EX-99.1 2 b50447ntexv99w1.txt PRESS RELEASE Exhibit 99.1 INVESTOR CONTACT: PRESS CONTACT: Mindy Kohl Jennifer Menard Netegrity, Inc. Netegrity, Inc. (781) 530-6061 (781) 530-6202 mkohl@netegrity.com jmenard@netegrity.com NETEGRITY ANNOUNCES Q1 2004 RESULTS COMPANY ACHIEVES THIRD CONSECUTIVE QUARTER OF PROFITABILITY; LICENSE REVENUE INCREASES 53% AND TOTAL REVENUE INCREASES 38% OVER Q1 2003 WALTHAM, MA - APRIL 27, 2004 - Netegrity, Inc. (Nasdaq: NETE), a leading provider of identity and access management solutions, today announced financial results for its first quarter ended March 31, 2004. Total revenues were $23.0 million for the first quarter of 2004, a 2% increase over total revenues of $22.5 million for the fourth quarter of 2003 and a 38% increase over Q1 2003. License revenues for the first quarter of 2004 were $12.9 million, a 5% decrease from license revenues of $13.5 million in the fourth quarter and a 53% increase over Q1 2003. The Company reported net income on a GAAP basis for the first quarter of 2004 of $1.3 million, or $0.03 per diluted share, compared to net income of $2.5 million or $0.06 per diluted share for the fourth quarter of 2003. Included in GAAP net income for the first quarter of 2004 is a $0.5 million charge for non-cash amortization of capitalized software acquired from Business Layers. Included in GAAP net income for the fourth quarter of 2003 were a gain on the sale of Netegrity's portal technology of $5.0 million, a $0.5 million restructuring charge related to closing the Company's Bellevue facility, and a $3.8 million charge for in process research and development purchased in connection with the Business Layers acquisition. As of March 31, 2004, Netegrity had $85.7 million in cash and marketable securities. Cash provided by operating activities was $1.3 million for the first quarter of 2004. Additionally, during the first quarter, Netegrity paid the remaining cash purchase price for the Business Layers acquisition of $3.8 million as well as an additional $3.7 million in transaction related expenses. "We have started 2004 off on a positive note, exceeding guidance and executing on the successful integration of Business Layers into the Netegrity business," said Barry Bycoff, Netegrity Chairman, President, and CEO. "Identity management solutions are enabling companies to realize strategic value from their key business initiatives including providing more online services to customers, linking across partner sites to provide additional services, and enabling regulatory compliance. Netegrity continues to set itself apart from the competition by providing a comprehensive identity and access management solution that enables customers to address these critical areas with best-of-breed products." Q1 2004 HIGHLIGHTS - Netegrity signed license agreements with 28 new customers and had 77 follow on software deals with existing customers, bringing the total number of customers to nearly 850. - Netegrity shipped its SiteMinder(R) 6.0 product which provides enhanced federated security capabilities that enable organizations to leverage open standards to securely exchange user identities and entitlements across partner sites. o Together with Microsoft, Netegrity completed and made available the Identity and Access Management Solution Guide. Netegrity also delivered expanded support for the Microsoft platform. Using the combination of Netegrity and Microsoft technologies, customers are able to extend their Microsoft environment and incorporate it as part of an enterprise wide identity and access management infrastructure. BUSINESS OUTLOOK While Netegrity saw significant improvement in customer demand activity and modest improvement in IT spending during the first quarter, the Company believes that it is appropriate to be somewhat conservative for Q2 2004. This perspective leads to the following outlook for Q2 2004: - Netegrity expects license revenue to increase by approximately 5% versus Q1 2004. - Netegrity expects total revenue to increase by approximately 3% versus Q1 2004. This guidance assumes that Q2 service revenue will be approximately flat with Q1 2004. - The above revenue guidance equates to an increase of approximately 25% in both total revenue and license revenue compared to Q2 2003. - Netegrity expects the Q2 gross margin percentage to be approximately 78-80%, which is slightly lower than Q1 2004 as a result of modest investments in headcount in both customer support and consulting services. - Operating expenses are expected to be approximately flat with Q1 2004. - Netegrity expects to report GAAP net income for Q2 2004 of approximately $0.04 per diluted share. GAAP net income will include a charge of approximately $0.5 million for non-cash amortization of capitalized software. - Netegrity based the per share earnings estimate on approximately 41.7 million diluted shares. - Netegrity expects to report positive cash flow from operating activities in Q2 2004. EARNINGS WEBCAST In conjunction with this announcement, Netegrity will host a conference call today at 5:00 p.m. ET to discuss the Company's financial results. Netegrity will broadcast the conference call live via the Internet at the Investor section of www.netegrity.com. This Webcast will also be archived for later listening in the Investors section of www.netegrity.com. In addition, a replay by telephone will be available until 11:59 p.m. (ET) on Thursday, April 29th. To access the replay, dial (800) 475-6701, or internationally dial (320) 365-3844, and enter access code 726675. ABOUT NETEGRITY, INC. Netegrity, Inc. is a leading provider of security software solutions that securely manage identities and their access to enterprise information assets, letting business in while keeping risk out. Netegrity provides a comprehensive identity and access management product line for continuously evolving computing environments, including legacy, Web, and service-oriented architectures. Netegrity's flexible, standards-based offerings are designed to increase security, reduce administrative costs, and enable revenue enhancement. Supported by a network of over 1200 trained integration consultants and over 200 technology partners, Netegrity solutions are licensed for more than 350 million users at nearly 850 organizations worldwide, including more than half of the Fortune 100. For more information, visit http://www.netegrity.com. ### Netegrity and SiteMinder are registered trademarks of Netegrity, Inc. All other product names, service marks, and trademarks mentioned herein are trademarks of their respective owners. Various statements in this release concerning Netegrity's future expectations, plans, and prospects constitute forward-looking statements for the purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors such as, but not limited to, general economic conditions, weakness in the global economy, increased operating expenses, our ability to develop and enhance our products and services or remain competitive in product pricing, competition in the marketplace, including competitors' sales strategies, development and performance of our direct and indirect sales channels, our ability to integrate the operations of acquired companies, delays in product development, changes in customer and market requirements and standards, market acceptance of new products and technologies, and technological changes in the computer industry, as well as those risks more fully discussed in the Company's reports on file with the Securities and Exchange Commission including the Company's latest Form 10-K, Form 10-Q and any subsequent filings. In addition, any forward-looking statements represent the Company's views only as of today and should not be relied upon as representing its views as of any subsequent date. While we may elect to update forward looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change and, therefore, you should not rely on any of these forward-looking statements as representing the Company's views as of any date subsequent to today. NETEGRITY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

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