Entrust Announces First Quarter Fiscal Year 2007 Financial Results



    
    (*) Total Revenues of $24.6 million - an increase of 16% year-over-year

    (*) Product revenues of $9.1 million - an increase of 39% year-over-year

    (*) Emerging Growth Products revenues of $2.3 million - an increase of 138%
    year-over-year

    (*) Total Transactions grew to a record 113 - an increase of 5% quarter-
    over-quarter

    (*) Deferred Revenue of $28.3 million - an increase of $4.9 million year-
    over-year
    

    DALLAS, April 24 /CNW/ -- Entrust, Inc. (Nasdaq:   ENTU), a world leader in
securing digital identities and information, today announced financial results
for its fiscal quarter ended March 31, 2007.
    Revenue for the first quarter was $24.6 million, an increase of 16% from
$21.1 million in Q1, 2006. Revenue in the first quarter was driven by product
revenue, which increased 39% from Q1, 2006.  Deferred revenue in the first
quarter increased to $28.3 million, a record high driven by an increase of
$2.0 million in subscription product bookings and $2.9 million in professional
services and support and maintenance renewals from Q1, 2006.
    "I am pleased with our Q1 performance toward meeting our first half
financial and operating commitments," said Bill Conner, Entrust chairman,
president and chief executive officer.  "Specifically, we grew total revenue
16 percent year-over-year and product revenue 39 percent year-over-year,
achieved record product transactions of 113 and increased deferred revenue by
$2.0 million in subscription product bookings and $2.9 million in professional
services and support and maintenance renewals."
    Conner added, "As a result of our continued focus on cost management, we
have also been able to successfully reduce our total quarterly cost basis to
approximately $25.5 million.  Our reduced expense profile will now allow us to
reach the low end of our earnings target for the first half on $52.0 million
in revenue.  I also am pleased with our fast start to this quarter as we have
already achieved approximately $3.0 million in product revenue, which puts us
in a good position to attain our planned fifty percent product growth for the
first half."
    Entrust recorded a Q1, 2007 net loss, calculated in accordance with GAAP,
of $2.4 million, or $0.04 per share, compared to Q1, 2006 net loss of $9.2
million, or $0.15 per share. On a non-GAAP basis the company recorded a loss
of $0.8 million, or $0.01 per share, compared to Q1, 2006 loss of $2.7
million, or $0.04 per share. The non-GAAP figures exclude amortization of
purchased intangibles and stock-option based compensation expense. See the
financial table below reconciling these non-GAAP figures to GAAP.
    The company ended Q1, 2007 with approximately $20.8 million in cash and
marketable securities and no debt.

    
    Financial Outlook:
    
    Entrust continues to target a first half 2007 net loss in accordance with
GAAP of between $0.02 and $0.04 per share.  On a non-GAAP basis the company
continues to target a profit of $0.02 to $0.04 per share for the first half of
2007.  The company's Q2, 2007, total expenses are expected to be approximately
$25.5 million.
    Entrust also continues to target a full year 2007 net income in
accordance with GAAP of between breakeven or $0.00 per share to a net income
of $0.04 per share.  On a non-GAAP basis the company continues to target a
profit of $0.11 to $0.15 per share for the full year 2007.  See the financial
table below reconciling the non-GAAP figures to GAAP.
    The following charges for the first half of 2007 and full year 2007,
reconcile the GAAP and non-GAAP earnings per share:

    
     (*)  A stock-based compensation charge in accordance with SFAS 123R of
        approximately $2.2 million, or $(0.04) per share for the first half of
        2007 and $4.4 million, or $(0.07) per share for the full year 2007
     (*)  Amortization charges of intangible assets primarily associated with
        the acquisition of Business Signatures, Orion and AmikaNow of
        approximately $1.2 million, or $(0.02) per share for the first half of
        2007 and $2.4 million, or $(0.04) per share for the full year 2007.

    Q1 Business and Financial Metrics:

     (*)  Revenue of $24.6 million consisted of 37% product revenue ($9.1
        million) and 63% services and maintenance revenue ($15.4 million). The
        top five product transactions accounted for 11% of Q1, 2007 revenues.
        There was one product transaction of over $1 million in Q1, 2007.
     (*)  Emerging growth products (Entrust IdentityGuard, Boundary Messaging
        and Fraud Detection) accounted for $2.3 million, or 25% of product
        revenue, up 138% from $954,000 in Q1, 2006.  Entrust IdentityGuard
        transactions increased to 34 this quarter, up from 15 in Q1, 2006. In
        the quarter, Entrust added three new fraud detection customers in the
        financial services vertical.
     (*)  Public Key Infrastructure (PKI) products accounted for $6.4 million,
        or 70% of product revenue, up 24% from $5.2 million in Q1, 2006.
        Entrust certificate services increased 20 percent year-over-year and
        accounted for $1.6 million of product revenue in Q1, 2007.
     (*)  Single Sign-on (SSO) products accounted for $484,000, or 5% of product
        revenue, up 3% from $470,000 in Q1, 2006.
     (*)  Product revenue for the quarter was 60% Extended Government and 40%
        Extended Enterprise. The financial services vertical continued to be
        strong, increasing 37% over Q1, 2006 and accounting for approximately
        18% of product revenue in Q1, 2007.
     (*)  The average purchase size in the first quarter was $61,000, a decrease
        from $85,000 in Q1, 2006. Total transactions in Q1, 2007 reached 113,
        which is up from 59 in Q1, 2006 and is up from 108 in Q4, 2006.
        Twenty-three, or 20% of the transactions were from new customers.
     (*)  Deferred revenue of $28.3 million increased $4.9 million from Q1, 2006
        and increased $4.7 from Q4, 2006. The deferred revenue increase from a
        year ago was made up of $2.0 million in subscription bookings and $2.9
        million in professional services and support and maintenance renewals.

    Technology and Industry Highlights:

     (*)  Entrust introduced the industry-first $5 one-time-passcode (OTP)
        security token. The low price point of the Entrust IdentityGuard Token
        is produced in conjunction with partner ActivIdentity.  Expedia will
        be the first customer for the Entrust IdentityGuard Token, which
        leverages Entrust's versatile authentication platform. In addition to
        the OTP token, Entrust IdentityGuard customers enjoy a range of
        authentication methods from a single platform. This provides
        unprecedented flexibility and choice customers currently do not have
        with existing OTP token vendors.

     (*)  In effort to promote the collaboration of security-conscious
        organizations, Entrust announced the first open, standards-based fraud
        intelligence network, the Entrust Open Fraud Intelligence Network
        (OFIN). OFIN is an information sharing service designed to help combat
        online fraud by consolidating and sharing key fraud behavior patterns
        and data among network participants. It is focused on providing
        participating members the latest fraud behaviors and tactics as well
        as key data for helping to detect and combat fraud as it evolves. OFIN
        is a key component of Entrust's layered security architecture.

     (*)  Another industry first, Entrust launched Entrust Entelligence Group
        Share, a leading edge information protection solution that helps
        organizations secure data stored on corporate networks in a manner
        that is automatic and transparent to the end-user. With zero-touch
        folder administration, Entrust Entelligence Group Share offers
        unprecedented management that allows the ability to change permissions
        on a shared folder without having to modify the folder or re-encrypt
        data.  Entrust Entelligence Group Share also provides detailed
        auditing and reporting capabilities to track who is accessing
        protected information on the network.  Furthermore Entrust
        Entelligence Group Share can use certificates issued from any
        certificate authority, or use no Public Key Infrastructure (PKI) at
        all.

     (*)  As another key element of the layered consumer security strategy,
        Entrust announced the availability of Extended Validation (EV) SSL
        Certificates for use with the next-generation of EV-aware browsers and
        was the first SSL vendor to activate EV SSL Certificates for Windows
        XP users with Microsoft(R) Internet Explorer 7. Entrust Extended
        Validation SSL Certificates - commonly referred to as "EV"
        certificates - are an effective anti-phishing tool that helps maintain
        and improve consumer confidence in online transactions by enabling
        strong visual cues that notify a user that a site is secure. The new
        technology displays prominent and consistent trust indicators in a
        browser's address bar, actually turning the URL address bar green.

     (*)  In collaboration with key industry leaders including Microsoft,
        Entrust announced the availability of Entrust Unified Communications
        Certificates, which secure and authenticate communication between mail
        servers, internally between the Exchange servers, and between
        Microsoft(R) Exchange servers and other mail servers. In addition,
        administrators can enable the new Auto Discover provisioning feature
        provided by Microsoft Office Outlook(R) 2007 and Outlook Web Access
        through Microsoft Exchange Server. The technology serves as a
        versatile management system that affords users the ability to track
        and respond to a range of communication options including e-mail,
        voicemail, instant message and facsimile.

     (*)  In December 2006, Entrust made the General Services Administration
        (GSA) list of approved shared service providers for PKI. Just six
        weeks later, Entrust completed the next step in this process by
        receiving a full Authority to Operate (ATO) - an accomplishment that
        has traditionally taken some providers a full year to accomplish. The
        ATO is the result of an extensive certification and accreditation
        review process that the GSA conducts on shared service providers. The
        ATO also placed the Entrust Shared Service Provider on the HSPD12
        Approved Product List. Entrust remains the provider with the largest
        footprint within U.S. federal civilian agencies.

     (*)  The Norwegian Ministry of Defense selected Entrust as the preferred
        vendor to help secure their communication infrastructure via strong
        versatile authentication and smart cards, while also providing
        application security, secure VPN and e-mail capabilities. The deal,
        which was facilitated by Entrust in conjunction with Hewlett Packard,
        included the purchase of Entrust Authority(TM) Security Manager and a
        host of more than 10 additional security components.

     (*)  The Department of State used their embedded PKI from Entrust to comply
        with Homeland Security Presidential Directive 12 (HSPD-12). Entrust
        designed and deployed the Department of State's current PKI solution,
        which gives State employees critical IT security capabilities
        including secure messaging, digital signatures, encryption and
        authentication to key resources. At present, the deployment of PKI
        technology and credentials to the Department of State's end-user
        community has reached more than 32,000 people - both inside the
        country and overseas.

     (*)  The State of Illinois turned to Entrust for deployment of Entrust
        Authority infrastructure and a suite of interoperable security
        products that help deliver valuable secure services to its citizens.
        The project - titled the Digital Signature/Public Key Infrastructure
        Project - provides a standardized way for state agencies to manage
        authentication, encryption and digital signatures to avoid having to
        purchase, build or manage similar solutions for individual
        applications. As one of the leading states to implement a large-scale,
        enterprise public key infrastructure, the State of Illinois issued its
        100,000th digital certificate on Jan. 3, 2007, a major milestone for
        one of the country's leading e-Government initiatives.
    

    Entrust will host a live teleconference and Webcast on Tuesday, April 24,
2007 at 5:00 p.m. (Eastern), featuring Chairman, President and CEO Bill Conner
and Chief Financial Officer David Wagner to discuss the company's fiscal first
quarter results and 2007 outlook. The conference call audio will be available
live via dial-in at 1-800-732-9307 and via the Internet at
http://phx.corporate-ir.net/playerlink.zhtml?c=73119&s=wm&e=1522410.  Please
log on approximately 15 minutes before the Webcast begins in order to register
and to download and install any necessary audio software. An archive of the
Webcast will be available for 90 days at the above Internet address.
    For those unable to attend the live conference call, an audio replay will
be available beginning at 7:00 p.m. (Eastern), Tuesday, April 24, 2007 through
Tuesday, May 1, 2007 at 11:59 p.m. (Eastern). The North American replay number
is 1- 877-289-8525 and the International replay number is 416-640-1917. Both
numbers have a pass code of 21226356#.

    
    Use of Non-GAAP Financial Measures
    
    To supplement the financial results that are prepared and presented in
accordance with accounting principles generally accepted in the United States,
Entrust's management prepares and uses non-GAAP financial measures for many of
its internal financial, operating and planning reports. The company's
management believes that by excluding charges such as the purchased
intangibles amortization in cost of goods sold, the amortization of purchased
intangible assets in operating expenses, stock compensation expense,
restructuring charges and write down of strategic investments from its GAAP-
based results, these non-GAAP financial measures are more likely to facilitate
investors' understanding of the company's ongoing business operating results.
These non-GAAP financial measures also facilitate comparisons to the operating
results of the company's competitors and provide investors with greater
transparency with respect to the supplemental information used by management
in its operational and financial decision making.
    The non-GAAP measures are included to provide investors with supplemental
information to facilitate their understanding of Entrust's operating results
and future prospects. Management uses these non-GAAP measures to assess its
success in reducing the company's cost structure, to measure its ongoing cash
operating costs, and to establish budgets and operational goals. The
presentation of this additional information should not be considered in
isolation or as a substitute for financial and operating results prepared in
accordance with accounting principles generally accepted in the United States,
as non-GAAP measures are susceptible to varying calculations and they may not
be comparable, as presented, to other similarly titled measures of other
companies.

    This press release contains forward-looking statements relating to
Entrust's projected net income and net loss per share and non-GAAP income per
share for the first half of 2007 and full year ending 2007.  Such statements
involve a number of risks and uncertainties. Among the important factors that
could cause actual results to differ materially from those indicated by such
forward-looking statements are unforeseen operating expenses, unconverted
customer opportunities, issues associated with revenue recognition, issues
raised in connection with the review of quarterly financial results, and the
risk factors detailed from time to time in Entrust's periodic reports and
registration statements filed with the Securities and Exchange Commission,
including without limitation Entrust's Annual Report on Form 10-K for the
fiscal year ended December 31, 2006. While Entrust may elect to update
forward-looking statements in the future, Entrust specifically disclaims any
obligation to do so, even if its estimates change.

    
    About Entrust
    
    Entrust, Inc. (NASDAQ:   ENTU) is a world leader in securing digital
identities and information. Over 1,650 enterprises and government agencies in
more than 50 countries use Entrust solutions to help secure the digital lives
of their citizens, customers, employees and partners. Our proven software and
services can help customers in achieving regulatory and corporate compliance,
while helping to turn security challenges such as identity theft and email
security into business opportunities. For more information on how Entrust can
help secure your digital life, please visit: www.entrust.com
    Entrust is a registered trademark of Entrust, Inc. in the United States
and certain other countries.  In Canada, Entrust is a registered trademark of
Entrust Limited.  All Entrust product names are trademarks of Entrust.  All
other company and product names are trademarks or registered trademarks of
their respective owners.



    
                                  ENTRUST, INC.
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)


                                                      Three Months Ended
                                                          March 31st,
                                                     2007              2006

    Revenues:
          Product                                    9,144            $6,578
          Services and maintenance                  15,419            14,521
    Total revenues                                  24,563            21,099

    Cost of revenues:
          Product                                    1,808             1,944
          Services and maintenance                   7,448             7,041
          Amortization of purchased product rights     332               207
    Total cost of revenues                           9,588             9,192

    Total gross profit                              14,975            11,907

    Operating expenses:
          Sales and marketing                        9,093             7,513
          Research and development                   5,349             4,240
          General and administrative                 3,260             3,675
          Restructuring charges and adjustments        ---             2,895
    Total operating expenses                        17,702            18,323

    Loss from operations                            (2,727)           (6,416)

    Other income (expense):
          Interest income                              180               742
          Foreign exchange gain (loss)                 247              (208)
          Loss from equity investments                 (77)             (171)
          Writedown of long-term
           strategic and equity investments            ---            (3,016)
    Total other income (expense)                       350            (2,653)

    Loss before income taxes                        (2,377)           (9,069)

    Provision for income taxes                          52                99

    Net loss                                       $(2,429)          $(9,168)

    Weighted average common shares used
          Basic                                     60,387            59,895
          Diluted                                   60,387            59,895

    Net loss per share
          Basic                                     ($0.04)           ($0.15)
          Diluted                                   ($0.04)           ($0.15)



                                  ENTRUST, INC.
                 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (in thousands)


                                                  March 31,           Dec. 31,
                                                     2007               2006

    ASSETS

      Cash and marketable investments              $20,789            $22,527
      Accounts receivable, net of
       allowance for doubtful accounts              21,282             21,117
      Other current assets                           3,058              2,904
      Property and equipment, net                    2,106              2,721
      Purchased product rights and other
       purchased intangible assets, net             13,254             13,843
      Goodwill                                      60,214             60,214
      Long-term strategic and equity investments        91                169
      Other long-term assets, net                    4,290              4,321

         Total assets                             $125,084           $127,816


    LIABILITIES AND SHAREHOLDERS' EQUITY

      Accounts payable and accruals                $14,738            $20,268
      Accrued restructuring charges                 23,280             24,518
      Deferred revenue                              28,279             23,575
      Long-term liabilities                            218                231

         Total liabilities                          66,515             68,592

      Shareholders' equity                          58,569             59,224

         Total liabilities and
          shareholders' equity                    $125,084           $127,816
    

    The following supplemental tables provide non-GAAP financial measures
used by the company's management to evaluate operational results.  The company
believes this information may be useful to investors.   In addition to
disclosing financial results calculated in accordance with U.S. generally
accepted accounting principles (GAAP), the company's earnings release contains
non-GAAP financial measures that exclude the income statement effects of
share-based compensation, amortization of purchase product rights, non
recurring restructuring and impairment charges. The non-GAAP financial
measures disclosed by the company should not be considered a substitute for,
or superior to, financial measures calculated in accordance with GAAP, and the
financial results calculated in accordance with GAAP and reconciliations to
those financial statements should be carefully evaluated. The non-GAAP
financial measures used by the company may be calculated differently from, and
therefore may not be comparable to, similarly titled measures used by other
companies.
    Set forth below are reconciliations of the non-GAAP financial measures to
the most directly comparable GAAP financial measures.
    For additional information regarding these non-GAAP financial measures,
see the Form 8-K dated April 25, 2007 that Entrust has filed with the
Securities and Exchange Commission.


    
                                  ENTRUST, INC.
                                  SUPPLEMENTAL
                  RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
                      (in thousands, except per share data)

                                                       Three Months Ended
                                                           March 31st,
                                                     2007              2006


    Reconciliation of net loss per GAAP
     to Non-GAAP loss:
    GAAP net loss                                  $(2,429)          $(9,168)
       Adjustments for share-based
        compensation expense:
           Cost of revenues                             67                57
           Sales and marketing                         289               170
           Research and development                    197                60
           General and administrative                  441               330
       Amortization of other purchased intangibles:
           Cost of revenues                             38               ---
           Sales and marketing                         228                17
       Amortization of purchased product rights        332               207
       Restructuring charges and adjustments           ---             2,895
       Write-down of long-term strategic and equity
        investments                                    ---             3,016
       Tax effect on Non-GAAP adjustments              ---              (252)

    Non-GAAP loss                                    $(837)          $(2,668)


    Reconciliation of net loss per diluted share according to GAAP to
    Non-GAAP loss per diluted share:

    GAAP net loss per diluted share                 ($0.04)           ($0.15)

       Adjustments for share-based
        compensation expense                          0.02              0.01
       Amortization of other purchased intangibles:    ---               ---
       Amortization of purchased product rights       0.01               ---
       Restructuring charges and adjustments           ---              0.05
       Write-down of long-term strategic and equity
        investments                                    ---              0.05
       Tax effect on Non-GAAP adjustments              ---               ---
                                                      0.03              0.11

    Non-GAAP loss per diluted share                 ($0.01)           ($0.04)

    Weighted average common shares used             60,387            59,895



                               Forward Looking Guidance
                               Earnings Per Share Range

                                              First Half         Full Year
                                                 2007              2007
     U.S. GAAP measure                    ($0.04)   ($0.02)   $0.00    $0.04

     Adjustments to exclude the
      effects of amortization of
      purchased intangible assets          $0.02     $0.02    $0.04    $0.04

     Adjustments to exclude the
      effects of expenses related
      to stock-based compensation          $0.04     $0.04    $0.07    $0.07

     Non-GAAP figures                      $0.02     $0.04    $0.11    $0.15



                                Forward Looking Guidance
                                 Total Quarterly Costs

                                                                  2007
     U.S. GAAP measure                                           $27.2

     Adjustments to exclude the effects of
      amortization of purchased intangible assets                 $0.6

     Adjustments to exclude the effects of
      expenses related to stock-based compensation                $1.1

     Non-GAAP figures                                            $25.5

    




For further information:

For further information: investors, David Rockvam, Investor Relations, 
+1-972-713-5824, or david.rockvam@entrust.com , or media, Michelle Metzger, 
Media Relations, +1-972-713-5866, or michelle.metzger@entrust.com , both of 
Entrust, Inc. Web Site: http://www.entrust.com                 
http://phx.corporate-ir.net/playerlink.zhtml?c=73119&s=wm&e=1522410

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