ImageX.com Revenue Increases to $14.6 Million, Cash Reserves Remain Strong
Friday, May 04, 2001
KIRKLAND, Wash. - May 3, 2001 - ImageX.com, Inc. (Nasdaq: IMGX), the technology market leader in Web-enabled design and printing services, today reported revenues of $14.6 million for the quarter ended March 31, 2001, an increase of 163% compared with revenues of $5.6 million for the same period last year. For the quarter ended March 31, 2001, the company reported a cash loss of $9.9 million, or ($0.37) per share, based on 26.4 million weighted average shares outstanding, versus the revised Thomson/First Call consensus estimate for the first quarter 2001 of ($0.38) per share. This compares with a cash loss of $8.2 million, or ($0.42) per share, based on 19.3 million shares outstanding for the same period last year. Including non-cash items, the company's net loss for the quarter ended March 31, 2001, was $15.2 million, or ($0.58) per share, on 26.4 million weighted average shares outstanding compared with a net loss of $9.5 million, or ($0.49) per diluted share, on 19.3 million weighted average shares outstanding for the period ended March 31, 2000. The first quarter 2001 net loss included one-time charges of $2.2 million related to a 17% staff reduction and closure of a print marketplace subsidiary. "While we experienced a softness in first quarter revenues due to customer reaction to short-term economic factors, we continue to add new customers and the return on investment of our Web-based printing solution has never been more compelling," said Rich Begert, president and chief executive officer. "In times like these, when customers are looking for ROI, they start paying attention to the cost value we provide. For both medium and large corporate customers, our technology reduces cost for both clients and their suppliers." Financial Highlights ImageX.com reported record gross profit, up 238%, to $4.7 million for the quarter ended March 31, 2001 compared with gross profit of $1.4 million for the same period last year. Total operating expenses before depreciation, amortization, and loss on disposal of assets totaled $14.9 million for the quarter ended March 31, 2001 compared with $10.3 million for the same period last year. Comparing the first quarter 2001 to the fourth quarter 2000 cash operating expenses fell over 9%, demonstrating the company's continued focus on expense control. The company reported cash and cash equivalents of $29.4 million at March 31, 2001. "With excellent cost management processes in place and a strong cash balance, we are well positioned to be the successful enterprise in our industry sector," said Robin L. Krueger, the company's chief financial officer. "The second quarter results should show further improvements as the initiatives completed in the first quarter achieve full effect." Operational Highlights "Our leadership position in our industry has never been so clear," said Begert. "In this quarter, we added new customers, experienced accelerating volume, and introduced new customer interface technologies - all while we were improving our cost performance." "We are a top performer in the area of large corporate branding implementations and our successes with new customers such as Credit Suisse First Boston and UBS PaineWebber Inc. illustrate this capability," Begert continued. "These are long-term relationships that will outlast short-term economic shifts." * Major cost savings measures implemented. During the first quarter a 17% staff reduction was completed, non-staff cost reductions were implemented, and the PrintBid.com marketplace was closed. As a result, annualized operating expenses are expected to decline by over $10 million during 2001. One-time charges related to the staff reduction plus the PrintBid.com closure totaled $2.2 million. "These actions were a rapid response to revenue trends which developed during the first quarter," said Begert. "As we achieve greater volumes through our system, new operating efficiencies will continue to occur." * Online printing center continues to see steady customer growth. ImageX.com's Corporate Online Printing Center's online Fortune 1000 customers totaled 33 at March 31, 2001. Cumulative online printing customers reached 341 by the end of the first quarter, reflecting an addition of 10 new corporate relationships. During the first quarter, the company also received significant orders from existing customers, including UBS PaineWebber Inc. and IKON Office Solutions. * Order volume and number of online products continues growth. Order volume for the quarter ended March 31, 2001 grew to 46,935 items, an increase of 32% compared to 35,677 in the prior quarter and up 194% from 15,954 orders, one year ago.. During the first quarter, 23 new customized corporate Web sites went live and 980 new products were set up on customer websites. * ImageX.com introduces new design and functionality for Corporate Online Printing Center. Version 8.0 of the core user interface of the Corporate Online Printing Center was fully implemented with customers during the first quarter. The new version provides improved shipment tracking, online customer service and more intuitive navigation through customized corporate websites. These features will increase speed to order and are accompanied by significant backroom efficiencies also completed during the quarter. "The latest enhancements are in response to specific customer needs," said Begert. "And we will continue to provide improvements that both serve the customer and improve operating efficiencies." ImageX.com currently has 81 patents pending to protect proprietary technologies company-wide. * New internal systems for Operations and Finance. A major capital investment that will achieve "no touch" customer order processing was completed in March after an intense eight month effort. This Oracle-based operations and finance system will enable significant operating efficiencies and process cost reductions. "This new system automates our entire process from customer order entry to invoicing and completes our investment in the highest quality and most scalable infrastructure available," said Begert. * Strategic Alliance with IKON Office Solutions creates new customer growth opportunities. A new cooperative sales and marketing arrangement with IKON Office Solutions provides access to a pool of over 350,000 new customers. "Through IKON's Digital Express, the ImageX.com Corporate Online Printing Center product will be potentially visible to thousands of new customers," stated Begert. "We continue to believe that strategic alliances can provide efficient distribution networks for our products. Financial Outlook "The revenue softness in the first quarter will impact our longer term outlook," stated Krueger. "As a consequence of staffing reductions and other cost measures our first quarter expenses declined 9% over the previous quarter and are expected to decline another 15% by the end of the second quarter. Revenues are expected to recover at least 5-7% in the June quarter as compared with the quarter ended March 31, 2001. Based on revenue trends observed year to date, full year 2001 revenue is expected to range between $60 and $65 million, or 20% to 30% growth over full year 2000. Cash operating expenses are expected to continue to decline and reach 75% of revenue for the full year compared to 111% of revenue in 2000. Based on the current revenue forecast and cost reductions, our cash balance is sufficient to reach cash flow breakeven and beyond."