724 Solutions Announces Strong First Quarter Revenue

* Net revenue up 345 percent from Q1 2000

* Product revenue up by 263 percent from Q1 2000

* Gross Margin reaches 63 percent

* First-phase integration of TANTAU Software complete

* $168 million in cash and cash equivalents



Apr 25, 2001, 01:00 ET from 724 Solutions Inc.

    TORONTO, and AUSTIN, April 25 /PRNewswire/ -- 724 Solutions Inc.
 (Nasdaq: SVNX and Toronto: SVN), a leading global provider of Internet
 infrastructure software that enables the delivery of secure financial services
 applications and mobile transaction solutions, today reported that first
 quarter revenues in 2001 increased 345 percent to $13.8 million from $3.1
 million in the same period a year earlier, and increased 72 percent from $8.1
 million in the fourth quarter of fiscal 2000 (all amounts in U.S. dollars).
     The first quarter results of 2001 include product revenue of $9.1 million
 representing a 263 percent increase over the same period last year and a 70
 percent increase over the fourth quarter of 2000.  Service revenue of $4.7
 million represents an increase of 691 percent and 75 percent over the same
 period last year and the fourth quarter of 2000, respectively.  The first
 quarter of 2001 represents the first period in which the company's reported
 results include the operation of TANTAU Software, which the company acquired
 in January 2001.
     The pro forma net loss for the first quarter of 2001 was $14.7 million,
 compared to $5.8 million in the same period last year and $10.3 million in the
 previous quarter, with a pro forma loss per share of $0.27 in the first
 quarter compared to $0.17 in the same period in 2000, and $0.26 in the
 previous quarter. Pro forma net loss and net loss per share includes net loss
 for the period, adjusted for amortization of intangibles, equity in income
 (loss) of affiliate, stock-based compensation, write-down of long-term
 investments and certain non-recurring expenses (including one-time costs
 incurred in connection with the integration of TANTAU Software and the
 realignment of 724 Solutions' business).
     As of March 31, 2001, the company's cash, cash equivalents and short-term
 investments totaled $168.3 million, compared to $166.6 million as of December
 31, 2000.
     "724 Solutions remains focused on execution and innovation as we enable
 our customers to deliver secure mobile transactions.  In my first quarter as
 CEO of 724 Solutions, I am delighted to report that we have achieved or
 exceeded all of the milestones we set out: improving our gross margin;
 completing first-phase integration; expanding our reach by adding new
 customers and turning on Wells Fargo; integrating the product portfolio and
 retaining and motivating our employees," said John Sims, Chief Executive
 Officer, 724 Solutions.
 
     Highlights from the quarter:
 
     New customers and rollouts
     * Citigroup Inc. chose 724 Solutions to support the development,
       implementation and delivery of wireless financial services to North
       American customers of Salomon Smith Barney, Cititrade and the Citibank
       Credit Card Division.
     * Wells Fargo launched its Wells Wireless offering to its 2.5 million
       online customers across the U.S.
 
     New alliances
     * Nokia Corporation, the world's leading wireless device manufacturer, is
       cooperating with 724 Solutions to deliver secure mobile financial
       services solutions by combining the 724 Solutions Financial Services
       Platform (FSP) with the Nokia Activ Signet Solution.
     * Nomura Research Institute Ltd. (NRI), Japan's leading systems integrator
       for the financial services industry, has agreed to offer 724 Solutions'
       aggregation and alerts technologies to financial institutions and
       portals in Japan.
     * NRI and NTT Data Corporation (NTT Data) - in a new joint venture -
       selected 724 Solutions to power aggregation and alerts services.
     * eCALYX Inc. e-Business platforms in India will use 724 Solutions to
       address the growing demand for mobile Internet solutions in the Indian
       market.
 
     Innovations and platform and functionality expansions
     * Version 3.0 of the 724 Solutions Wireless Internet Platform (WIP) was
       launched, delivering new value for customers by offering voice
       recognition and authentication, an advanced notification engine, and
       highly secure Wireless Application Protocol (WAP) browsers for leading
       personal digital assistants (PDAs).
     * 724 Solutions Inc. introduced its Public Key Infrastructure (PKI)
       Gateway product - the wireless industry's first broadly interoperable
       public key management solution based on open standards.
     * 724 Solutions acquired Webhelp Inc.'s Web Application Event Framework
       (WAEF) technology to broaden its m-commerce offering. 724 Solutions also
       announced an investment stake in Webhelp.
     * 724 Solutions launched its BEA WebLogic(R) Plug-In to accelerate the
       platform compatibility between the BEA WebLogic E-Business Platform(TM)
       and the 724 Solutions WIP.
     * 724 Solutions WIP received a Crossroads 2001 A-List Award as a leading
       product in the business and technology infrastructure category.
 
     Subsequent to the quarter
     * The 724 Solutions Mobile Commerce Services Platform (MSP) was
       introduced.  This next-generation, highly scalable and modular solution
       is designed to drive consumer-friendly secure payment transactions in
       the mobile commerce arena.
     * Raymond James Inc. licensed the 724 Solutions WIP to enable its 4,300
       financial advisors to deliver highly personalized client-side service.
     * 724 Solutions and Online Resources teamed to offer wireless banking and
       payment services to Online Resources' 500 regional and community
       financial institutions.
     * 724 Solutions launched its turnkey enterprise alerts application.  Its
       comprehensive toolkits enable rapid deployment of a secure, time-
       sensitive, personalized alerts solution in multiple languages.
     * Qatar Islamic Bank, The Bank of Kuwait & Middle East and Doha Bank-Qatar
       launched mobile Internet banking services using the WIP in partnership
       with 724 Solutions and International Turnkey Systems.
 
     Note: 724 Solutions will host a conference call regarding its financial
 results. The call will commence at 5:30 p.m. EST today and can be accessed by
 dialing 1-877-871-4052 or 1-416-620-2406.  PowerPoint slides used on the
 conference call are available from 4:30 p.m. EST onward from the investor
 information page of the 724 Solutions Web site at
 http://www.724.com/investors/IRStart.htm.  A replay of the call will be
 available on the Web site beginning today at 7:00 p.m. EST.
 
     About 724 Solutions Inc.
     724 Solutions Inc. is a leading global provider of Internet infrastructure
 software that enables the delivery of secure financial services applications
 and mobile transaction solutions across a wide range of Internet-enabled
 devices.  The 724 Solutions suite of products and services enables companies
 to realize value through the mobile Internet by building, deploying, and
 integrating personalized and secure mobile commerce and lifestyle
 applications.  With dual headquarters in Toronto, Canada, and Austin, Texas,
 the company has development and sales offices around the world.  724
 Solutions' common shares are listed on the NASDAQ National Market (SVNX) and
 The Toronto Stock Exchange (SVN).  For additional information visit
 www.724.com.
 
     This press release contains statements of a forward-looking nature. These
 statements are made under the "safe harbor" provisions of the U.S. Private
 Securities Litigation Reform Act of 1995.  These statements include the
 statements herein regarding the adequacy of the company's cash position, the
 services that will be offered by the company in the future, the markets in
 which the company's services will be offered and the company's results of
 operations for the current fiscal year, ending December 31, 2001.  The
 accuracy of these statements may be impacted by a number of business risks and
 uncertainties that could cause actual results to differ materially from those
 projected or anticipated, including risks related to: the risk that demand for
 wireless financial and transactional services will not increase as
 anticipated; the risk that the company will not respond adequately to evolving
 technology standards; the risk that the company will not have the adequate
 capital or personnel to develop and market its products and services; the risk
 that the company will not be able to increase the number of customers;
 competition in the company's target markets; the risk that the company will
 encounter difficulties in integrating the operations of acquired companies
 with its own; the risk of conducting the company's operations in a variety of
 international locations; and other risks outlined in 724 Solutions' SEC
 filings, including in its annual report on Form 10-K.  These risks are also
 described in 724 Solutions' filings with the Canadian Securities
 Administrators, including its prospectuses, material change reports, Annual
 Information Form and Management Information circular.  724 Solutions does not
 undertake any obligation to update this forward-looking information, except as
 required under applicable law.
 
    724 Solutions Inc. - Summary of Operations (unaudited)
    (In 000's of U.S. dollars, except per share amounts)
 
                                       2001                   2000
                                    March 31,      December 31,    March 31,
 
     Revenue:
      Product                         $9,127          $5,356        $2,762
      Less: stock-based
       compensation
       related to product                  -               -          (248)
      Service                          4,722           2,697           597
       Net Revenue                    13,849           8,053         3,111
      Cost of revenue                  5,090           4,065         1,953
       Gross Margin                    8,759           3,988         1,158
 
     Operating expenses:
      Research and development        11,189           9,103         4,163
      Sales and marketing              9,029           3,158         3,031
      General and administrative       6,586           3,308         1,896
      Depreciation                     1,742           1,632           317
      Amortization of intangibles     23,870           9,576             -
      Stock-based compensation
       Cost of revenue                   207             217           189
       Research and development        6,113           1,962           487
       Sales and marketing             2,529             144            85
       General and administrative      1,839             238            82
 
        Total operating expenses      63,104          29,338        10,250
     Loss from operations            (54,345)        (25,350)       (9,092)
     Interest income                   2,476           2,942         2,237
     Equity in income (losses)
      of affiliate                      (278)            261           (66)
 
     Loss before write-down of
      long term investments in
      other companies               (52,147)         (22,147)       (6,921)
      Write-down of long term
       investments                   (6,250)               -             -
      Net loss for the period     $ (58,397)        $(22,147)     $ (6,921)
 
     Basic and diluted net
      loss per share                 $(1.09)          $(0.57)       $(0.20)
     Weighted-average number
      of shares used in
      computing basic and diluted
      net loss per share
     (in thousands)                   53,581          39,092        34,037
 
     PRO FORMA ADJUSTMENTS
     Net loss for the period      $ (58,397)        $(22,147)     $ (6,921)
     Adjustments:
      Amortization of intangibles     23,870           9,576             -
      Equity in income (loss)
       of affiliate                      278           (261)            66
      Stock-based compensation        10,688           2,561         1,091
      Write-down of long term
       investments                     6,250               -             -
      Non-recurring expenses           2,638               -             -
 
     Adjusted net loss for
      the period                   $ (14,673)       $(10,271)     $ (5,764)
 
     Pro forma net loss per share     $(0.27)         $(0.26)       $(0.17)
 
    Certain comparative figures have been reclassified to conform to the
 urrent year's presentation
 
 
    724 Solutions Inc. - Consolidated Balance Sheet
    (In 000's of U.S. dollars, except share amounts)
 
                                                     March 31      December 31
                                                       2001           2000
                                                    (unaudited)
     Assets
     Current assets:
      Cash and cash equivalents                       $88,857        $73,898
      Short-term investments                           79,403         92,726
      Accounts receivable-trade
       net of allowance of nil
       (December 31, 2000 - $52)                        8,124          4,376
      Prepaid expenses and other receivables            3,232          2,260
                                                      179,616        173,260
 
     Fixed assets                                      14,759         11,297
     Investments                                       15,830         12,196
     Intangible and other assets                      396,391         90,563
                                                     $606,596       $287,316
 
     Liabilities and Shareholders' Equity
 
     Current liabilities:
      Accounts payable                                 $2,524         $2,203
      Accrued liabilities                              21,997         18,198
      Notes payable                                     5,009              -
      Deferred revenue                                  4,401          1,887
      Deferred consideration                              998          1,190
                                                       34,929         23,478
 
     Leasehold inducements                                346            375
 
     Deferred consideration, net of current portion     1,034          1,200
 
     Shareholders' equity:
      Share capital
       Authorized:
        Unlimited common shares
        Unlimited preferred shares
       Issued and outstanding:
        57,741,180 common shares
        (December 31, 2000 - 39,112,975)              767,466        357,158
      Deferred stock-based compensation              (58,745)       (14,946)
      Accumulated deficit                           (138,346)       (79,949)
      Cumulative translation adjustment                  (88)              -
                                                      570,287        262,263
                                                     $606,596       $287,316
 
 
      Ray McManus              Jessie Hennion                Monica Zaied
      Public Relations         Brodeur Worldwide             Investor Relations
      724 Solutions Inc.       for 724 Solutions Inc.        724 Solutions Inc.
      416-228-8191             617-587-2007                  416-228-2369
      rmcmanus@724.com         jhennion@brodeur.com          mzaied@724.com
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X42345530
 
 

SOURCE 724 Solutions Inc.
    TORONTO, and AUSTIN, April 25 /PRNewswire/ -- 724 Solutions Inc.
 (Nasdaq: SVNX and Toronto: SVN), a leading global provider of Internet
 infrastructure software that enables the delivery of secure financial services
 applications and mobile transaction solutions, today reported that first
 quarter revenues in 2001 increased 345 percent to $13.8 million from $3.1
 million in the same period a year earlier, and increased 72 percent from $8.1
 million in the fourth quarter of fiscal 2000 (all amounts in U.S. dollars).
     The first quarter results of 2001 include product revenue of $9.1 million
 representing a 263 percent increase over the same period last year and a 70
 percent increase over the fourth quarter of 2000.  Service revenue of $4.7
 million represents an increase of 691 percent and 75 percent over the same
 period last year and the fourth quarter of 2000, respectively.  The first
 quarter of 2001 represents the first period in which the company's reported
 results include the operation of TANTAU Software, which the company acquired
 in January 2001.
     The pro forma net loss for the first quarter of 2001 was $14.7 million,
 compared to $5.8 million in the same period last year and $10.3 million in the
 previous quarter, with a pro forma loss per share of $0.27 in the first
 quarter compared to $0.17 in the same period in 2000, and $0.26 in the
 previous quarter. Pro forma net loss and net loss per share includes net loss
 for the period, adjusted for amortization of intangibles, equity in income
 (loss) of affiliate, stock-based compensation, write-down of long-term
 investments and certain non-recurring expenses (including one-time costs
 incurred in connection with the integration of TANTAU Software and the
 realignment of 724 Solutions' business).
     As of March 31, 2001, the company's cash, cash equivalents and short-term
 investments totaled $168.3 million, compared to $166.6 million as of December
 31, 2000.
     "724 Solutions remains focused on execution and innovation as we enable
 our customers to deliver secure mobile transactions.  In my first quarter as
 CEO of 724 Solutions, I am delighted to report that we have achieved or
 exceeded all of the milestones we set out: improving our gross margin;
 completing first-phase integration; expanding our reach by adding new
 customers and turning on Wells Fargo; integrating the product portfolio and
 retaining and motivating our employees," said John Sims, Chief Executive
 Officer, 724 Solutions.
 
     Highlights from the quarter:
 
     New customers and rollouts
     * Citigroup Inc. chose 724 Solutions to support the development,
       implementation and delivery of wireless financial services to North
       American customers of Salomon Smith Barney, Cititrade and the Citibank
       Credit Card Division.
     * Wells Fargo launched its Wells Wireless offering to its 2.5 million
       online customers across the U.S.
 
     New alliances
     * Nokia Corporation, the world's leading wireless device manufacturer, is
       cooperating with 724 Solutions to deliver secure mobile financial
       services solutions by combining the 724 Solutions Financial Services
       Platform (FSP) with the Nokia Activ Signet Solution.
     * Nomura Research Institute Ltd. (NRI), Japan's leading systems integrator
       for the financial services industry, has agreed to offer 724 Solutions'
       aggregation and alerts technologies to financial institutions and
       portals in Japan.
     * NRI and NTT Data Corporation (NTT Data) - in a new joint venture -
       selected 724 Solutions to power aggregation and alerts services.
     * eCALYX Inc. e-Business platforms in India will use 724 Solutions to
       address the growing demand for mobile Internet solutions in the Indian
       market.
 
     Innovations and platform and functionality expansions
     * Version 3.0 of the 724 Solutions Wireless Internet Platform (WIP) was
       launched, delivering new value for customers by offering voice
       recognition and authentication, an advanced notification engine, and
       highly secure Wireless Application Protocol (WAP) browsers for leading
       personal digital assistants (PDAs).
     * 724 Solutions Inc. introduced its Public Key Infrastructure (PKI)
       Gateway product - the wireless industry's first broadly interoperable
       public key management solution based on open standards.
     * 724 Solutions acquired Webhelp Inc.'s Web Application Event Framework
       (WAEF) technology to broaden its m-commerce offering. 724 Solutions also
       announced an investment stake in Webhelp.
     * 724 Solutions launched its BEA WebLogic(R) Plug-In to accelerate the
       platform compatibility between the BEA WebLogic E-Business Platform(TM)
       and the 724 Solutions WIP.
     * 724 Solutions WIP received a Crossroads 2001 A-List Award as a leading
       product in the business and technology infrastructure category.
 
     Subsequent to the quarter
     * The 724 Solutions Mobile Commerce Services Platform (MSP) was
       introduced.  This next-generation, highly scalable and modular solution
       is designed to drive consumer-friendly secure payment transactions in
       the mobile commerce arena.
     * Raymond James Inc. licensed the 724 Solutions WIP to enable its 4,300
       financial advisors to deliver highly personalized client-side service.
     * 724 Solutions and Online Resources teamed to offer wireless banking and
       payment services to Online Resources' 500 regional and community
       financial institutions.
     * 724 Solutions launched its turnkey enterprise alerts application.  Its
       comprehensive toolkits enable rapid deployment of a secure, time-
       sensitive, personalized alerts solution in multiple languages.
     * Qatar Islamic Bank, The Bank of Kuwait & Middle East and Doha Bank-Qatar
       launched mobile Internet banking services using the WIP in partnership
       with 724 Solutions and International Turnkey Systems.
 
     Note: 724 Solutions will host a conference call regarding its financial
 results. The call will commence at 5:30 p.m. EST today and can be accessed by
 dialing 1-877-871-4052 or 1-416-620-2406.  PowerPoint slides used on the
 conference call are available from 4:30 p.m. EST onward from the investor
 information page of the 724 Solutions Web site at
 http://www.724.com/investors/IRStart.htm.  A replay of the call will be
 available on the Web site beginning today at 7:00 p.m. EST.
 
     About 724 Solutions Inc.
     724 Solutions Inc. is a leading global provider of Internet infrastructure
 software that enables the delivery of secure financial services applications
 and mobile transaction solutions across a wide range of Internet-enabled
 devices.  The 724 Solutions suite of products and services enables companies
 to realize value through the mobile Internet by building, deploying, and
 integrating personalized and secure mobile commerce and lifestyle
 applications.  With dual headquarters in Toronto, Canada, and Austin, Texas,
 the company has development and sales offices around the world.  724
 Solutions' common shares are listed on the NASDAQ National Market (SVNX) and
 The Toronto Stock Exchange (SVN).  For additional information visit
 www.724.com.
 
     This press release contains statements of a forward-looking nature. These
 statements are made under the "safe harbor" provisions of the U.S. Private
 Securities Litigation Reform Act of 1995.  These statements include the
 statements herein regarding the adequacy of the company's cash position, the
 services that will be offered by the company in the future, the markets in
 which the company's services will be offered and the company's results of
 operations for the current fiscal year, ending December 31, 2001.  The
 accuracy of these statements may be impacted by a number of business risks and
 uncertainties that could cause actual results to differ materially from those
 projected or anticipated, including risks related to: the risk that demand for
 wireless financial and transactional services will not increase as
 anticipated; the risk that the company will not respond adequately to evolving
 technology standards; the risk that the company will not have the adequate
 capital or personnel to develop and market its products and services; the risk
 that the company will not be able to increase the number of customers;
 competition in the company's target markets; the risk that the company will
 encounter difficulties in integrating the operations of acquired companies
 with its own; the risk of conducting the company's operations in a variety of
 international locations; and other risks outlined in 724 Solutions' SEC
 filings, including in its annual report on Form 10-K.  These risks are also
 described in 724 Solutions' filings with the Canadian Securities
 Administrators, including its prospectuses, material change reports, Annual
 Information Form and Management Information circular.  724 Solutions does not
 undertake any obligation to update this forward-looking information, except as
 required under applicable law.
 
    724 Solutions Inc. - Summary of Operations (unaudited)
    (In 000's of U.S. dollars, except per share amounts)
 
                                       2001                   2000
                                    March 31,      December 31,    March 31,
 
     Revenue:
      Product                         $9,127          $5,356        $2,762
      Less: stock-based
       compensation
       related to product                  -               -          (248)
      Service                          4,722           2,697           597
       Net Revenue                    13,849           8,053         3,111
      Cost of revenue                  5,090           4,065         1,953
       Gross Margin                    8,759           3,988         1,158
 
     Operating expenses:
      Research and development        11,189           9,103         4,163
      Sales and marketing              9,029           3,158         3,031
      General and administrative       6,586           3,308         1,896
      Depreciation                     1,742           1,632           317
      Amortization of intangibles     23,870           9,576             -
      Stock-based compensation
       Cost of revenue                   207             217           189
       Research and development        6,113           1,962           487
       Sales and marketing             2,529             144            85
       General and administrative      1,839             238            82
 
        Total operating expenses      63,104          29,338        10,250
     Loss from operations            (54,345)        (25,350)       (9,092)
     Interest income                   2,476           2,942         2,237
     Equity in income (losses)
      of affiliate                      (278)            261           (66)
 
     Loss before write-down of
      long term investments in
      other companies               (52,147)         (22,147)       (6,921)
      Write-down of long term
       investments                   (6,250)               -             -
      Net loss for the period     $ (58,397)        $(22,147)     $ (6,921)
 
     Basic and diluted net
      loss per share                 $(1.09)          $(0.57)       $(0.20)
     Weighted-average number
      of shares used in
      computing basic and diluted
      net loss per share
     (in thousands)                   53,581          39,092        34,037
 
     PRO FORMA ADJUSTMENTS
     Net loss for the period      $ (58,397)        $(22,147)     $ (6,921)
     Adjustments:
      Amortization of intangibles     23,870           9,576             -
      Equity in income (loss)
       of affiliate                      278           (261)            66
      Stock-based compensation        10,688           2,561         1,091
      Write-down of long term
       investments                     6,250               -             -
      Non-recurring expenses           2,638               -             -
 
     Adjusted net loss for
      the period                   $ (14,673)       $(10,271)     $ (5,764)
 
     Pro forma net loss per share     $(0.27)         $(0.26)       $(0.17)
 
    Certain comparative figures have been reclassified to conform to the
 urrent year's presentation
 
 
    724 Solutions Inc. - Consolidated Balance Sheet
    (In 000's of U.S. dollars, except share amounts)
 
                                                     March 31      December 31
                                                       2001           2000
                                                    (unaudited)
     Assets
     Current assets:
      Cash and cash equivalents                       $88,857        $73,898
      Short-term investments                           79,403         92,726
      Accounts receivable-trade
       net of allowance of nil
       (December 31, 2000 - $52)                        8,124          4,376
      Prepaid expenses and other receivables            3,232          2,260
                                                      179,616        173,260
 
     Fixed assets                                      14,759         11,297
     Investments                                       15,830         12,196
     Intangible and other assets                      396,391         90,563
                                                     $606,596       $287,316
 
     Liabilities and Shareholders' Equity
 
     Current liabilities:
      Accounts payable                                 $2,524         $2,203
      Accrued liabilities                              21,997         18,198
      Notes payable                                     5,009              -
      Deferred revenue                                  4,401          1,887
      Deferred consideration                              998          1,190
                                                       34,929         23,478
 
     Leasehold inducements                                346            375
 
     Deferred consideration, net of current portion     1,034          1,200
 
     Shareholders' equity:
      Share capital
       Authorized:
        Unlimited common shares
        Unlimited preferred shares
       Issued and outstanding:
        57,741,180 common shares
        (December 31, 2000 - 39,112,975)              767,466        357,158
      Deferred stock-based compensation              (58,745)       (14,946)
      Accumulated deficit                           (138,346)       (79,949)
      Cumulative translation adjustment                  (88)              -
                                                      570,287        262,263
                                                     $606,596       $287,316
 
 
      Ray McManus              Jessie Hennion                Monica Zaied
      Public Relations         Brodeur Worldwide             Investor Relations
      724 Solutions Inc.       for 724 Solutions Inc.        724 Solutions Inc.
      416-228-8191             617-587-2007                  416-228-2369
      rmcmanus@724.com         jhennion@brodeur.com          mzaied@724.com
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X42345530
 
 SOURCE  724 Solutions Inc.