted net loss
per share 31,656 30,770 31,607 28,961
LIONBRIDGE TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
September 30, December 31,
2002 2001
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $9,708 $11,711
Restricted cash 352 539
Accounts receivable, net of
allowances of $510 and $932 at
September 30, 2002 and
December 31, 2001, respectively 19,167 16,791
Work in process 7,432 4,286
Other current assets 2,057 1,336
Total current assets 38,716 34,663
Property and equipment, net 5,611 4,463
Goodwill 14,527 13,890
Other intangible assets, net 666 1,079
Other assets 881 652
Total assets $60,401 $54,747
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion
of long-term debt $14,593 $9,600
Accounts payable 8,827 7,121
Accrued expenses and other
current liabilities 15,613 12,641
Deferred revenue 3,577 3,053
Total current liabilities 42,610 32,415
Long-term debt, less current portion
and net of discount of $2,440 and $2,898
at September 30, 2002 and
December 31, 2001, respectively 14,084 17,318
Other long-term liabilities 1,591 1,566
Total stockholders' equity 2,116 3,448
Total liabilities and stockholders' equity $60,401 $54,747
LIONBRIDGE TECHNOLOGIES, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share data)
For the Quarter Ended September 30, 2002
Consolidated eTesting Core
Business
Revenue $33,911 $1,496 $32,415
Cost of revenue 20,247 950 19,297
Gross profit 13,664 546 13,118
Operating expenses 12,460 1,024 11,436
Profit (loss) from operations 1,204 (478) 1,682
Interest expense 946 --- 946
Other expense, net 311 2 309
Profit (loss) before
income taxes (53) (480) 427
Provision for income taxes 193 -- 193
Net profit (loss) $(246) $(480) $ 234
Diluted net profit (loss)
per share $(0.01) $(0.02) $0.01
Shares used in computing
diluted net profit (loss)
per share 31,656 31,656 38,908
Footnote:
This unaudited pro forma information is intended to present the operating
results of Lionbridge's core business excluding the operating results of
eTesting Labs, which was acquired on July 15, 2002.