Newsbit
October 18, 1999 16:20
Net Loss Per Share on Operations: $0.28
REDWOOD CITY, Calif., Oct. 18 /PRNewswire/ -- Liquid Audio, Inc. (Nasdaq: LQID), a leading provider of software and services for the digital delivery of music over the Internet, today announced financial results for the third quarter ended September 30, 1999. During the quarter, on July 8, the company completed an initial public offering of 4.8 million shares of common stock at $15 per share.
Third-quarter 1999 net revenues were $1.8 million, up 140 percent from $745,000 for the second quarter of 1999 and up 78 percent from $1.0 million for the third quarter of 1998.
Third-quarter 1999 net loss was $5.8 million, including a $826,000 strategic marketing-equity instruments expense for common stock and warrants issued to strategic partners and a $330,000 employee stock compensation expense. This compared sequentially with a net loss of $6.1 million, including strategic marketing and stock compensation expenses, for the second quarter.
Excluding strategic marketing and stock compensation expenses, third-quarter 1999 net loss on operations was $4.7 million, compared with a net loss on operations of $4.3 million for the preceding quarter and a net loss on operations of $1.5 million for the third quarter of 1998.
Third-quarter 1999 net loss per share was $0.35 (basic and diluted). This compared sequentially with a pro forma net loss of $0.36 per share for the second quarter. Pro forma computations for the three-month periods are based on 16.8 million weighted average shares, reflecting the issuance of common stock for the initial public offering and the conversion of preferred stock to common stock prior to that.
Excluding strategic marketing and stock compensation expenses, net loss per share on operations for the third quarter of 1999 was $0.28. This compared with a pro forma net loss on operations of $0.26 per share for the second quarter of 1999 and a pro forma net loss on operations of $0.09 per share for the third quarter of 1998.
Execution of Strategy, International Expansion
"During the third quarter, we continued building momentum in content aggregation, retail syndication and platform adoption -- three critical areas of digital music distribution," said Gerry Kearby, president and chief executive officer of Liquid Audio. "We measured our progress in terms of strategic alliances with both major and independent record labels, music and retail Web sites and leading technology providers for online music.
"International expansion was a key driver of our third-quarter revenue growth," Kearby continued. "The in-store digital music delivery opportunity in Korea and other countries where consumer market penetration for PCs and Internet access are relatively low has been very encouraging.
"We believe that the rapid music industry adoption of the Liquid Audio platform has positioned us at the forefront of the digital music distribution market. In order to meet the demand created by our industry alliances, we have increased our investments in product development, Internet services and music marketing."
Third-quarter software license revenue was $476,000, up 21 percent from $394,000 for second-quarter 1999 and up 27 percent from $374,000 for third-quarter 1998. Services revenue from maintenance and hosted service fees was $177,000, up 75 percent sequentially from $101,000 and up 70 percent from $104,000 a year ago. Business development revenue from the company's international partners in Asia was $1.1 million, more than quadruple the $250,000 reported for the second quarter and twice the $525,000 recorded a year earlier. Third-quarter gross margin was 75 percent, compared with 70 percent for the second quarter and 87 percent a year ago.
For the nine months ended September 30, net revenues were $3.1 million, up 77 percent from $1.7 million for the same period of 1998.
Nine-month net loss was $16.0 million, including strategic marketing and stock compensation expenses. Excluding these expenses, nine-month net loss on operations was $12.7 million, compared with a net loss on operations of $5.1 million for the year-earlier period.
Net loss per share for the nine months of 1999 was $2.07 (basic and diluted). This compared with a pro forma net loss of $0.77 per share for the nine months of 1998. Pro forma computations for the nine-month periods are based on 7.8 million weighted average shares, reflecting the issuance of common stock for the initial public offering and the conversion of preferred stock to common stock prior to that.
Excluding strategic marketing and stock compensation expenses, nine-month net loss per share on operations was $1.64, compared with a pro forma net loss of $0.65 per share on operations for the same period a year earlier.
Business Highlights
By the end of the third quarter, Liquid Audio's music distribution platform was used by more than 4,700 artists and 750 record labels to promote, syndicate and sell one of the largest commercially available catalogs of secure music online, comprising more than 37,000 songs. At quarter-end, Liquid Audio content was syndicated to more than 300 music and retail Web sites for preview and sale over the Internet.
Third-quarter 1999 highlights for content aggregation included the selection of Liquid Audio by three of the five major record labels-Warner Music Group/Atlantic, EMI Group/Virgin and BMG Entertainment/RCA, respectively-for the first commercially available, secure Internet downloads of a single track by a platinum artist (Tori Amos) and an entire album (David Bowie), both prior to release, and the first exclusive Internet sale, via secure digital download, of live recordings by a superstar artist (the Dave Matthews Band).
In the area of retail syndication, Liquid Audio formed a strategic alliance with Yahoo!, enabling artists to sell and consumers to buy secure digital music downloads on Yahoo! Digital, a new multimedia Web site, while offering online access to the entire Liquid Audio catalog. Liquid Audio also enabled the transformation of traditional "brick & mortar retailers" such as Best Buy, Sam Goody/Musicland, Virgin Megastores, and Wherehouse to "click & mortar retailers" of secure digital music downloads via the Liquid Music Network. In addition, the first digital music kiosk went live on schedule at a retail outlet in Korea, extending the Liquid Music Network from the Web to the store.
Third-quarter platform adoption highlights included the release of Liquid System 5.0 software, a major upgrade to Liquid Audio's end-to-end solution for digital music distribution that provides access to the widest selection of Internet downloads from a single integrated music player. Liquid System 5.0 supports all leading digital music standards, including mp3 and Secure Digital Music Initiative (SDMI). The company also released Liquid Plug-ins for RealNetworks, which enables users of RealPlayer G2 and RealJukebox to preview and purchase Liquid Tracks.
The Company
Liquid Audio is a leading provider of software and services for the digital delivery of music over the Internet. The Liquid Audio solution gives musicians, record labels, Web sites, and music retailers the ability to publish, syndicate and securely sell recorded music online with copy protection and copyright management. Using the Liquid Player software, available for free download at www.liquidaudio.com, music fans can preview and purchase downloadable music from the more than 300 affiliate Web sites in the Liquid Music Network. Traded on Nasdaq under the symbol LQID, Liquid Audio is located in Redwood City, California.
This news release contains forward-looking statements relating to future performance, technology and product development that may impact future results and the future viability of the company. Actual results could be affected or differ materially from those anticipated in the forward-looking statements as a result of new contracts or relationships that may not produce significant revenue or net income. Other risk factors that could cause results to vary include: future products and results; technological shifts; potential technical difficulties that could delay new products; competition; general economic conditions in the markets in which the company operates; the ability of the company, its customers and its suppliers to become Year 2000-compliant; pricing pressures; and the uncertainty of market acceptance of new products by OEM and end-user customers. Readers should refer to the "Risk Factors" section of the company's initial public offering prospectus, dated July 8, 1999, and other filings with the Securities and Exchange Commission.
NOTE: Liquid; Liquid Audio; Liquid Audio, Inc.; the Liquid Audio logo; Liquid Music; Liquid Plug-ins; and Liquid Tracks are trademarks of Liquid Audio, Inc. All other trademarks are the property of their respective owners. For more information about Liquid Audio software and services, call 888-Liquid-0 or visit http://www.liquidaudio.com .
Interest and other income, net 722 104 986 51 Net loss $(5,820) $(1,828) $ (16,035) $(5,946)
Net loss per share: Basic and diluted $(0.35) $(0.74) $(2.07) $(2.67)
Weighted average shares 16,821 2,457 7,755 2,227
SOURCE Liquid Audio, Inc.
/CONTACT: investors, Gary Iwatani, 650-549-2038, or [email protected],
/Web site: http://www.liquidaudio.com/
(LQID)
© 1999 Kiosks.Org. Liquid Audio Reports 3Q99 Results: Revenues More than Double Sequentially, Grow 78% Annually
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Condensed Statements of Operations
(in thousands, except per-share amounts; unaudited)
Three months ended Nine months ended
September 30 September 30
1999 1998 1999 1998
Net revenues:
License revenue $476 $374 $1,129 $808
Service revenue 177 104 367 169
Business development revenue 1,132 525 1,565 750
Total net revenues 1,785 1,003 3,061 1,727
Cost of revenues:
Cost of license revenue 58 63 156 175
Cost of service revenue 324 70 649 170
Cost of business development
revenue 66 -- 68 --
Total cost of revenues 448 133 873 345
Gross profit 1,337 870 2,188 1,382
Operating expenses:
Sales and marketing 2,533 887 6,449 2,676
Research and development 3,449 1,028 7,710 2,666
General and administrative 741 548 1,741 1,155
Strategic marketing
-- equity instruments 826 -- 2,190 --
Stock compensation expense 330 339 1,119 882
Total operating expenses 7,879 2,802 19,209 7,379
Loss from operations (6,542) (1,932) (17,021) (5,997)
Liquid Audio, Inc.
Condensed Balance Sheets
(in thousands; unaudited)
September 30 December 31
1999 1998
Assets
Current assets:
Cash, cash equivalents and
short-term investments $70,516 $17,144
Accounts receivable, net 183 376
Receivables from strategic partners 942 615
Other current assets 917 314
Total current assets 72,558 18,449
Property and equipment, net 4,320 1,507
Other assets 117 70
Total assets $76,995 $20,026
Liabilities, mandatorily redeemable
convertible preferred stock and warrants
and stockholders' equity (deficit)
Current liabilities:
Accounts payable $2,177 $ 802
Accrued expenses and other current
liabilities 2,361 932
Deferred revenue 1,191 1,177
Capital lease obligations, current portion 185 197
Equipment loan, current portion 589 281
Total current liabilities 6,503 3,389
Capital lease obligations,
non-current portion 231 330
Equipment loan, current portion 879 639
Note payable to strategic partner 425 --
Total liabilities 8,038 4,358
Mandatorily redeemable convertible
preferred stock and warrants -- 29,801
Stockholders' equity (deficit) 68,957 (14,133)
Total liabilities, mandatorily
redeemable convertible preferred
stock and warrants and stockholders'
equity (deficit) $76,995 $20,026
or media, Andrea Fleming, 650-549-2065, or [email protected], both of
Liquid Audio, Inc./
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