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BELLEVUE, Wash., Feb 05, 2008 (BUSINESS WIRE) -- InfoSpace, Inc. (NASDAQ:INSP) today announced financial results for the fourth quarter and the full year ended December 31, 2007.
"We are pleased that our revenue grew by fifteen percent sequentially and that overall our financial results exceeded our expectations in the fourth quarter," said Jim Voelker, chairman and chief executive officer of InfoSpace. "These results cap a year of transformation for InfoSpace and value creation for our shareholders that included more than $500 million in special dividends. As a result of the successful sales of our mobile and directory businesses, we enter 2008 as a focused online search company with a talented team, loyal users, leading search technology, strong customer relationships and a growing distribution network. With these assets, we are confident that InfoSpace is well positioned for continued growth."
Revenues for the fourth quarter of 2007 were $39.1 million, reflecting a $5.0 million increase over third quarter or a 15% increase, sequentially and year-over-year.
Net income for the fourth quarter of 2007 was $57.8 million compared to net income of $27.6 million in the fourth quarter of 2006. Net income was impacted by a number of notable items, including:
-- Results from discontinued operations of $131.5 million, which includes a gain from the sale of the Company's directory and mobile assets;
-- Restructuring charges and employee expenses related to a $300 million special dividend of $45.6 million;
-- Stock-based compensation costs of $16.9 million; and
-- Tax expense of $16.4 million primarily from placing a full valuation allowance on the deferred tax asset.
Adjusted EBITDA from continuing operations was a negative $42.6 million in the fourth quarter of 2007, compared to Adjusted EBITDA from continuing operations of $1.5 million in the fourth quarter of 2006. Adjusted EBITDA includes restructuring charges and employee expenses related to a $300 million special dividend totaling $45.6 million.
Fourth Quarter 2007 Highlights and Recent Developments
In the fourth quarter of 2007, InfoSpace:
-- Declared a special dividend of $300 million, which combined with the earlier dividend resulted in more than $500 million, or $15.30 per share in cash, in special dividends distributed from May 2007 to January 2008;
-- Closed the sale of its directory business to Idearc and the sale of its mobile services business to Motricity for a combined total of approximately $360 million;
-- Extended the Yahoo! search distribution agreement into 2011;
-- Entered into agreements with six new search distribution partners, including a partnership with Real Networks to provide search within RealPlayer(R);
-- Implemented a plan to realign its operating structure resulting in cost savings of approximately $7 million to $9 million annually beginning in the third quarter of 2008; and
-- Strengthened its management team with the appointment of Bruce Allenbaugh to the newly created position of Chief Marketing Officer and promoted senior executives, including David Binder as Chief Financial Officer and Treasurer, Alejandro C. Torres as General Counsel and Secretary, Sunil Thomas as Chief Technology Officer, and Eric Emans as Chief Accounting Officer.
Full Year Results
Revenues for the full year 2007 were $140.5 million, reflecting a $13.3 million or 9% decrease over the full year 2006.
Net income for the full year 2007, including results from discontinued operations of $114.6 million, which included a gain from the sale of the Company's directory and mobile assets, was $16.9 million compared to a net loss of $15.1 million for the full year 2006.
For the full year 2007, Adjusted EBITDA from continuing operations was a negative $47.6 million, compared to Adjusted EBITDA from continuing operations of a negative $28.3 million for the full year 2006.
Cash, cash equivalents, and marketable investments as of December 31, 2007 totaled $574.8 million. Of that total, the Company has paid or expects to pay approximately $360 million related to the $300 million special dividend, employee expenses related to the dividend, severance payments and deal related fees. After these payments, the Company expects its cash balance to be between $210 million and $215 million. At the end of the year, the Company had no debt obligations.
First Quarter 2008 Outlook
For the first quarter of 2008, the Company expects revenue to be between $35 million and $37 million. Additionally, the Company expects Adjusted EBITDA to be between $2.5 million and $3.5 million and GAAP net income to be between breakeven and $1.4 million, or zero and $0.04 per share.
The Company's guidance excludes the potential impact of any future one-time gains or losses. The Adjusted EBITDA guidance above has been prepared in a manner consistent with the historical Adjusted EBITDA data provided above and in the accompanying table.
Conference Call and Webcast
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, 2008, at 7:30 p.m. Pacific/ 10:30 p.m. Eastern.
Non-GAAP Financial Measures
InfoSpace's Adjusted EBITDA from continuing operations is calculated by adjusting GAAP income (loss) from continuing operations to exclude the effects of income taxes, depreciation, stock-based compensation expense, loss on investments, net, 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 preliminary 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 income (loss) from continuing operations in accordance with GAAP accompanies the preliminary condensed consolidated financial statements in this release.
About InfoSpace, Inc.
InfoSpace, Inc. is a leading developer of metasearch products to help people easily search and discover the web. InfoSpace uses its proprietary metasearch technology that combines the top results from the leading search engines to power a portfolio of branded Web sites, including Dogpile (www.dogpile.com) and WebFetch (www.webfetch.com.) For the second consecutive year, Dogpile ranked highest in customer satisfaction among search engines, according to JD Power and Associates. 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 2008. 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.
Preliminary Condensed Consolidated Statements of Operations(1)
(Unaudited)
(Amounts in thousands, except per share data)
Three months ended Year ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Revenues $ 39,058 $ 34,053 $ 140,537 $ 153,800
Operating expenses:
(2) (3)
Content and
distribution 18,946 12,924 61,765 62,346
Systems and
network
operations 2,820 2,933 9,800 11,494
Product
development 3,072 1,698 9,921 6,814
Sales and
marketing 12,252 4,650 29,260 15,935
General and
administrative 53,190 7,832 105,083 34,507
Depreciation 1,443 1,490 5,542 5,044
Restructuring and
other, net(4) 8,221 4,527 6,342 62,316
------------ ------------ ------------ ------------
Total operating
expenses 99,944 36,054 227,713 198,456
------------ ------------ ------------ ------------
Operating loss (60,886) (2,001) (87,176) (44,656)
Loss on
investments, net (2,182) - (2,117) -
Other income, net 5,738 5,522 18,227 19,581
------------ ------------ ------------ ------------
Income (loss) from
continuing
operations before
income taxes (57,330) 3,521 (71,066) (25,075)
Income tax
benefit
(expense) (16,354) 27,248 (26,678) 29,060
------------ ------------ ------------ ------------
Income (loss)
from continuing
operations (73,684) 30,769 (97,744) 3,985
------------ ------------ ------------ ------------
Discontinued
operations:(1)
Loss from
discontinued
operations, net
of taxes (8,440) (3,152) (25,307) (19,073)
Gain on sale of
discontinued
operations, net
of taxes 139,925 - 139,925 -
------------ ------------ ------------ ------------
Net income (loss) $ 57,801 $ 27,617 $ 16,874 $ (15,088)
============ ============ ============ ============
Earnings per share
- Basic
Income (loss)
from continuing
operations $ (2.21) $ 0.98 $ (2.99) $ 0.13
Loss from
discontinued
operations (0.25) (0.10) (0.78) (0.61)
Gain on sale of
discontinued
operations 4.20 - 4.29 -
------------ ------------ ------------ ------------
Net income
(loss) per
share - Basic $ 1.74 $ 0.88 $ 0.52 $ (0.48)
============ ============ ============ ============
Weighted average
shares outstanding
used in computing
basic net income
(loss) per share 33,291 31,376 32,640 31,254
============ ============ ============ ============
Earnings per share
- Diluted
Income (loss)
from continuing
operations $ (2.21) $ 0.93 $ (2.99) $ 0.12
Loss from
discontinued
operations (0.25) (0.10) (0.78) (0.58)
Gain on sale of
discontinued
operations 4.20 - 4.29 -
------------ ------------ ------------ ------------
Net income
(loss) per
share - Diluted $ 1.74 $ 0.83 $ 0.52 $ (0.46)
============ ============ ============ ============
Weighted average
shares outstanding
used in computing
diluted net income
(loss) per share 33,291 33,097 32,640 33,042
============ ============ ============ ============
1) In the three months and year ended December 31, 2007, the Company
completed the sale of its directory business. The operating results
of the directory business have been presented as discontinued
operations for all periods presented. Amounts for the three months
and year ended December 31, 2007 include $0 and $0.5 million of
payments made to employees related to the cash distribution to
shareholders in May 2007, respectively. Amounts include stock-based
compensation expense of $0.4 million and $1.6 million for the three
months and year ended December 31, 2007, respectively, and $0.3
million and $0.7 million for the three months and year ended December
31, 2006, respectively. Income taxes related to discontinued
operations were $0.4 million and $4.2 million for the three months
and year ended December 31, 2007, respectively. Income taxes related
to discontinued operations were $0.3 million and $5.2 million for the
three months and year ended December 31, 2006, respectively. A gain,
net of taxes of $72.2 million, on the sale of the directory business
was recorded in the three months and year ended December 31, 2007.
Revenue, operating expenses and income taxes, income and the gain on
sale of these discontinued operations are presented below (in
thousands):
Three months ended Year ended
------------------------- -------------------------
Directory December 31, December 31, December 31, December 31,
2007 2006 2007 2006
---------------------------------------------------
Revenue $ 2,988 $ 7,779 $ 28,882 $ 33,103
Operating
expenses and
income taxes 2,036 4,640 21,746 23,546
------------ ------------ ------------ ------------
Income from
discontinued
operations, net of
taxes $ 952 $ 3,139 $ 7,136 $ 9,557
============ ============ ============ ============
Gain on sale of
discontinued
operations, net of
taxes $ 64,280 $ - $ 64,280 $ -
============ ============ ============ ============
In the three months and year ended December 31, 2007, the Company
completed the sale of its Mobile services business. The operating
results of the Mobile services business have been presented as
discontinued operations for all periods presented. Amounts for the
year ended December 31, 2007 include $8.6 million and $11.6 million
of payments made to employees related to the cash distribution to
shareholders in May 2007 and a similar distribution announced in
November 2007, respectively. Amounts include stock-based
compensation expense of $2.5 million and $13.5 million for the three
months and year ended December 31, 2007, respectively, and $1.1
million and $4.9 million for the three months and year ended December
31, 2006, respectively. Income taxes related to discontinued
operations were a benefit of $4.4 million and $17.7 million for the
three months and year ended December 31, 2007, respectively. Income
taxes related to discontinued operations were a benefit of $3.2
million and $14.7 million for the three months and year ended
December 31, 2006, respectively. A gain, net of taxes of $39.5
million, on the sale of the Mobile services business was recorded in
the three months and year ended December 31, 2007. Revenue,
operating expenses and income taxes, loss and the gain on sale of
these discontinued operations are presented below (in thousands):
Three months ended Year ended
------------------------- -------------------------
Mobile December 31, December 31, December 31, December 31,
2007 2006 2007 2006
---------------------------------------------------
Revenue $ 16,200 $ 47,487 $ 103,488 $ 184,834
Operating
expenses and
income taxes 25,592 53,778 135,931 213,464
------------ ------------ ------------ ------------
Loss from
discontinued
operations, net of
taxes $ (9,392) $ (6,291) $ (32,443) $ (28,630)
============ ============ ============ ============
Gain on sale of
discontinued
operations, net of
taxes $ 75,645 $ - $ 75,645 $ -
============ ============ ============ ============
2) Stock-based compensation expense for the three months and year
ended December 31, 2007 and 2006 is allocated among the following
captions (in thousands):
Three months ended Year ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
---------------------------------------------------
Systems and
network
operations $ 249 $ 341 $ 1,091 $ 1,194
Product
development 492 238 2,383 960
Sales and
marketing 3,320 399 7,948 2,400
General and
administrative 12,792 984 22,636 6,715
------------ ------------ ------------ ------------
Total stock-based
compensation
expense $ 16,853 $ 1,962 $ 34,058 $ 11,269
============ ============ ============ ============
3) For the three months and year ended December 31, 2007 operating
expenses include payments made to employees and directors related to
the cash distribution to shareholders in May 2007 and a similar
distribution announced in November 2007. This amount is allocated
among the following captions (in thousands):
Three months ended Year ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
---------------------------------------------------
Systems and
network
operations $ 466 $ - $ 668 $ -
Product
development 991 - 1,458 -
Sales and
marketing 5,179 - 6,838 -
General and
administrative 30,729 - 47,270 -
------------ ------------ ------------ ------------
Total $ 37,365 $ - $ 56,234 $ -
============ ============ ============ ============
(4) Amounts for the three months and year ended December 31, 2007
consist of gains on the sale of assets related to the mobile media
operations of $0, $0, $0 and $3.3 million, respectively, and
restructuring charges comprised of the following (in thousands):
Three months ended Year ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
---------------------------------------------------
Employee separation
costs $ 7,362 $ 2,366 $ 7,963 $ 8,687
Stock-based
compensation
expense 568 1,878 670 824
Losses on
contractual
commitments 282 50 831 5,671
Estimated future
lease losses and
impairment of
long-lived assets 9 233 126 2,608
Impairment of
goodwill - - - 31,903
Impairment of
definite-lived
intangible assets - - - 12,623
------------ ------------ ------------ ------------
$ 8,221 $ 4,527 $ 9,590 $ 62,316
============ ============ ============ ============
InfoSpace, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
December 31, December 31,
2007 2006
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 498,326 $ 162,387
Short-term investments, available-for-sale 39,019 238,444
Accounts receivable, net 17,081 13,342
Prepaid expenses and other current assets 9,006 7,911
Assets of discontinued operations 4,730 200,998
------------ ------------
Total current assets 568,162 623,082
Property and equipment, net 10,945 10,187
Long-term investments, available-for-sale 37,472 -
Goodwill and other intangible assets 44,123 44,123
Deferred tax assets, net - 81,587
Other long-term assets 10,722 6,860
------------ ------------
Total assets $ 671,424 $ 765,839
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,148 $ 8,388
Accrued expenses and other current
liabilities 78,703 29,235
Dividend payable 299,296 -
Liabilities of discontinued operations 21,753 49,017
------------ ------------
Total current liabilities 404,900 86,640
Long-term liabilities: 634 634
------------ ------------
Total liabilities 405,534 87,274
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 1,285,142 1,712,897
Accumulated deficit (1,018,739) (1,035,613)
Accumulated other comprehensive income
(loss) (516) 1,278
------------ ------------
Total stockholders' equity 265,890 678,565
------------ ------------
Total liabilities and stockholders' equity $ 671,424 $ 765,839
============ ============
Summary of cash, short-term and long-term
investments:
Cash and cash equivalents $ 498,326 $ 162,387
Short-term investments, available-for-sale 39,019 238,444
Long-term investments, available-for-sale 37,472 -
------------ ------------
Cash, short-term and long-term investments $ 574,817 $ 400,831
============ ============
InfoSpace, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Year ended
-------------------------
December 31, December 31,
2007 2006
------------ ------------
Operating activities:
Net income (loss) $ 16,874 $ (15,088)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Loss from discontinued operations 25,307 19,073
Gain on sale of discontinued operations (139,925) -
Stock-based compensation 34,058 11,269
Deferred income taxes 29,998 (13,829)
Restructuring 9,590 62,316
Depreciation 5,542 5,044
Realized loss on long-term investments 2,182 -
Excess tax benefits from stock-based
award activity (24,561) -
Net gain on sale of assets (3,409) (150)
Other (196) (28)
Cash provided (used) by changes in
operating assets and liabilities:
Accounts receivable 36,681 (7,055)
Other receivables 1,032 570
Prepaid expenses and other current
assets (454) 314
Other long-term assets (718) (1,436)
Accounts payable (15,308) 2,527
Accrued expenses and other current and
long-term liabilities 16,199 (8,035)
------------ ------------
Net cash provided (used) by operating
activities (7,108) 55,492
Investing activities:
Proceeds from the sale of discontinued
operations 359,091 -
Purchases of property and equipment (3,684) (7,355)
Proceeds from the sale of assets 2,838 -
Loan to equity investee (2,000) -
Proceeds from sales and maturities of
investments 294,381 298,288
Purchases of investments (135,354) (313,883)
------------ ------------
Net cash provided (used) by investing
activities 515,272 (22,950)
Financing activities:
Dividend paid (208,203) -
Proceeds from stock option and warrant
exercises 13,736 3,599
Proceeds from issuance of stock through
employee stock purchase plan 1,383 1,833
Excess tax benefits from stock-based
award activity 24,561 -
------------ ------------
Net cash provided (used) by financing
activities (168,523) 5,432
------------ ------------
Discontinued operations:
Net cash provided by operating
activities attributable to discontinued
operations 13,621 12,572
Net cash used by investing activities
attributable to discontinued operations (17,323) (39,839)
------------ ------------
Net cash used by discontinued operations (3,702) (27,267)
------------ ------------
Net increase in cash and cash equivalents 335,939 10,707
Cash and cash equivalents:
Beginning of period 162,387 151,680
------------ ------------
End of period $ 498,326 $ 162,387
============ ============
InfoSpace, Inc.
Reconciliations of Non-GAAP Financial Measures to the Nearest
Comparable GAAP Measure
Preliminary Adjusted EBITDA from Continuing Operations Reconciliation
(1)
(Unaudited)
(Amounts in thousands)
Three months ended Year ended
--------------------------- -------------------------
December 31, December 31, December 31, December 31,
2007 2006 2007 2006
-------------- ------------ ------------ ------------
Income (loss)
from continuing
operations (2) $ (73,684) $ 30,769 $ (97,744) $ 3,985
Depreciation 1,443 1,490 5,542 5,044
Stock-based
compensation 16,853 1,962 34,058 11,269
Loss on
investments, net 2,182 - 2,117 -
Other income, net
(3) (5,738) (5,522) (18,227) (19,581)
Income tax
expense
(benefit) 16,354 (27,248) 26,678 (29,060)
-------------- ------------ ------------ ------------
Adjusted EBITDA
from continuing
operations $ (42,590) $ 1,451 $ (47,576) $ (28,343)
============== ============ ============ ============
Preliminary Adjusted EBITDA from Continuing Operations Reconciliation
for Forward-Looking Guidance (4)
(Amounts in thousands)
Ranges for the three months
ending
March 31, 2008
---------------------------
Income from
continuing
operations $ - $ 1,400
Depreciation 1,500 1,500
Stock-based
compensation 3,000 2,800
Other income, net
(3) (2,100) (2,300)
Income tax
expense 100 100
-------------- ------------
Adjusted EBITDA
from continuing
operations $ 2,500 $ 3,500
============== ============
1) Adjusted Earnings before Interest, Taxes, Depreciation and
Amortization ("EBITDA") from continuing operations is a non-GAAP
financial measure and is reconciled to income (loss) from continuing
operations, which the Company's management believes to be the most
comparable generally accepted accounting principles ("GAAP") measure.
Adjusted EBITDA from continuing operations results are calculated by
adjusting GAAP income (loss) from continuing operations to exclude
the effects of income taxes, depreciation, stock-based compensation
expense, losses on investments, net, 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. This calculation
excludes the directory and mobile businesses, as they have been
classified as discontinued operations in all periods presented. 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 (loss) from continuing operations in
accordance with GAAP.
(2) As presented in the preliminary 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 Stacy Ybarra, 425-709-8127 stacy.ybarra@infospace.com
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