Company Increases Profit Guidance for 2005 from $2.25 million to
$2.7 million Segue Software, Inc. (NASDAQ-CM: SEGU), a leader in
Software Quality Optimization(TM) (SQO(TM)), today announced that
net revenues for the third quarter ended September 30, 2005,
totaled $9.1 million, an increase of 8% over the $8.4 million
reported in the third quarter of 2004. Third quarter net income
applicable to common shares increased 17% to $824,000, or $0.07 per
diluted share, compared to $703,000, or $0.07 per diluted share,
for the third quarter of 2004. Net revenues for the nine months
ended September 30, 2005, totaled $26.4 million, an increase of 8%
over the $24.5 million reported for the first nine months of 2004.
Net income applicable to common shares for the first nine months of
2005 increased 50% to $1.8 million, or $0.16 per diluted share,
compared to $1.2 million, or $0.11 per diluted share, for the
comparable period in 2004. As of September 30, 2005, Segue posted
deferred revenues of $10.5 million, had no long-term debt and
enjoyed a strong cash position of $13.0 million, up from $9.9
million one year ago and $11.0 million as of December 31, 2004.
"Our third quarter results represent a new milestone in Segue's
history--we now have achieved seven straight quarters of profitable
revenue growth," said Joseph Krivickas, president and chief
executive officer. "This is a result of consistent execution of our
corporate strategy and continued focus on our three strategic
priorities: profitable revenue growth, market-driven product
innovations and selective partnerships and alliances. "As we look
to the remainder of 2005, we now expect net income applicable to
common shares for the year will exceed $2.7 million, or $0.24 per
diluted share, topping our previous estimate of $2.25 million, or
$0.20 per diluted share. We continue to expect our 2005 revenue to
grow at an annual rate equal to or exceeding the market growth rate
of 8-10% projected by analysts for the overall Automated Software
Quality market. Our long term goal of generating annual revenue of
$50-60 million and net income before tax of $5-9 million in 2006 or
2007 remains unchanged." Conference Call and Webcast As previously
announced, the Company will hold a conference call today at 8:00
a.m. EDT to discuss third quarter financial results and its 2005
outlook. To access the call from within the United States, dial
1-800-247-9979. To access the call from outside the United States,
dial +1-973-409-9254. The call will also be available via webcast
on Segue's Web site at http://www.segue.com on the About
Segue/Investor Relations/Calendar of Events page. The Internet
broadcast will be available live on Segue's site and an archived
replay will be available for one year. About Segue Software Segue
Software, Inc. (NASDAQ-CM: SEGU) is a global expert in delivering
solutions to define, measure, manage and improve software quality
throughout the entire software application lifecycle. Segue's
Software Quality Optimization(TM) (SQO(TM)) solutions help
companies reduce business risk, ensure the deployment of high
quality software and increase return on investment. Leading
businesses around the world, including many of the Fortune 500,
rely on Segue's innovative Silk family of products to protect their
business service levels, competitive edge and brand reputation.
Headquartered in Lexington, Mass., with offices across North
America and Europe, Segue can be reached at +1-781-402-1000 or
www.segue.com. Segue and the Segue logo are registered trademarks
and Software Quality Optimization and SQO are trademarks of Segue
Software, Inc. All other marks are the property of their respective
owners. This press release may contain forward-looking statements,
such as our financial projections for 2005 and beyond.
Forward-looking statements are statements that contain predictions
or projections of future events or performance, and often contain
words such as "anticipates", "can", "estimates", "believe",
"expects", "projects", "will", "might", or other words indicating a
statement about the future. The Company notes that any such
forward-looking statements are subject to change and are not
guarantees of future performance, and that actual results may
differ materially from any such predictions or projections, based
on various important factors and including, without limitation, the
ability of the Company to continue to achieve positive cash flow
and sustain profitability in this difficult economic and business
climate; the ability of the Company to close large enterprise
orders; the Company's transition to a new management team; the
timing and success of introductions of our new products; market
acceptance of recently-introduced products (including SilkCentral
Test Manager 8.0) and updated releases; the effectiveness of our
additional distributors and resellers; growth in license revenue;
new products and announcements from other companies; the Company's
continued access to capital; and changes in technology and industry
standards. Additional information on the factors that could affect
the Company's business and financial results is included in the
Company's periodic reports filed with the Securities and Exchange
Commission. -0- *T Segue Software, Inc. Consolidated Condensed
Balance Sheets (In thousands, except per share data) (Unaudited)
September December 30, 31, 2005 2004 --------- -------- ASSETS
Current assets: Cash and cash equivalents $12,994 $11,028 Accounts
receivable, net of allowances of $303 and $281, respectively 7,302
6,421 Other current assets 1,168 1,013 --------- -------- Total
current assets 21,464 18,462 Property and equipment, net 805 749
Goodwill, net 1,506 1,506 Other assets 486 604 --------- --------
Total assets $24,261 $21,321 ========= ======== LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $1,372
$564 Accrued compensation and benefits 1,416 1,602 Accrued lease
obligations on excess space 764 1,059 Accrued expenses 845 1,134
Deferred revenue 10,530 10,524 --------- -------- Total current
liabilities 14,927 14,883 Stockholders' equity: Preferred stock,
par value $.01 per share; 9,000 shares authorized; 949 and 921
shares of Series B and 605 and 570 shares of Series C preferred
stock issued and outstanding, respectively 5,090 4,726 Common
stock, par value $.01 per share; 30,000 shares authorized; 10,460
and 10,195 shares issued, respectively 104 102 Additional paid-in
capital 58,279 57,959 Cumulative translation adjustment 243 429
Unearned stock-based compensation (27) (47) Accumulated deficit
(53,755) (56,131) --------- -------- 9,934 7,038 Less treasury
stock, at cost, 145 shares (600) (600) --------- -------- Total
stockholders' equity 9,334 6,438 --------- -------- Total
liabilities and stockholders' equity $24,261 $21,321 =========
======== Segue Software, Inc. Consolidated Condensed Statements of
Operations (In thousands, except per share data) Unaudited Three
Months Nine Months Ended Ended September 30, September 30, 2005
2004 2005 2004 --------- ------- --------- -------- Revenue:
Software $3,936 $3,766 $11,244 $10,938 Services 5,263 4,711 15,383
13,659 --------- ------- --------- -------- Gross revenue 9,199
8,477 26,627 24,597 Less vendor consideration to a customer (123)
(46) (248) (104) --------- ------- --------- -------- Net revenue
9,076 8,431 26,379 24,493 Cost of revenue: Cost of software 86 82
297 259 Cost of services 1,172 1,217 3,558 3,823 --------- -------
--------- -------- Total cost of revenue 1,258 1,299 3,855 4,082
Gross margin 7,818 7,132 22,524 20,411 Operating expenses: Sales
and marketing 3,906 3,478 11,182 10,439 Research and development
1,673 1,550 5,443 4,835 General and administrative 1,323 1,176
3,767 3,404 --------- ------- --------- -------- Total operating
expenses 6,902 6,204 20,392 18,678 --------- ------- ---------
-------- Income from operations 916 928 2,132 1,733 Other income,
net - - - 15 Interest income, net 76 23 190 60 --------- -------
--------- -------- Income before provision for income taxes 992 951
2,322 1,808 Provision (benefit) for income taxes (26) 61 (54) 63
--------- ------- --------- -------- Net income 1,018 890 2,376
1,745 Preferred stock dividend-in-kind (194) (187) (558) (527)
--------- ------- --------- -------- Net income applicable to
common shares $824 $703 $1,818 $1,218 ========= ======= =========
======== Net income per common share - Basic $0.08 $0.07 $0.18
$0.12 Net income per common share - Diluted $0.07 $0.07 $0.16 $0.11
Weighted average common shares outstanding - Basic 10,268 9,962
10,218 9,827 Weighted average common shares outstanding -
Diluted(a) 11,334 10,604 11,361 10,622 (a) The assumed conversion
of preferred shares into common shares is not included because
their inclusion would be anti-dilutive. *T
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