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BELLEVUE, Wash., Aug 02, 2006 (BUSINESS WIRE) -- InfoSpace, Inc. (NASDAQ:INSP) today announced financial results for the three months ended June 30, 2006.
Revenues for the second quarter of 2006 were a record $95.8 million, reflecting an increase of $12.6 million or 15 percent over the second quarter 2005 and an increase of $5.5 million or six percent from the first quarter of 2006.
Net income for the second quarter of 2006 was $1.0 million, or $0.03 per diluted share, compared to net income of $16.3 million, or $0.44 per diluted share, in the second quarter of 2005. Net income in the second quarter of 2006 includes a $4.6 million deduction for stock-based compensation expense.
Cash, cash equivalents, and marketable investments at June 30, 2006, totaled $407.0 million, an increase of $11.5 million from March 31, 2006. At the end of the second quarter, the Company had no debt obligations.
"Our results were ahead of our expectations in the second quarter, primarily driven by growth in mobile media downloads and an increase in online monetization," said Jim Voelker, chairman and chief executive officer of InfoSpace, Inc. "We are pleased with the strength of our online business and the growth in the number of users accessing our mobile products."
Second Quarter Segment Information and Adjusted EBITDA
Mobile
Mobile revenues were $45.5 million in the second quarter of 2006, an increase of $8.4 million or 23 percent from the second quarter of 2005. Mobile segment gross profit totaled $17.5 million or 38 percent of mobile revenue for the second quarter of 2006.
Online
Online revenues were $50.4 million in the second quarter of 2006, an increase of $4.3 million or nine percent from the second quarter of 2005. Online segment gross profit was $32.3 million or 64 percent of online revenue for the second quarter of 2006.
Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization ("Adjusted EBITDA")
Adjusted EBITDA was $8.9 million in the second quarter of 2006, a decrease of $10.3 million from the second quarter of 2005 Adjusted EBITDA of $19.2 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.
Third Quarter 2006 Outlook
For the third quarter of 2006, the Company expects revenue to be between $95 million and $97 million. The Company expects that Adjusted EBITDA will be between $3.5 million and $4.5 million, and a net loss between $2.5 million and $3.5 million or $0.08 and $0.11 per share. Included in the net loss outlook is the impact of approximately $6.5 million of stock-based 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 August 16, 2006, at 7:30 p.m. Pacific/ 10:30 p.m. Eastern.
All information in this release is as of August 2, 2006. InfoSpace undertakes no duty to update any forward-looking statements to actual results or changes in the Company's expectations.
About InfoSpace, Inc.
A leading mobile media and technology company, InfoSpace, Inc. (NASDAQ:INSP) develops and distributes content, products and services that are creating a robust mobile marketplace and make it easy for consumers to discover, personalize and enjoy their experiences. Founded in 1996, InfoSpace leverages its online and mobile assets to potentially reach more than 90 percent of mobile subscribers in North America through partnerships with operators such as Cingular Wireless, Sprint, T-Mobile, Verizon Wireless, and Virgin Mobile and through its direct to consumer channel Moviso(R) (Moviso.com). The Company's mobile portal services are also available to more than 60 percent of the U.S. market. Online, the Company showcases its leading metasearch technology though Web sites such as Dogpile(R) (Dogpile.com) and its comprehensive directory listings in such properties as Switchboard(R) (Switchboard.com). For more information, please visit www.infospaceinc.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 third 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 Balance Sheets
(Unaudited)
(Amounts in thousands)
June 30, Dec. 31,
2006 2005
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $182,701 $153,013
Short-term investments, available-for-sale 222,612 222,360
Accounts receivable, net 64,555 71,661
Other receivables 3,564 3,972
Prepaid expenses and other current assets 10,397 12,639
----------- -----------
Total current assets 483,829 463,645
Property and equipment, net 28,512 26,889
Long-term investments, available-for-sale 1,712 -
Goodwill 171,948 176,979
Other intangible assets, net 36,761 44,080
Deferred tax assets, net 22,235 25,000
Other long-term assets 9,101 6,786
----------- -----------
Total assets $754,098 $743,379
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $9,391 $11,585
Accrued expenses and other current
liabilities 52,818 51,917
Short-term deferred revenue 2,991 2,474
----------- -----------
Total current liabilities 65,200 65,976
Long-term liabilities:
Other liabilities and long-term deferred
revenue 1,722 2,011
Deferred tax liabilities 5,390 10,421
----------- -----------
Total long-term liabilities 7,112 12,432
Total liabilities 72,312 78,408
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 1,697,365 1,684,974
Accumulated deficit (1,016,501) (1,020,525)
Accumulated other comprehensive income 919 519
----------- -----------
Total stockholders' equity 681,786 664,971
----------- -----------
Total liabilities and stockholders' equity $754,098 $743,379
=========== ===========
Summary of cash and marketable investments:
Cash and cash equivalents $182,701 $153,013
Short-term investments, available-for-
sale 222,612 222,360
Long-term investments, available-for-
sale 1,712 -
----------- -----------
Cash and marketable investments $407,025 $375,373
=========== ===========
InfoSpace, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(Amounts in thousands, except per share data)
Three months Six months
ended ended
----------------- -------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
-------- -------- --------- ---------
Revenues $95,846 $83,181 $186,120 $170,203
Operating expenses: (1)
Content and distribution 46,121 34,864 87,733 69,694
Systems and network operations 7,880 4,899 14,988 9,312
Product development 12,467 7,596 21,775 14,967
Sales and marketing 12,567 7,030 22,130 14,902
General and administrative 12,547 9,729 26,633 20,334
Depreciation 3,457 1,941 6,774 3,715
Amortization of intangible
assets 3,611 3,763 7,319 7,846
-------- -------- --------- ---------
Total operating expenses 98,650 69,822 187,352 140,770
-------- -------- --------- ---------
Operating income (loss) (2,804) 13,359 (1,232) 29,433
Gain on equity investments, net - 154 - 154
Other income, net (2) 4,723 2,838 8,595 82,992
-------- -------- --------- ---------
Income before income taxes 1,919 16,351 7,363 112,579
Provision for income taxes (3) (900) (65) (3,339) (2,394)
-------- -------- --------- ---------
Net income $1,019 $16,286 $4,024 $110,185
======== ======== ========= =========
Earnings per share - Basic $0.03 $0.49 $0.13 $3.33
======== ======== ========= =========
Weighted average shares
outstanding used in
computing basic net income
per share 31,239 33,108 31,162 33,081
======== ======== ========= =========
Earnings per share - Diluted $0.03 $0.44 $0.12 $2.98
======== ======== ========= =========
Weighted average shares
outstanding used in
computing diluted net income
per share 32,931 36,720 32,925 37,024
======== ======== ========= =========
(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 $4.6
million and $8.7 million of stock compensation expense for the three
and six months ended June 30, 2006, respectively, allocated among the
following captions (in thousands):
Three months Six months
ended ended
June 30, 2006 June 30, 2006
----------------- -------------------
Systems and network operations $464 $654
Product development 714 1,129
Sales and marketing 1,509 2,551
General and administrative 1,948 4,410
-------- ---------
$4,635 $8,744
======== =========
(2) Includes a net gain of $79.3 million in the six months ended
June 30, 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 six months ended June 30, 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 Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Six months ended
-------------------
June 30, June 30,
2006 2005
--------- ---------
Operating activities:
Net income $4,024 $110,185
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 14,093 11,561
Stock-based compensation expense 8,744 -
Deferred income taxes 2,765 (992)
Bad debt expense 67 318
Net gain on equity investment - (154)
Other 11 (90)
Cash provided (used) by changes in operating
assets and liabilities:
Accounts receivable 7,039 (5,038)
Other receivables 408 15,153
Prepaid expenses and other current assets 2,242 (2,380)
Other long-term assets (2,315) (1,699)
Accounts payable (1,701) (2,463)
Accrued expenses and other current and long-
term liabilities 2,524 (743)
Deferred revenue 119 (2,021)
--------- ---------
Net cash provided by operating activities 38,020 121,637
Investing activities:
Business acquisition, net of cash acquired - (26,364)
Purchases of property and equipment (10,082) (8,057)
Proceeds from the sale of assets and equity
investments 33 194
Proceeds from sales and maturities of
investments 231,263 106,232
Purchases of investments (233,053) (117,018)
--------- ---------
Net cash used by investing activities (11,839) (45,013)
Financing activities:
Common stock repurchases - (10,101)
Proceeds from exercise of stock options 2,564 6,798
Proceeds from employee stock purchase plan 943 766
--------- ---------
Net cash provided (used) by financing activities 3,507 (2,537)
--------- ---------
Net increase in cash and cash equivalents 29,688 74,087
Cash and cash equivalents:
Beginning of period 153,013 85,245
--------- ---------
End of period $182,701 $159,332
========= =========
InfoSpace, Inc.
Segment Information (1)
(Unaudited)
(Amounts in thousands)
Three Months Six months
Ended Ended
----------------- ------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
-------- -------- -------- ---------
Mobile
------
Revenue $45,473 $37,091 $89,617 $76,144
Content and distribution costs (2) 27,999 17,821 53,336 35,243
-------- -------- -------- ---------
Gross profit 17,474 19,270 36,281 40,901
Gross profit margin 38.4% 52.0% 40.5% 53.7%
Online
------
Revenue 50,373 46,090 96,503 94,059
Content and distribution costs (2) 18,122 17,043 34,397 34,451
-------- -------- -------- ---------
Gross profit 32,251 29,047 62,106 59,608
Gross profit margin 64.0% 63.0% 64.4% 63.4%
Total
-----
Total segment revenue 95,846 83,181 186,120 170,203
Total segment content and
distribution costs 46,121 34,864 87,733 69,694
-------- -------- -------- ---------
Total segment gross profit 49,725 48,317 98,387 100,509
Total segment gross profit margin 51.9% 58.1% 52.9% 59.1%
Corporate
---------
Operating expenses 40,826 29,254 76,782 59,515
Stock-based compensation
expense (3) 4,635 - 8,744 -
Depreciation 3,457 1,941 6,774 3,715
Amortization of intangible assets 3,611 3,763 7,319 7,846
Gain on equity investments, net - (154) - (154)
Other income, net (4) (4,723) (2,838) (8,595) (82,992)
Provision for income taxes (5) 900 65 3,339 2,394
-------- -------- -------- ---------
48,706 32,031 94,363 (9,676)
-------- -------- -------- ---------
Net income $1,019 $16,286 $4,024 $110,185
======== ======== ======== =========
(1) In the six months ended June 30, 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 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 six months ended
June 30, 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 six months ended June 30, 2005, the Company
recorded income taxes of $2.0 million related to the gain from the
settlement of certain litigation matters.
InfoSpace, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest
Comparable GAAP Measure
Adjusted EBITDA Reconciliation(1)
(Unaudited)
(Amounts in thousands)
Three months Six months
ended ended
------------------ ------------------
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
--------- -------- -------- ---------
Net income (2) $1,019 $16,286 $4,024 $110,185
Depreciation 3,457 1,941 6,774 3,715
Amortization of intangible assets 3,611 3,763 7,319 7,846
Stock-based compensation
expense (3) 4,635 - 8,744 -
Other income, net (4) (4,723) (2,838) (8,595) (82,992)
Provision for income taxes 900 65 3,339 2,394
--------- -------- -------- ---------
Adjusted EBITDA $8,899 $19,217 $21,605 $41,148
========= ======== ======== =========
Adjusted EBITDA Reconciliation for Forward
Looking Guidance
(Amounts in thousands)
Ranges for the three months ended
September 30, 2006
------------------
Net loss $(3,500) $(2,500)
Depreciation & amortization of
intangible assets 7,500 7,300
Other income, net (4) (4,100) (4,700)
Stock-based compensation
expense (3) 6,500 6,500
Provision for income taxes (2,900) (2,100)
--------- --------
Adjusted EBITDA $3,500 $4,500
========= ========
(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 reflects 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,
provides 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, Inc. 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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