Revenue for the quarter ended June 30, 2005 was $12.0 million compared to $9.5 million for the quarter ended June 30, 2004 an increase of 27%. Revenue increased by 31% compared to $9.2 million for the quarter ended March 31, 2005. Revenue for the quarter ended June 30, 2005 includes revenue from a one-time license fee of $4.1 million for certain patents.

Total operating expenses were $14.7 million for the quarter ended June 30, 2005 compared to $15.2 million for the quarter ended June 30, 2004 and $27.2 million for the quarter ended March 31, 2005. Sales and marketing, research and development, and general and administrative expenses were $13.7 million for the quarter ended June 30, 2005 compared to $13.2 million for the quarter ended June 30, 2004 and $14.4 million in the quarter ended March 31, 2005.

Net loss for the quarter ended June 30, 2005 was $5.6 million, or $0.13 per basic and diluted share, compared to $10.1 million, or $0.24 per basic and diluted share, for the quarter ended June 30, 2004, a decrease of 44%. Net loss decreased 78% compared to $25.4 million or $0.58 per basic and diluted share for the quarter ended March 31, 2005. The decrease in net loss between the March 2005 quarter and the June 2005 quarter is primarily driven by impairment charges related to acquired developed technology and goodwill and write-down of other intangible assets incurred in the March 2005 quarter. Revenue from the patent license agreement and realization of cost reduction measures executed in the June 2005 quarter further contributed to the reduction in net loss.

Revenue for the nine months ended June 30, 2005 was $32.7 million compared to $23.5 million for the nine months ended June 30, 2004 an increase of 39%. Excluding revenue from the patents license, revenue was $28.6 million for the nine months ended June 30, 2005 an increase of 22% over the comparable period in the prior year.

Sales and marketing, research and development, and general and administrative expenses were $43.5 million for the nine months ended June 30, 2005 compared to $36.7 million for the nine months ended June 30, 2004.

Net loss for the nine months ended June 30, 2005 was $37.8 million, or $0.87 per basic and diluted share, compared to $28.5 million, or $0.68 per basic and diluted share, for the nine months ended June 30, 2004, an increase of 33%, primarily due to the impairment of acquired technology and goodwill and write down of acquired intangible assets in the March 2005 quarter.

Third Quarter Financial Highlights

• Decreased sales and marketing, research and development, and general and administrative expenses by $710,000 from the March 2005 quarter.
• Ended the quarter with $177.8 million in cash and short-term investments.
• Used $7.8 million in cash for operations, a decrease of $3.1 million from the previous quarter. Overall cash decreased by $6.4 million.

"The improvements we made in our operational efficiencies, reducing our sales and marketing, research and development, and general and administrative expenses and cash burn, and leveraging our extensive intellectual property portfolio were all positive steps," said Ben C. Barnes, Chief Executive Officer of ActivCard, "yet, we are not satisfied with the performance of our basic business, mostly due to the continued softness in our U.S. government business," continued Mr. Barnes. "Improving sales execution, growing top-line revenue and integrating the Company and its product lines with the recently acquired Protocom Development Systems, will be our primary focus as we execute the recently announced restructuring plan and continue to improve our cost structure and drive the Company towards profitability."

Business Highlights

• Completed previously announced acquisition of Protocom Development Systems Pty. Ltd. in August 2005.
• Appointed Richard A. Kashnow as the Chairman of the Board of Directors.
• Reestablished relationship with ForeningsSparkbanken (Swedbank).
• Deployed Enterprise Access Card to 6,000 police officers at Hampshire Constabulary in United Kingdom.
• Signed a teaming agreement with IBM for joint solutions and marketing for the Enterprise, Healthcare, Government, and Banking sectors.
• Signed over 120 new customers, including: Nestle, Defense Advanced Research Projects Agency and National Commodity Exchange of Pakistan.
• Achieved additional revenue from many existing customers including: HP, Renault, M&T Bank and the FBI.
• Added 16 new value-added-resellers, bringing the total to 250 resellers worldwide.
• Signed agreement with MasterCard to deliver the first multi-channel Chip Authentication Program (CAP) approved authentication server.

Outlook

The financial outlook for the September 2005 quarter includes ActivCard's revenue and expenses for the quarter and Protocom's revenue and expenses from the date of closing of the transaction on August 5, 2005. ActivCard anticipates revenue for its fourth quarter of fiscal 2005 ending September 30, 2005 to be in the range of $12.0 to $13.0 million, gross margin in the range of 65% to 70% and sales and marketing, research and development, and general and administrative expenses in the range of $14.0 to $15.0 million.Download the document now 40.3 kb (Adobe Acrobat Document)