The company reported an EBITDA loss (net loss before interest, taxes, depreciation, amortization and non-cash stock compensation) of $18.2 million, an 18% improvement over a EBITDA loss of $22.1 million in the first quarter of 2001. The company also reported a net loss of $32.2 million, or $0.33 per share, compared with a loss of $32.9 million, or $0.34 per share, for the first quarter of 2001.
I am pleased with our second quarter results in terms of revenue growth, gross margin improvement, EBITDA loss, and net loss per share, stated Peter Bell, StorageNetworks’ Chairman and Chief Executive Officer. During the quarter, we continued to execute on our strategy to make our software the industry standard for data storage management. Our recently announced STORfusion service gained traction through partnerships with Fujitsu and Pihana. This offering allows our partners to offer our proprietary software, processes, and global monitoring as storage management services.
New customers for StorageNetworks STORmanage and fully managed PACS offerings include Cisco, Enron, Martha Stewart, American Greetings and Saksdirect, the Saks Fifth Avenue online initiative.
Despite this quarter’s strong financial performance, signing of key new customers, immediate traction of our newest service offering STORfusion, and the interest our services are receiving in enterprise companies, we are disappointed at the speed of which new bookings are occurring, continued Bell. We recognize that the challenging macroeconomic environment has caused a worldwide slowdown in information technology spending. Today, companies are taking longer to make purchasing decisions because of this challenging economic environment.
As a result of lengthened sales cycles, a reduction in our backlog, and the longer turn-on times from contract signing to when we begin recognizing revenue within existing enterprise accounts, we are reducing our revenue guidance for the year. We are projecting that revenues for 2001 will be between $120MM and $127MM, continued Bell.
I am very pleased with the overall financial results for the quarter, stated Paul Flanagan, Executive Vice President and Chief Financial Officer. We saw our gross margin, EBITDA loss, net loss and loss per share continue to improve toward profitability. Additionally, our balance sheet remains strong with $350 million in cash and our days sales outstanding of our accounts receivables balance remains at less than 45 days.
The company also announced that it was undergoing a cost reduction program. The company will reduce its headcount by approximately 220 employees primarily in its sales, delivery and support organizations. While we are disappointed that we are required to adjust revenue guidance downward, we have every intention to deliver upon our profitability targets that we have provided guidance on in the past, and accordingly we are aligning our cost structure with our revenues. As a result, we streamlined the sales, delivery and support organizations, reducing our headcount by approximately 220 employees bringing our total headcount to 450. Given these organizational changes, I feel confident that we will achieve gross margin profitability in the third quarter of this year, one quarter ahead of previous guidance. In addition, with $350 million in cash, and $35 million of available financing, we have sufficient funding to achieve operating profitability, continued Flanagan.
SOURCE: COMPANY PRESS RELEASE
