ActivCard Corp. (NASDAQ:ACTI), a leading global provider of strong authentication and trusted digital identity solutions for secure remote access, single sign-on, and enterprise access cards, today reported financial results for its first quarter of fiscal 2005 ended December 31, 2004.
In October 2004 the Company announced that it had changed its fiscal year end to September 30 from December 31.
In December 2004 the Company announced the acquisition of the remaining 51% equity of Aspace Solutions Limited. The acquisition has allowed the Company to combine the Aspace products, intellectual capital, and industry expertise to provide an unparalleled solution for the banking industry and to form the nucleus of ActivCard's financial services strategy.
In January 2005 Aspace signed a teaming agreement with IBM. In accordance with the terms of the acquisition agreement ActivCard has paid an additional 2.0 million pounds Sterling or $3.8 million, 50% in cash and 50% in common stock, to the shareholders of Aspace.
First Quarter Results
Revenue for the quarter ended December 31, 2004 was $11.6 million compared to $6.7 million for the quarter ended December 31, 2003, an increase of 72%. Revenue grew by 14% during the quarter ended December 31, 2004 compared to $10.1 million for the quarter ended September 30, 2004.
Total operating expenses increased from $11.9 million for the quarter ended December 31, 2003 to $16.1 million for the quarter ended December 31, 2004 primarily due to consolidation of Aspace Solutions' operating expenses of $2.1 million, in-process research and development expense of $537,000 in connection with the acquisition of the remainder of Aspace Solutions in December 2004, increase in personnel costs in the sales and marketing department of $1.2 million, and increase in general and administrative costs of $400,000 related to compliance with the Sarbanes-Oxley Act of 2002. Total operating expenses increased by $87,000 from the quarter ended September 30, 2004 to the quarter ended December 31, 2004.
Net loss for the quarter ended December 31, 2004 was $6.8 million, or $0.16 per basic and diluted share compared to $9.4 million, or $0.22 per basic and diluted share for the comparable period in the prior year, a decrease of 28%. Net loss declined 18% during the quarter ended December 31, 2004 compared to $8.3 million, or $0.20 per basic and diluted share for the quarter ended September 30, 2004.
First Quarter Financial Highlights
Fourth consecutive quarter of sequential revenue growth. Increased software revenue from $2.1 million to $5.7 million from the quarter ended December 31, 2003 to the quarter ended December 31, 2004. Improved gross margin from 46% during the quarter ended December 31, 2003 to 68% during the quarter ended December 31, 2004, as a result of increase in software and maintenance revenue. Acquired the remaining 51% interest in Aspace Solutions. Ended the quarter with $198.4 million in cash and short-term investments.
"In the first quarter of fiscal 2005 we met several of our key objectives including; acquiring the remaining interest in Aspace Solutions, and exceeding our revenue guidance, while keeping our quarter to quarter expenses essentially flat," said Ben C. Barnes, Chief Executive Officer of ActivCard. "We still have a lot of work ahead of us, but are making progress towards achieving our revenue and profitability goals, as the leader in the authentication and authorization market," continued Mr. Barnes.
First Quarter Business Highlights Unveiled the ActivCard Authentication Server (AAS) in collaboration with Aspace Solutions. Announced the release of an easy-to-use and very affordable keychain token for secure remote access banking. Sold and delivered our smart card management solution to the National Nuclear Security Agency. Sold and delivered our smart card management solution to The Federal Bureau of Investigation. Gained 140 new customers, including: City National Bank, Univision Communications, Dutch Ministry of Finance, Deutsche Bank UK. Achieved ongoing revenue from many customers including: HP, Visa, Veterans Affairs, Bristol Meyers Squibb, British Telecom, Renault, KDDI of Japan. Added 18 new value-added-resellers giving us more than 200 resellers worldwide.
Outlook
ActivCard anticipates that revenue for its second quarter of fiscal 2005 ending March 31, 2005 will be in the range of $9.0 to $10.0 million, excluding any revenue from two potentially large transactions and from our recent acquisition of Aspace.