Intershop Communications AG | Press Release |

Intershop reports sharp jump in revenue and earnings in Q1 compared to prior-year quarter

  • 35% sales growth over prior-year period
  • Intershop consistently profitable with EBIT margin at 6%
  • Software range expanded thanks to in-house developments and technology partners

Jena, Germany, May 7, 2008 – Intershop Communications AG (Prime Standard: ISH2) today announced its results for the first quarter of 2008 ended March 31, 2008.

In the first quarter of 2008, Intershop generated positive net earnings before tax of EUR 0.4 million. In the prior-year period, the Company had reported a quarterly loss of EUR 1.4 million. Intershop has therefore recorded a profit from operating activities before restructuring expenses (2007) for the past four quarters and positive net earnings for three consecutive quarters.

“The restructuring efforts of the previous year have had a sustained positive effect. After a solid second half of 2007, we have continued to grow profitably in 2008,” said Andreas Riedel, Chairman of Intershop’s Management Board, commenting on the results for the first three months of this year.

Revenues

In the first quarter of 2008, Intershop’s total net revenues rose by 35% from EUR 5.1 million in the prior-year quarter to EUR 6.9 million. The license revenues included in this figure increased by 31% from EUR 0.8 million to EUR 1.1 million. Net revenues from services, maintenance, etc. increased by 35%, from EUR 4.3 million to EUR 5.9 million.

Gross revenues (net revenues including media revenue from online marketing) increased from EUR 6.1 million to EUR 8.1 million.

Earnings

Intershop generated a profit in the first three months of fiscal year 2008, sustaining the positive earnings trend that began in 2007.

The result from operating activities (EBIT) amounted to EUR 0.4 million in the first quarter of 2008. In the prior-year quarter, EBIT was negative at EUR 1.4 million. The EBIT margin improved from -26% to +6%. Earnings before interest, taxes, depreciation, and amortization (EBITDA) amounted to EUR 0.5 million (Q1 2007: EUR 1.1 million); the EBITDA margin amounted to 8% (Q1 2007: -22%).

Earnings after tax totaled EUR 0.3 million, while Intershop’s earnings per share were EUR 0.01. In the first quarter of the previous year, earnings after tax were negative at EUR -1.4 million, and the Company reported a loss per share of EUR 0.06.

Balance sheet and cash flow

Intershop’s equity stood at EUR 13.0 million as of March 31, 2008. The equity ratio therefore rose from 26% as of March 31, 2007 to 51%.

Unrestricted cash increased from EUR 5.9 million as of December 31, 2007 and EUR 1.8 million as of March 31, 2007 to EUR 6.9 million (+16%) as of March 31, 2008. Total liquidity (cash and restricted cash) amounted to EUR 8.5 million as of March 31, 2008, in comparison to EUR 8.1 million as of March 31, 2007, and EUR 9.9 million on December 31, 2007.

Operating activities

The Company’s continued positive business performance enabled Intershop to step up direct sales activities as well as maintenance and expansion of its worldwide partner network, which includes Cesky Web in the Czech Republic, WipCore in Sweden, and Netteam in Italy. At the 2nd International Partnership Day in February of this year, representatives of more than 30 partner companies from eight European countries met with Intershop to discuss issues concerning the Enfinity technology and its optimal deployment for mutual clients.

In the first quarter, the sales activities conducted in conjunction with Intershop’s new Australian partner, ISHP Holdings Pty. Ltd., resulted in a major license order from a new customer in the region.

In addition, Intershop acquired several new clients for its Enfinity Suite 6 standard software in Europe, including Dun & Bradstreet, Sanoma, and Sogedesca in the Benelux countries.

In the first three months of this year, the Company continued its successful work on several major projects with existing customers in Europe, the USA, and Australia, including development of new B2B systems for Sun Microsystems. These activities generated consulting revenues of EUR 3.3 million, an increase of 58% over the first quarter of 2007.

In addition, the groundwork was laid for a sustained high level of service revenues and stable long-term relationships with customers by signing long-term contracts, such as the agreement with the Otto Group in March.

In January, Intershop recruited Nader Nemati, a well-known IT and e-commerce industry manager from the United States, for its US subsidiary. With this move, it has gained an experienced managing director who will be capable of substantially increasing the Company’s share of the North American market in e-commerce solutions for major corporations. In the early weeks of his employment, the final restructuring measures were completed and sales activities were stepped up, with the result that Intershop Communications, Inc. generated a profit from operations of EUR 0.3 million in the United States in the past quarter.

In the first three months of this year, the Online Marketing area landed several new clients and substantially extended its partnerships with existing customers, such as Mettler Toledo. The margin in Online Marketing increased to 30% in the first quarter of 2008 from 16% in the prior-year quarter. The agency segment of Intershop’s Online Marketing business ranked among Germany’s 70 largest multimedia, online, and e-commerce service providers and agencies in the New Media Service Ranking 2008, a study conducted by HighText iBusiness in conjunction with the Bundesverband Digitale Wirtschaft (BVDW – German Digital Industry Association) and the marketing industry publications Horizont and W&V.

Intershop’s full-service e-commerce operations again reported rising revenues in the past quarter resulting from double-digit growth rates in the online businesses of its customers.

Since March, the current version of the Enfinity Suite 6.2.1 software has also been available for the Sun Solaris 10 for x86/x64 platform, which many of the Company’s clients use as an operating system for their high-performance, failsafe e-commerce applications.

Intershop has expanded its software range this year by adding fresh components obtained through new technology partnerships. For instance, Enfinity customers can now enjoy additional powerful reporting functionality, Webtrends Analytics. Moreover, a jointly developed and certified standard interface between Enfinity Suite 6 and Paynova’s one-stop shopping payment services can be used with only minor adaptation required to integrate a number of standard and custom payment settlement applications with Enfinity Suite 6.

Gartner, an information technology (IT) research and advisory firm, recently released a study, “Gartner Business Process Maps for Multichannel Retailers,” analyzing vendors supporting multichannel business processes. Intershop’s robust e-commerce capabilities were included in this report which focused in part on a renewed interest in the multichannel shopper and managing the online shopping experience. This report as well as other related market research are available at Gartner’s Web site www.gartner.com

In the past quarter, the Company also successfully exhibited at trade fairs and industry conferences on e-commerce and online marketing, such as at the German Online Handel conference in January and at the E-business Expo in Belgium in March in conjunction with its partner Cronos.

At the end of the first quarter, Intershop rounded off its operations management team by hiring experienced finance expert Peter Vedder as Director Finance Global as of April 1, 2008.

As of March 31, 2008, Intershop had 240 full-time employees worldwide compared with 245 at the same reporting date in 2007.

Outlook


Intershop’s results in the first quarter of 2008 confirm the target it announced for the year as a whole of growth in excess of the industry average and the expectation that it will generate significant profits in the current year.
“We are confident that we will see a further improvement in our operating result in the second quarter. Long-term service contracts and promising negotiations by our sales teams with potential new software and service customers in all regions fully confirm the forecast to date for 2008. In the full-service e-commerce segment, we expect to sign major contracts with prominent clients together with our business partners,” sums up Andreas Riedel, describing the outlook for the current fiscal year.

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About Intershop

Intershop Communications AG (founded in Germany 1992; Prime Standard: ISH2) is the leading independent provider of omni-channel commerce solutions. Intershop offers high-performance packaged software for internet sales, complemented by all necessary services. Intershop also acts as a business process outsourcing provider, covering all aspects of online retailing up to fulfillment. Around the globe more than 300 enterprise customers, including HP, BMW, Würth, and Deutsche Telekom run Intershop solutions. Intershop is headquartered in Jena, Germany, and has offices in the United States, Europe, Australia, and China. More information about Intershop can be found online at www.intershop.com.

This news release contains forward-looking statements regarding future events or the future financial and operational performance of Intershop. Actual events or performance may differ materially from those contained or implied in such forward-looking statements. Risks and uncertainties that could lead to such difference could include, among other things: Intershop's limited operating history, the unpredictability of future revenues and expenses and potential fluctuations in revenues and operating results, significant dependence on large single customer deals, consumer trends, the level of competition, seasonality, risks related to electronic security, possible governmental regulation, and general economic conditions.

Intershop Public Relations

Heide Rausch

Head of Corporate Communication

Phone: +49 3641 50-1000
Fax: +49 3641 50-1309