Mercury Interactive Corporation, the global leader in business technology optimisation (BTO), today reported results for the fourth quarter and year ended 31 December 2003.
Revenue for the fourth quarter of 2003 was $152 million, an increase of 29% compared to $117.8 million reported in the fourth quarter of 2002. For the year ended 31 December 2003, revenue was $506.5 million, an increase of 27% compared to $400.1 million reported for the year ended 31 December 2002.
Deferred revenue for the fourth quarter of 2003 increased by $54.6 million from the third quarter of 2003 to $280.6 million. Cash generated from operations for the fourth quarter of 2003 was $66.9 million compared to $40.9 million in the fourth quarter of 2002.
GAAP results
Net income for the fourth quarter of 2003 was $13.1 million, or $0.14 per diluted share, compared to $18.8 million, or $0.21 per diluted share, for the same period a year ago. GAAP results for the fourth quarter include an executive severance charge of $6.6 million, stock-based compensation and amortisation of intangible assets of $4.2 million, restructuring, integration and other related charges of $1.1 million and net loss on investments in non-consolidated companies of $2.2 million. For the year ended 31 December 2003, net income was $41.5 million, or $0.45 per diluted share compared to $65.2 million, or $0.74 per diluted share, for the year ended 31 December 2002. The results for the year ended 2003 include an executive severance charge of $6.6 million, $16.9 million of non-cash impairment charges related to real estate consolidation, stock-based compensation and amortisation of intangible assets of $8.4 million, acquisition, restructuring, integration and other related charges of $15.4 million and net loss on investments in non-consolidated companies of $2.2 million.
Non-GAAP results
Net income for the fourth quarter of 2003 was $26.2 million, or $0.27 per diluted share, compared to $23.4 million, or $0.27 per diluted share, for the same period a year ago. Non-GAAP earnings per share for the fourth quarter of 2003 are calculated using fully diluted shares of 97 million. Net income for the year ended 31 December 2003 was $86.1 million, or $0.93 per diluted share, compared to $62.9 million, or $0.72 per diluted share, for the year ended 31 December 2002. Non-GAAP results for 2003, as presented in the attached reconciliation table, exclude the following recurring items: acquisition, restructuring, integration and other related charges, asset impairment charges related to real estate, gain on early retirement of debt, stock-based compensation and amortisation of intangible assets, net loss on investments in non-consolidated companies as well as related income tax provisions or benefits. Also excluded is a non-recurring charge associated with executive severance. "The fourth quarter capped off an impressive year of growth for Mercury with record revenues, record deferred revenue growth, and record cash flow from operations," said Amnon Landan, chairman and CEO at Mercury Interactive Corporation. "Our customers are adopting the new Mercury Optimisation Centres as they take an enterprise approach to business technology optimisation."
Q4 2003 highlights
* Record 19 transactions greater than $1 million in the fourth quarter
* Record 51% of new product orders as term licences
* Record net increase in deferred revenue of $54.6 million, principally from term licences
* Record results in application management and application delivery new orders and revenue
* IT governance (formerly Kintana) orders exceeded management expectations
Financial outlook
The following financial outlook is provided based on information as of 21 January 2004.
Management provides the following guidance for the quarter ending 31 March 2004:
* New order growth is expected to be in the range of 22% to 27%
* Term licences are expected to be in the range of 45% to 50% of new product orders
* Revenue is expected to be in the range of $145 million to $155 million
* Net increase in deferred revenue is expected to be in the range of $10 million to $20 million
* GAAP diluted earnings per share is expected to be in a range of $0.12 to $0.18
* Non-GAAP diluted earnings per share is expected to be in the range of $0.17 to $0.23 * Cash flow from operations is expected to be in the range of $50 million to $60 million
Non-GAAP guidance is adjusted from GAAP guidance by excluding recurring acquisition, restructuring, integration and other related charges and stock-based compensation and amortisation of intangible assets of approximately $5.1 million.
Quarterly conference call
A Webcast of the conference call, together with supplemental financial information, can be accessed through the company`s Investor Relations Web site at http://www.mercuryinteractive.com/ir. In addition, an archive of the Webcast can be accessed through the same link. An audio replay of the call will be available until midnight on 27 January 2004. The audio replay can be accessed by calling 888 203 1112 or 719 457 0820, conference call code: 708793.
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Mercury Interactive, the global leader in business technology optimisation (BTO), is committed to helping customers optimise the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today. Mercury provides software and services to govern the priorities, people and practices of IT; deliver and manage applications; and integrate IT strategy and execution. Customers worldwide rely on Mercury Optimisation Centres to improve quality and performance of applications and manage IT costs, risk and compliance. Mercury BTO offerings are complemented by technologies and services from global business partners. For more information, visit www.mercuryinteractive.com.
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