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BELLEVUE, Wash., Feb 11, 2009 (BUSINESS WIRE) -- InfoSpace, Inc. (NASDAQ:INSP) today announced financial results for the fourth quarter and full year ended December 31, 2008.
"InfoSpace is pleased to report fourth quarter results that exceeded our expectations for revenue and Adjusted EBITDA, and finished a year of strong financial performance," said Will Lansing, president and chief executive officer of InfoSpace. "In 2008, the company grew top line revenue and generated strong Adjusted EBITDA margins while investing in exciting product and marketing initiatives."
Revenues for the fourth quarter of 2008 were $36.7 million, a 6% decrease from the fourth quarter of 2007. Revenues for the year were $156.7 million in 2008, reflecting a $16.2 million, or 12%, increase over 2007.
Loss from continuing operations in the fourth quarter of 2008 was $7.2 million, including a charge of $6.4 million for unrealized losses on investments. This compares to loss from continuing operations for the fourth quarter of 2007 of $60.4 million, which included $61.6 million of employee expenses related to a special dividend, restructuring charges and income tax expense primarily related to placing a full valuation allowance on the deferred tax asset. For the year, loss from continuing operations was $16.5 million in 2008, compared with $84.5 million in 2007.
Adjusted EBITDA from continuing operations was $3.7 million for the fourth quarter of 2008, compared to Adjusted EBITDA from continuing operations of negative $42.6 million for the fourth quarter of 2007. Adjusted EBITDA for the fourth quarter of 2007 included $45.6 million of employee expenses related to a special dividend and restructuring charges. For the year, Adjusted EBITDA from continuing operations was $27.1 million in 2008, compared to negative $47.6 million in 2007.
Net loss for the fourth quarter of 2008 was $7.9 million, or $0.23 per share, compared to net income of $62.7 million, or $1.88 per share, for the fourth quarter of 2007. Net loss for the fourth quarter of 2008 included a charge of $6.4 million for unrealized losses on investments. Net income for the fourth quarter of 2007 included a $131.5 million gain on the sale of discontinued operations, partially offset by $45.6 million of employee expenses related to a special dividend and restructuring charges and $16.0 million of income tax expense primarily from placing a full valuation allowance on the deferred tax asset. Net loss for the year was $18.7 million, or $0.54 per share, in 2008, compared to net income of $21.7 million, or $0.67 per share, in 2007.
Cash, cash equivalents, and marketable securities as of December 31, 2008 totaled $205.4 million, including $13.9 million of auction rate securities. At the end of the year, the Company had no debt obligations.
Fourth Quarter 2008 Highlights
In the fourth quarter of 2008, InfoSpace:
First Quarter 2009 Outlook
For the first quarter of 2009, the Company expects revenue to be between $38 million and $40 million. The Company expects Adjusted EBITDA to be between $2.5 million and $3.5 million, and net loss to be between $1.5 million and $0.5 million, or $0.04 and $0.01 cents per share.
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 9 p.m. Pacific on February 18, 2009, and 12:00 a.m. Eastern on February 19, 2009.
Use of Non-GAAP Financial Measures
InfoSpace's Adjusted EBITDA from continuing operations is calculated by adjusting GAAP net income (loss) to exclude the effects of discontinued operations, 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 unaudited 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 its 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 income (loss) in accordance with GAAP accompanies the preliminary unaudited 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 from several of the largest online search engines, providing fast and comprehensive search results on InfoSpace sites including Dogpile (www.dogpile.com) and WebFetch (www.webfetch.com). InfoSpace's metasearch technology is also available on nearly 100 partner sites, including content, community and connectivity sites. More information may 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 expectations for our final results for the fourth quarter and year ended December 31, 2008, and statements regarding our expectations for our financial performance and results of operations for the first quarter of 2009.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: the completion of the audit our financial statements for the fourth quarter and year ended December 31, 2008; 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 | Year ended | ||||||||||||||
| December 31, | December 31, | December 31, | December 31, | ||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||||
| Revenues | $ | 36,748 | $ | 39,058 | $ | 156,727 | $ | 140,537 | |||||||
| Operating expenses: (2) | |||||||||||||||
| Content and distribution | 17,850 | 18,946 | 75,969 | 61,765 | |||||||||||
| Systems and network operations | 3,083 | 2,820 | 11,537 | 9,800 | |||||||||||
| Product development | 2,036 | 3,072 | 9,931 | 9,921 | |||||||||||
| Sales and marketing | 7,549 | 12,251 | 24,261 | 29,259 | |||||||||||
| General and administrative | 5,457 | 53,190 | 24,079 | 105,083 | |||||||||||
| Depreciation | 1,957 | 1,443 | 7,335 | 5,542 | |||||||||||
| Restructuring(3) | - | 8,221 | 17 | 9,590 | |||||||||||
| Other, net | - | - | (1,897 | ) | (3,248 | ) | |||||||||
| Total operating expenses | 37,932 | 99,943 | 151,232 | 227,712 | |||||||||||
| Operating income (loss) | (1,184 | ) | (60,885 | ) | 5,495 | (87,175 | ) | ||||||||
| Loss on investments, net (4) | (6,405 | ) | (2,182 | ) | (28,520 | ) | (2,117 | ) | |||||||
| Other income, net | 794 | 5,737 | 7,149 | 18,226 | |||||||||||
Loss from continuing operations before income taxes | (6,795 | ) | (57,330 | ) | (15,876 | ) | (71,066 | ) | |||||||
| Income tax expense | (445 | ) | (3,085 | ) | (598 | ) | (13,409 | ) | |||||||
| Loss from continuing operations | (7,240 | ) | (60,415 | ) | (16,474 | ) | (84,475 | ) | |||||||
| Discontinued operations:(1) | |||||||||||||||
| Loss from discontinued operations, net of taxes | (132 | ) | (8,379 | ) | (1,455 | ) | (25,246 | ) | |||||||
| Gain (loss) on sale of discontinued operations, net of taxes | (562 | ) | 131,454 | (770 | ) | 131,454 | |||||||||
| Net income (loss) | $ | (7,934 | ) | $ | 62,660 | $ | (18,699 | ) | $ | 21,733 | |||||
| Earnings (loss) per share - Basic and diluted | |||||||||||||||
| Loss from continuing operations | $ | (0.21 | ) | $ | (1.82 | ) | $ | (0.48 | ) | $ | (2.59 | ) | |||
| Loss from discontinued operations | 0.00 | (0.25 | ) | (0.04 | ) | (0.77 | ) | ||||||||
| Gain (loss) on sale of discontinued operations | (0.02 | ) | 3.95 | (0.02 | ) | 4.03 | |||||||||
| Net income (loss) per share - Basic and diluted | $ | (0.23 | ) | $ | 1.88 | $ | (0.54 | ) | $ | 0.67 | |||||
Weighted average shares outstanding used in computing basic and diluted income (loss) per share
| 34,548 | 33,291 | 34,415 | 32,640 | |||||||||||
(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 months and year ended December 31, 2008, respectively, and $0.4 million and $1.6 million for the three months and year ended December 31, 2007, respectively. Income tax expense related to discontinued operations was $0 and $76,000 for the three months and year ended December 31, 2008, respectively, and $0.4 million and $4.2 million for the three months and year ended December 31, 2007, respectively. A gain, including a tax benefit of $26,000, was recorded on the sale of the directory business in the year ended December 31, 2008. A gain, net of a tax expense of $79.2 million, was recorded on the sale of the directory business 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, 2008 | December 31, 2007 | December 31, 2008 | December 31, 2007 | |||||||||||
| Revenue | $ | - | $ | 2,988 | $ | - | $ | 28,882 | |||||||
| Operating expenses and income taxes | - | 2,036 | (128 | ) | 21,746 | ||||||||||
| Income from discontinued operations, net of taxes | $ | - | $ | 952 | $ | 128 | $ | 7,136 | |||||||
| Gain on sale of discontinued operations, net of taxes | $ | - | $ | 57,272 | $ | 48 | $ | 57,272 | |||||||
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 months and year ended December 31, 2008, respectively, and $2.5 million and $13.5 million for the three months and year ended December 31, 2007, respectively. Income taxes related to discontinued operations were an expense of $97,000 and a benefit of $0.5 million for the three months and year ended December 31, 2008, respectively, and a benefit of $4.4 million and $17.7 million for the three months and year ended December 31, 2007, respectively. A loss, net of a tax benefit of $0.4 million and $0.8 million, on the sale of the mobile services business was recorded in the three months and year ended December 31, 2008, respectively. A gain, net of a tax expense of $38.7 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 (loss) on sale of these discontinued operations are presented below (in thousands): | |||||||||||||||
| Three months ended | Year ended | ||||||||||||||
| Mobile | December 31, 2008 | December 31, 2007 | December 31, 2008 | December 31, 2007 | |||||||||||
| Revenue | $ | 2 | $ | 16,200 | $ | 127 | $ | 103,488 | |||||||
| Operating expenses and income taxes | 134 | 25,531 | 1,710 | 135,870 | |||||||||||
| Loss from discontinued operations, net of taxes | $ | (132 | ) | $ | (9,331 | ) | $ | (1,583 | ) | $ | (32,382 | ) | |||
| Gain (loss) on sale of discontinued operations, net of taxes | $ | (562 | ) | $ | 74,182 | $ | (818 | ) | $ | 74,182 | |||||
(2) Stock-based compensation expense for the three months and year ended December 31, 2008 and 2007 is allocated among the following captions (in thousands): | |||||||||||||||
| Three months ended | Year ended | ||||||||||||||
December 31, 2008 | December 31, 2007 | December 31, 2008 | December 31, 2007 | ||||||||||||
| Systems and network operations | $ | 356 | $ | 249 | $ | 1,663 | $ | 1,091 | |||||||
| Product development | 564 | 492 | 3,284 | 2,383 | |||||||||||
| Sales and marketing | 586 | 3,320 | 3,551 | 7,948 | |||||||||||
| General and administrative | 1,414 | 12,792 | 5,806 | 22,636 | |||||||||||
| Total stock-based compensation expense | $ | 2,920 | $ | 16,853 | $ | 14,304 | $ | 34,058 | |||||||
(3) Restructuring charges are comprised of the following (in thousands): | |||||||||||||||
| Three months ended | Year ended | ||||||||||||||
December 31, 2008 | December 31, 2007 | December 31, 2008 | December 31, 2007 | ||||||||||||
| Employee separation | $ | - | $ | 7,362 | $ | 52 | $ | 7,963 | |||||||
| Stock-based compensation expense | - | 568 | 60 | 670 | |||||||||||
| Contractual commitments | - | 282 | (88 | ) | 831 | ||||||||||
| Estimated future lease losses | - | - | (7 | ) | (84 | ) | |||||||||
| Other | - | 9 | - | 210 | |||||||||||
| $ | - | $ | 8,221 | $ | 17 | $ | 9,590 | ||||||||
(4) In the three months and year ended December 31, 2008, the Company recorded other-than-temporary impairment charges relating to the auction rate securities investments that it holds of $4.3 million and $24.3 million, respectively. In the three months and year ended December 31, 2008, the Company recorded a charge of $2.1 million and $4.2 million to write down the carrying value of certain equity investments. In the three months and year ended December 31, 2007, the Company recorded other-than-temporary impairment charges relating to auction rate securities investments that it holds of $2.2 million. | |||||||||||||||
| InfoSpace, Inc. | |||||||
| Preliminary Condensed Consolidated Balance Sheets | |||||||
| (Unaudited) | |||||||
| (Amounts in thousands) | |||||||
| December 31, | December 31, | ||||||
| 2008 | 2007 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 49,936 | $ | 498,326 | |||
| Short-term investments, available-for-sale | 141,592 | 39,019 | |||||
| Accounts receivable, net | 15,423 | 17,081 | |||||
| Notes and other receivables | 1,349 | 7,104 | |||||
| Prepaid expenses and other current assets | 1,767 | 1,902 | |||||
| Assets of discontinued operations | - | 4,730 | |||||
| Total current assets | 210,067 | 568,162 | |||||
| Property and equipment, net | 18,078 | 10,945 | |||||
| Long-term investments, available-for-sale | 13,916 | 37,472 | |||||
| Goodwill and other intangible assets, net | 44,123 | 44,123 | |||||
| Other long-term assets | 4,949 | 10,722 | |||||
| Total assets | $ | 291,133 | $ | 671,424 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 6,518 | $ | 5,148 | |||
| Accrued expenses and other current liabilities | 19,707 | 78,543 | |||||
| Special dividend payable | - | 299,296 | |||||
| Liabilities of discontinued operations | 1,109 | 21,753 | |||||
| Total current liabilities | 27,334 | 404,740 | |||||
| Other long-term liabilities | 1,475 | 634 | |||||
| Total liabilities | 28,809 | 405,374 | |||||
| Stockholders' equity: | |||||||
| Common stock | 3 | 3 | |||||
| Additional paid-in capital | 1,292,360 | 1,279,225 | |||||
| Accumulated deficit | (1,032,579 | ) | (1,013,880 | ) | |||
| Accumulated other comprehensive income | 2,540 | 702 | |||||
| Total stockholders' equity | 262,324 | 266,050 | |||||
| Total liabilities and stockholders' equity | $ | 291,133 | $ | 671,424 | |||
| Summary of cash, short-term and long-term investments: | |||||||
| Cash and cash equivalents | $ | 49,936 | $ | 498,326 | |||
| Short-term investments, available-for-sale | 141,592 | 39,019 | |||||
| Long-term investments, available-for-sale | 13,916 | 37,472 | |||||
| Cash, short-term and long-term investments | $ | 205,444 | $ | 574,817 | |||
| InfoSpace, Inc. | |||||||
| Preliminary Condensed Consolidated Statements of Cash Flows | |||||||
| (Unaudited) | |||||||
| (Amounts in thousands) | |||||||
| Year ended | |||||||
| December 31, | December 31, | ||||||
| 2008 | 2007 | ||||||
| Operating activities: | |||||||
| Net income (loss) | $ | (18,699 | ) | $ | 21,733 | ||
| Adjustments to reconcile net income (loss) to net cash used by operating activities: | |||||||
| Loss from discontinued operations | 1,455 | 25,246 | |||||
| Loss (gain) on sale of discontinued operations | 770 | (131,454 | ) | ||||
| Loss on investments, net | 28,520 | 2,182 | |||||
| Stock-based compensation | 14,304 | 34,058 | |||||
| Depreciation | 7,335 | 5,542 | |||||
| Deferred income taxes | (1,029 | ) | 12,816 | ||||
| Net gain on sale of assets | (1,897 | ) | (3,409 | ) | |||
| Restructuring | 17 | 9,590 | |||||
| Excess tax benefits from stock-based award activity | - | (23,700 | ) | ||||
| Other | 540 | (196 | ) | ||||
| Cash provided (used) by changes in operating assets and liabilities: | |||||||
| Accounts receivable | 1,643 | (3,657 | ) | ||||
| Notes and other receivables | 5,228 | (3,941 | ) | ||||
| Prepaid expenses and other current assets | 135 | 1,499 | |||||
| Other long-term assets | 1,784 | (1,862 | ) | ||||
| Accounts payable | 614 | (5,445 | ) | ||||
| Accrued expenses and other current and long-term liabilities | (60,902 | ) | 33,722 | ||||
| Net cash used by operating activities | (20,182 | ) | (27,276 | ) | |||
| Investing activities: | |||||||
| Purchases of property and equipment | (12,277 | ) | (3,684 | ) | |||
| Other long-term assets | (199 | ) | - | ||||
| Loan to equity investee | - | (2,000 | ) | ||||
| Proceeds from the sale of assets | 2,550 | 2,838 | |||||
| Proceeds from sales and maturities of investments | 43,980 | 294,381 | |||||
| Purchases of investments | (145,338 | ) | (135,354 | ) | |||
| Net cash provided (used) by investing activities | (111,284 | ) | 156,181 | ||||
| Financing activities: | |||||||
| Special dividend paid | (299,146 | ) | (208,203 | ) | |||
| Proceeds from stock option and warrant exercises | 16 | 13,736 | |||||
| Proceeds from issuance of stock through employee stock purchase plan | 437 | 1,382 | |||||
| Excess tax benefits from stock-based award activity | - | 23,700 | |||||
| Repayment of capital lease obligations | (233 | ) | - | ||||
| Net cash used by financing activities | (298,926 | ) | (169,385 | ) | |||
| Discontinued operations: | |||||||
| Net cash provided (used) by operating activities attributable to discontinued operations | (17,998 | ) | 33,820 | ||||
| Net cash provided by investing activities attributable to discontinued operations | - | 342,599 | |||||
| Net cash provided (used) by discontinued operations | (17,998 | ) | 376,419 | ||||
| Net increase (decrease) in cash and cash equivalents | (448,390 | ) | 335,939 | ||||
| Cash and cash equivalents: | |||||||
| Beginning of period | 498,326 | 162,387 | |||||
| End of period | $ | 49,936 | $ | 498,326 | |||
| 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, | ||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||||
| Net income (loss) (2) | $ | (7,934 | ) | $ | 62,660 | $ | (18,699 | ) | $ | 21,733 | |||||
| Discontinued operations | 694 | (123,075 | ) | 2,225 | (106,208 | ) | |||||||||
| Depreciation | 1,957 | 1,443 | 7,335 | 5,542 | |||||||||||
| Stock-based compensation | 2,920 | 16,853 | 14,304 | 34,058 | |||||||||||
| Loss on investments, net | 6,405 | 2,182 | 28,520 | 2,117 | |||||||||||
| Other income, net (3) | (794 | ) | (5,737 | ) | (7,149 | ) | (18,226 | ) | |||||||
| Income tax expense | 445 | 3,085 | 598 | 13,409 | |||||||||||
| Adjusted EBITDA from continuing operations | $ | 3,693 | $ | (42,589 | ) | $ | 27,134 | $ | (47,575 | ) | |||||
| Preliminary Adjusted EBITDA from Continuing Operations Reconciliation for Forward-Looking Guidance | |||||||||||||||
| (Amounts in thousands) | |||||||||||||||
| Ranges for the three months ending | |||||||||||||||
| March 31, 2009 | |||||||||||||||
| Net loss | $ | (1,500 | ) | $ | (500 | ) | |||||||||
| Discontinued operations | - | - | |||||||||||||
| Depreciation | 1,900 | 1,900 | |||||||||||||
| Stock-based compensation | 3,100 | 3,100 | |||||||||||||
| Loss on investments | - | - | |||||||||||||
| Other income, net (3) | (1,100 | ) | (1,100 | ) | |||||||||||
| 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 net income (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 income (loss) to exclude the effects of discontinued operations, income taxes, depreciation, stock-based compensation expense, 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 income (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
Investor Contact:
Karin G. Van Vleet, 425-709-8325
karin.vanvleet@infospace.com
or
Media Contact:
Melanie Apostol, 425-709-8315
melanie.apostol@infospace.com
Copyright Business Wire 2009
