April 19, 1999 19:40
infoUSA Inc. Reports First Quarter 1999 Financial Results
OMAHA, Neb.--(BUSINESS WIRE)--infoUSA Inc. (Nasdaq: IUSAA) (Nasdaq:IUSAB) announced today its results for the quarter ended March 31, 1999.
Results of Operations
The company reported net sales for the first quarter of 1999 of $55.5 million, compared to $55.4 million for the same period in 1998. Net income for the first quarter of 1999 was $6.3 million or $0.13 per share, as compared to a net loss of $1.1 million or $0.02 per share for the same period in 1998.
EBITDA, as adjusted
Earnings before interest, taxes, depreciation, amortization and acquisition-related and restructuring charges (EBITDA, as adjusted) for the first quarter of 1999 was $17.0 million, or 31 percent of net
sales, compared to $16.6 million, or 30 percent of net sales, for the same period last year.
Net Sales and Cost Reduction Program
Net sales were consistent with levels achieved over the comparable quarter of 1998. During the first quarter the company focused on expenses, successfully completing its cost reduction program which
included reductions in staff, as well as stricter credit and collections policies. As a result, the company improved its operating margin, which restored its EBITDA margin to historically high levels.
Cash and Liquidity
The company significantly improved its cash position as a result of its profitable operating performance over the quarter. As of March 31, 1999, the company had $52.9 million in cash and marketable securities, an increase of $2.7 million from the previous quarter ended December 31, 1998. Also during the first quarter, the company reduced its leverage by repurchasing $9.0 million of its infoUSA 9 1/2 percent Senior Subordinated Notes. The company also purchased in the open market 1.1 million shares of common stock at a total cost of $6.6 million during the first quarter of 1999.
Commenting on the quarter, Vinod Gupta, infoUSA chairman and chief executive officer said, "We are very pleased with the success we achieved after taking swift corrective action over the past quarter
to stabilize our core business. We have lowered costs, improved operating margins and reduced leverage at the same time as we increased liquidity. With the cash generated by our strong core
business, we are ideally positioned to invest in growing our already profitable Internet division. Our strategy is to build upon this profitable base by adding two additional sources of Internet revenue -
advertising and e-commerce."
infoUSA has set up a separate Internet Division, infoUSA.com, to take advantage of the many opportunities that exist for the company to generate additional revenues and profits over the Internet. The company recognized Internet revenues of $9 million for 1998 for combined database sales and licensing agreements, which were achieved without having made a dedicated investment in this business. This highlights the value of the company's proprietary database, as well as the ideal characteristics of the Internet as a profitable distribution channel for the company's products. The management is committed to growing these revenues in the following ways:
-- Licensing Revenues - White pages and yellow pages are a very popular application of our database and act as powerful drivers of traffic for our licensee web sites. The company's database is
proprietary, and the company invests $30 million per year to compile this information, which is updated daily. The infoUSA database powers the directory assistance of virtually all the Internet web sites,
which are dependent on the company as the sole source of this content. Licensees include Yahoo, AOL, Microsoft, InfoSpace and GTE SuperPages. The traffic that infoUSA data generates results in significant advertising revenue for these sites. A recent SEC filing by InfoSpace stated that without the proprietary content supplied to it from infoUSA, its business would be significantly impaired. The company plans to expand these relationships in the future by migrating customers from a fixed licensing fee to a CPM based fee, as well as by capturing a percentage of customer advertising and e-commerce revenues. The company believes that in the future there will be many additional potential licensees of the company's database due to the rapid emergence of new portal sites and Intranets.
-- Content Revenues - The company's web site, www.infousa.com receives over one million hits per day, making it one of the highest traffic business-to-business sites on the Internet. It has over 300,000
registered users and 68,000 of these have purchased products over our web site. We have an existing customer base of over 2 million and we intend for all of them to become our e-commerce customers. There is a huge untapped market worldwide of 100 million small businesses and entrepreneurs that constitute the target market for our products.
-- Advertising and E-commerce Revenues - The company plans to attract more consumer traffic to its site by offering free private-label yellow and white page directories to vertical portals, affinity portals, and corporate and private Intranets. By clicking on the directory assistance buttons, users will be seamlessly connected to the infoUSA site, generating additional traffic and content sales of infoUSA's products. This traffic, in combination with the company's already significant traffic as a business-to-business site, will be used to sell advertising. Last week we signed an agreement with DoubleClick (NASDAQ: DCLK) to act as ad server in facilitating the sale of targeted advertising on the infoUSA site. In addition to increased content sales and advertising revenues, the company expects to capture a percentage of the e-commerce revenue that is directed from the infoUSA site, both by advertisers and additional vendors.
-- Partnership Agreements - The company also plans to enter into partnerships with other Internet companies to leverage its proprietary database and strong presence on the Internet. An example of this is the agreement that the company announced today with Network Solutions (NASDAQ: NSOL) to jointly develop the Network Solutions new dot com directory(TM) and other products over the Internet in order to generate advertising and e-commerce revenues.
-- Video Yellow Pages - This service, currently in its testing phase, is available exclusively in our local market of Omaha, Nebraska. We have already signed up over 500 advertisers and the www.vyp.com
web site receives 5,000 hits per day. We are planning to next introduce the service in Lincoln, Nebraska, and we are exploring opportunities for joint ventures in order to expand into other geographical markets. The company has hired Tom Osborne, former University of Nebraska head football coach, as spokesman for the video yellow page product.
Management
Today the company promoted Susan Slevin to vice president, Internet design and development. She will be in charge of e-commerce development for infoUSA.com and responsible for launching the
company's small business portal in May. Slevin has been with infoUSA for eight years and has a wealth of experience in direct marketing, small business customer management and product development. Our senior leadership team includes Bill Chasse, president, small business and consumer groups; Al Ambrosino, president, large business groups; Monica Messer, president, database compilation and information systems; Bill Kerrey, president, database licensing and advertising sales groups; Fred Vakili, executive vice president, administration and Stormy Dean, corporate controller and acting chief financial officer. The company continues to search for a permanent chief financial officer.
Gupta concluded, "We have the best database in the industry and it is updated daily. We continue to enrich our content by offering new products for sale and distribution through traditional channels and
over the Internet. Over 1999 we will invest in developing new sources of revenue for both our Internet and core businesses. We will also leverage our position on the Internet to create national brand
recognition for our products. In addition, we continue to explore opportunities to potentially spin-off our Internet division to raise additional capital to support these operations."
infoUSA, www.infoUSA.com, is a leading provider of business and consumer marketing information products and data processing services in the United States and Canada. Nearly two million customers use the products and services for direct marketing, telemarketing, marketing planning, lead generation, sales planning, customer analysis and credit reference. Founded in 1972, the company headquarters are located at 5711 South 86th Circle, PO Box 27347 Omaha, Neb. 68127-0347. infoUSA can be contacted at (402) 593-4500.
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