SAN JOSE, Calif., Oct. 21, 2004-WebEx Communications, Inc. (Nasdaq: WEBX) today announced financial results for its third quarter ended September 30, 2004.
For the third quarter of 2004, revenue was $64 million, a 31% increase compared to the third quarter of 2003. Net income for the third quarter of 2004 was $11.8 million. Earnings per diluted share, or EPS, for the third quarter of 2004 calculated in accordance with generally accepted accounting principles ("GAAP") were $0.26, compared to EPS of $0.25 for the third quarter of 2003. GAAP EPS of $0.26 for the third quarter of 2004 was 43% higher than the EPS of $0.18 for the third quarter of 2003, not calculated in accordance with GAAP ("non-GAAP"). The third quarter 2003 non-GAAP EPS assumed a 40% tax rate and excluded equity based compensation expense. With the increase in its effective tax rate starting in the first quarter of 2004, WebEx has discontinued reporting non-GAAP EPS.
During the third quarter of 2004, cash and short-term investments increased to approximately $165 million, up approximately $3 million from the second quarter of 2004. Cash flow from operations of approximately $10 million was offset by $4 million for capital expenditures and the acquisition of certain patents. During the third quarter of 2004, WebEx spent approximately $6 million as part of its stock buyback program, purchasing slightly over 300,000 shares of common stock. WebEx received approximately $3 million in cash from stock issuances under WebEx's employee stock plans.
"We are proud to have achieved our twentieth quarter of sequential revenue growth and highest operating profit in the company's history," said Subrah Iyar, chairman and chief executive officer of WebEx. "We had good bookings and strong customer retention."
Guidance
The following contains forward-looking guidance regarding WebEx's financial outlook. The following statements are based on current expectations.
For the fourth quarter of 2004, WebEx anticipates revenue in the range of $65.5 to $67.5 million and GAAP EPS in the range of $0.23 to $0.26.
For fiscal year 2004, revenue is anticipated to be in the range of $247 to $249 million. For fiscal year 2004, GAAP EPS is anticipated to be in the range of $0.93 to $0.96, an increase from earlier guidance in the range of $0.86 to $0.92. WebEx may relieve the valuation reserve against part of its deferred tax asset in Q4 2004. The impact of any resulting one-time tax benefit is not included in this guidance.
For fiscal year 2005, revenue is anticipated to be in the range of $300 to $310 million. For fiscal year 2005, GAAP EPS is anticipated to be in the range of $1.05 to $1.15. This 2005 guidance does not take into account any changes in accounting standards regarding expensing equity based compensation that may become effective in 2005.
Non-GAAP Financial Measures
This press release includes a financial measure for earnings per share for the third quarter of 2003 that was not calculated in accordance with GAAP. This financial measure differs from GAAP in that it assumes a 40% tax rate and excludes equity based compensation expense. WebEx no longer provides non-GAAP financial measures for the current period, but believes that providing this non-GAAP financial measure for the prior period is still useful to investors because it provides a basis for comparison of WebEx's financial condition and results of operations between quarters, which comparison is not influenced by changes in its effective tax rate. Since WebEx has historically reported non-GAAP results to the investment community, WebEx also believes the inclusion of non-GAAP measurements for prior periods provides consistency in its financial reporting. The presentation of this additional information is not meant to be considered in isolation or as a substitute for earnings per share calculated in accordance with GAAP. A reconciliation of these GAAP and non-GAAP financial measures is included in the attached tables.
WebEx Online Meeting
Management will host the quarterly WebEx online meeting to discuss the results beginning at 5:00 PM Eastern time today. Interested parties may participate in the WebEx online meeting in one of the two ways mentioned below:
To join the WebEx online meeting and listen to the audio via the computer (WebEx VoIP), please go to http://webex.com/q3_earnings_voip
or
To join the WebEx online meeting and listen to the audio via the telephone, please go to http://webex.com/q3_earnings_tele and call (212) 271-4515.
For those unable to participate in the live WebEx meeting, a replay will be available beginning one hour after conclusion of the meeting. To replay the recorded WebEx meeting, go to http://webex.com/q3_replay or to replay the audio only, call (402) 977-9140, and enter pin code: 21209362.
About WebEx Communications, Inc.
WebEx Communications, Inc. is the world's leading provider of on-demand web meeting applications. WebEx applications improve collaboration and increase productivity in sales, support, training, marketing, engineering and product design. WebEx delivers its suite of real-time collaborative applications over the global WebEx MediaTone Network, a network specifically designed for secure web collaboration. WebEx Communications is based in San Jose, California and has regional headquarters in Europe, Asia and Australia. Please call toll free 877-509-3239 or visit http://www.webex.com or more information.
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