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BELLEVUE, Wash., Apr 26, 2006 (BUSINESS WIRE) -- InfoSpace, Inc. (NASDAQ: INSP) today announced financial results for the three months ended March 31, 2006.
Revenues for the first quarter of 2006 were a record $90.3 million, reflecting an increase of $3.3 million or four percent over the previous high of $87.0 million in the first quarter of 2005.
Net income for the first quarter of 2006 was $3.0 million, or $0.09 per diluted share, compared to net income of $93.9 million, or $2.52 per diluted share, in the first quarter of 2005. Net income in the first quarter of 2005 included a net gain of $77.3 million from the settlement of certain litigation matters and net income in the first quarter of 2006 includes a $4.1 million deduction for stock compensation expense.
Cash, cash equivalents, and marketable investments at March 31, 2006, totaled approximately $395.6 million, an increase of approximately $20.2 million from the end of 2005. At the end of the first quarter, the Company had no debt obligations.
"InfoSpace had an exciting quarter, delivering strong results and record revenues fueled by strength in media downloads and online search," said Jim Voelker, chairman and chief executive officer of InfoSpace, Inc. "Just as important, we are successfully executing on our strategic initiatives including the deployment of two new mobile search products. Our search applications are now available on three of the four major carriers in North America."
First Quarter Highlights and Recent Developments
-- InfoSpace launched InfoSpace Find It! on Sprint Nextel. InfoSpace Find It! is a comprehensive subscription-based location enabled search product that allows consumers to easily and quickly find everything from people to nearby restaurants and movie times or maps and driving directions, all in one integrated application.
-- InfoSpace partnered with Cingular Wireless and Fox to offer Cingular customers Live Idol Ringtones of many songs performed by "American Idol" finalists hours after they are performed on the show.
-- InfoSpace announced a partnership with Cingular Wireless and MySpace to provide an original platform that lets emerging artists create and market their personalized wireless content.
-- InfoSpace entered into multi-year online distribution agreements with Alltel and RCN.
-- InfoSpace launched a redesigned Switchboard.com site with improved refinement tools and simplified navigation that allow users to find information faster and easier.
-- InfoSpace signed a distribution agreement to feature Verizon SuperPages advertisers on its online directory site InfoSpace.com (www.infospace.com) and its online search sites, including Dogpile.com, and InfoSpace's network of affiliate sites.
First Quarter Segment Information and Adjusted EBITDA
During the first quarter of 2006, the Company changed its segment reporting to reflect changes in its organization. The Company continues to present revenue from its two segments, Mobile and Online, consistent with historical presentation. Additionally, the Company will present segment gross profit, which is segment revenues net of respective content and distribution costs.
-- Mobile revenues were $44.1 million in the first quarter of 2006, an increase of $5.1 million from the first quarter of 2005. Mobile segment gross profit totaled $18.8 million or 43% of mobile revenue for the first quarter of 2006.
-- Online revenues were $46.1 million in the first quarter of 2006, a decrease of $1.8 million from the first quarter of 2005. Online segment gross profit was $29.9 million or 65% of online revenue for the first quarter of 2006.
The historical segment results for the first quarter of 2005 through the first quarter of 2006 are presented in the accompanying table to the condensed consolidated financial statements.
Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization ("Adjusted EBITDA")
Adjusted EBITDA was $12.7 million in the first quarter of 2006, a decrease of $9.2 million from the first quarter of 2005 Adjusted EBITDA of $21.9 million. InfoSpace's Adjusted EBITDA is calculated by adjusting GAAP net income to exclude the effects of income taxes, depreciation, amortization of intangible assets, stock-based compensation expense and other income, net (including such items as interest income, litigation settlements, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed in the accompanying table to the condensed consolidated financial statements.
InfoSpace's management believes that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses and gains that are not indicative of our core business operating results. InfoSpace believes that management and the investors benefit from referring to this non-GAAP financial measure in assessing InfoSpace's performance. Adjusted EBITDA should be evaluated in light of the Company's financial results prepared in accordance with GAAP. A table reconciling the Company's Adjusted EBITDA to net income in accordance with GAAP accompanies the condensed consolidated financial statements in this release.
Outlook
The Company's guidance excludes the potential impact of any future one-time gains or losses. The Adjusted EBITDA guidance below has been prepared in a manner consistent with the historical Adjusted EBITDA data provided above and in the accompanying table.
Second Quarter 2006 Outlook
For the second quarter of 2006, the Company expects revenue to be between $90.0 million and $92.0 million. The Company expects that Adjusted EBITDA will be between $5.0 million and $6.0 million, and a net loss between $2.0 million and $3.0 million or $0.06 and $0.10 per share. Included in the net loss outlook is the impact of approximately $6.5 million of stock compensation expense.
A conference call will be held today at 2 p.m. Pacific/ 5 p.m. Eastern. The live Webcast can be accessed in the Investor Relations section of the InfoSpace corporate Web site, at http://www.infospaceinc.com. A replay of the call will be available approximately one hour after the call through May 5, 2006, at 7:30 p.m. Pacific/ 10:30 p.m. Eastern.
All information in this release is as of April 26, 2006. InfoSpace undertakes no duty to update any forward-looking statements to actual results or changes in the Company's expectations.
About InfoSpace, Inc.
InfoSpace, Inc. (NASDAQ: INSP) drives mobile media innovation. With one of the world's largest mobile content libraries, InfoSpace makes it easy for consumers to discover, personalize and enjoy their on-the-go experiences. The company uses its superior discovery, merchandising and technology capabilities to help facilitate the delivery of original and licensed content across hundreds of mobile devices and through multiple channels. InfoSpace also mobilizes brands and creates programming and revenue opportunities for mobile operators. The company's products and services have extensive reach in North America and Europe through carriers such as Cingular Wireless, Sprint Nextel, T-Mobile, Verizon Wireless, and Virgin Mobile; in partnership with world-class brands such as Cablevision and Fox News; and through online Web sites such as Dogpile (Dogpile.com), which showcase the company's leading metasearch technology and key advertising partnerships with companies like Google, Yahoo!, Verizon SuperPages and Yellowpages.com
This release contains forward-looking statements relating to InfoSpace, Inc.'s products and services and future operating results that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "believe," "expect," "intend," "anticipate," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward looking. Forward-looking statements include without limitation statements regarding the projected results of the Company's strategic plan and efforts to achieve long-term sustainable growth; projected financial performance for the Company for the second quarter of 2006; and material reductions of the reserve on its deferred tax asset. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect InfoSpace's actual results include general economic, industry and market sector conditions, the progress and costs of the development of our products and services, the timing and extent of market acceptance of those products and services, our dependence on companies to distribute our products and services, the ability to successfully integrate acquired businesses and the successful execution of the Company's strategic initiatives. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in InfoSpace's most recent Annual Report on Form 10-K and quarterly reports on form 10-Q as filed from time to time, in the section entitled "Risk Factors." Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. InfoSpace undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.
InfoSpace, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended
--------------------------------
March 31, March 31,
2006 2005
------------- -------------
Revenues $ 90,274 $ 87,022
Operating expenses: (1)
Content and distribution costs 41,612 34,830
Systems and network operations 7,108 4,413
Product development 9,308 7,371
Sales and marketing 9,563 7,872
General and administrative 14,086 10,605
Depreciation 3,317 1,774
Amortization of intangible assets 3,708 4,083
------------- -------------
Total operating expenses 88,702 70,948
------------- -------------
Operating income 1,572 16,074
Other income, net (2) 3,872 80,154
------------- -------------
Income before income taxes 5,444 96,228
Income tax expense (3) (2,439) (2,329)
------------- -------------
Net income $ 3,005 $ 93,899
============= =============
Earnings per share - Basic $ 0.10 $ 2.84
============= =============
Weighted average shares outstanding
used in computing basic net income
per share 31,083 33,054
============= =============
Earnings per share - Diluted $ 0.09 $ 2.52
============= =============
Weighted average shares outstanding
used in computing diluted net income
per share 32,917 37,327
============= =============
(1) Effective January 1, 2006, the Company adopted the provisions
of Statement of Financial Accounting Standards 123(R), "Share-Based
Payment," which requires an enterprise to expense the fair value of an
award of an equity instrument. Operating expenses includes $4.1
million of stock compensation expense in each of the following
captions (in thousands):
Systems and network operations $ 190
Product development 415
Sales and marketing 1,042
General and administrative 2,462
-------------
$ 4,109
=============
(2) Includes a net gain of $79.3 million in the three months ended
March 31, 2005 from the settlement of certain litigation matters,
comprised of proceeds of $83.2 million less related legal expenses.
(3) In December 2005, the Company recognized a portion of its
deferred tax assets related to its operating loss carryforwards. As a
result, commencing in January 2006 the Company began recognizing
income taxes. For the three months ended March 31, 2005, the Company
recorded income taxes of $2.0 million related to the gain from the
settlement of certain litigation matters.
InfoSpace, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
March 31, December 31,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 157,092 $ 153,013
Short-term investments, available-for-sale 238,467 222,360
Accounts receivable, net 64,219 71,661
Other receivables 3,168 3,972
Prepaid expenses and other current assets 10,162 12,639
----------- -----------
Total current assets 473,108 463,645
Property and equipment, net 26,935 26,889
Goodwill 171,948 176,979
Other intangible assets, net 40,372 44,080
Deferred tax asset, net 23,033 25,000
Other long-term assets 8,411 6,786
----------- -----------
Total assets $ 743,807 $ 743,379
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,040 $ 11,585
Accrued expenses and other current
liabilities 51,483 51,917
Deferred revenue 2,438 2,474
----------- -----------
Total current liabilities 61,961 65,976
Long-term liabilities:
Other liabilities and deferred revenue 1,790 2,011
Deferred tax liability 5,390 10,421
----------- -----------
Total long-term liabilities 7,180 12,432
Total liabilities 69,141 78,408
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 1,691,331 1,684,974
Accumulated deficit (1,017,520) (1,020,525)
Accumulated other comprehensive income 852 519
----------- -----------
Total stockholders' equity 674,666 664,971
----------- -----------
Total liabilities and stockholders' equity $ 743,807 $ 743,379
=========== ===========
Summary of cash and marketable investments:
Cash and cash equivalents $ 157,092 $ 153,013
Short-term investments, available-for-
sale 238,467 222,360
----------- -----------
Cash and marketable investments $ 395,559 $ 375,373
=========== ===========
InfoSpace, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Three months ended
-------------------
March 31, March 31,
2006 2005
-------- --------
Operating activities:
Net income $ 3,005 $ 93,899
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 7,025 5,857
Stock-based compensation expense 4,109 -
Deferred income taxes 1,967 (522)
Bad debt expense (109) 189
Other (78) (4)
Cash provided (used) by changes in operating
assets and liabilities:
Accounts receivable 7,551 (10,809)
Notes and other receivables 804 2,500
Prepaid expenses and other current assets 2,477 (1,316)
Other long-term assets (1,625) (1,954)
Accounts payable (2,549) (2,676)
Accrued expenses and other current and long-
term liabilities (646) 3,639
Deferred revenue (332) (1,203)
-------- --------
Net cash provided by operating activities 21,599 87,600
Investing activities:
Business acquisitions, net of cash acquired - (26,364)
Purchases of property and equipment (4,308) (4,546)
Proceeds from the sale of assets and equity
investments 33 -
Proceeds from sales and maturities of
investments 76,930 38,715
Purchases of investments (92,691) (40,244)
-------- --------
Net cash used by investing activities (20,036) (32,439)
Financing activities:
Proceeds from exercise of stock options 1,229 5,199
Proceeds from employee stock purchase plan 1,287 766
-------- --------
Net cash provided by financing activities 2,516 5,965
-------- --------
Net increase in cash and cash equivalents 4,079 61,126
Cash and cash equivalents:
Beginning of period 153,013 85,245
-------- --------
End of period $157,092 $146,371
======== ========
InfoSpace, Inc.
Segment Information (1)
(Unaudited)
(Amounts in thousands)
Three Months Ended
----------------------
March 31, March 31,
2006 2005
--------- ---------
Mobile
Revenue $ 44,144 $ 39,053
Content and distribution costs (2) 25,337 17,422
--------- ---------
Gross profit 18,807 21,631
Gross profit margin 42.6% 55.4%
Online
Revenue 46,130 47,969
Content and distribution costs (2) 16,275 17,408
--------- ---------
Gross profit 29,855 30,561
Gross profit margin 64.7% 63.7%
Total
Total segment revenue 90,274 87,022
Total segment content and distribution costs 41,612 34,830
--------- ---------
Total segment gross profit 48,662 52,192
Total segment gross profit margin 53.9% 60.0%
Corporate
Operating expense 35,956 30,261
Stock-based compensation expense (3) 4,109 -
Depreciation 3,317 1,774
Amortization of intangible assets 3,708 4,083
Other income, net (4) (3,872) (80,154)
Income tax expense (5) 2,439 2,329
--------- ---------
45,657 (41,707)
--------- ----------
Net income $ 3,005 $ 93,899
========= =========
(1) In the three months ended March 31, 2006, the Company
realigned its operations and, as a result, changed the way it presents
its financial information to its chief operating decision maker to
better reflect how management measures operating performance.
(2) Amounts primarily include royalties and license fees related
to the Company's Mobile products and other content or data licenses,
and primarily include revenue sharing arrangements with the Company's
Online distribution partners as well as online content and data
licenses. Amounts do not include allocations for systems and network
operations, product development, sales and marketing, general,
administrative and overhead costs, depreciation and amortization
expense, restructuring and other charges and non-operating gains and
losses.
(3) Effective January 1, 2006, the Company has adopted the
provisions of Statement of Financial Accounting Standards 123(R),
"Share-Based Payment," which requires an enterprise to expense the
fair value of an award of an equity instrument.
(4) Includes a net gain of $79.3 million in the three months ended
March 31, 2005 from the settlement of certain litigation matters,
comprised of proceeds of $83.2 million less related legal expenses.
(5) In December 2005, the Company recognized a portion of its
deferred tax assets related to its operating loss carryforwards. As a
result, commencing in January 2006 the Company began recognizing
income taxes. For the three months ended March 31, 2005, the Company
recorded income taxes of $2.0 million related to the gain from the
settlement of certain litigation matters.
InfoSpace, Inc
Segment Information (1)
(Unaudited)
(Amounts in thousands)
Three months ended
----------------------------------------- Year ended
March 31, June 30, September 30, December 31, December 31,
2005 2005 2005 2005 2005
-------- ------- ------- -------- --------
Mobile
Revenue $ 39,053 $37,091 $39,014 $ 42,254 $157,412
Content
and
distribution
costs (2) 17,422 17,821 20,153 21,946 77,342
-------- ------- ------- -------- --------
Gross profit 21,631 19,270 18,861 20,308 80,070
Gross profit
margin 55.4% 52.0% 48.3% 48.1% 50.9%
Online
Revenue 47,969 46,090 44,211 44,286 182,556
Content and
distribution
costs (2) 17,408 17,043 17,551 16,007 68,009
-------- ------- ------- -------- --------
Gross profit 30,561 29,047 26,660 28,279 114,547
Gross profit
margin 63.7% 63.0% 60.3% 63.9% 62.7%
Total
Total segment
revenue 87,022 83,181 83,225 86,540 339,968
Total segment
content and
distribution
costs 34,830 34,864 37,704 37,953 145,351
-------- ------- ------- -------- --------
Total segment
gross profit 52,192 48,317 45,521 48,587 194,617
Total segment
gross profit
margin 60.0% 58.1% 54.7% 56.1% 57.2%
Corporate
Operating
expense 30,261 29,254 31,522 32,837 123,874
Stock-based
compensation
expense - - - - -
Depreciation 1,774 1,941 2,454 2,892 9,061
Amortization
of
intangible
assets 4,083 3,763 3,709 3,710 15,265
Gain on
investments - (154) - - (154)
Other income,
net (3) (80,154) (2,838) (2,974) (3,356) (89,322)
Income tax
expense
(benefit)
(4) 2,329 65 (451) (25,418) (23,475)
-------- ------- ------- -------- --------
(41,707) 32,031 34,260 10,665 35,249
-------- ------- ------- -------- --------
Net income $ 93,899 $16,286 $11,261 $ 37,922 $159,368
======== ======= ======= ======== ========
(1) In the three months ended March 31, 2006, the Company
realigned its operations and, as a result, changed the way it presents
its financial information to its chief operating decision maker to
better reflect how management measures operating performance.
(2) Amounts primarily include royalties and license fees related
to the Company's Mobile products and other content or data licenses,
and primarily include revenue sharing arrangements with the Company's
Online distribution partners as well as online content and data
licenses. Amounts do not include allocations for systems and network
operations, product development, sales and marketing, general,
administrative and overhead costs, depreciation and amortization
expense, restructuring and other charges and non-operating gains and
losses.
(3) Includes a net gain of $79.3 million in the three months ended
March 31, 2005 from the settlement of certain litigation matters,
comprised of proceeds of $83.2 million less related legal expenses.
(4) In the three months ended March 31, 2005, the Company recorded
income taxes of $2.0 million related to the gain from the settlement
of certain litigation matters. In the three months ended December 31,
2005, the Company recognized a $25.0 million tax benefit from
realizing a deferred tax asset related to a portion of the net
operating loss carryforwards attributable to continuing operations.
InfoSpace, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest
Comparable GAAP Measure
Adjusted EBITDA Reconciliation (1)
(Unaudited)
(Amounts in thousands)
Three months ended
--------------------
March 31, March 31,
2006 2005
-------- --------
Net income (2) $ 3,005 $ 93,899
Depreciation 3,317 1,774
Amortization of intangible assets 3,708 4,083
Stock-based compensation expense (3) 4,109 -
Other income, net (4) (3,872) (80,154)
Income tax expense 2,439 2,329
-------- --------
Adjusted EBITDA $ 12,706 $ 21,931
======== ========
Adjusted EBITDA Reconciliation for Forward Looking Guidance
(Amounts in thousands)
Ranges for the three
months ended
June 30, 2006
-------------------
Net loss $ (3,000) $ (2,000)
Depreciation, amortization and other income 3,900 3,100
Stock-based compensation expense (3) 6,500 6,500
Income tax benefit (2,400)- (1,600)
-------- --------
Adjusted EBITDA $ 5,000 $ 6,000
======== ========
(1) Adjusted Earnings before Interest, Taxes, Depreciation and
Amortization ("EBITDA") is a non-GAAP financial measure and is
reconciled to net income, which the Company's management believes to
be the most comparable generally accepted accounting principles
("GAAP") measure. Adjusted EBITDA results are calculated by adjusting
GAAP net income to exclude the effects of income taxes, depreciation,
amortization of intangible assets, stock-based compensation expense
and other income, net (including such items as interest income, a gain
from the settlement of certain litigation matters, foreign currency
gains or losses, and gains or losses from the disposal of assets), as
detailed above. The Company uses this non-GAAP financial measure for
internal management purposes, when publicly providing guidance on
possible future results, and as a means to evaluate period to period
comparisons. The Company's management believes that this non-GAAP
financial measure is a common measure used by investors and analysts
to evaluate its performance. This non-GAAP financial measure is used
in addition to and in conjunction with results presented in accordance
with GAAP and reflect an additional way of viewing aspects of the
Company's operations that, when viewed with GAAP results and the
accompanying reconciliations to corresponding GAAP financial measures,
provide a more complete understanding of the results of operations and
trends affecting the Company's business. This non-GAAP financial
measure should be considered as a supplement to, and not as a
substitute for, or superior to, income from continuing operations in
accordance with GAAP.
(2) As presented in the unaudited Condensed Consolidated
Statements of Income.
(3) Effective January 1, 2006, the Company has adopted the
provisions of Statement of Financial Accounting Standards 123(R),
"Share-Based Payment," which requires an enterprise to expense the
fair value of an award of an equity instrument.
(4) Other income, net, primarily consists of the settlement of
certain litigation matters, interest income, gains or losses from the
disposal of assets, and foreign currency transaction gains or losses.
SOURCE: InfoSpace, Inc.
InfoSpace Media: Jeff Hasen, 425-201-8618 jeff.hasen@infospace.com or Investors: Stacy Ybarra, 425-709-8127 stacy.ybarra@infospace.com
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