Revenues for the fourth quarter were $19.7 million, up 18 percent from the preceding quarter, exceeding the high end of the Company’s previously announced revenue expectation for the quarter of $17.0 million to $19.0 million. The sequential increase in revenues reflects strong seasonal year-end customer buying, as well as a heightened customer-focus on IT security as a result of the terrorist attacks of Sept. 11, 2001, and the recent Nimda and Code Red Internet worms, among other major Internet security incidents.
For the fourth quarter, the Company reported net income of $0.7 million, or $0.01 per share, an improvement over a net loss of $12.8 million, or ($0.25) per share, in the third quarter. The improvement in net income for the quarter also exceeded the Company’s previously announced expectation of a slight net loss to breakeven results. The improvement in net income was the result of increased revenues, the expansion in gross margin and the significant improvement in operating leverage related to the Company’s corporate reorganization and restructuring initiatives.
License revenues for the quarter were $12.7 million, up 31 percent from the preceding quarter. The sequential growth of the license revenues was driven by sales of the Company’s bv-Control product line, which accounted for over 85 percent of total license revenues, reflecting strong demand for BindView’s security management software. Most of the growth in the quarter was related to sales of bv-Control for Microsoft platforms and applications, which now represents over 70 percent of the Company’s revenues. Revenues from services were $7.0 million, up slightly from the third quarter.
Gross profit for the fourth quarter was $18.0 million with gross margin improving to 91.5 percent compared with 89.6 percent for the preceding quarter. The sequential expansion in gross margin reflected the change in business mix toward higher-margin license sales and an improvement in operating leverage of the Company’s technical support and professional services units.
Operating income for the fourth quarter was $0.7 million, which represented the Company’s first quarterly operating profit since the third quarter of 2000. This improvement was the result of higher license revenues and the significant reduction in operating costs and expenses related to the Company’s corporate reorganization and restructuring efforts.
For the full year 2001, the Company reported a net loss of $24.1 million, or ($0.47) per share, on revenues of $70.9 million. This loss reflected the effects of high operating costs and expenses in the first three quarters of 2001 and the effects of charges related to the Company’s corporate reorganization and restructuring efforts and certain non-operating asset impairments. These charges, which were reflected in the operating results for the first nine months of 2001, totaled $13.6 million ($9.5 million after-tax or $0.18 per share).
As of December 31, 2001, the Company had cash and short-term investments of $43.0 million, an increase of approximately $1.0 million over September 30, 2001. The Company also had no outstanding debt.
Commenting on the results, Eric Pulaski, president and CEO, said We are very pleased with the results for the fourth quarter. We met or exceeded all our significant operational and financial targets, including the generation of operating income ahead of schedule.
Our better than anticipated fourth quarter results demonstrate the Company’s ability to set and achieve its business goals, continued Pulaski. The strong demand for our security management software fueled our revenue growth during the quarter, and profitability was driven by our planned improvements in operating leverage and efficiency from our restructuring initiatives. BindView is entering 2002 strategically positioned to benefit from the marketplace’s increased awareness of security and our management team is focused on executing our plan to increase our penetration in the security market. We will continue to address our customers’ needs to secure, automate and lower the costs of managing their IT infrastructures by delivering both proven and innovative solutions for proactive security management. By doing so, we will help our customers exert control over their complex, ever changing computing environments and achieve our long-term growth objectives.
