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BELLEVUE, Wash., Nov 05, 2008 (BUSINESS WIRE) -- InfoSpace, Inc. (NASDAQ:INSP) today announced financial results for the three months ended September 30, 2008.
Revenues for the third quarter of 2008 were $39.5 million, reflecting a $5.6 million or 17% increase over the third quarter of 2007.
"Our strong operating results in the third quarter were driven by growth in both our owned and operated and distribution businesses," said Jim Voelker, chairman and chief executive officer of InfoSpace, Inc. "Based on the success we've seen in driving traffic to our sites in both the second and third quarters, we will continue to invest in marketing programs for our flagship search site Dogpile.com. We are pleased with our progress and performance this year and are confident in our ability to continue this success despite the challenges in the macroeconomic environment."
Loss from continuing operations was $9.9 million in the third quarter of 2008, included in this amount is a charge of $11.0 million for unrealized losses on investments. This is compared to a loss from continuing operations of $6.6 million in the third quarter of 2007.
Adjusted EBITDA from continuing operations was $6.6 million in the third quarter of 2008, compared to Adjusted EBITDA from continuing operations of $3.1 million in the third quarter of 2007.
Net loss for the third quarter of 2008 was $9.9 million or $0.29 per share versus a net loss of $12.3 million or $0.37 per share in the third quarter of 2007. Net loss in the third quarter of 2008 includes an impairment charge of $9.0 million on the Company's investments in auction rate securities and an impairment charge of $2.1 million on an equity investment.
Cash, cash equivalents, and marketable securities as of September 30, 2008 totaled $210.4 million, which includes holdings of $18.2 million in auction rate securities.
Third Quarter Highlights and Recent Developments
InfoSpace:
-- Unveiled a new Dogpile downloadable social networking widget with Petfinder.com;
-- Signed five new search distribution partners;
-- Launched Web portal that supports new third-party content and includes its unique metasearch technology with Windstream Communications and Verizon;
-- Deployed DNS Error Assist product with two new partners; and
-- Strengthened its management team with new Vice President, Corporate Development and Chief Strategy Officer, Stuart West. Mr. West will oversee InfoSpace's corporate strategy and M&A activities.
Fourth Quarter Outlook
For the fourth quarter of 2008, the Company expects revenue to be between $34 million and $36 million. Additionally, the Company expects net loss to be between $2.0 million and $1.0 million, or $0.06 and $0.03 per share and Adjusted EBITDA from continuing operations to be between $2.0 million and $3.0 million.
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 November 12, 2008 at 9:00 p.m. Pacific/ 12:00 a.m. Eastern.
Non-GAAP Financial Measures
InfoSpace's Adjusted EBITDA from continuing operations is calculated by adjusting GAAP net loss to exclude the effects of discontinued operations, income taxes, depreciation, stock-based compensation expense, gain (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 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 loss in accordance with GAAP accompanies the preliminary condensed consolidated financial statements in this release.
About InfoSpace, Inc.
InfoSpace, Inc., a leading developer of metasearch products, is focused on bringing the best of the Web to Internet users. InfoSpace's proprietary metasearch technology combines the top results fromseveral of the largest onlinesearch engines, providing fast and comprehensivesearch resultson InfoSpace sites including Dogpile (www.dogpile.com) and WebFetch (www.webfetch.com). Forthe second consecutive year, JD Power and Associates ranked Dogpile highest in customer satisfaction among search engines. InfoSpace's metasearch technology is also available on more than 100 partner sites, including content, community and connectivity sites. 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 expectation that we will continue to invest in a new marketing program for our flagship search site Dogpile.com; our belief that we will achieve future success despite the challenges in the macroeconomic environment; our expectation that we will place a strong emphasis on our downloadable applications strategy; our belief that we are positioned well for future growth and profitability; and our expectations regarding our financial performance and results of operations for the fourth 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; the successful execution of the Company's strategic initiatives, marketing strategies, and restructuring plans; and the condition of our cash investments. 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 our 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 Nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2007 2008 2007
Revenues $ 39,469 $ 33,852 $ 119,979 $ 101,479
Operating expenses: (2)
Content and distribution 18,265 15,274 58,119 42,819
Systems and network operations 3,238 2,295 8,454 6,980
Product development 2,757 2,086 7,895 6,849
Sales and marketing 6,882 5,518 16,712 17,008
General and administrative 5,940 12,694 18,622 51,893
Depreciation 2,160 1,443 5,378 4,099
Restructuring and other, net(3) (9 ) 623 (1,880 ) (1,879 )
Total operating expenses 39,233 39,933 113,300 127,769
Operating income (loss) 236 (6,081 ) 6,679 (26,290 )
Gain (loss) on investments, net (4) (11,046 ) - (22,115 ) 65
Other income, net 1,458 2,804 6,355 12,489
Loss from continuing operations before income taxes (9,352 ) (3,277 ) (9,081 ) (13,736 )
Income tax expense (548 ) (3,355 ) (153 ) (10,324 )
Loss from continuing operations (9,900 ) (6,632 ) (9,234 ) (24,060 )
Discontinued operations:(1)
Loss from discontinued operations, net of taxes (12 ) (5,625 ) (1,323 ) (16,867 )
Loss on sale of discontinued operations, net of taxes (13 ) - (208 ) -
Net loss $ (9,925 ) $ (12,257 ) $ (10,765 ) $ (40,927 )
Loss per share - Basic and diluted
Loss from continuing operations $ (0.29 ) $ (0.20 ) $ (0.27 ) $ (0.74 )
Loss from discontinued operations (0.00 ) (0.17 ) (0.04 ) (0.52 )
Loss on sale of discontinued operations (0.00 ) - (0.00 ) -
Net loss per share - Basic and diluted $ (0.29 ) $ (0.37 ) $ (0.31 ) $ (1.26 )
Weighted average shares outstanding used in computing basic and 34,479 33,158 34,371 32,421
diluted loss per share
(1)In 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 include stock-based compensation expense of $0
and $52,000 for the three and nine months ended September 30,
2008, respectively, and $0.3 million and $1.2 million for the
three and nine months ended September 30, 2007,
respectively.Income tax expense related to discontinued
operations was $72,000 and $76,000 for the three and nine months
ended September 30, 2008, respectively, and $0.7 million and $3.8
million for the three and nine months ended September 30, 2007,
respectively. A loss, net of a tax benefit of $25,000 and a
gain, including a tax benefit of $26,000, was recorded on the sale
of the directory business in the three and nine months ended
September 30, 2008, respectively.Revenue, operating expenses and
income taxes, income (loss) and the gain (loss) on sale of these
discontinued operations are presented below (in thousands):
Three months ended Nine months ended
Directory Sept. 30, 2008 Sept. 30, 2007 Sept. 30, 2008 Sept. 30, 2007
Revenue $ - $ 8,740 $ - $ 25,894
Operating expenses and income taxes 72 7,359 (128 ) 19,710
Income (loss) from discontinued operations, net of taxes $ (72 ) $ 1,381 $ 128 $ 6,184
Gain (loss) on sale of discontinued operations, net of taxes $ (18 ) $ - $ 48 $ -
In 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 include stock-based compensation expense of $0
and $89,000 for the three and nine months ended September 30,
2008, respectively, and $5.3 million and $10.9 million for the
three and nine months ended September 30, 2007,
respectively.Income taxes related to discontinued operations
were a benefit of $0.7 million and $0.6 million for the three and
nine months ended September 30, 2008, respectively, and a benefit
of $4.0 million and $13.3 million for the three and nine months
ended September 30, 2007, respectively.A gain, net of taxes of
$0.2 million and a loss, including a tax expense of $0.4 million,
on the sale of the mobile services business was recorded in the
three and nine months ended September 30, 2008,
respectively.Revenue, operating expenses and income taxes,
income (loss) and the gain (loss) on sale of these discontinued
operations are presented below (in thousands):
Three months ended Nine months ended
Mobile Sept. 30, 2008 Sept. 30, 2007 Sept. 30, 2008 Sept. 30, 2007
Revenue $ 45 $ 14,896 $ 125 $ 87,288
Operating expenses and income taxes (15 ) 21,902 1,576 110,339
Income (loss) from discontinued operations, net of taxes $ 60 $ (7,006 ) $ (1,451 ) $ (23,051 )
Gain (loss) on sale of discontinued operations, net of taxes $ 5 $ - $ (256 ) $ -
(2) Stock-based compensation expense for the three and nine months
ended September 30, 2008 and 2007 is allocated among the following
captions (in thousands):
Three months ended Nine months ended
Sept. 30, 2008 Sept. 30, 2007 Sept. 30, 2008 Sept. 30, 2007
Systems and network operations $ 494 $ 377 $ 1,307 $ 842
Product development 1,080 706 2,720 1,891
Sales and marketing 1,074 1,926 2,965 4,628
General and administrative 1,535 4,710 4,392 9,844
Total stock-based compensation expense $ 4,183 $ 7,719 $ 11,384 $ 17,205
(3) Amounts for the three and nine months ended September 30, 2008
consist of gains on the sale of certain non-core assets of $0 and
$1.9 million, respectively, and amounts for the three and nine
months ended September 30, 2007 consist of a loss of $65,000 and a
gain of $3.2 million on the sale of certain non-core assets,
respectively.Restructuring charges are comprised of the
following (in thousands):
Three months ended Nine months ended
Sept. 30, 2008 Sept. 30, 2007 Sept. 30, 2008 Sept. 30, 2007
Employee separation $ (2 ) $ 240 $ 52 $ 601
Stock-based compensation expense - 170 60 102
Contractual commitments - 76 (88 ) 549
Estimated future lease losses (7 ) - (7 ) (84 )
Other - 72 - 201
$ (9 ) $ 558 $ 17 $ 1,369
(4) In the three and nine months ended September 30, 2008, the
Company recorded other-than-temporary impairment charges relating
to the auction rate securities investments that it holds of $9.0
million and $20.0 million, respectively.In the three and nine
months ended September 30, 2008, the Company recorded a charge of
$2.1 million to write down the carrying value of certain equity
investments.No impairment charges related to investments were
recorded in the three and nine months ended September 30, 2007.
InfoSpace, Inc.
Preliminary Condensed Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands)
September 30, December 31,
2008 2007
ASSETS
Current assets:
Cash and cash equivalents $ 179,235 $ 498,326
Short-term investments, available-for-sale 12,961 39,019
Accounts receivable, net 14,985 17,081
Notes and other receivables 761 7,104
Prepaid expenses and other current assets 2,047 1,902
Assets of discontinued operations - 4,730
Total current assets 209,989 568,162
Property and equipment, net 20,118 10,945
Long-term investments, available-for-sale 18,227 37,472
Goodwill and other intangible assets, net 44,123 44,123
Other long-term assets 6,353 10,722
Total assets $ 298,810 $ 671,424
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,393 $ 5,148
Accrued expenses and other current liabilities 21,337 78,543
Special dividend payable - 299,296
Liabilities of discontinued operations 3,052 21,753
Total current liabilities 30,782 404,740
Other long-term liabilities 1,548 634
Total liabilities 32,330 405,374
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 1,289,743 1,279,225
Accumulated deficit (1,024,645 ) (1,013,880 )
Accumulated other comprehensive income 1,379 702
Total stockholders' equity 266,480 266,050
Total liabilities and stockholders' equity $ 298,810 $ 671,424
Summary of cash, short-term and long-term investments:
Cash and cash equivalents $ 179,235 $ 498,326
Short-term investments, available-for-sale 12,961 39,019
Long-term investments, available-for-sale 18,227 37,472
Cash, short-term and long-term investments $ 210,423 $ 574,817
InfoSpace, Inc.
Preliminary Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Nine months ended
September 30, September 30,
2008 2007
Operating activities:
Net loss $ (10,765 ) $ (40,927 )
Adjustments to reconcile net loss to net cash used by operating
activities:
Loss from discontinued operations 1,323 16,867
Loss on sale of discontinued operations 208 -
Loss on investments 22,115 -
Stock-based compensation 11,384 17,205
Depreciation 5,378 4,099
Deferred income taxes (1,423 ) 618
Net gain on sale of non-core assets (1,897 ) (3,248 )
Restructuring 17 1,369
Other 17 (113 )
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable 2,025 (2,208 )
Notes and other receivables 5,927 1,231
Prepaid expenses and other current assets (145 ) 996
Other long-term assets 3,278 302
Accounts payable (464 ) (3,825 )
Accrued expenses and other current and long-term liabilities (58,554 ) (7,040 )
Net cash used by operating activities (21,576 ) (14,674 )
Investing activities:
Purchases of property and equipment (10,672 ) (4,294 )
Other long-term assets (1,003 ) -
Loan to equity investee - (2,000 )
Proceeds from the sale of assets 2,313 2,884
Proceeds from sales and maturities of investments 43,980 265,199
Purchases of investments (17,984 ) (127,834 )
Net cash provided by investing activities 16,634 133,955
Financing activities:
Special dividend paid (299,146 ) (208,203 )
Proceeds from stock option and warrant exercises 16 12,833
Proceeds from issuance of stock through employee stock purchase plan 438 1,381
Repayment of capital lease obligations (96 ) -
Net cash used by financing activities (298,788 ) (193,989 )
Discontinued operations:
Net cash provided (used) by operating activities attributable to (15,361 ) 39,322
discontinued operations
Net cash used by investing activities attributable to discontinued - (13,568 )
operations
Net cash provided (used) by discontinued operations (15,361 ) 25,754
Net decrease in cash and cash equivalents (319,091 ) (48,954 )
Cash and cash equivalents:
Beginning of period 498,326 162,387
End of period $ 179,235 $ 113,433
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 Nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2008 2007 2008 2007
Net loss (2) $ (9,925 ) $ (12,257 ) $ (10,765 ) $ (40,927 )
Discontinued operations 25 5,625 1,531 16,867
Depreciation 2,160 1,443 5,378 4,099
Stock-based compensation 4,183 7,719 11,384 17,205
Loss (gain) on investments, net 11,046 - 22,115 (65 )
Other income, net (3) (1,458 ) (2,804 ) (6,355 ) (12,489 )
Income tax expense 548 3,355 153 10,324
Adjusted EBITDA from continuing operations $ 6,579 $ 3,081 $ 23,441 $ (4,986 )
Preliminary Adjusted EBITDA from Continuing Operations
Reconciliation for Forward-Looking Guidance
(Amounts in thousands)
Ranges for the three months ending
December 31, 2008
Net loss $ (2,000 ) $ (1,000 )
Discontinued operations - -
Depreciation 2,000 2,000
Stock-based compensation 3,500 3,500
Loss on investments, net - -
Other income, net (3) (1,500 ) (1,500 )
Income tax expense - -
Adjusted EBITDA from continuing operations $ 2,000 $ 3,000
(1) Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") from continuing operations is a non-GAAP financial measure and is reconciled to net loss, 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 net loss to exclude the effects of discontinued operations, income taxes, depreciation, stock-based compensation expense, gain (loss) 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. 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, net loss 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, Inc. Stacy Ybarra, 425-709-8127 stacy.ybarra@infospace.com
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