Firstwave Reports Fourth Quarter and Year-ended Results for 2005
Monday February 6, 4:06 pm ET
Company reports positive outlook from the sale of the UK Subsidiary and the relationship with M1 Global
ATLANTA, Feb. 6 /PRNewswire-FirstCall/ -- Firstwave Technologies, Inc. (Nasdaq: FSTW - News), a web-based, CRM solutions provider, today announced financial results for the fourth quarter and year ended December 31, 2005.
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Continuing Operations
The loss from continuing operations for the fourth quarter of 2005 decreased 92% to $230,000, including dividends, or $0.08 per fully diluted share, from a loss of $2.9 million in the fourth quarter of 2004, or $1.08 per fully diluted share. For the full year of 2005, the loss from continuing operations decreased 65% to $1.86 million, including dividends, or $0.68 per fully diluted share, from a loss of $5.3 million, or $1.97 per fully diluted share, in 2004.
Software license revenues decreased 27% to $137,000 in the fourth quarter of 2005 from $187,000 in the fourth quarter of 2004. Services revenues decreased 81% to $47,000 in the fourth quarter of 2005 as compared to $244,000 in the same quarter a year ago. Maintenance revenues decreased 23% to $436,000 in fourth quarter of 2005 from $566,000 in the fourth quarter of 2004. Total revenues for the fourth quarter of 2005 were $622,000, a 38% decrease from the fourth quarter of 2004 revenues of $1.0 million. $110,000 of the total revenue decrease in the fourth quarter of 2005 relates to the fact that Firstwave began receiving a percentage of revenues from M1 Global's sales (33% of license revenues and 20% of services revenues); however, the costs relating to making such sales are borne entirely by M1 Global so the amounts received by Firstwave from these revenues totally benefit the bottom line.
For the full year of 2005, the Company reported a decrease in software license revenues of 37% to $551,000 from $876,000 in 2004, and a decrease in services revenues of 46% to $623,000 from $1.1 million in 2004. Maintenance revenues decreased 19% to $2.0 million in 2005 from $2.5 million in 2004, and total revenues decreased 29% to $3.2 million in 2005 from $4.5 million in 2004.
As more fully explained above, the decreases in license and services revenue is in part the result of a shift in the product marketing approach from a direct model to a channel model as reflected in the relationship with M1 Global. Maintenance revenues, however, fell at a much lesser rate than the other revenues, which stems from a high level of maintenance renewals from existing customers.
Although revenues decreased during the fourth quarter and for the full year of 2005, the bottom line improved primarily due to the M1 Global relationship, which results in Firstwave receiving 33% of license revenues and 20% of services revenues without incurring any of the associated expenses, rather than receiving 100% of the revenues and carrying 100% of the related costs.
Discontinued Operations
On June 3, 2005, Firstwave entered into the Stock Purchase Agreement with AllAboutTickets LLC to sell its UK Subsidiary. As a result of this sale, there were no discontinued operations results during the fourth quarter of 2005 compared to net income of $213,000 in the fourth quarter of 2004. For the full year 2005, the Company reported a loss from the discontinued operations of $457,000 prior to the sale compared to earnings of $410,000 for all of 2004. The $457,000 loss from discontinued operations in 2005 was partially offset by a gain on the sale of the UK subsidiary of $327,000.
Other
Firstwave reported a cash balance of $360,000 at December 31, 2005, and continues to carry no debt. This was the first increase in quarter-over- quarter cash flows from operations since the fourth quarter of 2004.
"As explained in my letter filed with this announcement and available on our web site, both the sale of the UK Subsidiary and the outsourcing agreement with M1 Global have had positive impacts on Firstwave," commented Richard Brock, President and CEO of Firstwave. "Operating at a greatly reduced expense level, we anticipate seeing movement toward profitability and continuing positive cash flows in the future."
Firstwave will hold its first quarter earnings conference call on Thursday, February 9, 2006, at 4:00 P.M. EST. To participate in the call from the United States or Canada, please dial 866-256-3815 approximately five minutes prior to the start time. To participate in the call from outside the United States or Canada, please dial 703-639-1212 five minutes prior to the start time.
ABOUT FIRSTWAVE
Firstwave® Technologies, Inc. is a global provider of strategic CRM solutions specifically designed for "capturing the story so far" in sales and customer support applications. Firstwave's solutions provide companies with fit-to-purpose features that optimize how companies win, maintain and grow customer and organizational relationships while improving the overall customer experience. With 20 years of experience in CRM, Firstwave's legacy of CRM best practices and Customer-First Commitment has earned the Company numerous industry awards and accolades. Firstwave is headquartered in Atlanta, Georgia. For more information, visit the Company's web site at www.firstwave.net or call 1-800-540-6061.
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