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BELLEVUE, Wash., Aug 08, 2007 (BUSINESS WIRE) --
InfoSpace, Inc. (NASDAQ: INSP) today announced financial results for the three months ended June 30, 2007.
Revenues for the second quarter of 2007 were $70.5 million, reflecting a $25.3 million decrease over the second quarter of 2006. Of this decrease, $19.0 million was attributable to the exit of the mobile media business.
Net loss for the second quarter of 2007 was $28.1 million, or $0.86 per share, versus net income of $1.0 million, or $0.03 per diluted share, in the second quarter of 2006. Net loss in the second quarter of 2007 includes a $22.3 million payment, or $0.68 per share, made to employees and directors related to the $208.2 million special dividend to shareholders. Additionally, the Company recorded an $8.8 million non-cash charge, or $0.27 per share, for stock-based compensation expense.
Cash, cash equivalents, and marketable investments as of June 30, 2007 totaled $197.8 million, after accounting for the cash distribution to shareholders of $208.2 million in the second quarter. At the end of the quarter, the Company had no debt obligations.
"Our second quarter operating results were largely in line with expectations. We have completed our restructuring, exited the mobile media business and significantly reduced costs. Moreover, we have good momentum in the mobile services business and have added several new high quality online distribution partners," said Jim Voelker, Chairman and CEO of InfoSpace, Inc. "Additionally, we completed the $208 million special dividend and reauthorized our $100 million stock repurchase plan."
Second Quarter Highlights and Recent Developments
InfoSpace:
-- Signed seven new online distribution partners, including Free SAS, one of the leading Internet service providers in France, as well as Publishers Clearing House and Break.com.
-- Renewed our partnership with Verizon to provide hosting, infrastructure and subscription management capabilities from its platform to power Verizon's Mobile Web 2.0 service through 2010.
-- Launched mCore(R) Mobile Services Platform, an innovative end-to-end technology platform that enables a world class unified mobile media experience spanning mobile search, storefronts, portals and messaging.
-- Announced a new partnership with blinkx, the world's largest video search engine, to offer video search capabilities for InfoSpace's family of metasearch brands.
-- Launched InfoSpace Find It! for the Apple iPhone. InfoSpace Find It! is a premium local search application that allows users to easily locate and navigate to nearby points of interest.
Second Quarter 2007 Segment Information and Adjusted EBITDA
Online
Online revenues were $39.7 million in the second quarter of 2007, a decrease of $10.6 million, compared to the second quarter of 2006. The revenue decrease is largely attributable to the reduction in traffic from the Company's search engine marketing distribution partners. Online segment income was $15.8 million in the second quarter of 2007.
Mobile
Mobile revenues were $30.8 million in the second quarter of 2007, a net decrease of $14.7 million compared to the second quarter of 2006. The $30.8 million is comprised of $13.4 million in mobile services revenues, an increase of $4.3 million from the second quarter of 2006 and $17.4 million in media content revenues, representing a decrease of $19.0 million from the second quarter of 2006. Mobile segment loss was $3.6 million in the second quarter of 2007.
Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization ("Adjusted EBITDA")
Adjusted EBITDA was a negative $17.5 million in the second quarter of 2007, compared to Adjusted EBITDA of $8.9 million in the second quarter of 2006. InfoSpace's Adjusted EBITDA is calculated by adjusting GAAP net income, which includes the effects of the restructuring charges, the payments made to employees and directors related to the cash distribution to shareholders, and sale of non-core operations, 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 the Company's performance by excluding certain expenses and gains that are not indicative of the Company's core business operating results. InfoSpace believes that management and its 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.
Third Quarter and Full Year 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 third quarter of 2007, with the exit of the mobile media business ($17.4 million in the second quarter of 2007), the Company expects revenue to be between $49 million and $51 million. Additionally, the Company expects Adjusted EBITDA to be between $1 million and $2 million and GAAP net loss to be between $16.5 million and $17.5 million, or $0.50 and $0.53 per share.
For the full year of 2007, the Company expects revenue to be between $260 million and $264 million (includes $47.1 million from the mobile media business that the Company exited in the second quarter of 2007). Additionally, the Company expects Adjusted EBITDA to be between negative $1 million and $3 million (includes a $22.3 million payment made to employees and directors related to the $208.2 million special dividend to shareholders) and GAAP net loss to be between $55 million and $57 million (includes $43 million of stock-based compensation), or $1.68 and $1.74 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 August 20, 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 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 projected financial performance for the third quarter and full year 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, quarterly reports on Form 10-Q as filed from time to time, in the section entitled "Risk Factors," and InfoSpace's current reports on Form 8-K as filed from time to time. 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 Operations
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended Six months ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
--------- -------- --------- ---------
Revenues $ 70,530 $95,846 $157,173 $186,120
Operating expenses: (1) (2)
Content and distribution 28,904 46,121 70,521 87,733
Systems and network
operations 7,484 7,880 14,209 14,988
Product development 15,882 12,467 30,624 21,775
Sales and marketing 11,153 12,567 20,102 22,130
General and administrative 35,099 12,547 48,793 26,633
Depreciation 4,809 3,457 9,400 6,774
Amortization of intangible
assets 1,668 3,611 3,470 7,319
Restructuring and other, net
(3) (1,669) - (2,502) -
--------- -------- --------- ---------
Total operating expenses 103,330 98,650 194,617 187,352
--------- -------- --------- ---------
Operating loss (32,800) (2,804) (37,444) (1,232)
Other income, net 4,384 4,723 9,575 8,595
--------- -------- --------- ---------
Income (loss) before income
taxes (28,416) 1,919 (27,869) 7,363
Income tax benefit
(provision) 286 (900) (801) (3,339)
--------- -------- --------- ---------
Net income (loss) $(28,130) $ 1,019 $(28,670) $ 4,024
========= ======== ========= =========
Net income (loss) per share -
Basic $ (0.86) $ 0.03 $ (0.89) $ 0.13
========= ======== ========= =========
Weighted average shares
outstanding used in computing
basic net income (loss) per
share 32,626 31,239 32,047 31,162
========= ======== ========= =========
Net income (loss) per share -
Diluted $ (0.86) $ 0.03 $ (0.89) $ 0.12
========= ======== ========= =========
Weighted average shares
outstanding used in computing
diluted net income (loss) per
share 32,626 32,931 32,047 32,925
========= ======== ========= =========
(1) Stock-based compensation expense for the three and six months
ended June 30, 2007 and 2006 is allocated among the following
captions (in thousands):
Three months ended Six months ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
--------- ----------------------------
Systems and network
operations $ 746 $ 464 $ 1,300 $ 654
Product development 2,023 714 3,648 1,129
Sales and marketing 2,412 1,509 4,504 2,551
General and administrative 3,631 1,948 6,645 4,410
--------- -------- --------- ---------
Total stock-based compensation
expense $ 8,812 $ 4,635 $ 16,097 $ 8,744
========= ======== ========= =========
(2) Amounts for the three and six months ended June 30, 2007 include
$22.3 million of payments made to employees and directors related to
the cash distribution to shareholders in May. This amount is
allocated among the following captions (in thousands):
Three months ended Six months ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
--------- ----------------------------
Systems and network
operations $ 507 $ - $ 507 $ -
Product development 1,577 - 1,577 -
Sales and marketing 2,367 - 2,367 -
General and administrative 17,825 - 17,825 -
--------- -------- --------- ---------
Total $ 22,276 $ - $ 22,276 $ -
========= ======== ========= =========
3) Amount for the three months ended June 30, 2007 consists of a gain
on the sale of the assets related to mobile media operations of $2.1
million and adjustments to estimated restructuring charges of $0.4
million. Amount for the six months ended June 30, 2007 consists of a
gain on the sale of the assets related to the mobile media operations
of $3.3 million and adjustments to estimated restructuring charges of
$0.8 million.
InfoSpace, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
June 30, December 31,
2007 2006
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 110,342 $ 163,505
Short-term investments, available-for-sale 87,458 238,444
Accounts receivable, net 60,820 78,742
Other receivables 2,836 3,402
Prepaid expenses and other current assets 11,763 14,753
------------ ------------
Total current assets 273,219 498,846
Property and equipment, net 39,993 33,212
Goodwill 104,424 104,424
Other intangible assets, net 16,095 19,565
Deferred tax assets, net 100,771 101,571
Other long-term assets 9,206 8,221
------------ ------------
Total assets $ 543,708 $ 765,839
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,515 $ 13,031
Accrued expenses and other current
liabilities 43,382 61,156
Short-term deferred revenue 9,271 6,708
------------ ------------
Total current liabilities 66,168 80,895
Long-term liabilities:
Other liabilities and long-term deferred
revenue 626 877
Deferred tax liabilities 5,502 5,502
------------ ------------
Total long-term liabilities 6,128 6,379
Total liabilities 72,296 87,274
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 1,534,423 1,712,897
Accumulated deficit (1,064,283) (1,035,613)
Accumulated other comprehensive income 1,269 1,278
------------ ------------
Total stockholders' equity 471,412 678,565
------------ ------------
Total liabilities and stockholders' equity $ 543,708 $ 765,839
============ ============
Summary of cash and short-term investments:
Cash and cash equivalents $ 110,342 $ 163,505
Short-term investments, available-
for-sale 87,458 238,444
------------ ------------
Cash and short-term investments $ 197,800 $ 401,949
============ ============
InfoSpace, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Six months ended
---------------------
June 30, June 30,
2007 2006
---------- ----------
Operating activities:
Net income (loss) $ (28,670) $ 4,024
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 12,870 14,093
Stock-based compensation 16,097 8,744
Deferred income taxes 800 2,765
Gain on sale of assets (3,313) -
Restructuring 811 -
Other 384 78
Cash provided (used) by changes in operating
assets and liabilities:
Accounts receivable 17,713 7,039
Other receivables 2,189 408
Prepaid expenses and other current assets 3,042 2,242
Other long-term assets 1,015 (2,315)
Accounts payable (1,959) (1,701)
Accrued expenses and other current and long-
term liabilities (19,075) 2,524
Deferred revenue 2,306 119
---------- ----------
Net cash provided by operating activities 4,210 38,020
Investing activities:
Purchases of property and equipment (13,847) (10,082)
Proceeds from the sale of assets 2,223 33
Loan to equity investee (2,000) -
Proceeds from sales and maturities of
investments 225,480 231,263
Purchases of investments (74,523) (233,053)
---------- ----------
Net cash provided (used) by investing
activities 137,333 (11,839)
Financing activities:
Dividend paid (208,203) -
Proceeds from stock option and warrant
exercises 12,756 2,564
Proceeds from issuance of stock through
employee stock purchase plan 741 943
---------- ----------
Net cash (used) provided by financing
activities (194,706) 3,507
---------- ----------
Net increase (decrease) in cash and cash
equivalents (53,163) 29,688
Cash and cash equivalents:
Beginning of period 163,505 153,013
---------- ----------
End of period $ 110,342 $ 182,701
========== ==========
InfoSpace, Inc.
Segment Information (1)
(Unaudited)
(Amounts in thousands)
Three months ended Six months ended
--------------------- ----------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
--------- -------- --------- ---------
Online
Revenue $ 39,742 $50,373 $ 84,782 $ 96,503
Content and
distribution
expenses 13,837 18,122 30,154 34,397
Operating expenses 10,112 (2) 9,419 (3) 20,823 (2) 19,213 (3)
--------- -------- --------- ---------
Segment income 15,793 22,832 33,805 42,893
Segment margin 39.7% 45.3% 39.9% 44.4%
Mobile
Revenue 30,788 45,473 72,391 89,617
Content and
distribution
expenses 15,067 27,999 40,367 53,336
Operating expenses 19,330 (2) 25,140 (3) 39,030 (2) 44,407 (3)
--------- -------- --------- ---------
Segment loss (3,609) (7,666) (7,006) (8,126)
Segment margin -11.7% -16.9% -9.7% -9.1%
Total
Total revenue 70,530 95,846 157,173 186,120
Total content and
distribution
expenses 28,904 46,121 70,521 87,733
Total segment
operating expenses 29,442 (2) 34,559 (3) 59,853 (2) 63,620 (3)
--------- -------- --------- ---------
Total segment income 12,184 15,166 26,799 34,767
Total segment margin 17.3% 15.8% 17.1% 18.7%
Corporate
Operating expenses
(4) 31,364 6,267 37,778 13,162
Depreciation 4,809 3,457 9,400 6,774
Amortization of
intangible assets 1,668 3,611 3,470 7,319
Stock-based
compensation 8,812 4,635 16,097 8,744
Restructuring and
other, net (5) (1,669) - (2,502) -
Other income, net (4,384) (4,723) (9,575) (8,595)
Income tax (benefit)
provision (286) 900 801 3,339
--------- -------- --------- ---------
Net income (loss) $(28,130) $ 1,019 $(28,670) $ 4,024
========= ======== ========= =========
(1) In the six months ended June 30, 2007, 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) Amount includes expenses directly attributable to the reportable
business units and, in addition, include certain indirect expenses
allocated to the reportable business units based on internal usage
measurements. Segment operating expenses do not include allocations
for certain indirect general and administrative expenses,
depreciation and amortization expense, stock-based compensation
expense, restructuring and other charges, non-operating gains and
losses, income taxes or interest income.
(3) Amount includes certain indirect expenses allocated to the
reportable business units based on the manner in which the Company
currently operates. Segment operating expenses do not include
allocations for certain indirect general and administrative expenses,
depreciation and amortization expense, stock-based compensation
expense, restructuring and other charges, non-operating gains and
losses, income taxes or interest income.
(4) Amounts for the three and six months ended June 30, 2007 include
$22.3 million of payments made to employees and directors related to
the cash distribution to shareholders in May.
(5) Amount for the three months ended June 30, 2007 consists of a gain
on the sale of the assets related to mobile media operations of $2.1
million and adjustments to estimated restructuring charges of $0.4
million. Amount for the six months ended June 30, 2007 consists of a
gain on the sale of the assets related to the mobile media operations
of $3.3 million and adjustments to estimated restructuring charges of
$0.8 million.
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 Six months ended
------------------- -------------------
June 30, June 30, June 30, June 30,
2007 2006 2007 2006
--------- --------- --------- ---------
Net income (loss) (2) $(28,130) $ 1,019 $(28,670) $ 4,024
Depreciation 4,809 3,457 9,400 6,774
Amortization of intangible
assets 1,668 3,611 3,470 7,319
Stock-based compensation 8,812 4,635 16,097 8,744
Other income, net (3) (4,384) (4,723) (9,575) (8,595)
Income tax (benefit) provision (286) 900 801 3,339
--------- --------- --------- ---------
Adjusted EBITDA $(17,511) $ 8,899 $ (8,477) $ 21,605
========= ========= ========= =========
Adjusted EBITDA Reconciliation for Forward Looking Guidance
(Amounts in thousands)
Ranges for the three Ranges for the year
months ended ended
September 30, 2007 December 31, 2007
------------------- -------------------
Net loss $(17,500) $(16,500) $(57,000) $(55,000)
Depreciation and amortization
of intangible assets 6,000 6,000 24,000 24,000
Stock-based compensation 15,000 15,000 43,000 43,000
Other income, net (3) (2,500) (2,500) (14,000) (14,000)
Income tax provision - - 1,000 1,000
--------- --------- --------- ---------
Adjusted EBITDA $ 1,000 $ 2,000 $ (3,000) $ (1,000)
========= ========= ========= =========
1) Adjusted Earnings before Interest, Taxes, Depreciation and
Amortization ("EBITDA") is a non-GAAP financial measure and is
reconciled to net income (loss), 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 (loss) 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) Other income, net, primarily consists of interest income, gains or
losses from the disposal of assets, and foreign currency transaction
gains or losses.
SOURCE: InfoSpace, Inc.
InfoSpace, Inc. Stacy Ybarra, 425-709-8127 stacy.ybarra@infospace.com
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