Press Release
- Date:
- Monday, January 14, 2002
- Contact:
- Mark Funston
- Phone:
- (301) 731-2300
- Email:
- mark_funston@g1.com
Group 1 Software Announces Preliminary Third Quarter Results
Lanham, MD — Group 1 Software (Nasdaq: GSOF) today announced that it anticipates revenues and earnings for the third quarter of fiscal year 2002, which ended December 31, 2001, to fall below analyst expectations. Group 1 estimates that third quarter revenues were approximately $22 million, with earnings per share in the range of $0.16 to $0.18. Cash flow continued positive. The company's cash and cash equivalents totaled approximately $43.8 million at December 31, 2001, up from the $41.8 million reported on September 30, 2001. More information on Group 1's third-quarter results and future guidance will be available on January 28, 2002 when the company anticipates reporting its final results and hosting a conference call to discuss those results.
Group 1's third quarter results were negatively impacted by weaker market conditions in both of its operating segments, directly the result of the current economic climate. For its DOC1 Customer Communications Management division, Latin American revenue fell substantially short of expectations due primarily to economic uncertainties in the region- particularly Argentina. Several other DOC1 deals that were expected to close were deferred as potential customers further scrutinized all technology investments. On a positive note, the company saw strong market interest plus the initial sales of the newest members of the DOC1 suite, DOC1 Interactive and the recently acquired DOC1 Archive.
The Enterprise Solutions division also saw delays in several large deals during the quarter. While our Enterprise Data Quality solutions provide significant benefits for organizations' Customer Relationship Management (CRM) efforts, current economic circumstances are extending the sales cycles for these sizeable deals. These same circumstances are making it especially difficult to predict the closing of these deals. Additionally, the company's important New York regional office still has not returned to normal business levels following the terrorist attacks.
A sizeable contract was signed during the quarter with British American Tobacco Corporation (BAT, parent of Brown & Williamson) for an installation of the DM1 database marketing system in BAT's Czechoslovakian subsidiary. Total revenue will be just under $800,000 for this project. Because of the nature of the contract, however, this revenue is expected to be recognized in the fourth fiscal quarter. More importantly, the successful conclusion of this engagement can lead to substantial additional business with other BAT subsidiaries.
"While we were disappointed with the shortfall in license revenue, the fundamental strength of our business model still allowed us to generate solid profits and continued positive cash flow in the quarter," said Bob Bowen, CEO of Group 1 Software. "Furthermore, the primary difference between the license revenue we generated and what we expected was attributable to delays in commitments, not abandonment of projects nor losses to competition. We intend to earn that delayed business, and we are no less optimistic about our prospects beyond the current economic downturn. In the meantime, we will continue to control operating costs rigidly. We will, however, protect the development programs for our important new products."
Group 1 Software (Nasdaq: GSOF) is a leading provider of customer relationship management (CRM)-enabling software solutions for data quality, marketing automation, customer relationship communications and direct marketing applications. Group 1's software systems and services enable 2,500 customers worldwide to market smarter by helping them find, reach and keep customers. Founded in 1982 and headquartered in Lanham, Maryland, Group 1's solutions are utilized by leaders in the financial services, banking, retail, telecommunications, utilities, e-commerce, and insurance industries. The company's customer base includes such recognized names as AT&T, Charles Schwab, Entergy, GEICO, L.L. Bean, MCI WorldCom, Wal-Mart and Wells Fargo. For more information about Group 1, visit the company's Web site at http://www.g1.com.