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Corio Reports EBITDA Profits

"We have achieved the EBITDA profitability we have all been targeting," Corio's chairman and CEO George Kadifa said yesterday in a conference call with analysts and the press.

Kadifa was referring to the company's first quarter of 2003 financial results in which the San Carlos, Calif.-based enterprise ASP reported an EBITDA (earnings before interest, taxes, depreciation and amortization) profit of $1.1 million. That compares to an EBITDA loss of $5.1 million for the same period in 2002.

For the veteran ASP, which brought its first customer live in November 1998, achieving profitability — EBITDA or otherwise — is a significant milestone. Corio is one of just a handful of pureplay ASPs that has ridden the high and low tides of the ASP market without either drowning or being rescued by a competitor.

In addition to the EBITDA profits, Corio announced a large increase in gross revenue the first quarter of 2003, which ended on March 31. Revenue was $19.0 million, a 45-percent jump over the $13.1 million reported for the same period in 2002. The lion share of that — $16.6 million — came from the company's application management services. That represented a 66-percent increase over the $10 million reported for the same period in 2002.

Despite the EBITDA profits, the actual net loss for the first quarter was $2.8 million ($0.05 per diluted share) compared to the net loss of $8.0 million (or $0.16 per diluted share) reported for the same period in 2002.

Cash, cash equivalents, restricted cash and short-term investments was $49.2 million, compared to $51.7 million at December 31, 2002.

Highlights for the quarter include the launch of the Corio Applications on Demand platform, a utility service designed to reduce the capital costs, skill and time required to implement and manage enterprise applications. The company also announced the Certified Corio Applications on Demand Partner program. Partners include Akibia Consulting, Buck Harbor Technologies, Extraquest, Parker Management Consultants, Sierra Atlantic and Solix Systems.

Corio also reported that any transitional efforts related to its acquisition of Qwest CyberSolutions are complete (see Corio Takes 'Let's Buy It' Approachh). "First quarter results reflect the integration of the customer relationships acquired from Qwest and, as a result, include costs and revenue that will not recur in future quarters," said Brett White, chief financial officer of Corio.

White said that any capital investments would focus on automation, adding that Corio already has the "ability to scale significantly." The company's subsidiary in India is the only place where, White said, the company may add headcount.

On the competitive landscape, Kadifa dismissed other enterprise ASPs, saying that when Corio does encounter them "we rarely lose to them." Rather, he said, the it remains "an in-house vs. out-of-house proposition." Asked why Corio would be chosen over companies such as IBM Global Services or Accenture to provide application outsourcing, Kadifa said, "We are better, faster and cheaper."

Corio is listed by ASPnews as a Top 20 Service Provider.


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