Geoff Kerr, USWeb/CKS, 415/369-6723
[email protected]
USWeb/CKS Reports Record Revenues for Third Quarter 1999
Company Scale and Nimble Execution Drives 38% Sequential Quarterly Revenue Increase; Continues to Realize Strong Organic Growth of 22%
San Francisco - October 25, 1999 - USWeb/CKS (Nasdaq: USWB), the leader in Internet professional services, today reported that its financial results for the third quarter of 1999 included record-high quarterly revenues and strong organic growth.
Revenues for the third quarter of 1999 were $138.9 million. Net income before non-cash charges and after the application of an assumed 38% effective tax rate was $13.3 million or $0.15 per diluted share. Including non-cash charges, the company reported a net loss for the quarter of $44.0 million or $0.54 per share. Compared to the prior year, third quarter revenues increased 122%, from $62.6 million. In the third quarter of 1998, net income before non-cash charges and after the application of an assumed 38% effective tax rate was $4.7 million or $0.06 per diluted share. Including non-cash charges, the company reported a net loss in the third quarter of 1998 of $27.8 million or $0.44 per share.
Non-cash charges include a provision for contract loss or recovery (which represents the value of certain warrants granted in a strategic relationship), stock compensation, acquired in-process technology, amortization of intangible assets, and depreciation and amortization.
"Once again, USWeb/CKS demonstrates the momentum created by our market leadership and scale," said Robert Shaw, CEO of USWeb/CKS. "Important clients, top-rate talent, and market-leading business partners are coming to USWeb/CKS because we help drive the digital economy."
During the third quarter of 1999, USWeb/CKS completed the acquisition of Mitchell Madison Group, adding approximately 700 employees, mostly experienced business strategy consultants, to the company's talent pool. Primarily as a result of this acquisition, the Company's outstanding shares increased to 89.1 million as of September 30, 1999.
Shaw commented on the strong Q3 performance, "In the third quarter of 1999 we capitalized on our strong leadership position, momentum and ability to execute rapidly. Ninety days ago I told you that we had become a recruiting magnet; our performance in Q3 is a direct result of those organic hires. We organically grew the business 22% sequentially while at the same time maintaining operating margins at 15%, before non-cash charges. We also reached a number of significant momentum milestones this quarter."
Significant Momentum Milestones
- Scale: The Company continues to build the
scale of a powerhouse. We now have over 4,000
employees, up from 2,900 in the second quarter of
1999, providing market-leading expertise in 50
locations across 13 countries. The breadth and
depth of our talent pool gives USWeb/CKS the ability
and scale to deliver Time-to-Value to clients
worldwide.
- Experience: Our number of completed client
projects and engagements, which is now over 4,500,
continues to represent an extraordinary level of
experience among Internet professional services
firms today.
- Client commitment: The size and scope of our
client work expanded substantially in the quarter.
Top client annualized average revenue for the quarter,
excluding Mitchell Madison Group, was as follows:
- Top 10 clients was $12.8 million
- Top 30 clients was $7.1 million
- Major wins: We continue to win industry-leading
engagements. Significant wins this quarter include
Britannica.com, Inc., who selected USWeb/CKS to help
build their educational portal; BellSouth, who named
USWeb/CKS their Internet Architect of Record; Saks
Fifth Avenue, who selected USWeb/CKS to develop an
e-commerce solution. In addition, three leading
global financial services companies recently selected
USWeb/CKS for consulting services, representing the
first significant engagement to take advantage of the
newly combined talent of Mitchell Madison Group and
USWeb/CKS.
- Time-to-Value: Recent client successes
demonstrate ongoing high demand for USWeb/CKS's
time-to-value proposition. USWeb/CKS delivered
breakthrough results for a wide variety of client
initiatives such as the Apple Online Store, the
e-commerce site for Fieldcrest Cannon, the branding
and redesign of Alta Vista, the new integrated online
and offline branding campaign for Audi USA, and the
second phase of the Williams?Sonoma e-commerce
initiative. USWeb/CKS developed and launched a
venture for Lucent Technologies to create a new
business-to-business e-commerce channel called Visual
Insights -- deployed in only three months.
- Strategic alliances: We established a market
defining strategic alliance with Microsoft, which
will focus on USWeb/CKS' Managed Services offering
to build an industry standard technology platform
called iFrame. The agreement included joint funding
for application development and building a technology
lab based in Redmond, Washington. We also formed key
strategic alliances with Ask Jeeves, BroadVision, IBM
and R.R. Donnelley.
- Top industry rankings: USWeb/CKS earned major
recognition from numerous sources during the past
three months. The top rankings include:
- The Industry Standard magazine's "Standard 100" list of the 100 most important companies in the Internet economy. Within the Standard 100, USWeb/CKS was named one of the top 10 "I-Builders."
- NewMedia magazine's list of the 100 companies most influential in the converging fields of computers, communications and media.
- The number one position on both Advertising Age and Adweek magazines' rosters of top interactive marketing and advertising companies.
- Client satisfaction: Raising the bar for establishing client loyalty in the Internet professional services market, USWeb/CKS launched the ClientCONNECT� initiative. This is a proprietary client loyalty program designed to enhance the building of long-term, mutually beneficial relationships with its clients.
About USWeb/CKS
USWeb/CKS (Nasdaq: USWB) seeks to transform businesses in the digital economy and create sustainable market leadership for its clients. As the leading Internet professional services firm, USWeb/CKS has created a new standard for success in the digital economy - Time-to-Value. Time-to-Value means USWeb/CKS applies its extensive insight, experience and scale to deliver breakthrough results quickly. The Company is headquartered in San Francisco, California, with more than 4,000 professionals in over 50 locations worldwide. Additional information about USWeb/CKS is available by calling 415/284-7070.
This press release contains "forward-looking statements" (as defined under securities law) regarding potential opportunities for USWeb/CKS to continue and build leadership in its markets and to attract and retain talented employees. USWeb/CKS's actual future results, including those in achieving its leadership, hiring, retention, timing, market share and financial goals, may differ materially and adversely from those discussed in this press release. Factors that may cause such a differences include the rate of adoption of Internet technology by large organizations and the level of investment these organizations make in Internet-related professional services, the Company's ability to differentiate itself from competitors and win new clients, the risks associated with implementation of the Company's products and service offerings, technical challenges, the Company's ability to attract, retain and motivate talented employees, timing in delivering completed projects, costs associated with formation of Internet data centers, risks relating to the integration of acquired entities, including difficulties in integration or loss of customers or employees, and diversion of management and employee time and attention from other aspects of the Company's business. Current revenue growth patterns are not necessarily indicative of future performance. For additional information about factors that could affect the Company's business, see the company's documents filed with the United States Securities and Exchange Commission.