Internet Commerce Corporation Announces Financial Results For Third Quarter Fiscal 2005

Norcross, Georgia - June 8, 2005 - Internet Commerce Corporation (ICC) (Nasdaq: ICCA), a pioneer in the use of the Internet for business-to-business (B2B) e-commerce solutions, today announced financial results for its fiscal third quarter ended April 30, 2005.

"Our third quarter financial results demonstrate outstanding performance, including ICC.NET and Service Center segment growth, positive cash flow from operations and a GAAP Net Income of $296,000. It is tremendous to see the first GAAP profitable quarter in the company’s history," said Thomas J. Stallings, ICC’s chief executive officer. "We attribute our success to execution of our ‘Growth with Profitability’ strategy."

Glen Shipley, ICC’s chief financial officer, said, "We continue to make significant progress toward achieving our financial goals. On a year-over-year basis, we grew our revenue 52% to $4.39 million up from $2.89 million in the third quarter of fiscal 2004. We delivered net income of $296,000 compared with net loss of $662,000 a year ago, an increase of 145%. With the acquisition of Inovis’ Managed EC business, the company’s performance is much more balanced and better positioned for continued growth in both segments."

Shipley continued, "We have and will continue to manage the business with expenses that are aligned with expected revenues. However, during the fourth quarter, we will manage some one time expenses associated with the integration of the Managed EC business into our EC Service Center in Carrollton, Georgia. In spite of the additional cost of this transition, the company will still report an overall EBITDA positive fiscal 2005 and we expect strong growth in sales and profit during fiscal 2006."

The Company further reported that basic and diluted income per common share of $0.01 compared with basic and diluted loss of $0.05 per common share in the same period of fiscal 2004, an increase of 120%.  It achieved Earnings Before Interest, non-cash compensation, Taxes, Depreciation and Amortization (Adjusted "EBITDA") of $802,000 in the third quarter of fiscal 2005 as compared to Adjusted EBITDA during the third quarter of fiscal 2004 of $(199,000). Adjusted EBITDA is not a financial measure within generally accepted accounting principles (GAAP). The Company believes that this presentation of Adjusted EBITDA provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, operating cash flows, is attached in addition to a reconciliation to net income for all periods presented.

Third quarter revenue growth of 52% from third quarter fiscal 2004 to third quarter fiscal 2005 was driven by both business segments. In the ICC.NETTM segment, third quarter revenues from continuing operations were $2.74 million, up 7% from $2.56 million in the fiscal 2004 period. This revenue represented 62% of consolidated revenue in the third quarter compared to 89% of consolidated revenue in the year ago period. Revenues from the Service Bureau segment were $1.65 million, an increase of 399% compared to $331,000 in the third quarter of fiscal 2004. This revenue represented 38% of consolidated revenue in the third quarter compared to 11% of consolidated revenue in the year ago period.

The Company’s total gross profit margin from continuing operations improved to 69% in third quarter fiscal 2005 from 46% in the third quarter of last fiscal year, and total expenses from continuing operations increased 16% in third quarter fiscal 2005 from the prior-year period to $4.11 million from $3.53 million. 

Nine Month Fiscal 2005 Results

For the nine months ended April 30, 2005, revenues from continuing operations totaled $11.63 million, up 33% compared with first nine months of fiscal 2004 revenues of $8.75 million. Income was a net loss of $394,000 compared to a net loss of $2.98 million for the same period in fiscal 2004, a decrease of 87%. Basic and diluted loss per common share was $0.04 compared with a loss of $0.23 per basic diluted and common share for the fiscal 2004 period, a decrease of 83%. 

The Company further reported that it achieved Adjusted EBITDA of $1.25 million in the first nine months of fiscal 2005 as compared to $(1.27) million of Adjusted EBITDA during the first nine months of fiscal 2004. The Company believes that this presentation of Adjusted EBITDA provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations. A reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, operating cash flows, is attached in addition to a reconciliation to net income for all periods presented.

Nine month revenue growth of 33% was driven by both business segments. In the ICC.NETTM segment, nine month revenues from continuing operations were $8.31 million, up 6% from $7.84 million the same fiscal 2004 period. This revenue represented 71% of consolidated revenue in the first nine months of fiscal 2005 compared to 90% of consolidated revenue in the year ago period. Revenues from the Service Bureau segment were $3.32 million, an increase of 265% compared with $910,000 in the first nine months of fiscal 2004. This revenue represented 29% of consolidated revenue compared to 10% of consolidated revenue in the year ago period

The Company’s total gross profit margin from continuing operations improved to 65% in the first nine months of fiscal 2005 from 41% in the first nine months of fiscal 2004, and total expenses from continuing operations increased 2% in first nine months of fiscal 2005 from the prior-year period to $12.05 million from $11.76 million. 

The Company ended the first nine months of fiscal 2005 with over $3.58 million of cash on hand. The balance sheet remains strong, and the Company is well positioned to take advantage of opportunities.

Click here the entire announcement including tablular data of the results. ( .pdf)

About Internet Commerce Corporation (ICC)
Internet Commerce Corporation (NasdaqCM: ICCA), headquartered in Norcross, Georgia, is a leader in providing business-to-business e-commerce solutions. Thousands of customers rely on ICC's comprehensive line of solutions, in-depth expertise, and unmatched customer service to help balance cost, fit, and function required to meet unique requirements for trading partner compliance, coordination, and collaboration.  With its software solutions, network services, hosted web applications, managed services, and consulting services, ICC is the trusted provider of e-commerce solutions for businesses, regardless of size and level of technical sophistication, to connect them with their trading communities.  For more information, visit www.icc.net.

Except for the historical information contained herein, this press release includes forward looking statements which are subject to a number of risks and uncertainties, including the risks and uncertainties associated with rapidly changing technologies such as the Internet, the risks of technology development and the risks of competition. Actual results could differ materially. For more information about these risks and uncertainties, see the SEC filings of Internet Commerce Corporation.