Kana Announces First Quarter 2001 Results

Apr 18, 2001, 01:00 ET from Kana Communications, Inc.

    REDWOOD CITY, Calif., April 18 /PRNewswire/ --
 Kana Communications, Inc. (Nasdaq:   KANA), a leading provider of enterprise
 relationship management solutions, today announced financial results for the
 quarter ended March 31, 2001.
     (Photo: http://www.newscom.com/cgi-bin/prnh/20010307/KANALOGO )
     Revenue for the first quarter was $24.2 million, an increase of
 126 percent from the $10.7 million in the quarter ended March 31, 2000.
 Revenue for the quarter ended December 31, 2000 was $42.4 million.
     Pro forma net loss for the quarter was $38.6 million, or $(0.42) per
 share, compared with $11.1 million, or $(0.21) per share, for the first
 quarter of 2000, and a pro forma net loss of $33.2 million, or $(0.37) per
 share, for the quarter ended December 31, 2000.
     Kana's reported pro forma financial results exclude amortization of
 intangible assets, stock-based compensation, a restructuring charge, and a
 goodwill impairment charge.  For full details on Kana's reported results, see
 the accompanying financial tables.
     "We are pleased with the list of top tier new customers we have signed
 during the first quarter," said Jay Wood, Kana's chairman and chief executive
 officer.  "While we remain cautiously optimistic about the second quarter and
 2001, we recognize the tough economic climate we are operating in.  As part of
 our commitment to attaining profitability, we have taken further cost-cutting
 measures and reduced our head-count by approximately 300 employees over the
 last week.  In line with this effort, we expect to further reduce head-count
 by roughly 100 employees during the second quarter," Wood continued.
     On April 9, 2001, Kana announced the signing of a definitive merger
 agreement with Broadbase Software (Nasdaq:   BBSW), a leading provider of
 Intelligent Customer Interaction(TM) solutions.  The agreement is subject to
 shareholder approval and is expected to close in the third quarter of 2001.
     Kana will host a conference call later today to discuss the results.  The
 call will begin at 2:00 p.m. Pacific Daylight Time (5:00 p.m. Eastern Daylight
 Time), and can be accessed via a webcast on the investor relations section of
 Kana's website, www.kana.com.  A webast replay will be available on the
 investor relations section of Kana's website for seven days following today's
 conference call.
 
     About Kana Communications, Inc.
     Kana Communications, Inc., a leading provider of Web-architected
 enterprise relationship management (eRM) solutions, delivers a broad range of
 world-class, integrated e-business and interaction applications with a modular
 and scalable platform for both global 2000 and Internet companies.  Kana
 solutions deliver personal web portals that offer customers, partners,
 suppliers and the enterprise an integrated, global view of their
 communications and relationships.  This global view includes managing the full
 set of communications channels such as e-mail, Web, chat, instant message,
 VOIP, phone and person-to-person, as well as e-business and communications
 applications to integrate the marketing, sales and service functions.  This
 full-service suite enables e-businesses to compete and succeed in today's
 customer-driven economy.  For more information about the solutions found in
 Global 2000 and leading Internet customers, please visit Kana at www.kana.com.
     NOTE:  Kana Communications, Kana and the Kana logo are trademarks of
 Kana Communications, Inc.  All other company and product names may be
 trademarks of their respective owners.
 
     Cautionary Note Regarding Forward-looking Statements Under the Private
     Securities Litigation Reform Act of 1995:
     Information in this release and during the presentation that involves
 Kana's financial forecasts, projections, expectations, beliefs, hopes, plans,
 intentions or strategies regarding the future are forward-looking statements
 that involve risks and uncertainties.  These statements include statements
 about Kana's strategies in the marketplace, its market position and its
 relationship with customers.  All forward-looking statements included in this
 release are based upon information available to Kana as of the date of the
 release, which may likely change, and we assume no obligation to update any
 such forward-looking statement.  These statements are not guarantees of future
 performance and actual results could differ materially from our current
 expectations.  Factors that could cause or contribute to such differences
 include, but are not limited to, competition in our marketplace, risks
 associated with the evolving and varying demand for eRM, eCRM, customer
 communication and similar software, our ability to manage our cash position
 and expenditures, our history of losses, our ability to expand sales, our
 ability to manage our business in light of recent management changes and
 personnel reductions, continued acceptance of email and the Internet as a
 communications medium, litigation over property rights, and general economic
 factors, particularly as it affects spending by our prospective customers on
 software products such as ours.
     In addition, statements that describe our proposed merger with
 Broadbase Software, and the anticipated results of combining the product lines
 and businesses of Kana and Broadbase, include forward looking statements.  The
 expected benefits of the proposed combination may not be realized for a number
 of reasons including the following:  the merger may not be approved by the
 stockholders of Kana and Broadbase and the other conditions of closing may not
 be satisfied; the announcement of the merger may disrupt the companies' normal
 sales cycles because their sales forces may be distracted by the pending
 business combination or because customers may delay new orders until the
 merger is closed and the sales forces and product lines are combined; the
 combined product lines may not be as broad as those of some of the competitors
 of Kana and Broadbase, and the merger could cause Kana and Broadbase's
 business partners and potential competitors to acquire other product lines
 that would compete directly with the combined company; Kana and Broadbase may
 not be able to rapidly integrate the operations or retain the key employees;
 the combined company may not achieve the increase in revenues that it expects
 or the optimal mix between license and service revenues that it targets to
 achieve its profitability goals.  These and other factors are risks associated
 with our business that may affect our operating results are discussed in the
 Company's filings with the Securities and Exchange Commission ("SEC"),
 including our most recent annual report on Form 10-K and quarterly report on
 Form 10-Q.
 
     Additional Information and Where to Find It
     Kana Communications plans to file a Registration Statement on SEC Form S-4
 in connection with the merger, and Kana and Broadbase expect to mail a Joint
 Proxy Statement/Prospectus to stockholders of Kana and Broadbase containing
 information about the merger.  Investors and security holders of Kana and
 Broadbase are urged to read the Registration Statement and Joint Proxy
 Statement/Prospectus carefully when they are available.  The Registration
 Statement and the Joint Proxy Statement/Prospectus will contain important
 information about Kana, Broadbase, the merger and related matters.  Investors
 and security holders will be able to obtain free copies of these documents
 through the Web site maintained by the U.S. Securities and Exchange Commission
 at http://www.sec.gov.  Free copies of the Proxy Statement/Prospectus and
 these other documents may also obtained from Broadbase by directing a request
 through the Investor Relations portion of Broadbase's site Investor Relations
 Department, 500 Broadway, Redwood City, CA 94063 or from Kana at Kana
 Communications, Inc., 740 Bay Road, Redwood City, CA 94063, attention:
 Investor Relations, telephone:  650-298-9282.  In addition to the Registration
 Statement and the Proxy Statement/Prospectus, Kana and Broadbase file annual,
 quarterly and special reports, proxy statements and other information with the
 Securities and Exchange Commission.  You may read and copy any reports,
 statements or other information filed by Kana and Broadbase at the SEC public
 reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at any of
 the SEC's other public reference rooms in New York, New York and Chicago,
 Illinois.  Please call the SEC at 800-SEC-0330 for further information on the
 public reference rooms.  Kana Communications' and Broadbase Software's filings
 with the SEC are also available to the public from commercial
 document-retrieval services and at the Web site maintained by the SEC at
 http://www.sec.gov.
 
     Interests of Certain Persons in the Merger
     The directors and executive officers of Kana Communications and
 Broadbase Software have interests in the merger, some of which may differ
 from, or may be in addition to, those of Broadbase Software's stockholders
 generally.  A description of the interests that Kana Communications and
 Broadbase Software's directors and executive officers have in the merger will
 be available in the Joint Proxy Statement/Prospectus.
 
     Solicitation of Proxies
     Kana Communications, its directors, executive officers and certain other
 members of its management and employees may be soliciting proxies from Kana
 stockholders in favor of the merger.  The directors and officers of
 Broadbase Software may be deemed to be participants in Broadbase solicitation
 of proxies.  Information concerning the participants will be set forth in the
 Joint Proxy Statement/Prospectus when it is filed with the Securities and
 Exchange Commission.
 
 
                             KANA COMMUNICATIONS, INC.
      UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (A)
                       (In thousands, except per share data)
 
                                                   Three Months Ended
                                                       March 31,
                                                   2001           2000
     Revenues:
       License                                   $11,857         $7,329
       Service                                    12,298          3,359
     Total revenues                               24,155         10,688
     Cost of revenues:
       License                                       633            143
       Service                                    16,829          4,032
     Total cost of revenues                       17,462          4,175
     Gross profit                                  6,693          6,513
     Operating expenses:
       Sales and marketing                        26,534         11,210
       Research and development                   12,949          5,239
       General and administrative                  6,068          1,835
     Total operating expenses                     45,551         18,284
     Pro forma operating loss                   (38,858)       (11,771)
     Other income, net                               302            643
     Pro forma net loss                        $(38,556)      $(11,128)
 
     Pro forma basic and diluted
      net loss per share                         $(0.42)        $(0.21)
     Shares used in computing pro forma
      basic and diluted net loss per share        91,518         52,550
 
     (A)Excludes charges for the amortization of intangible assets, stock-based
     compensation, restructuring costs and goodwill impairment.
 
 
                             KANA COMMUNICATIONS, INC.
             UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except per share data)
 
                                                   Three Months Ended
                                                        March 31,
                                                   2001           2000
     Revenues:
       License                                   $11,857         $7,329
       Service                                    12,298          3,359
     Total revenues                               24,155         10,688
     Cost of revenues:
       License                                       633            143
       Service                                    16,829          4,032
     Total cost of revenues                       17,462          4,175
     Gross profit                                  6,693          6,513
     Operating expenses:
       Sales and marketing                        26,534         11,210
       Research and development                   12,949          5,239
       General and administrative                  6,068          1,835
       Amortization of intangible assets
        and stock-based compensation              90,964          3,320
       Restructuring costs                        19,930             --
       Goodwill impairment                       603,446             --
     Total operating expenses                    759,891         21,604
     Operating loss                            (753,198)       (15,091)
     Other income, net                               302            643
     Net loss                                 $(752,896)      $(14,448)
 
     Basic and diluted net
      loss per share                             $(8.23)        $(0.27)
     Shares used in computing basic and
      diluted net loss per share                  91,518         52,550
 
 
                             KANA COMMUNICATIONS, INC.
                  UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (In thousands)
 
                                                March 31,     December 31,
                                                   2001          2000
     ASSETS
 
     Current assets:
       Cash and short-term investments           $20,999        $76,499
       Accounts receivable, net                   27,141         43,393
       Prepaid expenses and
        other current assets                      12,914         14,866
         Total current assets                     61,054        134,758
     Property and equipment, net                  37,048         40,095
     Intangible assets, principally
      goodwill                                   109,777        800,000
     Other assets                                  5,258          5,271
         Total assets                           $213,137       $980,124
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current liabilities:
       Notes payable                              $1,541         $1,604
       Accounts payable                           11,327         17,980
       Accrued liabilities                        26,019         35,846
       Deferred revenue                           23,325         25,242
         Total current liabilities                62,212         80,672
     Total stockholders' equity                  150,925        899,452
         Total liabilities and
          stockholders' equity                  $213,137       $980,124
 
 

SOURCE Kana Communications, Inc.
    REDWOOD CITY, Calif., April 18 /PRNewswire/ --
 Kana Communications, Inc. (Nasdaq:   KANA), a leading provider of enterprise
 relationship management solutions, today announced financial results for the
 quarter ended March 31, 2001.
     (Photo: http://www.newscom.com/cgi-bin/prnh/20010307/KANALOGO )
     Revenue for the first quarter was $24.2 million, an increase of
 126 percent from the $10.7 million in the quarter ended March 31, 2000.
 Revenue for the quarter ended December 31, 2000 was $42.4 million.
     Pro forma net loss for the quarter was $38.6 million, or $(0.42) per
 share, compared with $11.1 million, or $(0.21) per share, for the first
 quarter of 2000, and a pro forma net loss of $33.2 million, or $(0.37) per
 share, for the quarter ended December 31, 2000.
     Kana's reported pro forma financial results exclude amortization of
 intangible assets, stock-based compensation, a restructuring charge, and a
 goodwill impairment charge.  For full details on Kana's reported results, see
 the accompanying financial tables.
     "We are pleased with the list of top tier new customers we have signed
 during the first quarter," said Jay Wood, Kana's chairman and chief executive
 officer.  "While we remain cautiously optimistic about the second quarter and
 2001, we recognize the tough economic climate we are operating in.  As part of
 our commitment to attaining profitability, we have taken further cost-cutting
 measures and reduced our head-count by approximately 300 employees over the
 last week.  In line with this effort, we expect to further reduce head-count
 by roughly 100 employees during the second quarter," Wood continued.
     On April 9, 2001, Kana announced the signing of a definitive merger
 agreement with Broadbase Software (Nasdaq:   BBSW), a leading provider of
 Intelligent Customer Interaction(TM) solutions.  The agreement is subject to
 shareholder approval and is expected to close in the third quarter of 2001.
     Kana will host a conference call later today to discuss the results.  The
 call will begin at 2:00 p.m. Pacific Daylight Time (5:00 p.m. Eastern Daylight
 Time), and can be accessed via a webcast on the investor relations section of
 Kana's website, www.kana.com.  A webast replay will be available on the
 investor relations section of Kana's website for seven days following today's
 conference call.
 
     About Kana Communications, Inc.
     Kana Communications, Inc., a leading provider of Web-architected
 enterprise relationship management (eRM) solutions, delivers a broad range of
 world-class, integrated e-business and interaction applications with a modular
 and scalable platform for both global 2000 and Internet companies.  Kana
 solutions deliver personal web portals that offer customers, partners,
 suppliers and the enterprise an integrated, global view of their
 communications and relationships.  This global view includes managing the full
 set of communications channels such as e-mail, Web, chat, instant message,
 VOIP, phone and person-to-person, as well as e-business and communications
 applications to integrate the marketing, sales and service functions.  This
 full-service suite enables e-businesses to compete and succeed in today's
 customer-driven economy.  For more information about the solutions found in
 Global 2000 and leading Internet customers, please visit Kana at www.kana.com.
     NOTE:  Kana Communications, Kana and the Kana logo are trademarks of
 Kana Communications, Inc.  All other company and product names may be
 trademarks of their respective owners.
 
     Cautionary Note Regarding Forward-looking Statements Under the Private
     Securities Litigation Reform Act of 1995:
     Information in this release and during the presentation that involves
 Kana's financial forecasts, projections, expectations, beliefs, hopes, plans,
 intentions or strategies regarding the future are forward-looking statements
 that involve risks and uncertainties.  These statements include statements
 about Kana's strategies in the marketplace, its market position and its
 relationship with customers.  All forward-looking statements included in this
 release are based upon information available to Kana as of the date of the
 release, which may likely change, and we assume no obligation to update any
 such forward-looking statement.  These statements are not guarantees of future
 performance and actual results could differ materially from our current
 expectations.  Factors that could cause or contribute to such differences
 include, but are not limited to, competition in our marketplace, risks
 associated with the evolving and varying demand for eRM, eCRM, customer
 communication and similar software, our ability to manage our cash position
 and expenditures, our history of losses, our ability to expand sales, our
 ability to manage our business in light of recent management changes and
 personnel reductions, continued acceptance of email and the Internet as a
 communications medium, litigation over property rights, and general economic
 factors, particularly as it affects spending by our prospective customers on
 software products such as ours.
     In addition, statements that describe our proposed merger with
 Broadbase Software, and the anticipated results of combining the product lines
 and businesses of Kana and Broadbase, include forward looking statements.  The
 expected benefits of the proposed combination may not be realized for a number
 of reasons including the following:  the merger may not be approved by the
 stockholders of Kana and Broadbase and the other conditions of closing may not
 be satisfied; the announcement of the merger may disrupt the companies' normal
 sales cycles because their sales forces may be distracted by the pending
 business combination or because customers may delay new orders until the
 merger is closed and the sales forces and product lines are combined; the
 combined product lines may not be as broad as those of some of the competitors
 of Kana and Broadbase, and the merger could cause Kana and Broadbase's
 business partners and potential competitors to acquire other product lines
 that would compete directly with the combined company; Kana and Broadbase may
 not be able to rapidly integrate the operations or retain the key employees;
 the combined company may not achieve the increase in revenues that it expects
 or the optimal mix between license and service revenues that it targets to
 achieve its profitability goals.  These and other factors are risks associated
 with our business that may affect our operating results are discussed in the
 Company's filings with the Securities and Exchange Commission ("SEC"),
 including our most recent annual report on Form 10-K and quarterly report on
 Form 10-Q.
 
     Additional Information and Where to Find It
     Kana Communications plans to file a Registration Statement on SEC Form S-4
 in connection with the merger, and Kana and Broadbase expect to mail a Joint
 Proxy Statement/Prospectus to stockholders of Kana and Broadbase containing
 information about the merger.  Investors and security holders of Kana and
 Broadbase are urged to read the Registration Statement and Joint Proxy
 Statement/Prospectus carefully when they are available.  The Registration
 Statement and the Joint Proxy Statement/Prospectus will contain important
 information about Kana, Broadbase, the merger and related matters.  Investors
 and security holders will be able to obtain free copies of these documents
 through the Web site maintained by the U.S. Securities and Exchange Commission
 at http://www.sec.gov.  Free copies of the Proxy Statement/Prospectus and
 these other documents may also obtained from Broadbase by directing a request
 through the Investor Relations portion of Broadbase's site Investor Relations
 Department, 500 Broadway, Redwood City, CA 94063 or from Kana at Kana
 Communications, Inc., 740 Bay Road, Redwood City, CA 94063, attention:
 Investor Relations, telephone:  650-298-9282.  In addition to the Registration
 Statement and the Proxy Statement/Prospectus, Kana and Broadbase file annual,
 quarterly and special reports, proxy statements and other information with the
 Securities and Exchange Commission.  You may read and copy any reports,
 statements or other information filed by Kana and Broadbase at the SEC public
 reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at any of
 the SEC's other public reference rooms in New York, New York and Chicago,
 Illinois.  Please call the SEC at 800-SEC-0330 for further information on the
 public reference rooms.  Kana Communications' and Broadbase Software's filings
 with the SEC are also available to the public from commercial
 document-retrieval services and at the Web site maintained by the SEC at
 http://www.sec.gov.
 
     Interests of Certain Persons in the Merger
     The directors and executive officers of Kana Communications and
 Broadbase Software have interests in the merger, some of which may differ
 from, or may be in addition to, those of Broadbase Software's stockholders
 generally.  A description of the interests that Kana Communications and
 Broadbase Software's directors and executive officers have in the merger will
 be available in the Joint Proxy Statement/Prospectus.
 
     Solicitation of Proxies
     Kana Communications, its directors, executive officers and certain other
 members of its management and employees may be soliciting proxies from Kana
 stockholders in favor of the merger.  The directors and officers of
 Broadbase Software may be deemed to be participants in Broadbase solicitation
 of proxies.  Information concerning the participants will be set forth in the
 Joint Proxy Statement/Prospectus when it is filed with the Securities and
 Exchange Commission.
 
 
                             KANA COMMUNICATIONS, INC.
      UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (A)
                       (In thousands, except per share data)
 
                                                   Three Months Ended
                                                       March 31,
                                                   2001           2000
     Revenues:
       License                                   $11,857         $7,329
       Service                                    12,298          3,359
     Total revenues                               24,155         10,688
     Cost of revenues:
       License                                       633            143
       Service                                    16,829          4,032
     Total cost of revenues                       17,462          4,175
     Gross profit                                  6,693          6,513
     Operating expenses:
       Sales and marketing                        26,534         11,210
       Research and development                   12,949          5,239
       General and administrative                  6,068          1,835
     Total operating expenses                     45,551         18,284
     Pro forma operating loss                   (38,858)       (11,771)
     Other income, net                               302            643
     Pro forma net loss                        $(38,556)      $(11,128)
 
     Pro forma basic and diluted
      net loss per share                         $(0.42)        $(0.21)
     Shares used in computing pro forma
      basic and diluted net loss per share        91,518         52,550
 
     (A)Excludes charges for the amortization of intangible assets, stock-based
     compensation, restructuring costs and goodwill impairment.
 
 
                             KANA COMMUNICATIONS, INC.
             UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except per share data)
 
                                                   Three Months Ended
                                                        March 31,
                                                   2001           2000
     Revenues:
       License                                   $11,857         $7,329
       Service                                    12,298          3,359
     Total revenues                               24,155         10,688
     Cost of revenues:
       License                                       633            143
       Service                                    16,829          4,032
     Total cost of revenues                       17,462          4,175
     Gross profit                                  6,693          6,513
     Operating expenses:
       Sales and marketing                        26,534         11,210
       Research and development                   12,949          5,239
       General and administrative                  6,068          1,835
       Amortization of intangible assets
        and stock-based compensation              90,964          3,320
       Restructuring costs                        19,930             --
       Goodwill impairment                       603,446             --
     Total operating expenses                    759,891         21,604
     Operating loss                            (753,198)       (15,091)
     Other income, net                               302            643
     Net loss                                 $(752,896)      $(14,448)
 
     Basic and diluted net
      loss per share                             $(8.23)        $(0.27)
     Shares used in computing basic and
      diluted net loss per share                  91,518         52,550
 
 
                             KANA COMMUNICATIONS, INC.
                  UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (In thousands)
 
                                                March 31,     December 31,
                                                   2001          2000
     ASSETS
 
     Current assets:
       Cash and short-term investments           $20,999        $76,499
       Accounts receivable, net                   27,141         43,393
       Prepaid expenses and
        other current assets                      12,914         14,866
         Total current assets                     61,054        134,758
     Property and equipment, net                  37,048         40,095
     Intangible assets, principally
      goodwill                                   109,777        800,000
     Other assets                                  5,258          5,271
         Total assets                           $213,137       $980,124
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current liabilities:
       Notes payable                              $1,541         $1,604
       Accounts payable                           11,327         17,980
       Accrued liabilities                        26,019         35,846
       Deferred revenue                           23,325         25,242
         Total current liabilities                62,212         80,672
     Total stockholders' equity                  150,925        899,452
         Total liabilities and
          stockholders' equity                  $213,137       $980,124
 
 SOURCE  Kana Communications, Inc.