Broadband, Software and Service Fee Represent 81% of Total Revenues
REDWOOD SHORES, CA -- (Marketwire) -- 08/07/08 -- iPass Inc. (NASDAQ: IPAS), a global
provider of services that unify the management of enterprise mobility,
today announced financial results for its second quarter ended June 30,
2008.
"Our revenues continued to grow as we benefited from our large
international customer base, the recurring nature of our software and
service fee revenues and our enhanced product portfolio," said Ken Denman,
chairman and CEO of iPass. "We continue to manage operating expenses, add
new blue-chip customers despite a challenging economic environment, and
achieve double-digit increases in mobile broadband revenues. Our growth,
combined with stabilized gross margins, positions us to enhance shareholder
value in the second half of the year."
During the second quarter of 2008, broadband, software and service fee
revenues increased 7 percent sequentially, contributing to a full 81
percent of total revenues, compared to 19 percent for dial. The company
also continued to attract new global customers, signing eight new Forbes
Global 2000 companies during the quarter along with other new business,
representing over $20 million in new bookings during the quarter.
Financial Highlights Q2'08 Q1'08 Q2'07
(In millions, except per share amounts) ------- ------- -------
Total Revenues $ 48.6 $ 48.1 $ 47.6
Broadband Revenues $ 26.2 $ 24.1 $ 17.9
Software and Service Fee Revenues $ 13.0 $ 12.5 $ 11.4
Dial Revenues $ 9.4 $ 11.5 $ 18.4
Operating loss $ (2.3) $ (2.2) $ (3.7)
Non-GAAP Operating Income (loss) $ (0.1) $ 0.2 $ (1.1)
GAAP Net loss $ (1.4) $ (1.4) $ (2.3)
GAAP Diluted EPS (loss) $ (0.02) $ (0.02) $ (0.04)
Non-GAAP Net Income (loss) $ 0.7 $ 1.0 $ (0.1)
Non-GAAP Diluted EPS (loss) $ 0.01 $ 0.02 $ (0.00)
Cash and Short Term Investments $ 70 $ 70 $ 81
Key User, Footprint and Customer Metrics
Q2'08 Q1'08 Q2'07
--------- --------- ---------
iPass On-Network Users 537,000 547,000 635,000
iPass Off-Network Users 585,000 538,000 373,000
--------- --------- ---------
Total iPassConnect Software Users 1,122,000 1,085,000 1,008,000
Broadband Users 323,000 295,000 235,000
Dial Users 214,000 252,000 400,000
--------- --------- ---------
Total iPass On-Network Users 537,000 547,000 635,000
Broadband Venues 104,000 98,000 81,000
Total Forbes Global 2000 Customers 435 427 401
Share Repurchase Program -- During the period April 1, 2008 through June
30, 2008, the company repurchased approximately $500,000 of its common
stock, representing approximately 229,000 shares at an average cost of
$2.18 per share. These repurchases were made under the $30 million share
repurchase plan that the company's board of directors approved in February
2008.
Company Outlook
The following statements are based on information available to iPass today,
and iPass does not assume any duty to update these numbers at any time
during the quarter or thereafter. These statements are forward looking, and
actual results may differ materially.
For the quarter ending September 30, 2008, iPass projects revenues of
approximately $47 million to $50 million, fully diluted GAAP earnings
(loss) per share of approximately ($0.01) to ($0.04) and fully diluted
non-GAAP earnings per share of approximately $0.00 to $0.03. The difference
between the projected fully diluted GAAP loss per share and the projected
fully diluted non-GAAP earnings per share of approximately $0.04 is based
on expected FAS 123R stock-based compensation of $1.5 million dollars and
the expected amortization of intangibles of $1.1 million in the third
quarter of 2008 which, when divided by an expected 62 million fully diluted
shares outstanding, results in the $0.04 difference.
Conference Call
iPass will host a public conference call today to discuss this announcement
at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time).
The call will be webcast on iPass' web site at http://investor.ipass.com,
and a replay of the webcast will be available on iPass' web site until
iPass reports its third quarter 2008 financial results. A taped replay will
also be available for two weeks following the date of the call. The dial-in
numbers for the taped replay are 1-888-286-8010 (U.S. and Canada) and
1-617-801-6888 (international). The ID number for the replay call is
77102199.
Cautionary Statements
iPass' projections of its third quarter 2008 financial results under the
caption "Company Outlook," and in this press release are forward-looking
statements. Actual results may differ materially from the expectations
contained in these statements due to a number of risks and uncertainties,
including: the rate of decline in use of narrowband/dial technology as a
means of enterprise connectivity may be faster than iPass predicts; the
risk that iPass will not be able to generate broadband revenues in the
manner expected; rapidly emerging changes in the nature of markets served
by iPass, which may not be compatible with iPass' services; increased
competition, which may cause pricing pressure on the fees iPass charges;
iPass could unexpectedly lose current integrated broadband access points if
one or more current broadband access point providers perceive iPass'
services to be competing with the provider's services in a manner that
renders the relationship with iPass detrimental to the provider; iPass may
not be able to establish additional relationships with broadband access
point providers, including providers of 2.5G/3G Mobile Data, at the level
iPass expects if it is unable to negotiate such relationships on terms
acceptable to both iPass and the providers on the timeframe iPass currently
expects for any number of reasons, including perceived competition with the
providers; if bookings or sales are greater than iPass expects, then
resulting sales commissions and/or other sales related expenses could cause
iPass' non-stock compensation expenses in the third quarter to be greater
than currently expected; and iPass may not be able to generate revenue
from new services if market acceptance of those new services is not as
iPass expects. Detailed information about potential factors that could
potentially affect iPass' business, financial condition and results of
operations is included in iPass' Quarterly Report on Form 10-Q under the
caption " Factors Affecting Operating Results" in Part I, Item 2 of that
report, filed with the Securities and Exchange Commission (the "SEC") on
May 9, 2008 and available at the SEC's Web site at www.sec.gov. iPass
undertakes no responsibility to update the information in this press
release if any forward-looking statement later turns out to be inaccurate.
Information Regarding Non-GAAP Financial Measures
This press release contains financial measures that are not calculated in
accordance with U.S. generally accepted accounting principles (GAAP). iPass
management evaluates and makes operating decisions using various
performance measures. In addition to iPass' GAAP results, the company also
considers non-GAAP net income (loss). iPass further considers various
components of non-GAAP net income (loss) such as non-GAAP earnings (loss)
per share and non-GAAP operating income (loss). Non-GAAP net income (loss)
is generally based on the revenues, network access expenses, network
operations, research and development, sales and marketing and general and
administrative expenses management considers in evaluating the company's
ongoing core operating performance. Non-GAAP net income (loss) consists of
net income (loss) excluding equity
plan-related compensation expenses, restructuring charges, amortization of
intangible assets, the cumulative effect of change in accounting principle,
and valuation allowance for deferred tax assets which are charges and gains
which management does not consider reflective of the company's core
operating business. Equity plan-related compensation expenses represent the
fair value of all share-based payments to employees, including grants of
employee stock options, as required under SFAS No. 123 (revised 2004),
"Share-Based Payment" (FAS 123R). Restructuring charges consist of
severance and benefits, excess facilities and asset-related charges, and
also include strategic reallocations or reductions of personnel resources.
Intangible assets consist primarily of purchased technology, trade names,
customer relationships, employment agreements and other intangible assets
issued in connection with acquisitions. Cumulative effect of change in
accounting principle consists of a one-time benefit relating to the
adoption of FAS 123R.
