Quovadx Reports First and Second Quarter Financial Results for 2004; Company Becomes Current with SEC; Filings Bring Company into Compliance with Nasdaq Listing Requirements

Business Wire,  August 16, 2004  

Tags: Company, compliance, Nasdaq Stock Market Inc., SEC

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ENGLEWOOD, Colo. -- Quovadx, Inc. (Nasdaq:QVDXE), a global software and vertical solutions company, today announced financial results including revenue of $23.7 million for its first quarter which ended March 31, 2004, and revenue of $21.6 million for its second quarter which ended June 30, 2004. Today the Company filed with the Securities and Exchange Commission (SEC) its Form 10-Q for the first and second quarter of 2004. Quovadx has restated its consolidated financial results for fiscal years ended December 31, 2002, and 2003, on its Form 10-K/A, which was also filed with the SEC today.

The restatements reduced previously reported revenue for 2002 by $0.4 million. $0.3 million of this revenue has been recognized in 2003 and 2004. The remaining $0.1 million will be recognized as the cash is received. The 2002 restatements increased previously reported cost of revenue by $0.2 million and increased previously reported net loss by $0.7 million. The 2003 restatements reduced previously reported revenue by $1.7 million. The Company reversed $1.0 million of this revenue, recognized $0.6 million in 2004 and will recognize the remaining $0.1 million in future periods. The restatements increased previously reported cost of revenue by $0.1 million and increased the previously reported net loss for 2003 by $1.8 million.

Today's filings bring the Company into compliance with the SEC requirements for the filing of its periodic reports. The Company has notified Nasdaq that it is now in compliance with Nasdaq's filing requirements.

"Completing a thorough review of past accounting practices is an important milestone for Quovadx," said Harvey A. Wagner, acting president and chief executive officer of Quovadx. "While the review was underway, we continued to enter into new contracts with customers, announced product enhancements, and we began an evaluation of the Company's strategy, organization and operations in order to set the course for the future success of Quovadx."

Wagner continued: "We have been actively meeting with customers and the company has been working hard to build excellent customer relationships and to deliver quality customer service. Over the past months, based on our market opportunities, our customer base, our products and services and our employees, I've grown increasingly confident in the future of our business. I am optimistic about the ultimate success of this company."

2004 First Quarter Financial Results

Total revenue for the first quarter of 2004 was $23.7 million, up 35.0% from $17.5 million from the same period last year. Quovadx recorded software license revenue of $7.4 million for the quarter, up 36.1% from $5.4 million from the first quarter of 2003. These results include $10.4 million in total revenue and $5.0 million of license revenue from acquisitions made by the company in 2003.

Net loss, calculated in accordance with generally accepted accounting principles (GAAP), was $12.8 million or a loss of $0.33 per share for the quarter ended March 31, 2004. This compares with a GAAP loss of $2.7 million or a loss of $0.09 per share in the first quarter of 2003. The first quarter, 2004 results include several one-time, non-cash write-downs of capitalized software, prepaid assets and deferred costs totaling $6.8 million which increased the loss by $0.17 per share.

These one-time, non-cash charges include the write-off of $4.4 million of previously capitalized and acquired software from products that have not gained traction in the marketplace. The charges also include the write-off of $1.7 million of prepaid professional services to Infotech Network Group and a write-off of $0.7 million of deferred costs, related to cancelled contracts and lower than expected revenues on other contracts in the Company's transaction business.

Gross margin in the first quarter was 9.3% versus 38.0% in the first quarter of 2003. Excluding one-time charges totaling $6.8 million relating to one-time, non-cash write-offs, gross margin in the first quarter was 37.8%. The Company's deferred revenue was $18.8 million on March 31, 2004, compared to $19.4 million on December 31, 2003, and $10.3 million on March 31, 2003. The company had no debt and ended the first quarter with $14.0 million in cash and short-term investments. Days sales outstanding (DSOs) were 72 on March 31, 2004, down from restated DSOs of 97 at December 31, 2003.

2004 Second Quarter Financial Results

Total revenue for the second quarter of 2004 was $21.6 million, up 16.1% from $18.6 million from the same period last year. The Company recorded software license revenue of $5.5 million for the quarter, down 15.2% from $6.5 million for the second quarter of 2003. These results include $9.7 million in total revenue and $4.5 million of license revenue from acquisitions made by the company in 2003.

Net loss, calculated in accordance with GAAP, was $5.9 million or a loss of $0.15 per share for the quarter ended June 30, 2004. This compares with a GAAP loss of $1.4 million or a loss of $0.05 per share in the second quarter of 2003. The second quarter results include a $1.2 million or $0.03 per share one-time gain from the sale of a minority equity investment.