VitalStream Holdings Reports Record Quarterly and Year-to-Date
Revenue 51% Revenue Increase in Q3, 34% Revenue Increase YTD
IRVINE, Calif., Nov. 4 /PRNewswire-FirstCall/ -- VitalStream(R)
Holdings Inc. (OTC:VSTH) (BULLETIN BOARD: VSTH) , the parent
company of VitalStream, Inc., a global provider of integrated
content delivery and streaming media services, today reported
results for the third quarter and first nine months of 2004.
Revenues for the quarter ended September 30, 2004 were $2,691,000,
a 51 percent increase over revenues of $1,779,000 in the same
period a year ago, and a 17 percent sequential increase over
revenues of $2,302,000 in the second quarter of 2004. Revenues for
the first nine months of 2004 increased 34 percent to $6,984,000
compared with revenues of $5,229,000 in the first nine months of
2003. "Our continued revenue growth both year-over-year and
sequentially demonstrates the company's success in building
momentum with new customers, particularly large organizations in
the media, advertising and retail spaces, as well as our ability to
expand relationships with existing customers. We are experiencing
increased demand for our offerings including Macromedia(R)
Flash(TM) Video Streaming Service," noted Paul Summers, president
and chief executive officer of VitalStream, Inc. "During the
quarter, we increased our portfolio of services based on Flash with
the Macromedia Flash Video Streaming Service Lite, which allows
companies to broadcast pre-recorded Flash video from their website
with an easy-to-use, cost-effective and powerful solution for
adding rich media streaming to websites," he added. In addition,
VitalStream was recently identified by Microsoft as one of a select
group of Windows Media providers upgraded to the newly created
Premier certification level. New customers during the quarter
included Unisys, Target, ABC News, Red Bull and Eyeblaster. For the
third quarter of 2004, VitalStream reported a net loss of $223,000,
or $(0.00) per share, compared with a net loss of $176,000, or
$(0.01) per share, for the third quarter a year ago. For the first
nine months of 2004, the company reported a net loss of $1,084,000,
or $(0.03) per share, versus a net loss of $599,000, or $(0.02) per
share, for the same period a year ago. Included in the net loss for
the first nine months of 2004 were a $303,000 non-cash compensation
expense related to a severance agreement as well as $231,000 of
interest expense related to the conversion of outstanding notes
payable to common stock during the second quarter of 2004. Weighted
average shares outstanding used in the calculation of earnings per
share increased for the quarter and year-to-date periods due
primarily to the additional shares issued in the June 16, 2004
financing transaction as previously announced by the company. "Our
operating results reflect additional investments we are making to
effectively support the growth of our expanding customer base well
into the future. We have further increased the capacity and
scalability of our rich media delivery infrastructure and have also
expanded our sales force to take advantage of what we believe are
significant opportunities in the market," Summers said. Summers
noted that "the company has continued its strategy of strengthening
its financial position. In early October, we entered into a new
banking relationship with Comerica Bank that includes both a term
line and revolving line of credit facility totaling $4.0 million at
significantly lower borrowing costs than had been available in
previous credit arrangements. These new facilities can be used to
finance equipment purchases and to supplement our existing cash
balance of approximately $10 million," he continued. "Rich media is
becoming a more widely used form of communications by leading
enterprise, media, entertainment and advertising organizations. As
was recently reported by Neislen/NetRatings, broadband connections
have now surpassed dial-up among Internet users and the adoption of
broadband continues to grow at levels which portend greater
bandwidth and adoption of bandwidth-intensive content such as
streaming media," Summers commented. FINANCIAL SUMMARY (Unaudited)
(all numbers in 000's, except per share data) Statement of
Operations Three months ended Nine months ended September 30,
September 30, 2004 2003 2004 2003 Revenues $2,691 $1,779 $6,984
$5,229 Cost of revenue 1,172 783 2,907 2,296 Gross Profit 1,519 996
4,077 2,933 Research & development 130 85 328 256 Sales &
marketing 754 447 2,019 1,395 General & administrative 803 613
2,075 1,828 Stock based compensation -- -- 303 -- Operating loss
(168) (149) (648) (546) Other Income (Expense) Interest expense,
net (49) (44) (401) (114) Other income (expense) including taxes
(6) 17 (35) 61 Net loss ($223) ($176) ($1,084) ($599) Loss per
share (less preferred dividends) $0.00 ($0.01) ($0.03) ($0.02)
Weighted average shares outstanding 60,029 30,927 43,114 29,146
Balance Sheet Highlights September 30, December 31, 2004 2003 Cash
$9,876 $773 All other assets 5,376 3,882 Total Assets $15,252
$4,655 Total Liabilities $3,464 $3,182 Total Shareholders' Equity
11,788 1,473 Total Liabilities and Shareholders' Equity $15,252
$4,655 Adjusted EBITDA Adjusted EBITDA for the quarter ended
September 30, 2004, was $128,000, compared to $22,000 during the
comparable period last year. The reconciliation of net loss to
Adjusted EBITDA is as follows: Three months ended Nine months ended
September 30, September 30, 2004 2003 2004 2003 (all numbers in
000's) Net loss (223) (176) (599) (1,084) Depreciation and
amortization 302 154 760 434 Interest expense, net 49 44 401 114
Non-cash stock compensation -- -- 303 -- Income tax expense -- -- 3
3 Adjusted EBITDA $128 $22 $383 ($48) Use of Non-GAAP Financial
Measures VitalStream defines Adjusted EBITDA as net income (loss)
before interest, income taxes, depreciation, amortization and
stock-based compensation. Adjusted EBITDA is not a measure used in
financial statements reported in accordance with generally accepted
account principles, does not represent funds available for
discretionary use and is not intended to represent cash flow from
operations as measured under generally accepted accounting
principles. Adjusted EBITDA should not be considered as an
alternative to net loss or net cash used in operating activities.
VitalStream's calculation of Adjusted EBITDA may not be comparable
to the computation of similarly titled measures of other companies.
VitalStream's management uses Adjusted EBITDA as a measure of its
operating performance. In addition, VitalStream believes that
Adjusted EBITDA may be useful to existing and potential creditors
of VitalStream, and to analysts and investors that follow
VitalStream's performance, because it is one measure of the income
generated that is available to service any outstanding debt. About
VitalStream, Inc. VitalStream, Inc., a wholly-owned subsidiary of
VitalStream Holdings, Inc. (OTC:VSTH) (BULLETIN BOARD: VSTH) , is a
global provider of integrated content delivery services that enable
businesses to broadcast their digital media and communications to
worldwide audiences via the Internet. The Company provides complete
solutions, including audio and video streaming, live event
broadcasting, media asset management, integrated web hosting and
consulting services, that seamlessly integrate with today's leading
streaming media technologies. To ensure a worldwide reach,
VitalStream engineered its award-winning continent delivery network
certified for quality delivery in the United States, Europe and
Asia. For more information, call 800-254-7554, or visit
http://www.vitalstream.com/. Forward-Looking Statements This news
release may contain certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1993 and Section
21E of the Securities Exchange Act of 1934. These statements are
based on management's current expectations and are subject to
uncertainty and changes in circumstances. Actual results may vary
materially from the expectations contained in the forward-looking
statements. Forward-looking statements may include statements
addressing future financial and operating results of the Company.
The following factors, among others, could cause actual results to
differ materially from those described in any forward-looking
statements: The risk that the Company's revenue may decrease on a
quarter over quarter basis because of a slower than projected
growth in the demand for digital broadcast and streaming services;
the risks that the Company's existing customers may cease to use
the Company's services and/or may not use the Company's services at
the projected rate; uncertainties regarding the future demand for
the Company's products and services generally; the risk that the
trend towards increasing broadband penetration may not continue;
the inability of the Company to compete or the competitive
advantage of companies that compete or may compete in our markets;
the risk that the Company's operational efficiency may not continue
to improve; the risk that the Company may be unable to obtain
capital necessary to continue operations and fuel growth or obtain
it at favorable rates; the risk that the Company may experience
technical or security problems that injure its business or increase
its operating costs; and/or uncertainties regarding our ability to
pursue our proposed business strategy. More detailed information
about these factors and others is set forth in the Company's
filings with the Securities and Exchange Commission, including its
most recent Annual Report on Form 10-K. Such forward-looking
statements speak only as of the date of this release. The Company
is under no obligation (and expressly disclaims any obligation) to
update or revise any forward-looking statements whether as a result
of new information, future events or otherwise. Vital Stream is a
registered trademark of VitalStream, Inc. All other trademarks are
property of their respective holders. For more information please
contact: Investor Relations Contact: Mark Belzowski VitalStream,
Inc. 949/743-2000 Neal Rosen Kalt Rosen & Co. LLC 415/397-2686
DATASOURCE: VitalStream Holdings, Inc. CONTACT: investor relations,
Mark Belzowski of VitalStream, Inc., +1-949-743-2000, ; or Neal
Rosen of Kalt Rosen & Co. LLC, +1-415-397-2686, , for
VitalStream, Inc. Web site: http://www.vitalstream.com/
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