BackWeb Technologies Ltd. (Nasdaq: BWEB): Conference call:
Tomorrow, Thursday, Nov. 9th, 11:30 a.m. EST Dial-in numbers:
888-632-5950 or 713-481-1320 - 5-10 minutes in advance Replay URL:
http://www.backweb.com/aboutus/investor_relations.cfm BackWeb
Technologies Ltd. (Nasdaq: BWEB), a leading provider of offline and
mobile Web software, today reported financial results for its third
quarter and nine months ended September 30, 2006. The Company will
hold a conference call tomorrow at 11:30 a.m. EST (details above)
to review its business strategy and its year-to-date financial
performance. All investors are encouraged to participate in the
call or to review the replay which will be available online.
BackWeb reported Q3 2006 revenue of $0.72 million, below revenue of
$1.14 million in Q2 2006 and revenue of $1.78 million in Q3 2005.
The decrease in total revenue is the result of lower license and
consulting revenue, offsetting strength in maintenance revenue.
License revenue declined as certain larger opportunities with
customers were initiated via smaller pilot projects as part of
longer sales cycles. The pilots carry with them the potential for
additional and more substantial revenue in future quarters as their
results are reviewed. Pilots initiated in the third quarter were
with a branch of the U.S. Department of Defense as well as with a
major medical device manufacturer. Consulting revenue was in line
with Q2 2006 levels and lower as compared to Q3 2005 due to the
previously announced strategy of working with services partners in
some of the Company�s services activities. Maintenance revenue
continued to demonstrate strong renewal trends as Q3 2006
maintenance revenue was $516,000, compared to $493,000 in Q2 2006
and $504,000 in Q3 2005. License sales in the Q3 2006 period were
$61,000 and reflected modest sales to Novartis Pharmaceuticals and
Abbot Vascular (which acquired the vascular/endovascular businesses
of Guidant, a previous BackWeb client), as well as some revenue
recognition from previously announced sales. Additional license
revenue of approximately $100,000 was booked with other customers
during the quarter and will be recognized in future periods. As
anticipated, Q3 2006 included no license revenue contribution from
F-Secure Corporation, whereas during Q3 2005 the Company recognized
license revenue of $375,000 from this customer relating to a large
one-time order. Including approximately $200,000 in severance and
other costs for personnel and expense reductions announced at the
time of the Company�s second quarter results, total net expenses in
Q3 2006 were $2.3 million, resulting in a net loss of $1.56
million, or $0.04 per share. This compares to a net loss of $1.1
million, or $0.03 per share, in Q2 2006 and a net loss of $208,000,
or $0.01 per share, in Q3 2005. Non-cash stock-based compensation
(FAS 123R) related expenses of approximately $100,000 and $300,000,
were included in operating expenses for Q3 2006 and the first nine
months of 2006, respectively, with no comparable expense reflected
for Q3 2005 and the first nine month results of 2005. BackWeb�s
CEO, Bill Heye, stated, �Obviously our sales execution was below
our expectations this quarter, though we believe we have developed
a good pipeline of larger-sized opportunities for delivering
valuable solutions to prospects. These opportunities sometimes have
long sales cycles that include initial pilots prior to possible
larger rollouts. We believe our strong maintenance renewals are
evidence of the lasting value our product delivers to customers,
and the main challenge we have in building the business is finding
the most profitable way to market and sell our product. �To that
end, we are in the midst of a transition from a heavily direct
sales-oriented model to one that makes substantial use of partner
and channel marketing and sales. We believe this transition is a
key both to growing the business and managing our operating
expenses, but we must continue executing on direct sales even while
building our partnerships to enable growth. On the partner front we
have made important progress, announcing a new partnership last
month, and we believe we will see more progress in the coming
quarters. Of note, our existing partnerships were very active in
the third quarter. Our relationships with Oracle/PeopleSoft and a
major service partner led to the pilot engagement with the medical
device manufacturer, and our Department of Defense pilot was
initiated in conjunction with another of our major service
partners.� Ken Holmes, BackWeb�s VP Finance said, �The cost
reductions we identified at the close of Q2 2006 have been largely
implemented and the benefit of these actions will begin to impact
our performance in Q4 2006. We are currently anticipating expense
levels to be approximately $1.8 million in Q4 2006, and we are in
the process of implementing further cost reductions that we believe
should bring our operating expenses down to approximately $1.5
million per quarter by Q1 or Q2 of 2007. These reductions involve
personnel and non-personnel expenses and further streamlining of
our operations as we focus our efforts and spending on our most
productive go-to-market activities, relationships and personnel.
�Our cash position declined to $5.3 million as of September 30,
2006. Given our cost reduction actions and discipline, we believe
BackWeb has sufficient capital to meet the needs of our planned
spending levels and to execute on our business plan in the near
term.� Nasdaq Non-Compliance: Mr. Holmes added, �With respect to
our previously announced non-compliance with the Nasdaq Capital
Market�s minimum requirements for continued listing, after thorough
review by management, advisors and the board of directors, we have
decided to take no action, such as a reverse split, to stay the
expected delisting our shares on or after January 16, 2007. Our
decision was based on our review of the requirements for continued
listing, the costs, resources and risks associated with efforts
aimed at delaying or preventing such a delisting, and the relative
benefit of deploying our resources in support of our business. If
as expected, we do receive a determination by Nasdaq to delist our
common shares from the Capital Market, we intend to actively pursue
the transfer of our common stock listing to the OTC Bulletin Board,
an exchange that we believe provides adequate liquidity for a
company of our size.� About BackWeb Technologies: BackWeb
(http://www.backweb.com) mobilizes critical web applications and
content for mobile workforces and remote offices. Mobile
professionals can be productive anytime, anywhere, without
interruption, regardless of connection status or network
availability. BackWeb's patented web and polite synchronization
mobile solution delivers a seamless and simple user experience. The
solution is commonly deployed to sales forces, field employees,
mobile managers and remote operations. Typical e-business
applications include enterprise sales force automation, CRM,
e-learning and training and Human Capital Management (HCM). Content
examples include document repositories and rich media. BackWeb
customers include market leaders such as Boehringer Ingelheim,
Eastman Kodak, GE Healthcare, Hewlett-Packard, Johnson &
Johnson, KLA Tencor, Lam Research, and Pfizer. BackWeb also serves
customers through partnerships with BEA, Oracle PeopleSoft and SAP.
BackWeb's operations are centred in San Jose, California, New York,
New York, and Rosh Ha 'akin, Israel. Make every minute of your
mobile professional's day productive; visit www.backweb.com or call
(877) 222-5932. � 2006 BackWeb Technologies Ltd. All rights
reserved. BackWeb is a registered trademark and Offline Access
Server is a trademark of BackWeb Technologies Ltd. All other
trademarks are property of their respective owners. Cautionary Note
regarding Forward-Looking Statements Statements in this news
release, which are not purely historical, are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
including statements of beliefs, plans, expectations or intentions
regarding the future. Such forward-looking statements include, but
are not limited to, statements regarding: the demand for the
Company�s products and services and its pipeline of opportunities;
the level of activity and sales prospects with the Company�s
partners; that pilot or other larger future opportunities will
mature into future revenues; the Company�s ability to transition
from a heavily direct sales oriented model to one that primarily
depends on partner and channel sales; the Company�s ability to
execute on direct opportunities and to continue to build
partnerships; the adjustment of expense levels, and the expected
benefit of these actions in the future; and the Company�s ability
to regain compliance with NASDAQ�s minimum bid price per share
requirement. Actual results could differ materially from those in
such forward-looking statements. Factors that could cause actual
results to differ materially from expectations include, but are not
limited to: the Company has a history of operating losses and
expects to continue to incur losses; the uncertainty of market
acceptance of offline access products or our ability to license
those products to customers; general economic conditions or any
downturn in IT industry spending; the ability of BackWeb to develop
innovative technology and deliver solutions that meet customer
needs; and the potential emergence of competitive technologies or
competitor companies. In addition, please refer to our periodic
filings with the Securities and Exchange Commission, including our
report on Form 10-Q for the quarter ended June 30, 2006, which
contain more detailed descriptions of the risk factors facing our
business. BackWeb assumes no obligation to update any of the
forward-looking statements in this release. BackWeb Technologies
Ltd. Condensed Consolidated Statements of Operations (In thousands,
except per share data) � Three months ended Nine months ended
September 30, 2006 September 30, 2005 September 30, 2006 September
30, 2005 Unaudited Unaudited Unaudited Unaudited Revenue: License $
61� $ 942� $ 1,314� $ 2,569� Service � 663� � 840� � 2,208� �
2,588� Total revenue 724� 1,782� 3,522� 5,157� � Cost of revenue:
License 26� 14� 67� 27� Service � 149� � 183� � 570� � 533� Total
cost of revenue � 175� � 197� � 637� � 560� � Gross profit � 549� �
1,585� � 2,885� � 4,597� � Operating expenses: Research and
development 541� 530� 1,742� 1,670� Sales and marketing 928� 787�
2,980� 2,317� General and administrative � 699� � 511� � 1,780� �
1,359� Total operating expenses � 2,168� � 1,828� � 6,502� � 5,346�
� Loss from operations (1,619) (208) (3,617) (749) � Finance and
other income, net � 56� � 35� � 115� � 61� Net loss $ (1,563) $
(208) $ (3,502) $ (688) � Net loss per share $ (0.04) $ (0.01) $
(0.08) $ (0.02) � Shares used in computing net loss per share �
41,266� � 41,036� � 41,229� � 40,971� BackWeb Technologies Ltd.
Condensed Consolidated Balance Sheets (In thousands) � September
30, 2006 December 31, 2005 Unaudited ASSETS Current assets: Cash
and investments $ 5,268� $ 7,876� Trade accounts receivable, net
722� 1,554� Other current assets � 424� � 325� Total current assets
6,414� 9,755� � Long-term investments and other assets 44� 35�
Property and equipment, net � 158� � 213� Total assets $ 6,616� $
10,003� � LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable and accrued liabilities $ 1,805� $ 1,978� Deferred
revenue � 882� � 976� Total current liabilities 2,687� 2,954� �
Long-term liabilities -� 8� Total shareholders' equity � 3,929� �
7,041� Total liabilities and shareholders' equity $ 6,616� $
10,003� BackWeb Technologies Ltd. (Nasdaq: BWEB): -0- *T Conference
call: Tomorrow, Thursday, Nov. 9th, 11:30 a.m. EST Dial-in numbers:
888-632-5950 or 713-481-1320 - 5-10 minutes in advance Replay URL:
http://www.backweb.com/aboutus/investor_relations.cfm *T BackWeb
Technologies Ltd. (Nasdaq: BWEB), a leading provider of offline and
mobile Web software, today reported financial results for its third
quarter and nine months ended September 30, 2006. The Company will
hold a conference call tomorrow at 11:30 a.m. EST (details above)
to review its business strategy and its year-to-date financial
performance. All investors are encouraged to participate in the
call or to review the replay which will be available online.
BackWeb reported Q3 2006 revenue of $0.72 million, below revenue of
$1.14 million in Q2 2006 and revenue of $1.78 million in Q3 2005.
The decrease in total revenue is the result of lower license and
consulting revenue, offsetting strength in maintenance revenue.
License revenue declined as certain larger opportunities with
customers were initiated via smaller pilot projects as part of
longer sales cycles. The pilots carry with them the potential for
additional and more substantial revenue in future quarters as their
results are reviewed. Pilots initiated in the third quarter were
with a branch of the U.S. Department of Defense as well as with a
major medical device manufacturer. Consulting revenue was in line
with Q2 2006 levels and lower as compared to Q3 2005 due to the
previously announced strategy of working with services partners in
some of the Company's services activities. Maintenance revenue
continued to demonstrate strong renewal trends as Q3 2006
maintenance revenue was $516,000, compared to $493,000 in Q2 2006
and $504,000 in Q3 2005. License sales in the Q3 2006 period were
$61,000 and reflected modest sales to Novartis Pharmaceuticals and
Abbot Vascular (which acquired the vascular/endovascular businesses
of Guidant, a previous BackWeb client), as well as some revenue
recognition from previously announced sales. Additional license
revenue of approximately $100,000 was booked with other customers
during the quarter and will be recognized in future periods. As
anticipated, Q3 2006 included no license revenue contribution from
F-Secure Corporation, whereas during Q3 2005 the Company recognized
license revenue of $375,000 from this customer relating to a large
one-time order. Including approximately $200,000 in severance and
other costs for personnel and expense reductions announced at the
time of the Company's second quarter results, total net expenses in
Q3 2006 were $2.3 million, resulting in a net loss of $1.56
million, or $0.04 per share. This compares to a net loss of $1.1
million, or $0.03 per share, in Q2 2006 and a net loss of $208,000,
or $0.01 per share, in Q3 2005. Non-cash stock-based compensation
(FAS 123R) related expenses of approximately $100,000 and $300,000,
were included in operating expenses for Q3 2006 and the first nine
months of 2006, respectively, with no comparable expense reflected
for Q3 2005 and the first nine month results of 2005. BackWeb's
CEO, Bill Heye, stated, "Obviously our sales execution was below
our expectations this quarter, though we believe we have developed
a good pipeline of larger-sized opportunities for delivering
valuable solutions to prospects. These opportunities sometimes have
long sales cycles that include initial pilots prior to possible
larger rollouts. We believe our strong maintenance renewals are
evidence of the lasting value our product delivers to customers,
and the main challenge we have in building the business is finding
the most profitable way to market and sell our product. "To that
end, we are in the midst of a transition from a heavily direct
sales-oriented model to one that makes substantial use of partner
and channel marketing and sales. We believe this transition is a
key both to growing the business and managing our operating
expenses, but we must continue executing on direct sales even while
building our partnerships to enable growth. On the partner front we
have made important progress, announcing a new partnership last
month, and we believe we will see more progress in the coming
quarters. Of note, our existing partnerships were very active in
the third quarter. Our relationships with Oracle/PeopleSoft and a
major service partner led to the pilot engagement with the medical
device manufacturer, and our Department of Defense pilot was
initiated in conjunction with another of our major service
partners." Ken Holmes, BackWeb's VP Finance said, "The cost
reductions we identified at the close of Q2 2006 have been largely
implemented and the benefit of these actions will begin to impact
our performance in Q4 2006. We are currently anticipating expense
levels to be approximately $1.8 million in Q4 2006, and we are in
the process of implementing further cost reductions that we believe
should bring our operating expenses down to approximately $1.5
million per quarter by Q1 or Q2 of 2007. These reductions involve
personnel and non-personnel expenses and further streamlining of
our operations as we focus our efforts and spending on our most
productive go-to-market activities, relationships and personnel.
"Our cash position declined to $5.3 million as of September 30,
2006. Given our cost reduction actions and discipline, we believe
BackWeb has sufficient capital to meet the needs of our planned
spending levels and to execute on our business plan in the near
term." Nasdaq Non-Compliance: Mr. Holmes added, "With respect to
our previously announced non-compliance with the Nasdaq Capital
Market's minimum requirements for continued listing, after thorough
review by management, advisors and the board of directors, we have
decided to take no action, such as a reverse split, to stay the
expected delisting our shares on or after January 16, 2007. Our
decision was based on our review of the requirements for continued
listing, the costs, resources and risks associated with efforts
aimed at delaying or preventing such a delisting, and the relative
benefit of deploying our resources in support of our business. If
as expected, we do receive a determination by Nasdaq to delist our
common shares from the Capital Market, we intend to actively pursue
the transfer of our common stock listing to the OTC Bulletin Board,
an exchange that we believe provides adequate liquidity for a
company of our size." About BackWeb Technologies: BackWeb
(http://www.backweb.com) mobilizes critical web applications and
content for mobile workforces and remote offices. Mobile
professionals can be productive anytime, anywhere, without
interruption, regardless of connection status or network
availability. BackWeb's patented web and polite synchronization
mobile solution delivers a seamless and simple user experience. The
solution is commonly deployed to sales forces, field employees,
mobile managers and remote operations. Typical e-business
applications include enterprise sales force automation, CRM,
e-learning and training and Human Capital Management (HCM). Content
examples include document repositories and rich media. BackWeb
customers include market leaders such as Boehringer Ingelheim,
Eastman Kodak, GE Healthcare, Hewlett-Packard, Johnson &
Johnson, KLA Tencor, Lam Research, and Pfizer. BackWeb also serves
customers through partnerships with BEA, Oracle PeopleSoft and SAP.
BackWeb's operations are centred in San Jose, California, New York,
New York, and Rosh Ha 'akin, Israel. Make every minute of your
mobile professional's day productive; visit www.backweb.com or call
(877) 222-5932. (C) 2006 BackWeb Technologies Ltd. All rights
reserved. BackWeb is a registered trademark and Offline Access
Server is a trademark of BackWeb Technologies Ltd. All other
trademarks are property of their respective owners. Cautionary Note
regarding Forward-Looking Statements Statements in this news
release, which are not purely historical, are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
including statements of beliefs, plans, expectations or intentions
regarding the future. Such forward-looking statements include, but
are not limited to, statements regarding: the demand for the
Company's products and services and its pipeline of opportunities;
the level of activity and sales prospects with the Company's
partners; that pilot or other larger future opportunities will
mature into future revenues; the Company's ability to transition
from a heavily direct sales oriented model to one that primarily
depends on partner and channel sales; the Company's ability to
execute on direct opportunities and to continue to build
partnerships; the adjustment of expense levels, and the expected
benefit of these actions in the future; and the Company's ability
to regain compliance with NASDAQ's minimum bid price per share
requirement. Actual results could differ materially from those in
such forward-looking statements. Factors that could cause actual
results to differ materially from expectations include, but are not
limited to: the Company has a history of operating losses and
expects to continue to incur losses; the uncertainty of market
acceptance of offline access products or our ability to license
those products to customers; general economic conditions or any
downturn in IT industry spending; the ability of BackWeb to develop
innovative technology and deliver solutions that meet customer
needs; and the potential emergence of competitive technologies or
competitor companies. In addition, please refer to our periodic
filings with the Securities and Exchange Commission, including our
report on Form 10-Q for the quarter ended June 30, 2006, which
contain more detailed descriptions of the risk factors facing our
business. BackWeb assumes no obligation to update any of the
forward-looking statements in this release. -0- *T BackWeb
Technologies Ltd. Condensed Consolidated Statements of Operations
(In thousands, except per share data) Three months ended Nine
months ended -------------------- -------------------- September
September September September 30, 2006 30, 2005 30, 2006 30, 2005
Unaudited Unaudited Unaudited Unaudited --------- ---------
--------- --------- Revenue: License $ 61 $ 942 $ 1,314 $ 2,569
Service 663 840 2,208 2,588 --------- --------- --------- ---------
Total revenue 724 1,782 3,522 5,157 Cost of revenue: License 26 14
67 27 Service 149 183 570 533 --------- --------- ---------
--------- Total cost of revenue 175 197 637 560 --------- ---------
--------- --------- Gross profit 549 1,585 2,885 4,597 ---------
--------- --------- --------- Operating expenses: Research and
development 541 530 1,742 1,670 Sales and marketing 928 787 2,980
2,317 General and administrative 699 511 1,780 1,359 ---------
--------- --------- --------- Total operating expenses 2,168 1,828
6,502 5,346 --------- --------- --------- --------- Loss from
operations (1,619) (208) (3,617) (749) Finance and other income,
net 56 35 115 61 --------- --------- --------- --------- Net loss
$(1,563) $ (208) $(3,502) $ (688) ========= ========= =========
========= Net loss per share $ (0.04) $ (0.01) $ (0.08) $ (0.02)
========= ========= ========= ========= Shares used in computing
net loss per share 41,266 41,036 41,229 40,971 ========= =========
========= ========= *T -0- *T BackWeb Technologies Ltd. Condensed
Consolidated Balance Sheets (In thousands) September 30, December
31, 2006 2005 Unaudited ------------- ASSETS Current assets: Cash
and investments $ 5,268 $ 7,876 Trade accounts receivable, net 722
1,554 Other current assets 424 325 ------------- ------------ Total
current assets 6,414 9,755 Long-term investments and other assets
44 35 Property and equipment, net 158 213 -------------
------------ Total assets $ 6,616 $10,003 =============
============ LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued liabilities $ 1,805 $
1,978 Deferred revenue 882 976 ------------- ------------ Total
current liabilities 2,687 2,954 Long-term liabilities - 8 Total
shareholders' equity 3,929 7,041 ------------- ------------ Total
liabilities and shareholders' equity $ 6,616 $10,003 =============
============ *T
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