Event Brief of Q4 2004 MatrixOne Inc. Earnings Conference Call - Part 1.

(From Fair Disclosure Wire)

CORPORATE PARTICIPANTS . Brian Norris, MatrixOne Inc., Director, IR . Mark O'Connell, MatrixOne Inc., President and CEO . Moe Castonguay, MatrixOne Inc., CFO, SVP Finance and Administration, and Treasurer OVERVIEW MONE reported total revenues for 4Q04 of $30m and net income of $441,000 or $0.01 per share. 4Q04 pro forma net income was $308,000 or $0.01 per share. This was the third consecutive quarter that the co. met or exceeded guidance and analysts' mean estimates for software license revenues, total revenues and EPS. Total revenues for FY04 were $109.1m. The company provided guidance for 1Q05 revenues of between $30-32m. Q&A Focus: gross margin, Synchronicity acquisition, and large deal pipeline. FINANCIAL DATA A. Key Data From Call 1. 4Q04 Revenues = $30m. 2. 4Q04 Gross Margin = 56%. 3. 4Q04 Net income = $441,000 4. 4Q04 EPS = $0.01. 5. 4Q04 Pro forma net income = $308,000 6. 4Q04 Pro forma EPS = $0.01. 7. FY04 Revenues = $109.1m. 8. FY04 Net Loss = $16.2m. 9. FY04 EPS loss = $0.33. 10. FY04 Pro forma Net Loss = $12.2m. 11. FY04 Pro forma EPS loss = $0.25. 12. 4Q04 Cash and Cash Equivalents = $118.4m. 13. 4Q04 DSO = 77 days. 14. 1Q05 Revenue Guidance = $30-32m. 15. 1Q05 EPS Guidance = approximately $0.04. 16. 1Q05 Pro Forma EPS Guidance = approximately $0.03. PRESENTATION SUMMARY S1. Review of 4Q04 (M.C.) 1. Opening Comments: 1. MONE is pleased to report for third consecutive quarter, met or exceeded guidance and analysts' mean estimates for software license revenues, total revenues and EPS. 2. Co.'s sequential and YoverY revenue growth and tight cost controls enabled MONE to achieve profitability and generate positive cash flow in 4Q04. 2. Financial Results for 4Q04: 1. Total revenues were $30m. 1. Software license revenues of $11.5m. 2. Service revenues up $18.5m. 2. Total revenues increased 4% sequentially and 14% compared to 4Q03. 1. Software license revenues increased 4% sequentially and 26% compared to 4Q03. 2. Co. recognized 73 software revenue transactions in 4Q04, including one software transaction in excess of $1m. 3. No single customer represents 10% or more of total 4Q04 revenues. 4. Average software revenue transaction was $157,000. 5. Eliminating orders under $75,000, the average software revenue transaction was $283,000. 3. The geographic split of total revenues: 1. 58% from the Americas. 2. 29% from Europe. 3. 13% from Asia/Pacific. 4. Best performing vertical markets, measured by trailing 12 month software license revenues: 1. High-tech at 38%. 2. Automotive at 29%. 3. Aerospace and defense at 13%. 3. Gross Margin: 1. Gross margin improved 3% to 56% from 53% in 3Q04 and improved 5% over the 51% realized in 4Q03. 2. Improvement was due to increases in both product and service gross margins. 1. Product gross margins increased due to a higher percentage of co.'s licensing revenues being derived from software products with low or no third party royalty costs. 2. Service margins due to higher revenues and utilization rates in co.'s consulting business. 4. Operating Expenses: 1. Total operating expenses, excluding a net reconstruction credit of $133,000, decreased 7% sequentially to $17m, down from co.'s previous guidance of $17.5m and down from $18.4m in 3Q04. 5. Other Income: 1. Other income was $443,000. 2. Resulting from: 1. Increased interest from higher interest rates and cash balances. 2. Net gain on foreign exchange transactions. 6. Net Income: 1. Net income for 4Q04 was $441,000 or $0.01 per share profit. 2. This is a $0.07 per share improvement sequentially and a $0.09 per share improvement compared to 4Q03. 3. Pro forma net income for the quarter was $308,000 or $0.01 per share compared to a pro forma loss of $2.8m or $0.06 per share in 3Q04, and a pro forma loss of $3.3m or $0.07 per share in 4Q03. 4. Pro forma results exclude: 1. Stock based compensation. 2. Restructuring…