BWEB Backweb Technologies

BackWeb Technologies Ltd. (Nasdaq: BWEB), a leading provider of offline and mobile web software, today reported financial results for its third quarter and nine months ended September 30, 2005. BackWeb(R) reported Q3 2005 revenue increased 51% to $1.78 million compared to $1.18 million in the third quarter of 2004 and revenue of $1.72 million, or 4%, in the second quarter of 2005. Higher license revenues in particular, as well as continued strength in services, drove the third quarter revenue increase. License sales in the period included significant new and follow-on orders from Centocor, Dade Behring, Pfizer and Siemens AG's Communications Group. BackWeb continued its expense management discipline, reporting a reduced net loss of $208,000, or $0.01 per share, for Q3 2005, compared to a net loss of $1.54 million, or $0.04 per share, in Q3 2004, and a net loss of $233,000, or $0.01 per share, in Q2 2005. For the first nine months of 2005, BackWeb's revenue rose 30% to $5.16 million compared to $3.97 million in the first nine months of 2004. BackWeb reported a significantly lower net loss of $688,000, or $0.02 per share, for the first nine months of 2005, compared to a net loss of $4.23 million, or $0.10 per share, in the first nine months of 2004. BackWeb's balance sheet and cash position continue to remain solid, with no long-term debt and cash and investments totaling approximately $8.62 million as of September 30, 2005. BackWeb's Vice President Finance, Ken Holmes, commented, "The third quarter was our strongest period of license revenue recognition in three years and reflects customers who are either expanding existing deployments or bringing BackWeb's value to other new applications." BackWeb's CEO, Bill Heye, commented, "Our Q3 success reflects progress in both revenue growth and expense management toward our goal of sustainable profitability. We believe that current market dynamics are driving greater demand for the mobilization of key enterprise web applications. In an effort to accelerate our revenue ramp in coming quarters, we recently expanded our senior management team with the appointments of two proven industry executives to head worldwide sales and marketing and business development. Already, we are seeing the benefit of their contributions as they expand our sales outreach and work toward new partnering opportunities. While these additions, as well as the planned ramp in sales, marketing and partnering activity will moderately increase our expenses going forward, we believe the growing opportunities for mobile software justify these investments at this time." Mr. Heye concluded, "Also supporting our sales and marketing effort is a growing base of customers who have achieved successful deployments of our solutions, some with deployments exceeding 10,000 users. A number of our customers have already returned to BackWeb to expand their original deployments or to deploy our mobility solutions in new applications or divisions. Additionally, our partnership with Oracle's PeopleSoft(R) Enterprise ePerformance application is gaining traction and contributed to an important business win in the recent quarter. Expanding our base of partnerships of this type is a major focus of our company, and we hope to demonstrate more progress in this area in the coming quarters." About BackWeb Technologies: BackWeb mobilizes critical web applications and content for mobile workforces and remote offices. Mobile professionals can be productive anytime, anywhere, without interruption, regardless of connection status or network availability. BackWeb's patented web and polite synchronization mobile solution delivers a seamless and simple user experience. The solution is commonly deployed to sales forces, field employees, mobile managers and remote operations. Typical e-business applications include enterprise sales force automation, CRM, e-learning and training and Human Capital Management (HCM). Content examples include document repositories and rich media. BackWeb customers include market leaders such as Boehringer Ingelheim, Eastman Kodak, GE Healthcare, Hewlett-Packard, Johnson & Johnson, KLA Tencor, Lam Research, and Pfizer. BackWeb also serves customers through partnerships with BEA, Oracle PeopleSoft and SAP. BackWeb's operations are centered in San Jose, California, and Rosh Ha 'ayin, Israel with field offices in New York and Europe. Make every minute of your mobile professional's day productive; visit www.backweb.com or call (877) 222-5932. (C) 2005 BackWeb Technologies Ltd. All rights reserved. BackWeb is a registered trademark and Offline Access Server is a trademark of BackWeb Technologies Ltd. All other trademarks are property of their respective owners. Statements in this news release, which are not purely historical, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements of beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include statements regarding: BackWeb's ability to achieve sustainable profitability; the expected contributions to our business of BackWeb's new officers; our planned increase in sales, marketing and partnering activity and the resulting expected increase to our expenses; and our efforts to expand our partnership base. Actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially from expectations include, but are not limited to, the ability of BackWeb's new and existing sales personnel to effectively transition to the new sales execution model; the uncertainty of market acceptance of offline access products or our ability to license those products to customers; general economic conditions or any downturn in IT industry spending; the ability of BackWeb to develop innovative technology and deliver solutions that meet customer needs; and the potential emergence of competitive technologies or competitor companies. In addition, please refer to our periodic filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, which contain more detailed descriptions of the risk factors facing our business. BackWeb assumes no obligation to update any of the forward-looking statements in this release. -0- *T BackWeb Technologies Ltd. Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2005 2004 Unaudited ------------- ASSETS Current assets: Cash and investments $ 8,617 $10,320 Trade accounts receivable, net 1,145 1,677 Other current assets 298 378 ------------- ------------- Total current assets 10,060 12,375 Long-term investments and other assets 33 26 Property and equipment, net 206 154 ------------- ------------- Total assets $10,299 $12,555 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 1,779 $ 1,800 Deferred revenue 1,121 2,672 ------------- ------------- Total current liabilities 2,900 4,472 Long-term liabilities 21 145 Total shareholders' equity 7,378 7,938 ------------- ------------- Total liabilities and shareholders' equity $10,299 $12,555 ============= ============= *T -0- *T BackWeb Technologies Ltd. Condensed Consolidated Statements of Operations (in thousands, except per share data) Three months ended Nine months ended ------------------- ------------------- September September September September 30, 2005 30, 2004 30, 2005 30, 2004 Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- Revenue: License $ 942 $ 124 $ 2,569 $ 1,043 Service 840 1,057 2,588 2,923 --------- --------- --------- --------- Total revenue 1,782 1,181 5,157 3,966 Cost of revenue: License 14 12 27 53 Service 183 347 533 960 --------- --------- --------- --------- Total cost of revenue 197 360 560 1,013 --------- --------- --------- --------- Gross profit 1,585 821 4,597 2,953 --------- --------- --------- --------- Operating expenses: Research and development 530 768 1,670 2,527 Sales and marketing 787 1,236 2,317 3,273 General and administrative 511 423 1,359 1,533 --------- --------- --------- --------- Total operating expenses 1,828 2,427 5,346 7,333 --------- --------- --------- --------- Loss from operations (243) (1,606) (749) (4,380) Finance and other income, net 35 68 61 149 --------- --------- --------- --------- Net loss $ (208) $ (1,538) $ (688) $ (4,231) ========= ========= ========= ========= Net loss per share $ (0.01) $ (0.04) $ (0.02) $ (0.10) ========= ========= ========= ========= Shares used in computing net loss per share 41,036 40,717 40,971 40,669 ========= ========= ========= ========= *T