Reston, Virginia, and Montpellier, France - November 15, 2005 - Genesys Conferencing
(Euronext Eurolist: FR0004270270) (NASDAQ: GNSY), a global multimedia conferencing
service leader, today reported financial results for the third quarter ended September
30, 2005. All results are reported under new International Financial Reporting
Standards (IFRS). For comparison purposes, financial results for the third quarter
ended September 30, 2004, have been stated under IFRS and may differ from the
results previously reported for this period under French Generally Accepted Accounting
Principles (GAAP).
Operating Highlights: Q3 2005 versus Q3 2004
- Total volume increased 33.7% to 499.4 million minutes
- Genesys Meeting Center automated services volume increased 37.2% to 463.5
million minutes
- Volume utilizing Multimedia Minute pricing increased 272.6% to 124.3 million
minutes
- Revenue1 was up 8.4% to €36.1 million
- Gross margin increased to 66.1% up from 58.8% in the third quarter of 2004
- EBITDA2 was €6.0 million compared to €4.0 million in the third
quarter of 2004
- Net income was €2.0 million compared to a net loss of €(1.1)
million in the third quarter of 2004
"Our flagship service, Genesys Meeting Center, holds one of the highest
organic volume growth rates in the industry and continues to gain market share,"
stated François Legros, Chairman and Chief Executive Officer. "Overall,
large enterprises around the world are turning more and more to multimedia collaboration
services. Traditional users of stand-alone audio and web conferencing solutions
are increasingly recognizing the benefits our multimedia collaboration tools
and the value proposition of our Multimedia Minute. As such, Genesys is well
positioned to lead an expected phase of mass end-user adoption of multimedia
collaboration solutions."
Third Quarter 2005 Operating Performance
In the third quarter of 2005, revenue? was €36.1 million, up 8.4% compared
with revenue of €33.3 million in the third quarter of 2004. In U.S. dollars,
third quarter 2005 revenue was $44.0 million, up 8.2% compared to $40.7 million
in the third quarter of 2004. On a sequential basis, Genesys Meeting Center
volume and revenue were each down by approximately 2% due principally to seasonality.
Revenue from Genesys Meeting Center services accounted for 76.1% of total revenue
down sequentially from 77.4% in the second quarter of 2005 primarily as a result
of greater than expected revenue from Genesys Event Services, the company's
premium managed service. Long-term, the company continues to expect revenue
from Genesys Meeting Center services will account for approximately 80% of total
revenue.
Gross margin for the third quarter of 2005 was 66.1% compared to 58.8% for
the third quarter of 2004. Gross margin continues to meet the company's target
of greater than 60%. Overall, the company's cost structure continues to benefit
from improved economies of scale while allowing the company to manage the greater
migration of existing customers to Multimedia Minute-based services. Gross profit
increased by €4.3 million, or 21.9%, in the third quarter of 2005 up to
€23.9 million.
Selling, general and administrative expenses were €20.2 million in the
third quarter of 2005 up €1.5 million, or 8.2%, compared to €18.7
million in the third quarter of 2004. The increase is due to: the increase of
sales personnel during the second quarter of 2005; the recent implementation
of marketing programs designed to promote greater customer adoption of Multimedia
Minute-priced services; and additional legal and advisory expenses that were
incurred this quarter, particularly in connection with the previously described
Genesys Iberia arbitration process.
Earnings before interest, taxes, depreciation and amortization (EBITDA?) and
before stock-based compensation expenses was €6.0 million for the third
quarter 2005, a 16.7% EBITDA margin compared to €4.0 million and 12.0%,
respectively, for the third quarter of 2004. Stock-based compensation expenses,
as reported under IFRS, were €306,000 and €302,000 for the third quarters
of 2005 and 2004, respectively.
Net income was €2.0 million, or €0.11 per diluted share, for the
third quarter of 2005 compared to a net loss of €(1.1) million or €(0.06)
per share in the third quarter of 2004. Net income growth is primarily the result
of improved income from operations. Earnings before interest and taxes (EBIT)
increased to €2.9 million in the third quarter of 2005 from €0.1 million
in the third quarter of 2004. Net income also benefited by nearly €0.6
million in deferred tax credits.
"Third quarter results reflect our ability to achieve positive net income
while we increase growth initiatives in operational areas, such as sales and
marketing, technology development and global expansion," stated Michael
Savage, Executive Vice President, and Chief Financial Officer. "The company
expects to continue to reinvest in efforts to promote volume growth while managing
through price competition."
Liquidity
As of September 30, 2005, the company's cash? was €8.6 million after
deducting bank overdrafts. On October 31, 2005, the company made semi-annual
principal and interest payments under its existing senior credit facility. Additionally,
on October 31, 2005, the company fully repaid the remaining principal due under
its convertible bonds. Today, following the October repayments, the company's
cash and cash equivalents total more than €6.0 million.
"Our 2005 debt repayments represent important steps in the company's ability
to improve shareholder value," followed Savage. "On an enterprise
value basis the repayment of debt this year translates into a meaningful increase
of equity value per share."
Guidance
The following contains forward-looking guidance regarding Genesys Conferencing's
financial outlook and is based on expectations as of November 15, 2005. Actual
results may differ materially and the company may not update any forward-looking
statements made in this press release. Guidance continues to be based on a fixed
rate of exchange of EUR 1.00 = USD 1.25.
The company noted the recent departure of one of its largest audio conferencing
customers in connection with this customer's merger with a company that utilizes
an in-house audio conferencing solution. Revenue and volume from this customer
is expected to decline significantly over the next few months. Overall, this
customer is expected to account for approximately 5.5% of 2005 revenue.
The company however, projects that revenue for the full-year 2005 will continue
to be within the range of its previously disclosed guidance of €140 to
€145 million and EBITDA will be within the range of its previously disclosed
guidance of €23 million to €26 million.
Conference Call and Webcast
Chairman and Chief Executive Officer François Legros and Executive Vice
President/Chief Financial Officer Michael E. Savage will host a conference call
on Tuesday, November 15, 2005, at 5:30 p.m. Central European Time or 11:30 a.m.
Eastern Time to discuss third quarter 2005 financial results.
The conference call will be web cast live and may be accessed at www.genesys.com/investors
A replay of the call will be available at www.genesys.com/investors
_____________________________
(1) Please refer to the paragraph "Impact of Exchange Rates" below
for information regarding the calculation of U.S. dollar amounts.
(2) See attached note to consolidated statements of operations for reconciliation
of Operating Income and EBITDA. The company believes that EBITDA is a meaningful
measure of performance, because it presents the company's results of operations
without the non-cash impact of depreciation and amortization. EBITDA is reported
excluding stock-based compensation expense.
(3) Cash includes cash and cash equivalents less bank overdrafts.
Financial
Tables to Follow
Adoption of International Financial Reporting Standards
Effective January 1, 2005, the company, like many companies organized in
France and other European countries, adopted the new International Financial
Reporting Standards (IFRS) for reporting of its financial results. The company
previously reported under French GAAP.
Impact of Exchange Rates
The company serves large enterprises on a worldwide basis. As a result,
the company has extensive international operations and, thus, significant exposure
to exchange rate fluctuations, in particular those of the U.S. dollar. In 2003,
the U.S. dollar declined significantly compared to the euro, and its value further
fluctuated during 2004 and 2005. As a result, the comparability of the company's
revenues and results of operations expressed in euros was significantly impacted.
The company prepares its consolidated financial statements in euros. In order
to demonstrate the impact of the volatility of the U.S. dollar on its revenues
from the third quarter of 2004 to the third quarter of 2005, the company has
recalculated its revenues as if its functional currency had been the U.S. dollar
rather than the euro. For this purpose, the company has used the average for
each quarter of the daily euro/U.S. dollar exchange rate for the third quarters
of 2004 and 2005, respectively, which are the rates it used for translation
purposes in its consolidated income statement.
Forward-Looking Statements
This release contains statements that constitute forward-looking statements
within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements are statements other than historical information
or statements of current condition. These statements appear in a number of places
in this release and include statements concerning the parties' intent, belief
or current expectations regarding future events and trends affecting the parties'
financial condition or results of operations.
Forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and actual results may differ materially from those
in the forward-looking statements as a result of various factors. Some of these
factors are described in the Form 20-F that was filed by Genesys with the Securities
and Exchange Commission on May 2, 2005.
Although management of the parties believe that their expectations reflected
in the forward-looking statements are reasonable based on information currently
available to them, they cannot assure you that the expectations will prove to
have been correct. Accordingly, you should not place undue reliance on these
forward-looking statements. In any event, these statements speak only as of
the date of this release. Except to the extent required by law, the parties
undertake no obligation to revise or update any of them to reflect events or
circumstances after the date of this release, or to reflect new information
or the occurrence of unanticipated events.
About Genesys Conferencing
Genesys Conferencing is a leading provider of integrated Web, audio and
video conferencing services to thousands of organizations worldwide, including
more than 200 of the Fortune Global 500. The company's services are designed
to meet the full range of communication needs within the large enterprise, from
collaborative team meetings to high-profile online events. The company's flagship
product, Genesys Meeting Center, provides a single-platform multimedia conferencing
solution that is easy to use and available on demand. With offices in 24 countries
across North America, Europe and Asia Pacific, the company offers an unmatched
global presence and strong local support. Genesys Conferencing is publicly traded
on Euronext in France (ISIN FR0004270270) and on the NASDAQ in the U.S. (GNSY).
Additional information is available at www.genesys.com.
At Genesys Conferencing
Michael E. Savage
Executive Vice President, Chief Financial Officer
Phone: +1 703 736-7100
michael.savage@genesys.com
Marine Pouvreau
Investor Relations Manager
Phone: +1 703 733-2140
marine.pouvreau@genesys.com