Brainpower remains stable in second quarter

Brainpower remains stable in second quarter

Swiss investment analysis software company Brainpower is reporting revenues for the second quarter 2002 of EUR1.9 million, up a marginal six per cent from the same period last year.

Brainpower reduced operating costs below estimates to EUR3.26 million, excluding restructuring costs of EUR0.5 million. This compares favorably with operating costs of EUR3.37, excluding restructuring costs of EUR0.1 million, in the first quarter of this year and EUR4 million in the corresponding period of 2001.

Contract revenue backlog remained stable during the quarter at EUR9.3 million. Despite challenging market conditions and the belief large financial services companies will remain guarded with their IT spending in the forseeable future, Rocco Pellegrinelli, chairman and chief executive officer of Brainpower, remains positive. "We are confident of meeting our target of EBITDA break-even by the end of this year, but on lower expected revenue of approximately EUR6 million for second half of the year," he says.

During the quarter, the company signed a new contract to integrate Brainpower technology with Reuters' Investor and Market Monitor products. Integration is currently underway and should be completed by the end of the third quarter. Pellegrinelli expects to see significant revenue impact in 2003 from the deal.

New clients won during the period include a private bank in Germany and Brainpower's first clients in both Luxembourg and Canada.

EBITDA losses (earnings before interest, taxes, depreciation and amortisation) before restructuring costs reduced for the fifth consecutive quarter to EUR1.7 million, reflecting initial benefits from the cost reduction programme launched during the period.

Brainpower ended the quarter with a cash and cash equivalents position of EUR8 million, which is sufficient to fund operations until the company reaches EBITDA breakeven, says Bill Holwell, chief financial officer. Shareholders equity as of June 30, 2002 was EUR10.6 million. Company net loss was EUR2.6 million for the quarter, which includes EUR0.5 million of restructuring costs.

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