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Green Hills Software Announces Record Revenue and Operating Income for 2003 and First Quarter 2004
Operating Income Grew 92% in 2003 and 65% in Q1 2004; Revenue Grew 26% in 2003 and 48% in Q1 2004
SANTA BARBARA, CA —June 28, 2004 —Green Hills Software, Inc., the market leader in embedded software development tools and royalty-free real-time operating systems (RTOS), today announced record revenue and operating income for the year ended December 31, 2003 and for the quarter ended March 31, 2004. All results are in accordance with U.S. GAAP and results for 2003 have been audited by Ernst & Young.
In the full year 2003, revenue grew 26% to a record $51.2 million. Operating income was a record $11.4 million, an increase of 92% over the prior year. Earnings for the year were a record $0.31 per share, fully diluted, 106% higher than in 2002.
In the first quarter of 2004, revenue grew 48% over the same period of 2003 to a quarterly record of $15.6 million. Operating income was $3.5 million, an increase of 65% over the prior year. Earnings were $0.10 per share, 66% higher than in the first quarter of 2003.
"With our record-setting performance and sustained high growth rate, Green Hills Software has distinguished itself from the rest of the embedded software industry," commented Dan O'Dowd, founder and chief executive officer of Green Hills Software. "We are the fastest-growing RTOS supplier and we dominate the fastest-growing segments: the markets for safety-critical RTOSes and for royalty-free RTOSes."
"Green Hills Software is seeing rapid growth in demand," added David Chandler, vice president of sales for Green Hills Software. "To meet this demand and maintain our growth rate, a top priority has become recruiting proven, senior sales professionals. Consequently, we are aggressively pursuing embedded software industry veterans to support our on-going expansion. Throughout the past year, we have added many of the industry's most successful senior sales managers and field application engineers to our staff. This has allowed Green Hills Software to open nine new sales offices since May 2003, including two in the past 30 days. We plan to continue this pace of expansion for the foreseeable future."
2003 and Q1 Highlights
In 2003 and the first quarter of 2004, the aerospace, defense and commercial sectors of the company's business enjoyed strong, consistent growth. In aerospace and defense, Green Hills Software continued to dominate the market for safety-critical and secure RTOSes while software-defined radio, including the Joint Tactical Radio System (JTRS), established itself as a substantial market segment. In the commercial sector, telecommunications and networking business expanded, both in enterprise networking products and telecommunications infrastructure equipment. Automotive and consumer applications also constituted major growth areas.
For both the year 2003 and first quarter of 2004, growth was also consistent across geographies.
Fundamental Changes in the Embedded Software Market
The embedded software market has undergone a dramatic shift throughout the past three years, with every major embedded software vendor other than Green Hills Software abandoning their proprietary products in favor of trying to sell free and open-source software such as the Linux operating system, Eclipse development environment and GNU compilers.
Commenting on this development, O'Dowd said: "Only Green Hills Software and Linux are growing rapidly. This is a clear indication that other suppliers' proprietary development tools and operating systems cannot compete with their open-source counterparts. These other suppliers hope to salvage their business by trying to make money from free software. Since all changes to Linux, Eclipse and GNU must be put back into the public domain, no one will be able to sustain a competitive advantage. Despite the investment of hundreds of millions of dollars in venture capital in at least nine vendors of embedded, open-source software, no one has been able to demonstrate a profitable business model. Most of them have already abandoned the business.
“Green Hills Software's strategy is different. We provide a superior solution to free software, enabling electronic product developers to achieve faster time-to-market, lower manufacturing and development costs and much higher reliability, security and performance. For years, our INTEGRITY RTOS has been the fastest growing RTOS because it was the first—and for a long time the only—embedded operating system that was royalty-free, memory protected and available with source code. Now that embedded Linux has emerged with these same attributes, it is also growing. Yet, embedded Linux and the INTEGRITY RTOS are very different. The INTEGRITY RTOS was designed for resource-constrained, high-performance and real-time embedded applications. Linux was designed for desktop computers. Using Linux in an embedded application is equivalent to trying to compete at Le Mans with a Mack truck. It is too big and too slow and it doesn't respond fast enough.
“Embedded product developers will only choose Linux if they believe that their success doesn't depend on reliability, security, performance, time-to-market or manufacturing and development costs. Embedded developers will also choose Linux if they are developing their products in countries where the cost of programmers is so low that they can throw resources at attempting to overcome the problems created by using a desktop operating system in embedded applications.
“Green Hills Software is the choice of embedded product developers that need to maximize the productivity of more expensive software engineers in developed countries. It costs a small fraction of the fully burdened cost of an engineer in the U.S., Europe or Japan to equip that engineer with the most advanced embedded development technology. This is the productivity advantage necessary to prevent all of the good embedded programming jobs from going to emerging economies like China, India and Russia.
“Green Hills Software's extraordinary growth and profitability in the face of open-source competition is a tremendous endorsement of the benefits provided by our products and technology, our strong customer relationships and our business model."
Looking Forward
"I expect that our growth will continue to accelerate through 2004, as it did in Q1," stated David Chandler. "We continue to see an increase in end-user demand. We have established the industry's premier direct sales and support organization, allowing us to foster deep, long-term partnerships with our major customers and industry partners. We are still enjoying the ramp-up in sales of our new products introduced in the second half of 2003, including the revolutionary TimeMachine debugger and SuperTrace probe. We will also benefit from the recent release of the velOSity microkernel and the addition of POSIX conformance to our INTEGRITY RTOS—giving us a significant leg up with developers that require standards compliance or Linux compatibility."
About Green Hills Software
Founded in 1982, Green Hills Software, Inc. is the technology leader for real-time operating systems and software development tools for 32- and 64-bit embedded systems. The royalty-free velOSity microkernel, INTEGRITY RTOS, compilers, MULTI and AdaMULTI Integrated Development Environments and TimeMachine product line offer a complete development solution that addresses embedded systems from the lowest cost consumer products to the most safety-critical aircraft flight systems. Green Hills is headquartered in Santa Barbara, CA, with European headquarters in the United Kingdom.
Green Hills Software, the Green Hills logo, MULTI, INTEGRITY, velOSity, AdaMULTI and TimeMachine are trademarks or registered trademarks of Green Hills Software, Inc. in the U.S. and/or internationally. All other trademarks and products are the property of their respective owners.
| North American Sales Contact: Green Hills Software, Inc. 30 West Sola Street, Santa Barbara, CA 93101, Tel: 805-965-6044 Fax: 805-965-6343 Website: www.ghs.com Email: sales@ghs.com |
International Sales Contact: |
| Media Contacts: Green Hills Software, Inc. Lynn J. Robinson (805) 965-6044 lynnr@ghs.com |
Patterson & Associates Barbara Stewart (480) 488-6909 barbara@patterson.com |
