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Intershop - The E-Commerce Company

Press Release | 2006-02-09

Intershop Communications AG Reports Fourth Quarter and Full Year 2005 Financial Results

Jena, Germany – February 9, 2006 - Intershop Communications AG (Prime Standard: ISH2) today announced financial results for the fourth quarter 2005 and full financial year 2005, ended December 31, 2005.

Fourth quarter 2005 revenue rose 36% as against the previous quarter from Euro 3.9 million to Euro 5.3 million, compared with Euro 4.1 million in the fourth quarter of 2004. License revenue triples in the fourth quarter of 2005 as against the third quarter of 2005 to Euro 1.6 million, compared with Euro 0.5 million in the fourth quarter of 2004. Revenue for the full year of 2005 totaled Euro 17.8 million, as compared to Euro 17.6 million for the full year of 2004.

Intershop recorded fourth quarter 2005 total operational cost (cost of revenue plus operating expense) of Euro 4.6 million. Total operating costs declined 10% quarter-on-quarter to Euro 0.5 million in the fourth quarter of 2005. Compared to the fourth quarter of 2004, Intershop reduced its total operating costs by Euro 3.9 million or 54%. Intershop reduced its total annual operational cost in 2005 by 24%, to Euro 19.9 million. The reduction is due to the completed restructuring measures and efficiency increases in the operating business; in addition, accruals amounting to EUR 2.3 million for the now completed settlement of the class action suit in the U.S.A. are contained in the figures for Q4 2004.

Intershop reported Euro 0.2 million in net income in the fourth quarter of 2005 million or Euro 0.02 per share, compared to a net loss of Euro 1.5 million or a net loss of Euro 0.18 per share in the third quarter of 2005. In comparison, Intershop’s net loss in the fourth quarter of 2004 was Euro 4.4 million or a net loss of Euro 0.52 per share. For the full year of 2005, Intershop’s net loss totaled Euro 3.3 million or a net loss of Euro 0.34 per share, compared to a net loss of Euro 8.9 million or a net loss of Euro 0.57 per share for the full year of 2004. Total cash, including cash and cash equivalents, marketable securities, and restricted cash rose from Euro 11.2 million as of September 30, 2005 to Euro 13.5 million as of December 31, 2005. This includes unrestricted cash of Euro 7.3 million, which amounted to Euro 5,0 million at the end of the previous quarter. The increase in cash is based on the cash capital increase with gross proceeds amounting to Euro 4.3 million.

As Intershop is reporting the result in accordance with IFRSs for the first time, the comparative figures for the previous year and the prior quarters were also calculated in accordance with IFRSs. They therefore differ in some cases from the figures published in the previous year and prior quarters in accordance with U.S. GAAP. Due to the first-time reporting of the results in accordance with IFRSs, there may also be deviations in the results following the final audit of the annual financial statements as against the provisional figures presented here.

Operating Highlights for the Fourth Quarter of 2005

  • Intershop customers in the fourth quarter of 2005 included existing customers as Deutsche Telekom, Otto, Itellium Systems & Service GmbH, Schott AG, Action Village (USA), Apoteket (Sweden) and Kronans (Sweden).
  • In November 2005, around 200 users and developers of e-commerce solutions met at Intershop Open@home in Jena. The focus of the Intershop Open event was on the successful implementation of e-commerce strategies.
  • In December 2005, a new product offering was launched on the market with Release 6.1 of the Enfinity Suite 6. Since its market launch at CeBIT 2004, Enfinity Suite 6 has been implemented at a total of 44 customers, 19 of these were new accounts such as smart, Lenscare, or ver.di.
  • As of December 31, 2005, the company employed 222 full-time equivalent employees, as compared to 220 full-time equivalent employees as of September 30, 2005.

Business Outlook

Intershop will present itself as a full-service e-commerce service provider for the first time at CeBIT 2006. With this new strategy, Intershop will enter a whole new business field in 2006, in addition to the sale of e-commerce standard software. With immediate effect, Intershop is a full-service provider covering all e-commerce business processes - from software through services and fulfillment down to online marketing and logistics. The new offering was explicitly oriented to the customer requirements that have been defined over years. Intershop will work together with a number of new partners in this connection. On the basis of the significant improvement in revenue as of the end of 2005 and the slight increase in IT expenditure by companies in 2006, Intershop expects a net profit in fiscal year 2006.

About Intershop

Intershop Communications AG (founded in Germany 1992; Prime Standard: ISH2) is a leading provider of comprehensive state-of-the-art e-commerce solutions. Intershop offers high-performance packaged software for internet sales, complemented by all necessary services including comprehensive online marketing consulting and a transaction platform for order-, supplier-, product- and channel management from its daughter companies SoQuero and TheBakery. Intershop also acts as a business process outsourcing provider, covering all aspects of online retailing, including fulfillment. Around the globe more than 500 enterprise customers, including HP, BMW, Deutsche Telekom, and Mexx run Intershop solutions. Intershop is headquartered in Jena, Germany, and has offices in the United States, Europe, and Australia.

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.