Revenues for the quarter were $16.7 million compared with $17.5 million in the preceding quarter and $23.5 million in the third quarter of 2000. The sequential quarterly decline in revenues was primarily due to the general slowdown in sales activity following the terrorist acts of September 11, 2001 and lower than expected sales from the Company’s European units. The decrease in revenues from the third quarter of 2000 also reflected the global decline in IT spending in 2001. License revenues for the quarter were $9.7 million compared with $10.3 million in the preceding quarter. Revenues from services were $6.9 million compared with $7.2 million in the preceding quarter.
Gross profit for the quarter totaled $14.9 million and the gross margin was 89.6 percent, up from 87.4 percent for the preceding quarter. This 2.2 percentage point expansion in gross margin reflects higher operating leverage of the technical support and professional services units as a result of certain of the Company’s restructuring initiatives. The Company’s net loss (excluding the after-tax effects of non-recurring charges) was $3.8 million, or $0.07 per share, compared with a net loss of $7.7 million, or $0.15 per share, in the second quarter of 2001 and net income of $1.8 million, or $0.03 per share, for the third quarter of 2000.
Operating costs and expenses (excluding the non-recurring charges discussed below and costs of revenues) for the third quarter were approximately $6.0 million lower than the preceding quarter as a result of the Company’s previously announced restructuring initiatives discussed below. Due to timing of implementation, third quarter expenses do not reflect the full benefit of the Company’s restructuring initiatives and additional reductions in expenses related to these initiatives will be reflected over the next two quarters. Operating costs and expenses (exclusive of costs of revenues) are expected to be at or below $17.5 million in the fourth quarter of 2001 and at or below $17.0 million in the first quarter of 2002.
The Company’s reported net loss for the third quarter was $12.8 million, or $0.25 per share, and included non-recurring charges of $9.1 million ($13.0 million before tax), or $0.18 per share. These charges were comprised of: (i) a non-recurring restructuring charge of $6.0 million related to the previously announced corporate reorganization and restructuring and (ii) non-recurring (non-cash) asset impairments totaling $7.0 million, which primarily consisted of a write-off of a $5.0 million equity investment made by the Company in a UK-based software distribution and consulting firm. The write-off of this equity investment is included in non-operating expenses.
As of the end of the third quarter, the Company had cash and short-term investments of $46.6 million and no outstanding debt.
BindView’s security management products continue to receive strong acceptance in the market and we believe that they constitute a solid foundation for creating value for our customers, said Eric Pulaski, president and CEO. Moving forward, we are focused on deploying our go-to-market strategy and building on our leadership position in the vulnerability assessment space.
Although we were below our revenue target for the third quarter, we are pleased with the progress we have made in reducing our operating costs and expenses and increasing the productivity of our operations. The assertive steps we are taking to drive efficiencies in our business are accelerating our return to profitability and positioning our business for the next stage of growth.
