eSpeed Reports Record Second Quarter 2001 ResultsPipeline for Growth Reaches $196 million
NEW YORK - August 1, 2001 - eSpeed, Inc. (NASDAQ: ESPD), the leading developer of electronic marketplaces and related trading technology solutions, today reported record results for the second quarter ended June 30, 2001. eSpeed's revenue for the second quarter increased 52 percent to $34.1 million versus $22.5 million in the same period in 2000. Sequentially, total revenue increased seven percent in a market environment where industry metrics were down approximately between five and 12 percent. Second quarter fully electronic revenue grew 57 percent year-over-year to $20.8 million. Total revenue from Software Solutions in the second quarter 2001 increased 68 percent over the comparable period last year. Software Solutions includes technology revenue (formerly system service fees) associated with TradeSpark, Freedom and Cantor Fitzgerald and software revenue (formerly private label) associated with the Company's software licensing agreements. The Company reported a net operating loss, excluding non-cash charges and taxes, of $0.5 million or ($0.01) per share compared to a net operating loss, excluding non-cash charges and taxes, of $9.1 million, or ($0.18) per share, for the second quarter ended June 30, 2000. The second quarter 2001 per share amount represents a 94 percent improvement year-over-year and exceeds consensus estimates. Based on second quarter 2001 performance, the Company's pipeline growth opportunity has reached $196 million in revenue potential. eSpeed has maintained the size of its pipeline over the last 12 months, while at the same time substantially growing its businesses. The strong pipeline represents upside capacity associated with conversion of the Company's voice-assisted and open outcry revenue to the fully electronic trading platform. Howard W. Lutnick, Chairman and CEO of eSpeed, Inc. said, "We are committed to our stated growth initiatives which includes pipeline conversion to fully electronic transactions, our software solutions business, new product and technology enhancements, additional instruments and verticals as well as leveraging our intellectual property. These strategic factors will drive eSpeed's growth and represent significant opportunities for our Company and our shareholders." The Company also announced volume and transaction figures for the quarter. eSpeed's total electronic volume was $10.9 trillion, an increase of almost 35 percent over the prior year, with more than one million transactions executed in the second quarter. The volume and transaction growth was attributable to a 69 percent increase in fully electronic volume and a 75 percent increase in fully electronic transactions year-over-year. Commenting on today's results, Frederick T. Varacchi, eSpeed's President and Chief Operating Officer said, "Our 18 percent sequential increase in voice transaction revenue demonstrates the positive impact of our entrance into the U.S. Energy sector and Canadian capital markets. These market expansions have contributed to our pipeline reaching nearly $196 million, and coupled with our $154 million cash balance, strongly position eSpeed into the future." For the remainder of 2001, subject to seasonality and other external factors, and excluding non-cash charges and taxes, eSpeed continues to expect net operating income to be in the range of $0.00 to $0.01 per share in the third quarter and $0.02 to $0.04 per share in the fourth quarter. For the full year 2001, the Company expects an annual net operating income (loss) per share in the range of $0.00 to ($0.03), representing a $0.01 to $0.02 improvement over previous guidance. Recent Highlights Wagner Patent. On August 1, 2001 eSpeed announced it had received a positive preliminary ruling on the scope of the Wagner Patent for the trading of electronic futures. If the final decision is issued in its current form, the order will be consistent with eSpeed's interpretation of the scope of the patent, which it acquired in April of this year. eSpeed believes that the method of electronic trading described by the Wagner Patent will be the cornerstone in building a variety of electronic futures markets and will enable eSpeed to generate several new partnership and software solutions opportunities with companies interested in developing and trading futures-related products. Deutsche Bank. On August 1, 2001 eSpeed announced that it had signed an agreement with Deutsche Bank, one of the world's leading international financial service providers, whereby the European bank will channel its electronic market-making engines and liquidity for a broad range of European fixed income products through the eSpeed® system. The agreement makes eSpeed a primary distribution channel for Deutsche Bank in the wholesale market. This liquidity arrangement with Deutsche Bank furthers eSpeed's goal to become the leading fixed income trading platform in Europe. BNP Paribas. In connection with eSpeed's acquisition of Treasury Connect, eSpeed will provide BNP Paribas Securities Corp., U.S., a division of BNP Paribas, the largest listed banking group in France, front-end trading technology that allows the bank's institutional customers to trade interest rate derivatives electronically. eSpeed's front-end technology will allow BNP Paribas' institutional customers to more effectively communicate trade terms to BNP Paribas dealers by using detailed term sheets submitted over the internet. Users will also benefit from automatic reporting functions and instantaneously generated activity reports. eSpeed's Software Solutions division continues to attract some of the world's leading companies in some of the most demanding markets by developing tailored components of the eSpeedâ platform for any type of product or market. Refco Securities. On July 11, 2001 eSpeed announced a licensing agreement with Refco Securities, the broker-dealer subsidiary of Refco Group. Refco is considered the largest online and retail futures firm in the world. eSpeed's Software Solutions division has developed a front-end trading system for Refco that will enable the securities firm to communicate prices for an array of financial and non-financial instruments for their clients. TradeSpark. The Company announced that TradeSpark, its first non-financial commodity marketplace, had transacted $41.9 billion worth of energy products (notional value) during second quarter 2001, representing and increase of 132 percent versus the first quarter 2001. Total transactions since TradeSpark's October 2000 launch are $71 billion (notional value). TradeSpark traded more than 6.8 billion MMBTUs of natural gas instruments, with a notional value of $33 billion. A rise of 189 percent versus the first quarter. Additionally, the marketplace traded 155.3 million MWHs of electricity instruments, with a notional value of approximately $8.2 billion, representing a 29 percent increase sequentially. Further, average daily transactions for TradeSpark during second quarter 2001 were up 37 percent over first quarter 2001, electronic trades were up 30 percent sequentially and non-partner trading activity accounted for more than 50 percent of overall trading volume. TreasuryConnect. On June 19, 2001, eSpeed announced that it had acquired TreasuryConnect LLC, the electronic trade communication and execution platform for OTC derivatives. The purchase added increased functionality for the trading of illiquid and derivative products, such as interest rate and currency swaps, to eSpeed's full-service software solutions offering. TreasuryConnect products feature sophisticated, reliable technology and systems integration mechanisms that are customizable to any business or marketplace. eSpeed's range of software products enable licensees to offer their own prices for products and/or services to customers over eSpeed's global private electronic trading network or over the Internet. About eSpeed, Inc. eSpeed, Inc. operates multiple buyer/multiple seller real-time electronic marketplaces. eSpeed's suite of marketplace tools provides end-to-end transaction solutions for the purchase and sale of financial and non-financial products via the Internet or over eSpeed's global private network. eSpeed currently provides the marketplace infrastructure for 48 financial and non-financial instruments, including most of the world's fixed income marketplaces. eSpeed transacts over $200 billion of financial instruments daily and is headquartered in New York City. Additional information on eSpeed is available via the Internet at http://www.espeed.com. Statements contained in this Press Release, which are not historical facts, are forward-looking statements, as the term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to: the limited operating history of eSpeed, Inc., its expected incurrence of future losses and negative cash flow from operations for the first half of 2001, its ability to enter into marketing and strategic alliances, to effectively manage its growth, to expand the use of its electronic systems, and to induce customers to use its marketplaces and services and other factors that are discussed in eSpeed's Annual Report on Form 10-K filed with the Securities and Exchange Commission. ### CONTACT: Suria Clarke Beth Logler
|