InfoSpace Reports Record Third Quarter Results
Pro Forma Net Income of $0.03 Per Share and Revenues of $57.7 Million
Significantly Exceeded Expectations
BELLEVUE, Wash., Oct. 25 /PRNewswire/ -- InfoSpace (Nasdaq: INSP), a leading global provider of cross-platform merchant and consumer infrastructure services on wireless, broadband, and narrowband platforms, today announced operating results for the quarter ended September 30, 2000. Financial results reflect the Go2Net merger that closed on October 12, 2000, which was accounted for as a pooling of interests.
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Financial highlights for the quarter:
-- Revenues grew to $57.7 million, an increase of 189% over the year-ago
period
-- Pro forma net profits increased to approximately $9.5 million
-- Generated positive cash flow from operations
-- Committed revenue backlog increased to more than $130 million for the
next four quarters
-- Strong balance sheet, with more than $425 million in cash, cash
equivalents and commercial paper, an additional $145 million in equity
securities, with no short- or long-term debt
Revenues for the quarter ended September 30, 2000 were $57,695,129, representing an increase of 189% from the comparable quarter for the previous year. Gross margins as a percentage of revenue increased to 82% for the quarter ended September 30, 2000, as compared to 81% for the comparable period of the previous year. For the quarter, the company reported pro forma net income of $9,474,372, or $0.03 per share. This compares to pro forma net income of $2,965,987 or $.01 per share, for the comparable quarter of the previous year.
"This was an excellent quarter for InfoSpace, as we continued to build upon our market leadership in the globally-expanding wireless sector," said Arun Sarin, InfoSpace CEO. "InfoSpace is better positioned than ever to leverage four parallel areas with massive promise: Wireless, merchant, broadband, and wireline consumer services. As the industry's first true cross-platform infrastructure technology and services provider, we're also very pleased to have completed our integration with Go2Net, strengthening InfoSpace's core infrastructure technologies and services assets, while adding considerable depth to our management team."
"During the recently completed quarter, we made significant progress across all of our key operating metrics," added Russell C. Horowitz, InfoSpace president. "We're pleased to report significantly increasing pro forma operating profits, with a diversified and growing base of revenues contributing to our profile. As InfoSpace continues to aggressively expand to leverage the many opportunities in front of us, we will maintain high standards of fiscal discipline, to ensure that all of our activities are contributing to the success of our business and to the creation of sustainable shareholder value."
During the quarter, InfoSpace launched or announced strategic alliances to provide its wireless technology platform and integrated suite of services to many of the industry's best-known national and global brands, including Verizon, ALLTEL, Cingular Wireless (and all of its affiliates nationwide, including Pacific Bell Wireless, Nevada Bell Wireless, Ameritech, Cellular One, Southwestern Bell and SNET), and Virgin Mobile, expanding InfoSpace's global wireless network to include more than 20 of the world's leading carriers.
In wireline consumer services, InfoSpace's reach has grown to more than 92 percent of Internet users through the company's affiliate network, which extends to more than 3,200 Web sites, including AOL, Microsoft, Lycos, Disney's GO Network, and NBC's Snap. Meanwhile, in merchant services, InfoSpace's commerce platforms enabled more than $340 million in merchant transactions during the quarter, and the company expanded its network of member merchants to approximately 1.9 million.
About InfoSpace, Inc.
InfoSpace is a leading global provider of cross-platform merchant and consumer infrastructure services on wireless, broadband, and narrowband platforms. The company provides commerce, information, and communication infrastructure services to wireless devices, merchants, and Web sites. InfoSpace's affiliates encompass a global network of wireless, PC, and non-PC devices, including cellular phones, pagers, screen telephones, television set-top boxes, online kiosks and personal digital assistants. These include relationships with AT&T Wireless, Intel, Ericsson, Nokia, Mitsui, Acer America, Hasbro, National Discount Brokers, and Bloomberg LLC. InfoSpace's affiliate network also consists of more 3,200 Web sites that include AOL, Microsoft, Disney's GO Network, NBC's Snap, Lycos, DoubleClick and ABC LocalNet, among others. InfoSpace is also positioned to tap the market for broadband wired (DSL and cable) and broadband wireless (2.5G and 3G) services, such as interactive gaming, television and other entertainment services. In addition, the company recently added full back end payment processing to InfoSpace's existing commerce services, allowing InfoSpace to offer everything a merchant needs to conduct the entire lifecycle of a transaction, one of the key drivers of mobile commerce adoption.
This release contains forward-looking statements relating to the development of the company's products and services and future 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. 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 the Company's actual results include the progress and costs of the development of our products and services and the timing of market acceptance of those products and services. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in InfoSpace's Annual Report on Form 10-K, in the section entitled "Factors Affecting InfoSpace's Operating Results, Business Prospects and Market Price of Stock 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.
Pro Forma Consolidated Statements of Operations (A)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
Revenues $57,695,129 $19,946,365 $142,788,889 $42,188,368
Cost of
revenues 10,356,077 3,785,470 24,562,780 8,826,423
Gross profit 47,339,052 16,160,895 118,226,109 33,361,945
Operating
expenses:
Product
development 10,039,061 3,734,738 24,047,149 10,240,882
Sales, general
and
administrative 34,278,149 17,180,557 86,079,717 41,368,812
Total
operating
expenses 44,317,210 20,915,295 110,126,866 51,609,694
Income (loss)
from
operations 3,021,842 (4,754,400) 8,099,243 (18,247,749)
Other income,
net 5,574,069 6,986,992 20,007,450 14,647,661
Income tax
benefit
(expense) 878,461 733,395 (933,728) 714,862
Cumulative
effect of
change in
accounting
principle -- -- (719,216) --
Pro forma
income (loss) $9,474,372 $2,965,987 $26,453,749 $(2,885,226)
Pro forma
basic income
(loss) per
share $0.03 $0.01 $0.09 $(0.01)
Pro forma
diluted
income (loss)
per share $0.03 $0.01 $0.08 $(0.01)
Shares used in
computing pro
forma basic
income (loss)
per share 291,335,813 253,640,130 283,914,204 242,157,208
Shares used in
computing pro
forma diluted
income (loss)
per share 341,417,327 316,042,916 341,189,817 297,095,051
(1) Pro forma results exclude non-cash charges, non-recurring charges and items unrelated to the Company's core operations. This financial statement excludes amortization of intangibles, acquisition-related expenses, other non-recurring charges, restructuring charges, preferred stock dividend, realized gains/losses on investments in the Venture Capital Fund and minority interest in the VC fund, which are summarized in the following table. This financial statement also excludes employer payroll taxes assessed on stock option gains realized by employees from non-qualified stock option exercises which are recorded in cost of revenue, product development and sales, general and administrative expenses. They do not purport to be financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP). The following table reconciles the pro forma net income in accordance with GAAP for the periods presented.
InfoSpace, Inc.
Reconciliation of Pro Forma Net Income
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
Pro forma
net income
(loss) $9,474,372 $2,965,987 $26,453,749 $(2,885,226)
Employer payroll
taxes on stock
option
exercises (251,116) (300,537) (3,593,029) (616,984)
Amortization
of
intangibles (47,095,853) (17,706,080) (115,064,338) (21,050,783)
Acquisition &
other related
charges (7,608,779) (959,889) (94,208,188) (6,119,043)
Other - non-
recurring
charges -- (650,000) (2,887,609) (859,500)
Restructuring
charges -- -- (2,171,462) --
Preferred
stock dividend -- -- -- (159,930,733)
Unrealized gain
(loss) on
investments
held in VC
Fund (5,371,549) -- 9,778,806 --
Minority
interest in
VC Fund 2,154,087 -- (4,243,945) --
Net loss $(48,698,838) $(16,650,519) $(185,936,016) $(191,462,269)
InfoSpace, Inc.
Consolidated Statements of Operations
(unaudited)
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
Revenues $57,695,129 $19,946,365 $142,788,889 $42,188,368
Cost of
revenues 10,363,743 3,795,302 24,604,777 8,842,886
Gross Profit 47,331,386 16,151,063 118,184,112 33,345,482
Operating expenses:
Product
development 10,152,298 3,891,712 25,490,303 10,462,984
Sales, general
and
administra-
tive 34,408,362 17,314,288 88,187,595 41,747,231
Amortization
of
intangibles 47,095,853 17,706,080 115,064,338 21,050,783
Acquisition &
other related
charges 7,608,779 959,889 94,208,188 6,119,043
Other - non-
recurring
charges -- 650,000 2,887,609 859,500
Total
operating
expenses 99,265,292 40,521,969 325,838,033 80,239,541
Loss from
operations (51,933,906) (24,370,906) (207,653,921) (46,894,059)
Unrealized
gain (loss)
on
investments
held in VC
Fund (5,371,549) -- 9,778,806 --
Minority
interest in
VC Fund 2,154,087 -- (4,243,945) --
Restructuring
charges -- -- (2,171,462) --
Other income,
net 5,574,069 6,986,992 20,007,450 14,647,661
Loss from
operations
before income
tax expense,
preferred stock
dividend and
cumulative
effect of
change in
accounting
principle (49,577,299) (17,383,914) (184,283,072) (32,246,398)
Preferred stock
dividend -- -- -- 159,930,733
Income tax
expense
(benefit) (878,461) (733,395) 933,728 (714,862)
Loss from
operations
before
cumulative
effect of
change in
accounting
principle (48,698,838) (16,650,519) (185,216,800) (191,462,269)
Cumulative
effect of
change in
accounting
principle -- -- (719,216) --
Net loss $(48,698,838) $(16,650,519) $(185,936,016) $(191,462,269)
Basic loss
per share $(0.17) $(0.07) $(0.65) $(0.79)
Shares used
in computing
basic net
loss
per share 291,335,813 253,640,130 283,914,204 242,157,208
InfoSpace, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
September 30, December 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $55,819,433 $104,349,565
Short-term investments 306,848,738 295,311,142
Accounts receivable, net 26,998,891 13,551,478
Notes and other receivables * 24,863,171 15,189,986
Deferred tax asset 8,948,977 4,852,985
Prepaid expenses and other current
assets 17,607,257 14,161,782
Total current assets 441,086,467 447,416,938
Property and equipment, net 47,569,408 11,878,406
Long-term investments 63,095,728 116,076,569
Other investments 145,342,442 109,189,809
Intangibles, net 692,938,160 272,823,930
Other long-term assets 4,540,664 2,046,405
Total assets $1,394,572,869 $959,432,057
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilties:
Accounts payable $7,391,749 $3,688,750
Accrued expenses and other
current liabilities 17,095,792 23,481,121
Deferred revenue 29,069,207 10,697,592
Total current liabilities 53,556,748 37,867,463
Long-term liabilities and minority interest:
Deferred revenue 6,273,121 479,355
Long-term debt -- 685,762
Deferred tax liability 14,830,094 40,726,280
Minority interest - VC Fund 22,901,939 --
Total long-term liabilities and
minority interest 44,005,154 41,891,397
Stockholders' equity:
Common stock 30,941 28,341
Additional paid-in capital 1,600,821,583 959,491,801
Accumulated deficit (312,154,625) (126,273,816)
Comprehensive income 12,191,255 50,256,174
Deferred expense - warrants (1,699,382) (2,311,159)
Unearned compensation - stock options (2,178,805) (1,518,144)
Total liabilities and stockholders'
equity $1,394,572,869 $959,432,057
* Notes and other receivables is primarily comprised of the following:
$6.2 million of interest receivable, $1 million of fully secured loans to
key employees, $10 million fully secured note to a former officer of the
company which is due 12/01, $5 million advance to a company that InfoSpace
has signed a definitive agreement to acquire which is expected to close in
the fourth quarter of 2000.
SOURCE InfoSpace
-0- 10/25/2000
/CONTACT: Mark S. Peterson, Vice President of Public Relations, 206-357-4000, or mark@infospace.com, or Dino Christofilis, SVP, Investor Relations, 206-357-4000, or dino@infospace.com, both of InfoSpace, Inc./
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/Web site: infospace.com
(INSP)
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