Jena (Germany), February 18, 2009 – Intershop Communications AG today announced the preliminary results for the fourth quarter ended December 31, 2008 and for fiscal year 2008.
In 2008, Intershop had its most successful fiscal year in the Company's history, with continuous increases in revenues, profit, and unrestricted cash. The significant profit announced for the past fiscal year amounted to EUR 1.5 million, of which EUR 0.4 million was generated in the fourth quarter of 2008 alone.
In spite of the repayment of a convertible bond amounting to EUR 0.9 million in December 2008, the Company's unrestricted cash continued to rise in the fourth quarter. This means that Intershop no longer has any financial liabilities. The Company's unrestricted cash increased by EUR 2.1 million in the course of the year. The equity ratio as of December 31, 2008 rose to a respectable 66%.
"2008 was an exceptionally good year for us. The results reflect the successful and sustained turnaround at Intershop, even though we had to face a number of challenges in 2008. The extremely committed and competent work of our employees in all business areas was instrumental in meeting our financial targets with determination and success. At the same time, we developed a clear roadmap for the coming years, focusing on profitable growth and significant profits. The ongoing expansion of the e-commerce market, our excellent order book, and good prospects for new business in all regions, combined with the continuing broadening of our range of e-commerce offerings make us very optimistic about the future. Our high equity ratio and comfortable cash position reflect the strength of our business," said Management Board member Henry Goettler about the current situation at Intershop.
Total net revenues advanced from EUR 26.9 million in 2007 to EUR 28.1 million in 2008. Net revenues from services, maintenance, and other included in this figure increased by 14%, from EUR 21.2 million to EUR 24.0 million. This increase is primarily the result of sharply higher consulting and online marketing revenues. In both these areas, Intershop was awarded a number of major multi-year service contracts in 2008.
In the fourth quarter of 2008, total net revenues amounted to EUR 7.3 million, compared with EUR 7.2 million in the prior-year period. Net revenues from services, maintenance, and other included in this figure rose by 13%, from EUR 5.5 million to EUR 6.2 million.
Intershop recorded a positive result for the year for the first time in the Company's history. Net earnings increased from a loss of EUR 2.0 million in 2007 to a profit of EUR 1.5 million in fiscal year 2008. The Company's result from operating activities (EBIT) amounted to EUR 1.9 million, while the EBIT margin reached 7%. In the previous fiscal year, Intershop had reported a negative EBIT margin of 7% (EBIT: EUR -1.9 million). The earnings per share were EUR 0.06, as against EUR 0.08 loss per share in the previous year. EBIT in the fourth quarter of 2008 was EUR 0.4 million and the EBIT margin was 6 % (Q4 2007: EUR 0.5 million and 7% respectively).
Earnings from Intershop’s operative core business exceeded reported EBIT results for fiscal year 2008 and the fourth quarter by EUR 0.8 million. Intershop set this sum aside as a one-off, non-cash provision related to rental expenses until 2013.
Balance sheet and cash flow
Intershop's equity increased by 32% year-on-year, from EUR 12.4 million as of December 31, 2007 to EUR 16.3 million as of December 31, 2008. The equity ratio rose from 53% to 66%. The Company's only financial liability, a convertible bond issued in 2004, was repaid in December. As of December 31, 2008, Intershop had unrestricted cash of EUR 8.1 million, 36% more than as of December 31, 2007 (December 31, 2007: EUR 5.9 million).
Operating activities in the fourth quarter of 2008
The past quarter saw intensive sales activities and the highest revenues in 2008.
Intershop's presence at specialist trade fairs, such as Mail Order World or the Deutscher Versandhandelskongress (German Mail Order Conference) was consistently well received. Hagebau's Enfinity- based online shop received was selected as “Online Shop of the Year”, adding to the list of award-winning customers supported by Intershop. The Company's trustful cooperation with customers and partners was boosted through well attended events held at its headquarters in Jena.
Two new partnerships in the U.S.A. boosted indirect sales channels, and the first major contract for EUR 1.0 million won by Intershop's new Australian partner ISHP Holdings underpinned this development. The Company's own sales team won a comprehensive license and service contract USD 1.7 million from a large technology provider in the U.S.A.
Intershop has recorded considerable order intakes in all segments. Almost 20 contracts for Enfinity Suite 6 software licenses were signed in the fourth quarter. About one half of these orders came from new customers, such as the Italian fashion house Furla, which has also commissioned Intershop to handle the online marketing for its Internet business; this has already gone live.
Intershop successfully completed a number of projects in the fourth quarter. For example, Sun Microsystems launched its Global Catalog on Enfinity Suite 6, which is used in ten languages for 60 different countries. The American online trader Actionvillage opened its Intershop online shop and Quelle, a well known German mail order company, migrated its highest-revenue generating and best known Internet marketplace to Enfinity Suite 6.
New and ongoing software development reached a new milestone when important work on Enfinity Suite 6.3, the standard software for e-commerce applications, was completed. Highlights of the new version include technology-based online marketing and even better support of internationalization, payment methods and product data management. Version 2.0 of the Customer Information Center (CIC) is available. It can create reports to an even greater level of detail, especially on all important parameters of Enfinity Suite 6.
New developments in the fourth quarter also include the latest version of the Intershop Bid Manager, which has a unique algorithm to optimize search engine displays, the Intershop Feedengine for the automated integration of product data in over 30 different price search engines, and the Intershop Market Place Adapter (IMPA), created in cooperation with Intershop's partner novomind. This adapter automatically matches product and order data between Internet marketplaces and Enfinity-based online shops.
As of December 1, 2008, the Supervisory Board appointed Dr. Ludger Vogt, one of the Company's longstanding senior executives, as second member of Intershop's Management Board.
As of December 31, 2008, Intershop had 264 full-time employees worldwide, as against 233 as of December 31, 2007.
In order to develop its own young recruits, promote inhouse research, and support new academic talent, Intershop maintains a number of alliances and partnerships with universities and universities of applied sciences. In the past quarter, a comprehensive partnership agreement was signed with Jena's University for Applied Sciences and a research project on IT in full-service e-commerce was launched in cooperation with the Institute for Applied Informatics at Leipzig University.
Intershop expects that the sustained positive trend, which began in mid-2007, will continue in 2009. Although it is difficult to estimate the specific impact on Intershop of the global financial and economic crisis, the Company's current situation provides a sound basis for further expansion of its business activities and for increased earnings:
Its comfortable cash position and positive cash flow make operations completely independent from lenders and offer favorable investment opportunities in the current economic environment.
Long-term agreements with corporate customers in different sectors and regions now secure a considerable portion of revenues, including far beyond the end of 2009. Intershop will continue this strategy of making its income more consistent.
Version 6.3 of the Enfinity Suite software, which was released at the beginning of 2009, provides considerable competitive advantages for both Intershop and its customers.
Investments in online marketing and Internet-based sales solutions could become instrumental in dealing with the current crisis for many companies. Intershop's comprehensive know-how, mature technology, full-service offerings, and powerful network of partners are of particular relevance in these areas.
Member of Intershop's Managing Board Dr. Ludger Vogt comments as follows on the Company's future prospects: "We continue to enjoy excellent order books, experience brisk demand from our customers, and offer the full e-commerce spectrum from A to Z. We have strengthened our sales team and are very confident that we will win prestigious new customers. Intershop's full service range can again be experienced at this year's CeBIT.
It is difficult to make accurate forecasts in the current uncertain macroeconomic climate. Nevertheless, we believe that Intershop will emerge a clear winner from the current economic crisis. We are confident that we can successfully continue on our profitable growth path in 2009."
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.