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Ace*Comm Reports Improved Results For The Fourth Quarter And Fiscal Year 2005


August 23, 2005, Gaithersburg, Maryland – ACE*COMM Corporation (NASDAQ:ACEC), a global provider of network business intelligence and advanced operations support systems (OSS) solutions, today reported financial results for the fourth quarter and fiscal year 2005, both ending June 30, 2005.

Revenues for the fourth quarter 2005 totaled $6.8 million compared to $4.0 million for the same quarter in fiscal year 2004. Net income for the quarter was $0.3 million, or $0.02 per fully diluted share, compared to a net loss of $2.0 million, or $0.15 per fully diluted share for the same quarter a year ago. For the year ended June 30, 2005, the Company recorded revenues of $20.0 million, compared to $13.7 million for fiscal year 2004. The Company had a net loss and loss per fully diluted share of $6.5 million and $0.44, respectively, compared to a net loss and loss per fully diluted share of $5.9 million and $0.49 for fiscal year 2004. Approximately $5.1 million of the fiscal 2005 loss consisted of a one-time expense for in-process research and development related to the acquisition of 2helix. In fiscal 2004, we expensed $1.2 million for in process research and development expenses related to the purchase of assets of Intasys. When these expenses are excluded, the net loss decreased from $4.7 million in fiscal 2004 to $1.3 million in fiscal 2005.

“The fourth quarter results signal financial improvement in our target markets that should support further revenue growth for the Company,” said George T. Jimenez, CEO of ACE*COMM. “Overall results improved solidly in most categories. We increased annual revenues by 46 percent and backlog by over 90 percent over the previous year."

Continued Mr. Jimenez: “During the past fiscal year, we continued to build on our large base of industry-leading customers in both the carrier and enterprise sectors. We gained a number of new customers globally including the Bangladesh Telegraph & Telephone Board (BTTB), Vivodi – a next-generation service provider in Greece, Telecom Malaysia, Saudi Aramco, a Tennessee-based public power utility, a US Army base, and a major US airport, and we signed our first US government customer as an approved SBC vendor. We conducted asset recovery and revenue assurance pilot projects with Telewest Communications and CYTA in Europe to establish the potential for projects with both carriers, and we expanded our business engagement with Level 3 Communications, Telecom Egypt, and VSNL in India. As previously announced, we were selected to provide our NetPlus® telecommunications management system (TMS) under a US Air Force contract for a global TMS deployment program that is expected to generate revenue in excess of $20 million for the Company over its multi-year lifespan.”

“Our strong revenue growth, quarterly net income, and revenue mix all demonstrate effective execution of our business strategy outlined last year at this time,” said Steve Delmar, CFO of ACE*COMM. “We added a total of $6.3 million in new revenues for the year. These were comprised almost equally of organic growth and growth by acquisition. Our move to international markets to offset sluggish domestic markets clearly paid off. International market revenues made up 65 percent of our total revenues, as opposed to 44 percent for the previous fiscal year. Additionally, firm order backlog increased from $12.1 million at the beginning of the fiscal year to over $23.1 million by year end. We are further encouraged by the number of new business opportunities that have developed from customer interaction during the fourth quarter.”

Concluded Mr. Jimenez: “During the year we added new product capabilities to our core offerings to enhance our product portfolio and services capabilities with new vertical market solutions. We intend to continue to build out our technology offerings, broaden our market penetration, and add major new customers. We will work to improve our financial liquidity, and more tightly integrate our business lines and operations. Our goal is to be the highest-value provider of network business intelligence and profit enhancing solutions to operators and large private networks worldwide.”

ACE*COMM will host an earnings teleconference call this evening, August 23, 2005 at 5:30 pm, Eastern Standard Time, to discuss the fourth quarter fiscal year 2005 results. To participate, please call 866-814-8476. When prompted, enter the ACE*COMM reservation number 758524. Internet users can hear a simultaneous live Webcast of the teleconference at http://acecomm.com or http://www.fulldisclosure.com. A taped replay of the call will be made available from the ACE*COMM Corporate Web Site after 8:30 pm, on August 23, 2005.

ACE*COMM is a global provider of network business intelligence and advanced operations support systems (OSS) solutions for telecom service providers and enterprises. ACE*COMM’s solutions are applicable to a range of legacy through next-generation networks that include wired, wireless, voice, data, multimedia, and Internet communications networks. These solutions provide the analytical tools required to extract knowledge from operating networks—knowledge customers use for asset recovery and revenue assurance, cost reduction, improved operational efficiency, acceleration of time-to-market for new services, and more effective customer care.

For over 20 years, ACE*COMM technology has been effectively deployed for more than 300 customers, spanning over 4000 installations in 70 countries worldwide. ACE*COMM-installed products are currently enabling the success of customers and partners such as Alcatel, AT&T, Cisco, General Dynamics, IBM, Level 3 Communications, Marconi, Motorola, Northrop Grumman, Siemens, and Unisys. Headquartered in the Washington, DC area, ACE*COMM has corporate offices in Australia, Canada, China, and the UK. ACE*COMM is a registered ISO 9001 quality standard company. For more information, visit www.acecomm.com.

ACE*COMM, NetPlus, the ACE*COMM logo, and N*VISION are registered trademarks, and Convergent Mediation and Parent Patrol are trademarks of ACE*COMM Corporation.

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