KNTA Kintera (MM)

Kintera(R) Inc. (NASDAQ:KNTA), the leading provider of software as a service to the nonprofit and government sectors, today announced financial results for the third quarter ended Sept. 30, 2005. Total revenue for the third quarter 2005 was $12.1 million, an increase of 73 percent compared with the third quarter 2004, and an increase of 16 percent from the second quarter 2005. Kintera's net loss for the third quarter of 2005 was $8.3 million, or $0.27 per share. This is a decrease of 18 percent compared to a loss of $10.1 million, or $0.33 per share, in the second quarter of 2005, and an increase of 86 percent compared to $4.5 million, or $0.17 per share, in the third quarter 2004. Earnings before interest, taxes, depreciation and amortization (EBITDA) was a loss of $6.1 million, or $0.20 per share, in the third quarter of 2005, compared to a loss of $7.7 million, or $0.25 per share, in the second quarter 2005, and a loss of $2.5 million, or $0.10 per share, in the third quarter 2004. Cash provided by operations was $1.5 million in the third quarter 2005, improved from $6.1 million used in operations in the second quarter 2005 and $0.7 million used in the third quarter 2004. Cash, cash equivalents and marketable securities as of Sept. 30, 2005 totaled $33.6 million, as compared to $31.9 million in the second quarter 2005 and $46.8 million in the third quarter 2004. Kintera typically generates revenue from upfront and monthly maintenance fees, as well as transaction fees for data screened and online donations processed for Kintera customers. The company processed $92 million in online donations in the third quarter of 2005, which is 166 percent more than the $34.6 million processed in the third quarter 2004, and 64 percent more than the $56 million processed in the second quarter 2005. "Kintera's third quarter results reflect significant revenue growth - and most importantly, improvement of the company's bottom line. Kintera's financial results this quarter are just one step forward in an ongoing process," said Kintera CEO Harry E. Gruber, M.D. "Kintera's focus will remain on providing exceptional client solutions and services, while improving operating results." Operating expenses for the third quarter 2005 totaled $17.7 million, a decrease of $0.6 million from the second quarter 2005 and an increase of $8.1 million from the third quarter 2004. Additional Third Quarter Business Highlights In addition to improved revenue and operating performance, Kintera continued to gain marketplace visibility, enhance its product offerings, and achieve client successes in the third quarter. Highlights of the company's business activities and results included: -0- *T -- MedStar Health - a nonprofit healthcare organization serving the Baltimore/Washington region - recently signed a multi-year agreement to use Kintera Contact Relationship Management (CRM) with Prospect Relationship Management, which includes P!N Electronic Screening, for its nine hospitals and institutions. Kintera CRM will be used to centralize MedStar's fundraising systems and expand fundraising revenue. -- Kintera CRM gained additional traction as organizations increasingly rely on the predictive analytics of P!N Electronic Screening to identify the donors in their database with the highest capacity, propensity and affinity to donate - and to focus major gift fundraisers on prospects with the highest giving potential. -- The company launched several technology enhancements, including the Friend or Foe feature within Kintera Advocacy, and a new user interface for Kintera Content Management System (CMS). -- Kintera counted numerous client accomplishments including: -- Launch of Heifer International's online Giving Registry (www.heifer.org/giftregistry). The registry functions like a traditional gift registry and enables users to engage in fundraising for the organization. -- Launch of Earth Share's online custom card shop (www.earthshare.org/CharityGift.html) that sells the organization's own private-labeled CharityGift(R) greeting cards and gift certificates. -- The Government of the Federated States of Micronesia signed a $2.8 million contract to implement Kintera FundWare(R) as its financial management software. -- The Bush-Clinton Katrina Fund hired Kintera for online donation processing (www.BushClintonKatrinaFund.org). -- Big Brothers Big Sisters of Sydney signed on as Kintera's first Australian client via reseller and consulting partner, Yarraga Pty Ltd. -- Financial institutions, including Franklin Templeton and Fiduciary Trust, renewed Donor Advised Fund contracts. -- The company signed a multi-year, exclusive agreement with wealth screening provider, Echelon Targeting(TM). The agreement gives Kintera exclusive rights to market Echelon Targeting's Power Segments to nonprofit organizations. *T Conference Call Details Kintera will host a conference call on Thurs., Nov. 10, 2005 at 8:15 a.m. EST to discuss the company's financial results and provide a company update. The conference call can be accessed by dialing toll-free 888-396-2298 (617-847-8708 for international calls), using conference code 73623672. A live Webcast and replay of the call via the Internet will be available at www.kintera.com/webcasts. About Kintera, Inc. Kintera(R), Inc. (NASDAQ:KNTA) provides an online solution to help nonprofit organizations deliver The Giving Experience(TM) to donors - including giving convenience, financial transparency, feedback about the social impact of their gifts, and a sense of belonging and appreciation. More than 15,000 accounts in the nonprofit, government and corporate sectors use Kintera's "software as a service" innovations, including the Friends Asking Friends(R) fundraising program and Kintera Sphere(TM), an enterprise-grade software platform that provides a secure, scaleable and reliable system for contact relationship management (CRM), a web content management system (CMS), eMarketing and directed giving applications. Additionally, Kintera FundWare(R) provides award-winning financial management software developed for nonprofit organizations and governments. Kintera also provides the Kintera GivingFund payment option offering donors Internet convenience for initiating grant requests from their Donor Advised Funds (DAF). Organizations sponsoring donor advised funds as well as recipient nonprofits and foundations are now able to provide improved customer service to philanthropists through this new, innovative way to make major gifts online. A one-time DAF, CharityGift(R), is available for purchase at Kintera's The Giving Communities(TM) website at www.kintera.org. For more information about Kintera's software and services, visit www.kintera.com. Kintera, Kintera Sphere, Friends Asking Friends, The Giving Experience, The Giving Communities, GivingFund, CharityGift, and FundWare are either registered trademarks or trademarks of Kintera, Inc. in the U.S. and/or other countries. Forward-Looking Statements This press release contains, in addition to historical information, forward-looking statements. Such statements are based on management's current estimates and expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Kintera is providing this information as of Nov. 9, 2005, and expressly disclaims any duty to update information contained in this press release. Forward-looking statements in this press release include, without limitation, express and implied statements regarding Kintera's anticipated operating results and, the growth in the market for Kintera's services. These forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those expressed or implied here. Readers are referred to the documents filed by Kintera with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: our limited operating history; our history of losses; our dependence on increased acceptance by nonprofit organizations of online fundraising; lengthy sales cycles for major customers; our need to manage growth; risks associated with accounting for and processing large amounts of donations; the rapidly changing technologies and market demands; and other risks identified in our filings with the Securities and Exchange Commission. Given these uncertainties, you should not place undue reliance on these forward-looking statements. The information contained in this press release is a statement of Kintera's present intention, belief or expectation and is based upon, among other things, the existing industry conditions, market conditions and prices, the economy in general and Kintera's assumptions. Kintera may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Kintera's assumptions or otherwise. Kintera undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Note Regarding Use of Non-GAAP Financial Measures Certain of the information set forth herein, including EBITDA and EBITDA per share, are considered non-GAAP financial measures. Kintera believes this information is useful to investors because it provides a basis for measuring the Company's available capital resources, the operating performance of the Company's business and the Company's cash flow, excluding non-cash items that would normally be included in the most directly comparable measures calculated and presented in accordance with generally accepted accounting principles. The Company's management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measures in evaluating the Company's operating performance and capital resources and cash flow. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies. -0- *T Kintera, Inc. Condensed Consolidated Balance Sheet Data (in thousands) (unaudited) As of As of September 30, December 31, 2005 2004 --------------------------- Cash, cash equivalents and short- investments $33,556 $50,246 Accounts receivable 7,227 6,471 Other current assets 1,763 1,970 --------------------------- Total current assets 42,546 58,687 Property and equipment, net 4,368 3,576 Intangibles and other 25,442 24,675 --------------------------- Total assets $72,356 $86,938 =========================== Donations payable to customers $7,796 $4,610 Deferred revenue 11,587 8,149 Accounts payable and other current liabilities 5,376 5,488 --------------------------- Total current liabilities 24,759 18,247 Other liabilities 118 104 Stockholders' equity 47,479 68,587 --------------------------- Total liabilities and stockholders' equity $72,356 $86,938 =========================== Kintera, Inc. Reconciliation of GAAP Net Loss to EBITDA (in thousands, except per share data) (unaudited) For the three For the nine months ended months ended September 30, September 30, ----------------- ------------------- 2005 2004 2005 2004 ----------------- ------------------- Net loss $(8,305) $(4,463) $(30,062) $(13,373) Interest expense - - 8 - Depreciation and amortization 1,353 464 4,108 1,440 Income taxes - 23 - 92 Stock based compensation 839 1,380 2,781 3,663 Stock based compensation, non- cash charge for vesting stock related to CTSG acquisition - - 2,995 - ----------------- ------------------- EBITDA $(6,113) $(2,596) $(20,170) $(8,178) ================= =================== EBITDA per share $(0.20) $(0.10) $(0.67) $(0.34) ================= =================== Weighted average shares - basic and diluted 30,670 26,301 30,276 24,218 ================= =================== Kintera, Inc. Consolidated Statements of Operations Data (in thousands, except per share data) (unaudited) For the three For the nine months ended months ended September 30, September 30, ----------------- ------------------ 2005 2004 2005 2004 ----------------- ------------------ Net revenues $12,085 $7,001 $31,851 $15,965 Cost of revenues 3,171 1,997 8,225 3,771 ----------------- ------------------ Gross profit 8,914 5,004 23,626 12,194 Gross margin 74% 71% 74% 76% Sales and marketing 7,248 3,988 21,811 9,914 Product development and support 3,958 1,661 11,089 5,345 General and administrative 4,334 2,137 12,017 5,527 Depreciation and amortization 1,289 443 3,808 1,386 Stock-based compensation 839 1,380 2,781 3,663 Stock-based compensation, non- cash charge for vesting stock related to CTSG acquisition - - 2,995 - -------- -------- -------- --------- Total operating expenses 17,668 9,609 54,501 25,835 Operating loss (8,754) (4,605) (30,875) (13,641) Interest income (expense) and other 449 142 813 269 -------- ----------------- --------- Net loss $(8,305) $(4,463)$(30,062) $(13,372) ======== ================= ========= Basic and diluted net loss per share $(0.27) $(0.17) $(0.99) $(0.55) ======== ================= ========= Weighted average shares - basic and diluted 30,670 26,301 30,276 24,218 ======== ================= ========= *T