EX-99 2 dkm368a.txt EXHIBIT 99 - PRESS RELEASE Inforte Corp. Reports Strong Year-Over-Year Revenue Growth Net Revenue of $11.5 million and Operating Cash Flow of $0.4 million CHICAGO, October 19 /PRNewswire-FirstCall/ -- Enterprise Business Intelligence consultancy Inforte Corp. (Nasdaq: INFT - News) announced today that revenue and diluted earnings per share (EPS) were both within the guidance ranges for the quarter ending September 30, 2004. Phil Bligh, Inforte's chairman and chief executive officer, commented, "We now have three consecutive quarters with year-over-year revenue growth -- our best achievement since 2000. Building on this foundation, today we are announcing an accelerated focus on the key strategic market opportunity for Inforte: Enterprise Business Intelligence. We are bringing together our deep skills in strategy, process, customer analytics, change and program management, which have developed from our distinguished enterprise CRM practice, and combining these with our recently acquired SAP business intelligence group. The resulting value proposition is targeted specifically to deliver business intelligence capabilities and strategic insights to large global and government entities that are operating in complex environments." Actual revenue and earnings results for the quarter ended September 30, 2004, and financial highlights, are as follows: o Third quarter revenue was $13.2 million, net revenue (revenue before expense reimbursements) was $11.5 million and EPS was $0.00. o Quarterly revenue performance represents 49% year-over-year growth. 12% is organic growth. o Cash flow from operations for 3Q04 was $0.4 million. Inforte has now generated positive cash flow from operations for 25 of the last 27 quarters. o Net income was $5,000, continuing an unbroken run of 27 straight quarters of profitability. o As of September 30, 2004, employees totaled 310 of which 260 were billable. o Cash and marketable securities were $58.5 million; this represents $5.29 of cash and marketable securities per share, based upon 11,065,218 actual shares outstanding. o Quarterly net revenue per consultant and per employee were $179,000 and $151,000 annualized, respectively. Utilization for the quarter was 64%. o Inforte welcomed Alstom, Coloplast, Freshfields, German Army, Kimberly-Clark, Pepsi and Underwriters Laboratory as some of its new clients during the third quarter. Nick Heyes, Inforte's chief financial officer, stated, "In this quarter we have continued our strong year-over-year growth both on an overall and organic basis. Revenue is on target for about 25% growth for the full year 2004 over 2003. We have reduced earnings guidance primarily as the result of the cancellation of a large contract due to an internal change of direction at that client. We expect this to have a short-term impact only and that the impacted practice area will quickly recover. The cancellation also caused a reduction in revenue guidance, which was also affected by our decision to more aggressively transform Inforte's revenue mix from operational CRM to enterprise business intelligence." Guidance is as follows: o Inforte's net revenue guidance for 4Q04 is a range of $9.5 million to $10.5 million. EPS guidance for 4Q04 is a range of $-0.04 to $0.01 excluding the impact of one time charges associated with office space restructuring o Annual net revenue guidance for 2004 is a range of $43.7 million to $44.7 million. 2004 EPS guidance is at a range of $0.03 to $0.08 o Net revenue guidance for 1Q05 is a range of $9.5 million to $10.5 million. 1Q05 EPS guidance is a range of $-0.02 to $0.03 This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ from forward-looking results for a number of reasons, including but not limited to, Inforte's ability to: (i) effectively forecast demand and profitably match resources with demand during a period of tight client budgets and lower spending levels, and when worldwide economic and geopolitical uncertainty is high; (ii) attract and retain clients and satisfy our clients' expectations; (iii) recruit and retain qualified professionals; (iv) accurately estimate the time and resources necessary for the delivery of our services; (v) build and maintain marketing relationships with leading software vendors while occasionally competing with their professional services organizations; (vi) compete with emerging alternative economic models for delivery, such as offshore development; and (vii) identify and successfully offer the solutions that clients demand; as well as other factors discussed from time to time in our SEC filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. All forward-looking statements included in this document are made as of the date hereof, based on information available to Inforte on the date thereof, and Inforte assumes no obligation to update any forward-looking statements. About Inforte Corp. Inforte Corp. helps global and large government organizations develop enterprise-grade business intelligence capabilities and leverage these to generate strategic insights and transformational business results. Inforte executives are the authors of several leading books on implementing enterprise-grade business intelligence capabilities, gaining customer insight, and marketing ROI including CRM Unplugged: Releasing CRM's Strategic Value, Enterprise Marketing Management: The New Science of Marketing, and Mastering the SAP Business Information Warehouse. Founded in 1993, Inforte is headquartered in Chicago and has offices in Atlanta; Dallas; Delhi, India; Hamburg, Germany; London; Los Angeles; New York; San Francisco; Walldorf, Germany; and Washington, D.C. For more information, contact Inforte at 800-340-0200 or visit www.inforte.com. Inforte Corp. is the only strategic consultancy in its industry to be named one of Forbes Magazine's 200 Best Small Companies of 2003 CONTACT: Craig Dooley, +1.312.233.9642, craig.dooley@inforte.com, or ir@inforte.com. Visit http://www.inforte.com/investor/ to access the October 19, 2004, Investor Conference Call web cast, which begins at 8:30 a.m. Eastern. CONSOLIDATED STATEMENTS OF OPERATIONS (000's, except per share data)

THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------ ----------------------- 2003 2004 2003 2004 ---------- ---------- ---------- ---------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues: Revenue before reimbursements(net revenue) $ 7,720 $ 11,516 $ 24,094 $ 34,160 Reimbursements 1,359 1,675 3,404 4,886 -------- --------- --------- --------- Total Revenues 9,079 13,191 27,498 39,046 Operating expenses: Project personnel and related expenses 4,107 7,085 12,424 19,842 Reimbursed expenses 1,359 1,675 3,404 4,886 Sales and marketing 1,040 1,178 3,702 3,757 Recruiting, retention and training 183 370 476 1,104 Management and administrative 2,135 3,142 7,057 9,037 -------- --------- --------- --------- Total operating expenses 8,824 13,450 27,063 38,626 Operating income (loss) 255 (259) 435 420 Interest income, net and other 257 267 1,084 772 -------- --------- --------- --------- Income before income tax 512 8 1,519 1,192 Income tax expense 65 3 167 476 -------- --------- --------- --------- Net income $ 447 $ 5 $ 1,352 $ 716 ======== ========= ========= ========= Earnings per share: -Basic $ 0.04 $ 0.00 $ 0.12 $ 0.06 -Diluted $ 0.04 $ 0.00 $ 0.12 $ 0.06 Weighted average common shares outstanding: -Basic 10,915 11,056 10,881 11,025 -Diluted 11,055 11,183 10,993 11,297 Expenses as a percentage of net revenue Project personnel and related expenses 53.2% 61.5% 51.6% 58.1% Sales and marketing 13.5% 10.2% 15.4% 11.0% Recruiting, retention, and training 2.4% 3.2% 2.0% 3.2% Management and administrative 27.7% 27.3% 29.3% 26.5% Income tax rate 12.7% 40.0% 11.0% 40.0% Margins Gross income 46.8% 38.5% 48.4% 41.9% Operating income 3.3% -2.2% 1.8% 1.2% Pretax income 6.6% 0.1% 6.3% 3.5% Net income 5.8% 0.0% 5.6% 2.1% Year-over-year change Net revenue 49% 42% Gross income 23% 23% Operating income -202% -3% Pretax income -98% -21% Net income -99% -47% Diluted EPS -100% -50%

INFORTE CORP. CONSOLIDATED BALANCE SHEETS (000's)

SEPT 30, DEC 31, MAR 31, JUN 30, SEPT 30, 2003 2003 2004 2004 2004 -------- -------- -------- -------- -------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 22,114 $ 24,071 $ 18,630 $ 17,767 $ 18,889 Short-term marketable securities 27,866 25,471 15,860 22,273 25,457 Accounts receivable 5,094 4,811 8,633 8,893 7,469 Allowance for doubtful accounts (525) (500) (500) (500) (500) --------- -------- --------- --------- --------- Accounts receivable, net 4,569 4,311 8,133 8,393 6,969 Prepaid expenses and other current assets 1,009 692 1,273 1,144 985 Interest receivable on investment securities 469 372 403 314 389 Income taxes recoverable - - 401 460 501 Deferred income taxes 953 664 643 656 622 --------- -------- --------- --------- --------- Total current assets 56,980 55,581 45,343 51,007 53,812 Computers, purchased software and property 2,091 2,084 2,525 2,682 3,113 Less accumulated depreciation and amortization 1,334 1,370 1,572 1,690 1,907 --------- -------- --------- --------- --------- Computers, purchased software and property, net 757 714 953 992 1,206 Long-term marketable securities 17,237 18,187 24,457 18,441 14,136 Goodwill and intangible assets - - 5,505 5,512 11,775 Deferred income taxes 350 326 317 309 295 --------- -------- --------- --------- --------- Total assets $ 75,324 $ 74,808 $ 76,575 $ 76,261 $ 81,224 ========= ======== ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 887 573 1,554 1,341 995 Income taxes payable 357 299 - - - Accrued expenses 3,312 3,558 3,146 3,315 2,738 Accrued loss on disposal of leased property 681 558 489 419 346 Deferred acquisition payment - - 500 - 3,150 Deferred revenue 3,539 2,617 2,657 2,778 2,209 --------- -------- --------- --------- --------- Total current liabilities 8,776 7,605 8,346 7,853 9,438 Non-current liabilities: Deferred acquisition payment - - - - 3,150 Stockholders' equity: Common stock, $0.001 par value authorized- 50,000,000 shares; issued and outstanding (net of treasury stock)- 11,065,218 as of Sept. 30, 2004 11 11 11 11 11 Additional paid-in capital 79,658 79,791 80,113 80,206 80,384 Cost of common stock in treasury (2,720,823 shares as of Sept. 30, 2004) (24,997) (24,997) (24,997) (24,997) (24,997) Stock-based compensation - - 60 161 180 Retained earnings 11,629 12,026 12,541 12,737 12,742 Accumulated other comprehensive income 247 372 501 290 316 --------- -------- --------- --------- --------- Total stockholders' equity 66,548 67,203 68,229 68,408 68,636 --------- -------- --------- --------- --------- Total liabilities and stockholders' equity 75,324 74,808 76,575 76,261 81,224 ========= ======== ========= ========= ========= Total cash and marketable securities $ 67,217 $ 67,729 $ 58,947 $ 58,481 $ 58,482

INFORTE CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (000's)

THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------ ----------------------- 2003 2004 2003 2004 ---------- --------- ---------- ---------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Cash flows from operating activities Net income $ 447 $ 5 $ 1,352 $ 716 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 364 435 1,024 1,216 Non-cash compensation - - (75) - Stock based compensation - 19 - 180 Deferred income taxes 252 48 249 74 Changes in operating assets and liabilities Accounts receivable (620) 1,424 (69) (464) Prepaid expenses and other current assets 148 84 168 (237) Accounts payable 416 (346) 647 (607) Income taxes (228) (41) 66 (1,142) Accrued expenses and other (124) (650) (2,328) (1,823) Deferred revenue 310 (569) (948) (556) ------- -------- -------- -------- Net cash provided by (used in) operating activities 965 409 86 (2,643) Cash flows from investing activities Acquisition of Compendit, net of cash - (1) - (5,677) (Increase)/Decrease in marketable securities (9,189) 981 2,484 3,315 Purchases of property and equipment (94) (431) (301) (841) ------- -------- -------- -------- Net cash provided by (used in) investing activities (9,283) 549 2,183 (3,203) Cash flows from financing activities Proceeds from stock option and purchase plans 231 178 541 593 ------- -------- -------- -------- Net cash provided by financing activities 231 178 541 593 ------- -------- -------- -------- Effect of changes in exchange rates on cash 34 (14) 118 71 Increase (decrease) in cash and cash equivalents (8,053) 1,122 2,928 (5,182) Cash and cash equivalents, beg. of period 30,167 17,767 19,186 24,071 ------- -------- -------- -------- Cash and cash equivalents, end of period $ 22,114 $ 18,889 $ 22,114 $ 18,889 ======= ======== ======== ========