VA Linux Reports Record Revenues
SUNNYVALE, Calif. August 23, 2000 VA Linux Systems, Inc. (Nasdaq: LNUX) today reported record revenues of $50.7 million for the fiscal fourth quarter ended July 28, 2000, an increase of 547% compared to the same period of fiscal 1999 and an increase of 46% compared to the prior fiscal quarter. VA Linux also reported a fourth quarter net loss, excluding non-cash items, of ($0.10) per share. This compares favorably to First Call consensus analyst estimates of ($0.15) per share and represents a significant improvement from ($0.34) per share in the fourth quarter of fiscal 1999 and ($0.13) in the prior fiscal quarter. Net loss per share, excluding non-cash items, improved sequentially in every quarter during fiscal 2000. (Per share loss amounts for historical quarters were calculated using pro-forma shares).
For the full fiscal year 2000, VA Linux revenues totaled $120.3 million, an increase of 579% over fiscal year 1999 revenues of $17.7 million.
"We have continued to demonstrate, quarter after quarter, strong revenue growth and improved financial results," said Dr. Larry M. Augustin, President and Chief Executive Officer. "We improved our gross margins to 22% and reduced our net loss, excluding non-cash charges, to 8.1% of revenue. Our differentiation as a full solution provider of Linux and Open Source products became more visible this month with the launch of our Build-to-Order Software Selector (BOSSTM) and our launch of the Open Source Development Network (OSDNTM). It is gratifying to see the positive response our products and services have received in the Internet Infrastructure market."
Other Notable Highlights
On June 7, VA Linux closed its acquisition of Andover.Net for shares of VA Linux common stock. The transaction was valued at approximately $342 million. Andover.Net's and VA Linux's web properties have been integrated and re-launched as the Open Source Development Network-the leading Open Source destination on the Internet-generating in excess of 80 million page views per month. OSDN will serve as the entry point for individuals and companies new to Open Source and a central resource for the development, distribution, and discussion of Open Source software. Compaq, EMC, Hewlett-Packard, Intel, IBM, and Sun, among others, have joined OSDN as technology partners.
On August 14, VA Linux announced its new Build-to-Order Software Selector (BOSS) enabling online customization of the operating system and applications ordered by VA Linux customers. BOSS from VA Linux is a unique, groundbreaking solution that makes it possible for customers to point, click, select and save the specific software components they want pre-installed at the factory and delivered on their servers - all via the Web. BOSS is available on valinux.com and offers a selection of over 700 software packages - an unprecedented level of online configurability - with hundreds more expected to be offered in the coming months. By providing Build-to-Order Software, VA Linux Systems helps engineering and IT departments dramatically reduce the time and resources spent manually re-installing and re-configuring systems individually.
Additional Highlights for the Quarter:
About VA Linux Systems
VA Linux Systems (Nasdaq: LNUX) is the world's Linux leader. The expert provider of Linux and Open Source solutions for the Web, VA Linux offers a single point of contact for highly customized Linux servers-featuring the industry's first build-to-order software-as well as professional consulting services and support. VA Linux Systems' mission is to make its customers successful through the use of Linux and Open Source- whether they are e-businesses rapidly expanding their Internet infrastructures, or technology companies leveraging the power and methodology of Open Source software development. As part of its commitment to expanding the Open Source community, VA Linux Systems operates the Open Source Development Network (OSDN). A network of the leading Internet sites for Open Source development, distribution and discussion, OSDN includes SourceForge, Freshmeat.net, Slashdot and Linux.com. Founded in 1993 and headquartered in Sunnyvale, California with offices across North America and Europe, VA Linux is located on the Web at www.valinux.com.
International Data Corporation (IDC) recently ranked VA Linux Systems as a top four Linux server vendor in Q1 2000. VA Linux Systems was selected as one of Fortune Magazine's top "Cool Companies," Red Herring's "Top 100 Companies of the Electronic Economy" and Upside's "Hot 100 Companies" in 1999. VA Linux was awarded the 1999 Linux Journal Editors' Choice Award for Best New Hardware, and was the only company to win multiple "Show Favorite" awards at LinuxWorld Conference & Expo in March 1999 (in Computers and Science/Engineering) and again in February 2000 (in Hardware and Peripherals/Support Services).
Safe Harbor Statement Under Private Securities Litigation Reform Act of 1995.
This press release contains forward looking statements, including, without limitation, statements regarding future financial performance; management's strategy, plans and objectives for future operations, including additional offices in foreign markets; VA Linux's product plans, including the expected and planned performance and demand therefor; the future functionality, business potential and adoption of build- to-order software, the Build- to-Order Software Selector (BOSS), and the Open Source Development Network (OSDN); growth in adoption and support of the Open Source development model; the expansion of the range of Open Source software applications, and management's assessment of market factors. Actual results may differ materially from those projected in such statements due to various factors, including: are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different from those projected in such statements due to various factors, including: the rate of growth and acceptance of Linux and the Open Source software development model; VA Linux's ability to continue to introduce new products and expand its business focus and operations, particularly internationally; the fact that VA Linux has incurred and expects to continue to incur substantial losses; the risks associated with VA Linux's dependence upon an open source business model, independent third-party Linux developers, and a single source contract manufacturer; VA Linux's reliance on sales of server products and the expansion of its services line of business; VA Linux's reliance upon strategic relationships and ability to implement specific terms relating to them; the scarcity of Linux-based applications; competition with and pricing pressures from larger and more established companies; VA Linux's dependence on its Internet-based businesses; the enforceability of the GNU General Public License; VA Linux's ability to attract and retain qualified personnel especially in the areas of professional services and overseas; and the ability of VA Linux to successfully integrate Andover.Net into its operations.
Investors should consult VA Linux's registration statement on Form S-4 and Quarterly Report on Form 10-Q for the period ended April 28, 2000, and VA Linux's other and future filings with the Securities and Exchange Commission, for further information regarding these and the other risks of VA Linux's business. The above mentioned documents contain important information and you are urged to review them carefully. These documents are available at the SEC Website at www.sec.gov or from the contacts listed above.
VA Linux Systems, Build-to-Order Software Selector (BOSS), Open Source Development Network (OSDN), SourceForge, Slashdot and Freshmeat are trademarks of VA Linux Systems, Inc. Linux is a registered trademark of Linus Torvalds. All other trademarks are property of their respective owners.
Consolidated Statements of Operations
Pro forma Consolidated Statements of Operations
Condensed Balance Sheets