Geoff Kerr, USWeb Corporation, (408) 987-3260,
[email protected]
Investor Contact: Carolyn Aver, USWeb Corporation, (408) 987-3295,
[email protected]
USWeb Corporation Reports Strong Third Quarter 1998 Financial Results
Achieves EBITDA operating profit
SANTA CLARA, Calif., - October 14, 1998 - USWeb Corporation (Nasdaq: USWB), a leader in strategic Internet professional services, today reported its results for the third quarter, ended September 30, 1998.
Revenues for the quarter were $34.0 million, a 34% increase over revenues of $25.4 million reported for the quarter ended June 30, 1998 and a 493% increase over revenue for the same period last year. Including non-cash charges, the company reported a net loss for the quarter of $38.5 million, or $0.95 per share, compared with a net loss of $60.9 million, or $1.81 per share, in the previous quarter. Excluding non-cash charges, the Company reported a profit of $835,000, or $0.02 per share, compared with a net loss of $1.2 million, or $.03 per share, in the previous quarter. Non-cash charges are primarily related to acquisitions and include depreciation and amortization, stock compensation, acquired in-process technology, and amortization of intangible assets including goodwill. Sequential organic growth (based on companies integrated prior to June 30, 1998) was 17%. Revenues for the nine-months ended September 30, 1998 were $73.1 million, a 742% increase over revenues of $8.7 million for the nine-months ended September 30, 1997. The net loss for the nine-months ended September 30, 1998 was $115.7 million compared to a net loss of $39.3 million for the same period in 1997.
In the third quarter, USWeb made significant additions to its professional service offerings. In addition to acquiring two leading technology consulting firms, the Company agreed to merge with CKS Group to create Reinvent Communications. The merger with CKS Group, which is expected to close by the end of 1998, is a key move to meet client demand for integrated consulting services across Internet systems and new media marketing communications. The merger continues to build upon USWeb's mission to pioneer systems and communications capabilities that enable clients to compete in the 21st century economy.
In total, USWeb has acquired and integrated 33 companies in the last 21 months. On a pro forma basis, assuming each acquisition had occurred by the start of 1998, the consolidated revenues of USWeb Corporation for the third quarter would have been $34.5 million.
"This was another milestone quarter for USWeb. We attribute our early attainment of profitability, after non-cash charges, to a number of key factors: the benefits of a well integrated organization, very strong demand, larger client engagements, streamlined business processes and shared knowledge across the firm," said Toby Corey, president and COO of USWeb Corporation.
The Company's gross profit excluding non-cash charges was 39% for both this quarter and the second quarter. Operating expenses excluding non-cash charges were $13.0 million or 38% of revenues in the third quarter, compared to $11.7 million or 46% in the previous quarter.
The Company also today announced USWeb Electronic Services, a new initiative that aims to extend the effectiveness of corporate IT. (See related press release titled "USWeb Launches Electronic Services Initiative.") USWeb Electronic Services are a set of custom and packaged Internet applications that are housed and managed by USWeb, but are fully integrated with a company's own internal IT infrastructure. As part of this initiative, USWeb is expanding the notion of the virtual private network by building an "extended" IT infrastructure that includes not only baseline data communication, but management, applications, scalability, services, support, and security-bundled together in a combined offering.
"The traditional model of continually expanding internal IT infrastructures to meet the growing needs of a business is no longer cost effective for many enterprises," said Joe Firmage, chairman and CEO of USWeb. "For businesses to succeed in the new economy, they must have computing systems that can be implemented with speed and that can be changed quickly in response to competitive pressures and client demands. With this new approach enterprise IT organizations can now do more for less. Providing those systems is the goal of USWeb Electronic Services.
USWeb Corporation (Nasdaq: USWB) is a leading strategic Internet services firm helping clients achieve revenue, profit, market share, and customer loyalty objectives through Internet strategies and systems. USWeb partners with a diverse and prominent portfolio of clients, from Fortune 100 corporations to medium-size organizations. The Company, headquartered in Santa Clara, California, recently announced that it intends to merge with CKS Group, Inc. pending regulatory and stockholder approval. Additional information about USWeb Corporation is available by calling 408-987-3200.
Statements made in this press release that state the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future, or that discuss any other contingent future events are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, such statements include those regarding USWeb's business model, current and proposed service offerings, and key performance metrics. The Company's actual results could differ materially from those projected in such forward-looking statements because of changes in our business strategy, integration programs, rapid changes in the market, and changes in scope of client engagements. As a result of the Company's limited operating history, rapid growth (due largely to acquisitions, which carry certain inherent risks), and the emerging nature of the market in which the Company competes, the Company's historical financial data is of limited value in predicting future results. The pending merger with CKS Group is subject to approval of both companies' stockholders and other closing conditions. For additional information and risk factors including factors that could cause actual results to differ materially from those in forward-looking statements we ask that you refer to the recent documents filed by USWeb with the Securities and Exchange Commission, specifically the Preliminary Joint Proxy Statement/Prospectus filed September 14, 1998, and Amendment No. 5 to the Registration Statement on Form S-4 filed September 30, 1998.