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BELLEVUE, Wash., Feb 01, 2007 (BUSINESS WIRE) -- InfoSpace, Inc. (NASDAQ: INSP) today announced financial results for the fourth quarter and the year ended December 31, 2006.
Revenues for the fourth quarter of 2006 were $89.3 million, reflecting a $2.8 million or 3% increase over the fourth quarter of 2005. Net income for the fourth quarter of 2006 was $30.0 million or $0.91 per diluted share versus net income of $37.9 million or $1.13 per diluted share in the fourth quarter of 2005. The fourth quarters of 2006 and 2005 included a tax benefit of $32.6 million and $25.4 million, respectively, primarily from realizing a deferred tax asset related to a portion of the Company's net operating loss carryforwards. Additionally, the Company recorded stock-based compensation costs of $3.3 million and a restructuring charge of $4.5 million in the fourth quarter of 2006.
Revenues for the full year 2006 were $371.7 million, reflecting a $31.8 million or 9% increase over the full year 2005. Net loss for 2006 was $12.7 million or $0.41 per share versus net income of $159.4 million or $4.47 per diluted share in 2005. Included in the full year 2006 net loss were restructuring charges of $62.3 million, stock-based compensation costs of $16.9 million and the tax benefit referred to above. For the full year 2005, net income included a gain on the settlement of certain litigation matters of approximately $77 million, net of fees and income taxes, and also the tax benefit referred to above.
Cash, cash equivalents, and marketable investments as of December 31, 2006 totaled $401.9 million, a net increase of $26.6 million from the end of 2005. At the end of the year, the Company had no debt obligations.
"As we emerge from restructuring, our remaining business continues to generate solid cash flow and our strong balance sheet positions us for growth," said Jim Voelker, chairman and chief executive officer of InfoSpace Inc.
Fourth Quarter and 2006 Segment Information and Adjusted EBITDA
Mobile
Mobile revenues were $47.5 million in the fourth quarter of 2006, an increase of $5.2 million or 12% from the fourth quarter of 2005. Mobile gross profit totaled $18.7 million or 39% of Mobile revenue for the fourth quarter of 2006. For the full year, Mobile revenues were $184.8 million, an increase of $27.4 million or 17% from 2005. Mobile gross profit totaled $73.2 million or 40% of Mobile revenue for 2006.
Online
Online revenues were $41.8 million in the fourth quarter of 2006, a decrease of $2.5 million or 6% from the fourth quarter of 2005. Online gross profit was $27.8 million or 66% of Online revenue for the fourth quarter of 2006. For the full year, Online revenues were $186.9 million, an increase of $4.3 million or 2% from 2005. Online gross profit totaled $120.2 million or 64% of Online revenue for 2006.
Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization ("Adjusted EBITDA")
Adjusted EBITDA was $1.9 million in the fourth quarter of 2006, compared to Adjusted EBITDA of $15.8 million in the fourth quarter of 2005. For the full year, Adjusted EBITDA was a negative $27.8 million, compared to Adjusted EBITDA of $70.9 million for the full year 2005. InfoSpace's Adjusted EBITDA is calculated by adjusting GAAP net income, which includes the effects of the restructuring charges, 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, 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.
First Quarter 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.
For the first quarter of 2007, the Company expects revenue to be between $82 million and $84 million. Additionally, the Company expects Adjusted EBITDA to be between $6.5 million and $7.5 million and GAAP net loss to be between $1.0 million and $1.5 million, or $0.03 and $0.05 per share.
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 February 14, 2007, at 7:30 p.m. Pacific/ 10:30 p.m. Eastern.
About InfoSpace, Inc.
InfoSpace, Inc. is a leading developer of tools and technologies to help people discover and enjoy content and information -- whether on a mobile phone or on the PC. The Company's mobile platform and applications, such as InfoSpace Find It! (www.infospacefindit.com), create programming and sales opportunities for carriers, while satisfying consumer demand for highly relevant mobile functionality and content. InfoSpace uses its proprietary metasearch technology to power a portfolio of branded Web sites, including Dogpile (www.dogpile.com) and Zoo (www.zoo.com), a new kid-friendly search engine, and provide private-label search and online directory services to consumers on a global basis. More information can be found at www.infospaceinc.com.
This release contains forward-looking statements relating to InfoSpace, Inc.'s 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 our continuing generation of cash flow, and our projected financial performance for the first quarter of 2007. 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 and restructuring plans. 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)
December 31, December 31,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 163,505 $ 153,013
Short-term investments, available-for-sale 238,444 222,360
Accounts receivable, net 78,742 71,661
Other receivables 3,402 3,972
Prepaid expenses and other current assets 14,753 12,639
------------ ------------
Total current assets 498,846 463,645
Property and equipment, net 33,212 26,889
Goodwill 104,424 176,979
Other intangible assets, net 19,565 44,080
Deferred tax assets, net 101,571 25,000
Other long-term assets 8,221 6,786
------------ ------------
Total assets $ 765,839 $ 743,379
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,031 $ 11,585
Accrued expenses and other current
liabilities 61,166 51,917
Short-term deferred revenue 6,708 2,474
------------ ------------
Total current liabilities 80,905 65,976
Long-term liabilities:
Other liabilities and long-term deferred
revenue 874 2,011
Deferred tax liabilities 5,502 10,421
------------ ------------
Total long-term liabilities 6,376 12,432
Total liabilities 87,281 78,408
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 1,710,485 1,684,974
Accumulated deficit (1,033,208) (1,020,525)
Accumulated other comprehensive income 1,278 519
------------ ------------
Total stockholders' equity 678,558 664,971
------------ ------------
Total liabilities and stockholders' equity $ 765,839 $ 743,379
============ ============
Summary of cash and short-term investments:
Cash and cash equivalents $ 163,505 $ 153,013
Short-term investments, available-for-
sale 238,444 222,360
------------ ------------
Cash and short-term investments $ 401,949 $ 375,373
============ ============
InfoSpace, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(Amounts in thousands, except per share data)
Three months
ended December Year ended December
December 31, 31, December 31, 31,
2006 2005 2006 2005
------------ ----------- ----------------------
Revenues $ 89,319 $ 86,540 $ 371,737 $339,968
Operating expenses: (1)
Content and
distribution 42,890 37,953 178,327 145,351
Systems and network
operations 7,843 6,571 31,222 21,375
Product development 12,466 8,396 46,340 31,203
Sales and marketing 11,442 7,641 46,518 31,062
General and
administrative 11,594 10,229 51,725 40,234
Depreciation 4,674 2,892 16,083 9,061
Amortization of
intangible assets 1,848 3,710 12,213 15,265
Restructuring (2) 4,527 - 62,316 -
------------ ----------- ------------ ---------
Total operating
expenses 97,284 77,392 444,744 293,551
------------ ----------- ------------ ---------
Operating income
(loss) (7,965) 9,148 (73,007) 46,417
Gain on investments,
net - - - 154
Other income, net (3) 5,381 3,356 19,381 89,322
------------ ----------- ------------ ---------
Income (loss) before
income taxes (2,584) 12,504 (53,626) 135,893
Income tax benefit
(4) 32,606 25,418 40,943 23,475
------------ ----------- ------------ ---------
Net income (loss) $ 30,022 $ 37,922 $ (12,683) $159,368
============ =========== ============ =========
Net income (loss) per
share - Basic $ 0.96 $ 1.22 $ (0.41) $ 4.94
============ =========== ============ =========
Weighted average shares
outstanding used in
computing basic net
income (loss) per
share 31,376 31,042 31,254 32,284
============ =========== ============ =========
Net income (loss) per
share - Diluted $ 0.91 $ 1.13 $ (0.41) $ 4.47
============ =========== ============ =========
Weighted average shares
outstanding used in
computing diluted net
income (loss) per
share 33,097 33,612 31,254 35,616
============ =========== ============ =========
(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 $3.3
million and $16.9 million of stock-based compensation expense for the
three months and year ended December 31, 2006, respectively,
allocated among the following captions (in thousands):
Three months
ended Year ended
December 31, December 31,
2006 2006
------------ ------------
Systems and network
operations $ 496 $ 1,646
Product development 771 2,662
Sales and marketing 809 4,772
General and
administrative 1,236 7,783
------------ ------------
Total stock-based
compensation expense $ 3,312 $ 16,863
============ ============
(2) During the three months and year ended December 31, 2006, the
Company recorded restructuring charges of $4.5 million and $62.3
million, respectively, comprised of the following (in thousands):
Three months
ended Year ended
December 31, December 31,
2006 2006
------------ ------------
Impairments of goodwill
and other intangible
assets $ - $ 44,526
Employee separation
costs 2,366 8,687
Stock-based
compensation 1,878 824
Losses on contractual
commitments 50 5,671
Costs of abandoned
facilities 233 2,608
------------ ------------
Total restructuring
charges $ 4,527 $ 62,316
============ ============
(3) Includes a net gain of $79.3 million in the year ended December
31, 2005 from the settlement of certain litigation matters, comprised
of proceeds of $83.2 million less related legal expenses.
(4) In 2006 and 2005, the Company recognized a portion of its deferred
tax assets related to its operating loss carryforwards.
InfoSpace, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Year ended
----------------------
December December
31, 31,
2006 2005
---------- -----------
Operating activities:
Net income (loss) $ (12,683) $ 159,368
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Restructuring 62,316 -
Depreciation and amortization 28,296 24,326
Stock-based compensation expense 16,863 -
Deferred income taxes (41,324) (26,931)
Other 247 464
Cash provided (used) by changes in operating
assets and liabilities:
Accounts receivable (7,180) (13,585)
Other receivables 570 16,853
Prepaid expenses and other current assets 315 (8,535)
Other long-term assets (1,435) (1,190)
Accounts payable 1,842 2,244
Accrued expenses and other current and long-
term liabilities (7,325) 5,913
Deferred revenue 3,038 (1,340)
---------- -----------
Net cash provided by operating activities 43,540 157,587
Investing activities:
Business acquisition, net of cash acquired - (26,364)
Increase in other long-term assets - (4,495)
Purchases of property and equipment (22,600) (16,969)
Purchase of intangible assets (320) -
Proceeds from the sale of assets and equity
investments 35 293
Proceeds from sales and maturities of
investments 298,288 202,947
Purchases of investments (313,883) (188,964)
---------- -----------
Net cash used by investing activities (38,480) (33,552)
Financing activities:
Common stock repurchases - (70,393)
Proceeds from exercise of stock options 3,599 12,614
Proceeds from issuance of stock through
employee stock purchase plan 1,833 1,512
---------- -----------
Net cash provided (used) by financing
activities 5,432 (56,267)
---------- -----------
Net increase in cash and cash equivalents 10,492 67,768
Cash and cash equivalents:
Beginning of period 153,013 85,245
---------- -----------
End of period $ 163,505 $ 153,013
========== ===========
InfoSpace, Inc.
Segment Information (1)
(Unaudited)
(Amounts in thousands)
Three Months Ended Year ended
------------------- -------------------
December December December December
31, 31, 31, 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Mobile
Revenue $ 47,488 $ 42,254 $184,836 $157,412
Content and distribution
costs (2) 28,832 21,946 111,655 77,342
--------- --------- --------- ---------
Gross profit 18,656 20,308 73,181 80,070
Gross profit margin 39.3% 48.1% 39.6% 50.9%
Online
Revenue 41,831 44,286 186,901 182,556
Content and distribution
costs (2) 14,058 16,007 66,672 68,009
--------- --------- --------- ---------
Gross profit 27,773 28,279 120,229 114,547
Gross profit margin 66.4% 63.9% 64.3% 62.7%
Total
Total segment revenue 89,319 86,540 371,737 339,968
Total segment content and
distribution costs 42,890 37,953 178,327 145,351
--------- --------- --------- ---------
Total segment gross profit 46,429 48,587 193,410 194,617
Total segment gross profit
margin 52.0% 56.1% 52.0% 57.2%
Corporate
Operating expenses 40,033 32,837 158,942 123,874
Restructuring (3) 4,527 - 62,316 -
Stock-based compensation(4) 3,312 - 16,863 9,061
Depreciation 4,674 2,892 16,083 15,265
Amortization of intangible
assets 1,848 3,710 12,213 -
Gain on equity investments, net - - - (154)
Other income, net (5) (5,381) (3,356) (19,381) (89,322)
Income tax benefit (6) (32,606) (25,418) (40,943) (23,475)
--------- --------- --------- ---------
16,407 10,665 206,093 35,249
--------- --------- --------- ---------
Net income (loss) $ 30,022 $ 37,922 $(12,683) $159,368
========= ========= ========= =========
(1) In the year ended December 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) During the three months and year ended December 31, 2006, the
Company recorded restructuring charges of $4.5 million and $62.3
million, respectively, comprised of the following items (in
thousands):
Three
months Year
ended ended
December December
31, 2006 31, 2006
--------- ---------
Impairments of goodwill and
other intangible assets $ - $ 44,526
Employee separation costs 2,366 8,687
Stock-based compensation 1,878 824
Losses on contractual
commitments 50 5,671
Costs of abandoned facilities 233 2,608
--------- ---------
Total restructuring charges $ 4,527 $ 62,316
========= =========
(4) 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.
(5) Includes a net gain of $79.3 million in the year ended December
31, 2005 from the settlement of certain litigation matters, comprised
of proceeds of $83.2 million less related legal expenses.
(6) In 2006 and 2005, the Company recognized a portion of its
deferred tax assets related to its operating loss carryforwards.
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 Year ended
----------------------------------------
December December December December
31, 31, 31, 31,
2006 2005 2006 2005
-------------------- -------------------
Net income (loss) (2) $ 30,022 $ 37,922 $(12,683) $159,368
Depreciation 4,674 2,892 16,083 9,061
Amortization of intangible
assets 1,848 3,710 12,213 15,265
Stock-based compensation(3) 3,312 - 16,863 -
Other income, net (4) (5,381) (3,356) (19,381) (89,322)
Income tax benefit (32,606) (25,418) (40,943) (23,475)
---------- --------- --------- ---------
Adjusted EBITDA $ 1,869 $ 15,750 $(27,848) $ 70,897
========== ========= ========= =========
Adjusted EBITDA Reconciliation for Forward Looking Guidance
(Amounts in thousands)
Ranges for the three
months ended
March 31, 2007
--------------------
Net loss $ (1,500) $ (1,000)
Depreciation and amortization
of intangible assets 7,300 7,400
Stock-based compensation(3) 7,000 7,000
Other income, net (4) (5,000) (5,000)
Income tax benefit (1,300) (900)
---------- ---------
Adjusted EBITDA $ 6,500 $ 7,500
========== =========
(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, litigation settlements and contingencies, 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
Operations.
(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) Other income, net, primarily consists 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.
InfoSpace, Inc. Stacy Ybarra, 425-709-8127 stacy.ybarra@infospace.com
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