Third quarter numbers
BW)(WA-INFOSPACE)(INSP) InfoSpace Reports Third Quarter Results
Business Editors, High-Tech Writers
BELLEVUE, Wash.--(BUSINESS WIRE)--Oct. 23, 2002--InfoSpace, Inc. (Nasdaq:INSP), a provider of wireless and Internet software and application services, today announced results for its third quarter ended September 30, 2002.
Revenues for the third quarter were $33.6 million.
Pro forma net loss for the third quarter was $610,000, which included $4.7 million of non-cash depreciation. Pro forma EPS was a net loss of $0.02 post split. Pro forma excludes impairment and amortization of intangibles and certain other items as detailed in the footnotes in the following financial tables.
In accordance with Generally Accepted Accounting Principles (GAAP), net loss for the third quarter was $26.4 million, or a loss of $0.86 per basic share.
"I'm pleased to report that our focus on profitability is paying off. We are continuing to focus on core products, allowing us to streamline and further reduce our operating expenses," said Naveen Jain, chairman and CEO of InfoSpace, Inc. "This quarter we added more than $10 million in cash from operating activities to our already strong and debt free balance sheet."
Financial and operating highlights:
-- All three of InfoSpace's Business Units -- Merchant, Wireline and Wireless -- were profitable on a segment basis. (For segment basis reporting, the Company does not allocate certain operating expenses. See statement of operations by business unit in the following financial tables for further information.)
-- InfoSpace's balance sheet remains strong with no debt. The Company's cash and short-term investment grade securities totaled $275 million at the end of the third quarter, an increase of more than $10 million from the second quarter. In addition, the Company has investments in private and public securities of $24 million, and a federal payroll tax receivable of $13.2 million.
-- Merchant services processed more than $1.7 billion in transactions during the quarter, up from the $1.5 billion reported last quarter. Number of transactions processed grew to more than 22 million, up from the 20 million reported last quarter.
-- Wireline signed several search agreements, including a long term -- until March 2006 -- contract with Overture Services; and a new contract with Google, Inc., bringing Google's award winning search technology to InfoSpace's meta-search capabilities.
Merchant
During the third quarter InfoSpace's Merchant Business Unit processed more than $1.7 billion in transactions, up from the $1.5 billion reported last quarter. InfoSpace continues to see strong growth in the number of transactions processed, which grew to more than 22 million, up from the 20 million reported last quarter.
InfoSpace's channel for selling merchant services also grew during the quarter to include more than 1,300 resellers. These critical relationships are primarily responsible for the addition of nearly 11,000 new merchant accounts in the third quarter bringing the total number of active merchants accounts to 71,000. New York Times Digital, including NYTimes.com and Boston.com and the University of California, are among the accounts established.
Wireline
The Wireline Business Unit continues to improve the monetization of the Internet traffic utilizing its core Internet services -- Web search, directory and broadband -- further increasing revenue efficiency and reducing costs. During the quarter, 2.9 billion queries were made to InfoSpace's wireline services.
As part of a contract extension until March 2006, Overture Services will continue to be the premier provider of paid search listings to InfoSpace's Web search properties, including Excite (www.excite.com), Dogpile (www.dogpile.com), WebCrawler (www.webcrawler.com) and MetaCrawler (www.metacrawler.com), as well as other InfoSpace search distribution relationships. As the premier provider, Overture is guaranteed premium placement across InfoSpace's meta-search properties.
Also, during the quarter, InfoSpace added Google's award winning search results to its industry-leading meta-search technology. In addition to providing Google's highly relevant search results from billions of Web pages, InfoSpace's meta-search technology also now include results from the Google Sponsored Links Program, a paid advertising service that complements Google's objective search results with targeted text-based advertising listings.
Wireless
As wireless data evolves, InfoSpace Wireless is increasing its focus on the technologies and services with proven ability to drive mobile data service usage and revenue. Around the world, push-messaging technologies such as SMS and MMS are emerging as the foundation for many of the most successful wireless data deployments.
For example, in Europe, InfoSpace is seeing significant results from its strategy to offer the application development expertise and distribution necessary for businesses to utilize wireless push-messaging to reach existing and potential customers.
During the third quarter, the Company announced an innovative SMS-based marketing campaign for McDonald's in the Netherlands. The promotion offers McDonald's customers the opportunity to participate in an interactive trivia game using their mobile phones and to win prizes for providing correct answers.
The Company also announced it is extending its success in the Dutch market to the UK and is now offering UK businesses application development services and a single point of distribution through which they can potentially reach the vast majority of UK mobile subscribers via SMS through agreements with the UK's four largest mobile operators -- Vodafone, Orange, O2 and T-Mobile.
InfoSpace also continues to demonstrate its ability to support its carrier partner's next generation service deployments. During the quarter, InfoSpace announced the launch of a set of J2ME(TM)-based applications through PCS Vision(SM), a next generation wireless service recently launched nationwide by Sprint PCS.
Corporate
As part of InfoSpace's focus on profitability and streamlining operations, the Company will reduce its work force by approximately 90 employees.
A replay of the conference call will be available in the investor relations section of the Web site www.infospaceinc.com approximately one hour after the call until Mon., October 28, at 4 p.m. PST.
About InfoSpace, Inc.
InfoSpace, Inc. (Nasdaq:INSP) provides wireless and Internet software and application services. The Company develops software technologies that enable customers to efficiently offer a broad array of network-based services under their own brand to any device. InfoSpace corporate information can be found at www.infospaceinc.com.
This release contains forward-looking statements relating to the development of InfoSpace, Inc.'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 InfoSpace's actual results include the progress and costs of the development of our products and services, and the timing and extent 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 most recent Quarterly Report on Form 10-Q, in the section entitled "Factors Affecting Our Operating Results, Business Prospects and Market Price of Stock." 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)(B)
(Amounts in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $33,571 $33,051 $99,981 $130,558
Cost of revenues 8,578 9,460 27,463 31,795
----------- ----------- ----------- -----------
Gross profit 24,993 23,591 72,518 98,763
Operating expenses:
Product
development 7,881 9,051 24,357 31,407
Sales, general
and
administrative 19,335 27,694 67,092 95,472
----------- ----------- ----------- -----------
Total operating
expenses 27,216 36,745 91,449 126,879
----------- ----------- ----------- -----------
Loss from
operations (2,223) (13,154) (18,931) (28,116)
Other income, net 1,706 3,764 5,765 14,327
Income tax
expense (93) (557) (333) (744)
----------- ----------- ----------- -----------
Pro forma net loss $(610) $(9,947) $(13,499) $(14,533)
=========== =========== =========== ===========
Pro forma basic and
diluted net loss
per share $(0.02) $(0.31) $(0.44) $(0.45)
Shares used in
computing pro
forma basic and
diluted net loss
per share 30,912 32,072 30,892 32,301
(A) Pro forma results exclude non-cash charges, non-recurring charges
and items unrelated to the Company's core operations. These
financial statements exclude restricted stock compensation
expense, amortization, acquisition-related expenses, restructuring
charges, other non-recurring charges, gains and losses on equity
investments and the cumulative effects of changes in accounting
principles. They do not purport to be financial statements
prepared in accordance with accounting principles generally
accepted in the United States (GAAP). The following table
reconciles the pro forma net loss in accordance with GAAP for all
periods presented.
(B) Effective September 13, 2002, the Company's shareholders approved
a one-for-ten reverse stock split of all outstanding shares of
common stock, as recommended and approved by the Company's Board
of Directors. Accordingly, InfoSpace shareholders received one
share of the Company's common stock for each ten shares of common
stock held as of the effective date of the reverse split. This
split is retroactively applied to prior year share data for
calculation of earnings per share.
InfoSpace, Inc.
Reconciliations of Pro Forma Net Loss
(Amounts in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
Pro forma net loss $(610) $(9,947) $(13,499) $(14,533)
Restricted stock
compensation
expense (803) - (5,799) -
Amortization of
intangibles (3,120) (57,983) (14,784) (180,987)
Impairment of
intangibles (15,474) (99,157) (15,474) (99,157)
Acquisition and
related charges - 4,504 - 3,504
Other non-
recurring
charges (22) (1,660) (821) (1,827)
Restructuring
charges (881) (13,755) (881) (15,410)
Loss on equity
investments, net
of minority
interest (5,532) (26,753) (22,788) (88,468)
Cumulative effect
of change in
accounting
principle - - (206,619) (3,171)
----------- ----------- ----------- -----------
Net loss $(26,442) $(204,751) $(280,665) $(400,049)
=========== =========== =========== ===========
Basic and diluted
net loss per share $(0.86) $(6.38) $(9.09) $(12.39)
Shares used in
computing pro
forma basic and
diluted net loss
per share 30,912 32,072 30,892 32,301
InfoSpace, Inc.
Consolidated Statements of Operations (A)
(Amounts in thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $33,571 $33,051 $99,981 $130,558
Cost of revenues 8,661 9,460 28,045 31,795
----------- ----------- ----------- -----------
Gross profit 24,910 23,591 71,936 98,763
Operating expenses:
Product
development 8,372 9,051 27,315 31,407
Sales, general and
administrative 19,564 27,694 69,351 95,472
Amortization of
intangibles 3,120 57,983 14,784 180,987
Impairment of
intangibles 15,474 99,157 15,474 99,157
Acquisition and
related charges - (4,504) - (3,504)
Other non-
recurring charges 22 1,660 821 1,827
Restructuring
charges 881 13,755 881 15,410
----------- ----------- ----------- -----------
Total operating
expenses 47,433 204,796 128,626 420,756
----------- ----------- ----------- -----------
Loss from
operations (22,523) (181,205) (56,690) (321,993)
Loss on equity
investments (5,532) (26,753) (22,788) (88,468)
Other income, net 1,706 3,764 5,765 14,327
----------- ----------- ----------- -----------
Loss before
income tax
expense and
cumulative
effect of
change in
accounting
principle (26,349) (204,194) (73,713) (396,134)
Income tax expense (93) (557) (333) (744)
----------- ----------- ----------- -----------
Loss before
cumulative
effect of
change in
accounting
principle (26,442) (204,751) (74,046) (396,878)
Cumulative effect
of change in
accounting
principle - - (206,619) (3,171)
----------- ----------- ----------- -----------
Net loss $(26,442) $(204,751) $(280,665) $(400,049)
=========== =========== =========== ===========
Basic and diluted
net loss per share $(0.86) $(6.38) $(9.09) $(12.39)
Shares used in
computing basic and
diluted net loss
per share 30,912 32,072 30,892 32,301
(A) Effective September 13, 2002, the Company's shareholders approved
a one-for-ten reverse stock split of all outstanding shares of
common stock, as recommended and approved by the Company's Board
of Directors. Accordingly, InfoSpace shareholders received one
share of the Company's common stock for each ten shares of common
stock held as of the effective date of the reverse split. This
split is retroactively applied to prior year share data for
calculation of earnings per share.
InfoSpace, Inc.
Consolidated Balance Sheets
(Amounts in thousands)
September 30, December 31,
2002 2001
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $134,160 $118,561
Short-term investments,
available-for- sale 141,042 80,319
Accounts receivable, net 17,322 16,305
Payroll tax receivable 13,214 13,214
Notes receivable, net 1,842 2,888
Other receivables, net 9,486 11,095
Prepaid expenses and other current
assets 5,169 8,239
------------------------------
Total current assets 322,235 250,621
Property and equipment, net 29,830 39,443
Long-term investments,
available-for-sale - 94,891
Other investments 23,981 47,087
Goodwill, net 153,948 356,476
Other intangible assets, net 17,881 47,084
Other long-term assets 781 1,403
------------------------------
Total assets $548,656 $837,005
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,495 $9,139
Accrued expenses and other current
liabilities 19,877 25,791
Deferred revenue 11,589 15,794
------------------------------
Total current liabilities 34,961 50,724
Long-term liabilities:
Long-term deferred revenue 1,590 3,693
------------------------------
Total liabilities 36,551 54,417
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 1,704,356 1,702,550
Accumulated deficit (1,191,390) (910,725)
Deferred expense - warrants (155) (680)
Unearned compensation - restricted stock (1,264) (7,881)
Accumulated other comprehensive loss 555 (679)
------------------------------
Total stockholders' equity 512,105 782,588
------------------------------
Total liabilities and stockholders'
equity $548,656 $837,005
==============================
Summary of cash and marketable
investments(a):
Cash and cash equivalents $134,160 $118,561
Short-term investments,
available-for-sale 141,042 80,319
Long-term investments,
available-for-sale - 94,891
------------------------------
Total cash and marketable investments $275,202 $293,771
==============================
(a) We invest our excess cash in high quality marketable investments,
which are rated at least A-1, P-1. These investments, which
include, but are not limited to, commercial paper, certificates of
deposit, money market, corporate and United States government
securities, and taxable municipal bonds are classified on the
balance sheet in three captions: cash and cash equivalents,
short-term investments and long term investments based on their
relative maturity dates.
InfoSpace, Inc.
Consolidated Statements of Cash Flows
(Amounts in thousands)
Three months ended
September 30,
------------------------------
2002 2001
(unaudited) (unaudited)
----------- -----------
Operating Activities:
Net loss $(26,442) $(204,751)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 7,780 63,163
Impairment of intangibles 15,474 99,157
Warrant and stock-related revenue (644) (2,264)
Warrant expense 117 204
Stock-based compensation expense 792 302
Bad debt recoveries (307) (160)
Loss on disposal of assets 547 61
Restructuring charges 881 13,702
Loss and impairment on equity
investments 5,532 26,753
Other non-recurring charges 22 1,474
Minority interest - -
In process research and development - -
Cumulative effect of change in
accounting principle - -
Cash provided (used) by changes in
operating assets
and liabilities:
Accounts receivable 10,062 (1,543)
Other receivables 1,158 969
Prepaid expense and other current
assets 2,168 5,228
Other long-term assets 136 (1,866)
Accounts payable (2,611) 2,010
Accrued expenses (1,930) (15,723)
Deferred revenue (1,828) (964)
----------- -----------
Net cash provided (used) by operating
activities 10,907 (14,248)
Investing Activities:
Business acquisition
Business sale - 2,657
Purchase of minority interest
ownership in VC Fund -
Notes receivable - 37
Other investments -
Purchases of fixed assets (662) (1,639)
Purchases of short-term investments (21,981) (14,100)
Sales (purchases) of long-term
investments 50,953 (5,144)
----------- -----------
Net cash provided (used) by investing
activities 28,310 (18,189)
Financing activities:
Proceeds from issuance of ESPP shares 220 446
Proceeds from exercise of options and
warrants - 60
Payments for share repurchase - (22,786)
Payments on long-term debt -
----------- -----------
Net cash provided (used) by financing
activities 220 (22,280)
----------- -----------
Net increase (decrease) in cash and
cash equivalents 39,437 (54,717)
Cash and cash equivalents at
beginning of period 94,723 182,295
----------- -----------
Cash and cash equivalents at end of
period $134,160 $127,578
=========== ===========
InfoSpace, Inc
Statement of Operations by Business Unit
(Amounts in thousands)
Three months ended September 30, 2002
Wireline Merchant Wireless Corporate Consolidated
----------------------------------------------------
Revenues $12,886 $12,183 $8,501 $ - $33,570
Operating expenses 5,619 8,395 7,424 9,397(a) 30,835
Unallocated
depreciation and
non-capitalized
property, plant
and equipment - - - 4,958(b) 4,958
----------------------------------------------------
Pro forma
income (loss)
from
operations 7,267 3,788 1,077 (14,355) (2,223)
Income tax expense - - - (93) (93)
Other income, net - - - 1,706 1,706
----------------------------------------------------
Pro forma net
income (loss) 7,267 3,788 1,077 (12,742) (610)
Loss on equity
investments - - - (5,532) (5,532)
Amortization of
intangibles - - - (3,120) (3,120)
Impairment of
intangibles (15,474) (15,474)
Restructuring
charges (881) (881)
Other non-
recurring charges - - - (22) (22)
Restricted stock
compensation
expense - - - (803) (803)
----------------------------------------------------
Net income (loss) $7,267 $3,788 $1,077 $(38,574) $(26,442)
====================================================
(a) Unallocated indirect operating expenses includes approximately
$3.1 million of professional services, $1.9 million of facilities
expense, $1.9 million of corporate insurance expense and $1.3
million of salaries and benefits
(b) Depreciation and non-capitalized property, plant and equipment
expenses may be allocated in future periods
--30--RYG/se*
CONTACT: InfoSpace, Inc. (Investor Relations)
Nicole Knowles, 425/201-6100
nknowles@infospace.com
or
InfoSpace, Inc. (Public Relations)
Steve Stratz, 425/709-8167
steve.stratz@infospace.com
or
Adam Whinston, 425/201-8946
adam.whinston@infospace.com
KEYWORD: WASHINGTON
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS INTERNET NETWORKING
SOFTWARE TELECOMMUNICATIONS EARNINGS
SOURCE: InfoSpace, Inc. |
