HAMBURG, Germany, Nov. 23, 2000 (PRIMEZONE) -- Gauss Interprise AG (GSOG.DE), German market leader and global technology leader with content and portal management systems, continues the high growth performance of previous quarters in the third quarter of 2000.
In the first nine months of 2000 total revenue increased by 219% to DEM 41.4 million (DEM 13.0 million in 1999). Sales revenues in the product division rose to DEM 19 million. This amounts to an increase of 459% over the same period in the previous year (DEM 3.4 million). The product division contributed 46% of total sales in the first nine months and 62% of total sales in the third quarter.
In Europe product revenues reached DEM 11.6 million in the nine-month period, which represented growth of 252% over the same period the previous year (DEM 3.3 million). New sales offices in Europe outside Germany contributed 6% to these revenues in the third quarter.
Gauss Interprise Inc., USA (formerly Magellan Software Inc.) was consolidated for the first time in the 3rd quarter and contributed 61% (DEM 7.4 million) to product sales in that quarter. U.S. revenues as well as earnings have been reduced by a purchase accounting adjustment of DEM 1.6 million. This adjustment resulted from removing license revenues deferred prior to acquisition against goodwill. For the next two quarters further adjustments of approximately DEM 1.4 million are expected.
Gauss's consulting division which has been legally separated into Gauss Interprise Consulting AG contributed DEM 22.4 million, an increase of 130% by comparison with the previous year (DEM 9.7 million).
The somewhat lower growth rates vs. the first half-year are attributable to seasonal influences. Moreover in the U.S. the refocussing of the sales force caused some slowdown in sales. The Consulting division did not quite achieve its recruitment targets for Q3.
In Europe 21 new VIP customers were obtained in the third quarter. They included RWE, Postbank easy trade and Hella. 53.3% of European license sales in the third quarter (DEM 3.8 million) were generated via sales partners. This means that partners accounted for DEM 4.8 million or 48% of license sales in the first nine months. 19 new sales partners were obtained in the third quarter, including Brockhaus AG Software & Consulting, Ision Internet AG, MaK DATA SYSTEM, Concept! Technology and NEXT LEVEL Communications.
Co-operation in the strategic alliances was also extended successfully. The Gauss VIP ContentManagement system was, for example, certified by the Oracle European Development & Technology Center and Fujitsu Siemens for the Oracle 8i Appliance at the Oracle/Fujitsu Siemens Competence Center in Munich. In addition, there was further expansion of the strategic alliance with IBM. As a result of the successful placement of the VIP products in the e-lab of the European e-business Innovation Center in Hamburg, IBM Global Services has completed several VIP training courses and has developed internal VIP know-how.
In the US Gauss obtained 35 new customers in the third quarter, including the insurance group Seabury & Smith, Helmerich & Payne and Griffin Group. The network of sales partners was expanded by 12 new partners obtained in the third quarter, including Pegasus TransTech, LendingSpace.com, New Wave Technologies, ProDX and ePlanets. The channel partners contributed 31% to License sales in the US.
In the first nine months, Gauss generated EBITDA losses of DEM 19.8 million (DEM -3.8 million in the same period the previous year). DEM 11.2 million of this total including a purchase accounting adjustment of DM 1.6 million were recorded in the third quarter. The goodwill resulting from the acquisition of Magellan Software Inc. is being depreciated over five years. Accordingly goodwill amortization increased to DEM 12.8 million in the third quarter and DEM 20.0 million for the first nine months. Taking into account net interest earned of 2.3 million and depreciation of 2.9 million the net loss amounted for the first nine months to DEM 40.6 million.
The increase of EBITDA loss in the third quarter is due to the additional expenses for the integration of the Gauss and Magellan product lines, investments into expanding the US sales force as well as an increase in deferred revenues. Gauss Interprise Inc.'s EBITDA amounted to DEM -8.0 million including the DEM 1.6 million purchase accounting adjustment.
EBITDA losses of Gauss Interprise AG increased only slightly to DEM 3.2 million from DEM 2.4 million in the previous quarter due to seasonality and higher deferred revenues.
The total increase in deferred revenues amounted to DEM 4.3 million most of which was related to the USA.
The number of employees continued to grow in the third quarter. By comparison with the same period the previous year, staff increased 175% -- from 157 to 432. 266 of them are employed in Europe and 166 in the USA.
Successful progress was made in expanding the sales organization throughout Europe in the third quarter of 2000. Following the establishment of a location in France, Gauss entered the market in Great Britain and the Netherlands in September with the acquisitions of Magellan Software Ltd. and Magellan B.V.. Gauss has as a result obtained access not only to the second-largest IT market in Europe but also to more than 100 existing customers, including Sony, Panasonic, Rentokil, Wedgewood, Cornhill Insurance, Debenhams, KLM Royal Dutch Airlines and BT Cellnet.
Moreover a wholly owned subsidiary was founded in Switzerland that will initially be covering the Italian market as well. The first customers include AGI Services AG, Intelligence AG and Platinum Web Performance GmbH.
Including the sales offices in Spain and Sweden which were set up in the fourth quarter Gauss is now represented in the major markets of Europe.
Management's sales target of DEM 75 million for the year 2000 remains unchanged. The Company continues to expect EBITDA break-even to be reached in the fourth quarter of 2001.