Advanced Technology (AT) contract revenue remained stable at $1.1 million, which is consistent with the company’s continued strategy of focusing only on development contracts that add value to its P&S offerings. Total revenues were $12.6 million, a 42% increase compared to revenues of $8.8 million in the same quarter last year. While IT spending has slowed worldwide, we continue to exceed our outlook guidance, first published on October 19, 2000, on all fronts and have exceeded consensus analyst expectations for eight consecutive quarters, said John McNulty, chairman and chief executive officer at Secure Computing. During the second quarter we continued to gain market share while several other Internet security software companies missed their targets. Although security spending is not recession-proof, we remain confident in the long-term health of the Internet security industry and we believe that our superior products, partners and people are giving us an edge in weathering this storm, added McNulty.
Net loss for the second quarter was $3.2 million or $0.11 per share, compared to a net loss of $5.7 million, or $0.23 per share, a 45%, or $2.5 million reduction, from the year ago quarter.
Year to date, P&S revenues were $21.7 million, a 54% increase compared to P&S revenues of $14.1 million in the same period last year. Net loss for the year to date was $7.7 million, or $.28 per share, compared to a net loss of $12.2 million or $.50 per share in the same period last year.
We are in the final phase of reinventing Secure Computing. Our management, sales, and marketing teams are positioned with the right products and partners to succeed. We are intensely focused on leveraging our partner and channel relationships going forward. Opportunities like our 3Com relationship and our recently announced partnership with Phoenix Technologies are examples of relationships that we believe will provide long term growth opportunity and increased momentum for our products in the quarters ahead, said Tim McGurran, president and chief operating officer at Secure Computing. Further, the recent addition of Vincent Schiavo to the newly created position of senior vice president of worldwide sales, is important to us at a time when our products are beginning to experience increasing momentum in the commercial market, continued McGurran.
Enterprise licenses were executed by a number of industry leaders including Prudential Financial, the number one U.S. life insurer and one of the top insurers worldwide; John Deere & Company, a leading manufacturer of farm, industrial, forestry and lawn-care equipment; Dana Corporation, one of the world’s largest suppliers of components, modules and complete systems to global vehicle manufacturers and their related after markets; Guardian Life Insurance Co. of America, the fourth largest mutual life insurance company in the United States; GPU, Inc., an international provider of energy-related infrastructure and services; AMD (Advanced Micro Devices), a global supplier of integrated circuits for the personal and networked computer and communications markets; Panasonic of America, a subsidiary of the 26th largest company in Fortune’s Global 500, Matsushita Electric, Ltd.; and St. Elizabeth’s Hospital, an affiliate of Hospital Sisters Health System, one of the 10 largest private hospital systems in the United States.
Gross margins continued to set new records for the company at 83% of revenue or $10.4 million for the quarter compared to 70% of revenue or $6.1 million in the year ago quarter. Secure’s operating expenses were $13.9 million, up 15% from the year ago quarter. Sales and marketing expenses were $9.2 million, up 16% from the year ago quarter as the company continued its ongoing strategy to increase its investment in selling and marketing. Research and development (R&D) costs of $3.6 million increased 19% from the year ago quarter as the company continues to invest in its next-generation embedded firewall technology.
General and administrative costs of $1.1 million remained consistent with the year ago quarter. Our success in growing products and services revenues by over 51%, while expanding gross margins by over 13 percentage points, and keeping our expense growth to only 15%, resulted in a 45% reduction in our net loss, said Tim Steinkopf, vice president and chief financial officer.
SOURCE: COMPANY PRESS RELEASE
