Netcentives Reports First Quarter Revenue Up 268% Year-Over-Year

Net Loss Improves Sequentially to $0.31 Per Share, Expenses Below Expectations



Apr 24, 2001, 01:00 ET from Netcentives Inc.

    SAN FRANCISCO, April 24 /PRNewswire Interactive News Release/ --
 Netcentives Inc.(TM) (Nasdaq: NCNT), a leading provider of loyalty and direct
 marketing solutions, today announced results for the first quarter ended
 March 31, 2001. During the period, the Company narrowed its losses, posting a
 sequential earnings per share improvement.
     Eric Larsen President and CEO said, "Our first quarter reflects early
 success related to the Company's expense structure realignment. We have
 exceeded our internal revenue projections, reduced our total expenses by 14%
 sequentially, and continued to improve operating margins. These strides are
 paving the way toward our first full three-month period of positive free cash
 flow during the fourth quarter of this year, which is a key milestone for the
 Company. During the second quarter we expect to continue the trend of
 narrowing our losses."
     Netcentives reported revenues of $17.1 million during the first quarter, a
 268% increase from $4.6 million reported in the first quarter of 2000. During
 the three-month period, the Company reported a net loss of $13.2 million, or
 $0.31 per share. These results exclude non-cash charges of $28.4 million. This
 compares to a net loss on the same basis of $9.4 million, or $0.29 per share,
 reported in the first quarter of 2000. The Company lost $0.42 during its
 fourth quarter of 2000.
     Larsen concluded, "Despite the current economic climate, over the past
 quarter, we have seen an increased level of activity in our new sales pipeline
 as our solutions are evaluated by many Global 2000 companies. In addition to
 new customer opportunities, we are harvesting more revenue from our existing
 customer base as they chose to outsource non-core functions such as email and
 loyalty solutions."
 
     Quarterly Conference Call
     The Company will hold a live Webcast presentation at 2:00 p.m. Pacific
 Time today to review earnings results and future guidance. The Webcast can be
 accessed by visiting www.netcentives.com. As an alternative, participants can
 dial into 800-251-3185 to hear the live audio portion of the presentation and
 should reference the passcode: NCNT.
 
     About Netcentives Inc.
     San Francisco-based Netcentives Inc., a leading provider of loyalty and
 direct marketing solutions, delivers a broad suite of relationship marketing
 technology and services including business, consumer and employee loyalty
 programs, customized email marketing and consulting services. The Company's
 patented business processes and scalable technology infrastructure provide
 clients with the power and flexibility to drive enduring customer
 relationships both online and offline. For more information about Netcentives
 and its portfolio of relationship marketing solutions, visit
 www.netcentives.com or call 415-538-1888.
 
     NOTE:  Netcentives is a trademark of Netcentives Inc. Other product and
 company names herein may be trademarks of their respective owners. This press
 release contains forward-looking statements within the meaning of the Private
 Securities Litigation Reform Act of 1995, regarding Netcentives' business
 strategy and future plans and projected results of operations. Forward-looking
 statements involve known and unknown risks and uncertainties, both general and
 specific to the matters discussed in this press release. These and other
 important factors, including those mentioned in various Securities and
 Exchange Commission filings made periodically by Netcentives, may cause
 Netcentives' actual results and performance to differ materially from the
 future results and performance expressed in or implied by such forward-looking
 statements. The forward-looking statements contained in this press release
 speak only as of the date hereof and Netcentives expressly disclaims any
 obligation to provide public updates, revisions or amendments to any
 forward-looking statements made herein to reflect changes in Netcentives'
 expectations or future events.
 
     (Financial tables follow)
 
                                  NETCENTIVES INC.
 
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share amounts)
                                    (unaudited)
 
 
                                                            Three Months
                                                          Ended March 31,
                                                         2001           2000
     REVENUES:
      Product                                          $6,097           $487
      Program-related services                          5,528          1,645
      Direct marketing services                         3,298          1,320
      Technical and marketing consulting services       2,155          1,186
        Total revenues                                 17,078          4,638
 
     COSTS AND EXPENSES:
      Cost of product revenues                          5,084            408
      Program-related services, marketing
       and support costs                               11,111          7,706
      Cost of direct marketing services                 1,948            184
      Cost of technical and marketing consulting
       services                                         1,204            474
      Research and development                          4,166          1,653
      Selling, general and administrative               7,086          4,786
      Amortization of deferred stock compensation         701          1,092
      Amortization of supplier and other stock
       arrangements                                     6,174          1,077
      Amortization of intangibles                      21,238          1,524
        Total costs and expenses                       58,712         18,904
 
      Loss from operations                           (41,634)       (14,266)
 
      Interest income                                     625          1,272
      Income from equity investee                       (289)             --
      Interest expense                                  (309)           (95)
 
      Net loss                                      $(41,607)      $(13,089)
 
      Net loss per share -- basic and diluted         $(0.98)        $(0.40)
 
      Shares used in computing per share amounts       42,652         32,590
 
      Net loss excluding non cash charges          $ (13,205)       $(9,396)
 
      Net loss per share excluding non cash charges   $(0.31)        $(0.29)
 
 
 
                                  NETCENTIVES INC.
 
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (In thousands)
                                    (unaudited)
 
                                                       March 31,  December 31,
                                                         2001         2000
     ASSETS
     Current assets:
      Cash and equivalents                             $14,508       $31,670
      Short-term investments                            11,254        11,604
      Accounts receivable                                6,486         7,228
      Prepaid incentive awards                             830           910
      Prepaid expenses and other current assets          1,389         1,707
        Total current assets                            34,467        53,119
 
      Property and equipment - net                      36,981        40,671
      Intangible assets - net                          250,468       269,724
      Marketable securities                              1,114         2,403
      Other assets                                      10,327        10,295
        Total assets                                  $333,357      $376,212
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
      Accounts payable                                  $6,272        $6,263
      Accrued compensation and benefits                  3,422         6,029
      Accrued redemption costs                           1,901         1,931
      Other accrued liabilities                          5,586         5,496
      Deferred revenue-product                          15,144        17,661
      Deferred revenue-services                         14,623        14,506
      Current portion of long-term obligations           3,017         3,870
       Total current liabilities                        49,965        55,756
      Long-term obligations                              4,129         4,255
 
     Stockholders' Equity:
      Common stock                                          43            43
      Paid-in capital                                  629,482       631,158
      Deferred stock expenses                         (57,743)      (65,524)
      Unrealized gain/(loss) on marketable securities  (1,289)           147
      Receivables from sales of stock                     (41)          (41)
      Accumulated deficit                            (291,189)     (249,582)
 
        Total stockholders' equity                     279,263       316,201
 
        Total liabilities and stockholders' equity    $333,357      $376,212
 
 
 
                                  NETCENTIVES INC.
 
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (In thousands)
                                    (unaudited)
 
                                                           Three Months
                                                         Ended March 31,
                                                        2001           2000
     CASH FLOWS FROM OPERATING ACTIVITIES:
      Cash received from customers                    $15,392         $6,460
      Cash paid to suppliers and employees           (30,219)        (9,160)
      Cash paid for interest                            (309)           (89)
      Interest received                                   625          1,272
       Net cash used in operating activities         (14,511)        (1,517)
 
     CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of property and equipment             (1,913)        (7,807)
      Maturity (purchases) of short term
       investments, net                                   203          4,037
      Cash paid in UVN acquisition, net of cash
       acquired                                            --        (4,103)
      Cash acquired in MaxMiles acquisition                --             32
      Other long-term assets                               --          (128)
        Net cash used in investing activities         (1,710)        (7,969)
 
     CASH FLOWS FROM FINANCING ACTIVITIES:
      Sales of common stock                                38            159
      Repayment (issuance) of receivable
      related to previous issuances of common stock        --            450
      Borrowings on long-term debt                         --            493
      Principal payments on long-term debt              (979)          (338)
       Net cash (used in) provided by financing
        activities                                      (941)            764
 
     NET DECREASE IN CASH AND EQUIVALENTS            (17,162)        (8,722)
     CASH AND EQUIVALENTS, Beginning of period         31,670         75,290
     CASH AND EQUIVALENTS, End of period              $14,508        $66,568
 
 
                      MAKE YOUR OPINION COUNT - Click Here
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SOURCE Netcentives Inc.
    SAN FRANCISCO, April 24 /PRNewswire Interactive News Release/ --
 Netcentives Inc.(TM) (Nasdaq: NCNT), a leading provider of loyalty and direct
 marketing solutions, today announced results for the first quarter ended
 March 31, 2001. During the period, the Company narrowed its losses, posting a
 sequential earnings per share improvement.
     Eric Larsen President and CEO said, "Our first quarter reflects early
 success related to the Company's expense structure realignment. We have
 exceeded our internal revenue projections, reduced our total expenses by 14%
 sequentially, and continued to improve operating margins. These strides are
 paving the way toward our first full three-month period of positive free cash
 flow during the fourth quarter of this year, which is a key milestone for the
 Company. During the second quarter we expect to continue the trend of
 narrowing our losses."
     Netcentives reported revenues of $17.1 million during the first quarter, a
 268% increase from $4.6 million reported in the first quarter of 2000. During
 the three-month period, the Company reported a net loss of $13.2 million, or
 $0.31 per share. These results exclude non-cash charges of $28.4 million. This
 compares to a net loss on the same basis of $9.4 million, or $0.29 per share,
 reported in the first quarter of 2000. The Company lost $0.42 during its
 fourth quarter of 2000.
     Larsen concluded, "Despite the current economic climate, over the past
 quarter, we have seen an increased level of activity in our new sales pipeline
 as our solutions are evaluated by many Global 2000 companies. In addition to
 new customer opportunities, we are harvesting more revenue from our existing
 customer base as they chose to outsource non-core functions such as email and
 loyalty solutions."
 
     Quarterly Conference Call
     The Company will hold a live Webcast presentation at 2:00 p.m. Pacific
 Time today to review earnings results and future guidance. The Webcast can be
 accessed by visiting www.netcentives.com. As an alternative, participants can
 dial into 800-251-3185 to hear the live audio portion of the presentation and
 should reference the passcode: NCNT.
 
     About Netcentives Inc.
     San Francisco-based Netcentives Inc., a leading provider of loyalty and
 direct marketing solutions, delivers a broad suite of relationship marketing
 technology and services including business, consumer and employee loyalty
 programs, customized email marketing and consulting services. The Company's
 patented business processes and scalable technology infrastructure provide
 clients with the power and flexibility to drive enduring customer
 relationships both online and offline. For more information about Netcentives
 and its portfolio of relationship marketing solutions, visit
 www.netcentives.com or call 415-538-1888.
 
     NOTE:  Netcentives is a trademark of Netcentives Inc. Other product and
 company names herein may be trademarks of their respective owners. This press
 release contains forward-looking statements within the meaning of the Private
 Securities Litigation Reform Act of 1995, regarding Netcentives' business
 strategy and future plans and projected results of operations. Forward-looking
 statements involve known and unknown risks and uncertainties, both general and
 specific to the matters discussed in this press release. These and other
 important factors, including those mentioned in various Securities and
 Exchange Commission filings made periodically by Netcentives, may cause
 Netcentives' actual results and performance to differ materially from the
 future results and performance expressed in or implied by such forward-looking
 statements. The forward-looking statements contained in this press release
 speak only as of the date hereof and Netcentives expressly disclaims any
 obligation to provide public updates, revisions or amendments to any
 forward-looking statements made herein to reflect changes in Netcentives'
 expectations or future events.
 
     (Financial tables follow)
 
                                  NETCENTIVES INC.
 
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share amounts)
                                    (unaudited)
 
 
                                                            Three Months
                                                          Ended March 31,
                                                         2001           2000
     REVENUES:
      Product                                          $6,097           $487
      Program-related services                          5,528          1,645
      Direct marketing services                         3,298          1,320
      Technical and marketing consulting services       2,155          1,186
        Total revenues                                 17,078          4,638
 
     COSTS AND EXPENSES:
      Cost of product revenues                          5,084            408
      Program-related services, marketing
       and support costs                               11,111          7,706
      Cost of direct marketing services                 1,948            184
      Cost of technical and marketing consulting
       services                                         1,204            474
      Research and development                          4,166          1,653
      Selling, general and administrative               7,086          4,786
      Amortization of deferred stock compensation         701          1,092
      Amortization of supplier and other stock
       arrangements                                     6,174          1,077
      Amortization of intangibles                      21,238          1,524
        Total costs and expenses                       58,712         18,904
 
      Loss from operations                           (41,634)       (14,266)
 
      Interest income                                     625          1,272
      Income from equity investee                       (289)             --
      Interest expense                                  (309)           (95)
 
      Net loss                                      $(41,607)      $(13,089)
 
      Net loss per share -- basic and diluted         $(0.98)        $(0.40)
 
      Shares used in computing per share amounts       42,652         32,590
 
      Net loss excluding non cash charges          $ (13,205)       $(9,396)
 
      Net loss per share excluding non cash charges   $(0.31)        $(0.29)
 
 
 
                                  NETCENTIVES INC.
 
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (In thousands)
                                    (unaudited)
 
                                                       March 31,  December 31,
                                                         2001         2000
     ASSETS
     Current assets:
      Cash and equivalents                             $14,508       $31,670
      Short-term investments                            11,254        11,604
      Accounts receivable                                6,486         7,228
      Prepaid incentive awards                             830           910
      Prepaid expenses and other current assets          1,389         1,707
        Total current assets                            34,467        53,119
 
      Property and equipment - net                      36,981        40,671
      Intangible assets - net                          250,468       269,724
      Marketable securities                              1,114         2,403
      Other assets                                      10,327        10,295
        Total assets                                  $333,357      $376,212
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
      Accounts payable                                  $6,272        $6,263
      Accrued compensation and benefits                  3,422         6,029
      Accrued redemption costs                           1,901         1,931
      Other accrued liabilities                          5,586         5,496
      Deferred revenue-product                          15,144        17,661
      Deferred revenue-services                         14,623        14,506
      Current portion of long-term obligations           3,017         3,870
       Total current liabilities                        49,965        55,756
      Long-term obligations                              4,129         4,255
 
     Stockholders' Equity:
      Common stock                                          43            43
      Paid-in capital                                  629,482       631,158
      Deferred stock expenses                         (57,743)      (65,524)
      Unrealized gain/(loss) on marketable securities  (1,289)           147
      Receivables from sales of stock                     (41)          (41)
      Accumulated deficit                            (291,189)     (249,582)
 
        Total stockholders' equity                     279,263       316,201
 
        Total liabilities and stockholders' equity    $333,357      $376,212
 
 
 
                                  NETCENTIVES INC.
 
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (In thousands)
                                    (unaudited)
 
                                                           Three Months
                                                         Ended March 31,
                                                        2001           2000
     CASH FLOWS FROM OPERATING ACTIVITIES:
      Cash received from customers                    $15,392         $6,460
      Cash paid to suppliers and employees           (30,219)        (9,160)
      Cash paid for interest                            (309)           (89)
      Interest received                                   625          1,272
       Net cash used in operating activities         (14,511)        (1,517)
 
     CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of property and equipment             (1,913)        (7,807)
      Maturity (purchases) of short term
       investments, net                                   203          4,037
      Cash paid in UVN acquisition, net of cash
       acquired                                            --        (4,103)
      Cash acquired in MaxMiles acquisition                --             32
      Other long-term assets                               --          (128)
        Net cash used in investing activities         (1,710)        (7,969)
 
     CASH FLOWS FROM FINANCING ACTIVITIES:
      Sales of common stock                                38            159
      Repayment (issuance) of receivable
      related to previous issuances of common stock        --            450
      Borrowings on long-term debt                         --            493
      Principal payments on long-term debt              (979)          (338)
       Net cash (used in) provided by financing
        activities                                      (941)            764
 
     NET DECREASE IN CASH AND EQUIVALENTS            (17,162)        (8,722)
     CASH AND EQUIVALENTS, Beginning of period         31,670         75,290
     CASH AND EQUIVALENTS, End of period              $14,508        $66,568
 
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X65574851
 
 SOURCE  Netcentives Inc.