May 18, 1999 04:03 PM
WALTHAM, Mass.--(BUSINESS WIRE)--May 18, 1999--Lycos, Inc. LCOS , the most visited portal on the Internet and largest online community, today announced financial results for its third quarter ended April 30, 1999. Revenues for the quarter were $35.1 million, representing a 132% increase over the comparable period from the previous fiscal year and an increase of 15% over the previous quarter ended January 31, 1999. The Company reported a loss of $1.0 million or $0.02 per share for the quarter before goodwill amortization. This compares to a net loss of $1.5 million or $0.03 per share for the previous quarter ended January 31, 1999.
"We are extremely pleased by the phenomenal growth of the Lycos Network," said Robert J. Davis, president and CEO of Lycos. "The significant increase in our reach, traffic and revenues is the result of our strategy of combining high quality brand-name sites under the Lycos Network umbrella. I am particularly pleased with the strength of our commerce business as we enjoyed our best quarter ever signing $200 million of new business."
The Lycos Network demonstrated its strength and progress by becoming the most visited hub on the Internet with 31.9 million unique users, which represents nearly 52% of all Internet users. Average daily page views grew by 20% to more than 60 million and this strong growth confirms Lycos' multi-brand and traffic re-circulation strategy. In addition, the Lycos Network now has nearly 27 million registered members, an increase of 29% over last quarter.
"Once again, the Lycos Network has shown great improvement in all meaningful growth areas, reaffirming the power of our core business model. We continue to concentrate on the main components of the Lycos Network - commerce, community and navigation - and during the quarter we announced several new products and alliances that we believe solidify our leadership position in those key areas," said Edward M. Philip, Lycos' COO and CFO.
In a separate announcement today, Lycos said that it its Board of Directors has approved a 2-for-1 common stock split. The split is subject to shareholder approval of an amendment to the Company's Certificate of Incorporation to increase the Company's authorized common stock. The Company anticipates the split to become effective in late July 1999.
Key accomplishments for the quarter:
Strategic Milestones
--The Lycos Network extended its audience reach to 51.8% of all Internet users to become the most visited hub on the Internet (Media Metrix, 4/99 report), surpassing rival Yahoo YHOO for the first time. The growth is a testament to the success of each of the leading brands in the Network and traffic re-circulation strategies pioneered by Lycos.
--Following the mutual agreement to terminate their merger agreement, Lycos, USA Networks USAI and Ticketmaster Online-CitySearch TMCS have agreed to continue to work together in non-exclusive areas including significant promotion of the Lycos Network on USA Network's cable and broadcasting assets, a co-branded My Lycos start page for Home Shopping Network's viewers, Lycos branding and messages on all Ticketmaster envelopes, exclusive Ticketmaster content on the Lycos Network, CitySearch as the local portal site for Lycos, and a cooperative program to build a local commerce platform for the more than 15,000 businesses presently hosted by Ticketmaster Online-CitySearch.
--With Tripod and Angelfire alone, Lycos is now the world's largest online community with more than 6.75 million registered community members. Tripod's and Angelfire's audience reach grew by 81 percent and 117 percent respectively over the past year (March 98--March 99), according to Media Metrix.
--Lycos and Mirae Corporation, a prominent high-technology company in Korea, formed Lycos Korea, a joint venture to provide localized versions of Lycos.com, Tripod, and MailCity.
E-commerce and Advertising
--New e-commerce alliances and expanded agreements were signed totaling $200 million and include among others: WebMD, Audio Book Club, Auto by Tel, Auto Connect and Name Secure.
--Lycos announced its largest agreement in a $52 million alliance with WebMD. This broad content, community and commerce agreement allows WebMD to become the exclusive provider of all healthcare content, sponsorships and e-commerce on the Lycos Network. The co-branded site will integrate Lycos services such as email, homepages and searches.
--Open Market OMKT and Lycos announced that they have entered into a revenue-sharing agreement to integrate the power of Open Market's software solutions into Lycos' burgeoning e-commerce infrastructure. The agreement enables Lycos to deliver a platform that offers the ultimate in convenience and efficiency for both the shopper and the vendor.
--Subsequent to quarter end, Lycos announced the formation of a strategic alliance with FairMarket, Inc., a pioneer in Web auction and e-commerce solutions for merchants and communities. Fair Market will work with Lycos to build an infrastructure to power Lycos' online auction offering. The agreement, subject to certain terms, allows Lycos to purchase up to 9 percent of FairMarket.
New Products
--AOL AOL and Lycos announced a major Open Directory alliance. The move introduced the Web's largest and fastest growing user-edited directory to the Lycos Network users and enhances the search power of both Lycos.com and HotBot.com.
--Lycos unveiled the Lycos Radio Network, a groundbreaking online interactive broadcast network that utilizes state-of-the-art broadband technology to deliver high-quality audio and streaming video. The same high quality sound technology that powers the nation's largest broadcast stations powers five channels, which are hosted by live disc jockeys.
--Lycos introduced Lycos Clubs (www.clubs.lycos.com) a revolutionary community-building product that makes it easier for people to connect in cyberspace. Lycos Clubs delivers ongoing, real-time communication enhanced by features such as instant messaging, e-mail, paging and file transfer. Club users also now have the ability to create both public and private rooms within a club where the discussions may be open to the entire club or just the specific invitees.
--Lycos announced the Web's first personal portal, My Lycos, redefining the personalization category by giving users personalized news, weather, stock quotes, and the ability to read e-mail, update their homepage, search, shop or chat all from the same place. The array of services is completely customizable and easy to use.
--Lycos introduced MyTime.com--the next generation Web calendar. MyTime.com allows users to create an online calendar, track their schedule and add public calendar information such as sporting events to their own customized calendars. MyTime.com is also the first calendar site that provides a way for users to create and publish group calendars that can be shared with a limited number of people or the entire Web community.
--Tripod, a top 10 Web site and one of the fastest-growing online communities, continued to lead the homepage building revolution with Homepage Studio 2.0 , the latest version of its homepage building tools and services. Homepage Studio 2.0 is suitable for all homepage builder skill levels.
Other Financial Information
--Revenues for the nine months ended April 30, 1999 increased 144% to $90.4 million from $37.0 million in 1998.
--Deferred revenues grew 138% to $148 million for the quarter.
--Net loss per share for the quarter ended April 30,1999 after goodwill amortization was $0.31.
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including, without limitation, the level of usage of the Internet and traffic to the Company's Internet site, continued acceptance of the Company's products, demand for Internet advertising, seasonal trends in advertising sales, the advertising budgeting cycles of individual advertisers, capital expenditures and other costs relating to the expansion of operations, the introduction of new products or services by the Company or its competitors, the mix of the services sold and the channels through which those services are sold, pricing changes, general economic conditions and specific economic conditions in the Internet industry and actual results may differ materially from those projected. Additional information concerning factors that may cause actual results to differ materially from those in the forward-looking statements may be found under the heading "Factors Affecting the Company's Business, Operating Results and Financial Conditions" in the Company's annual report on Form 10-K.
About Lycos
Founded in 1995, Lycos, Inc. is a leading Web media company and owner of the Lycos Network, the most visited hub on the Internet reaching 51.8 percent of Web users. The Lycos Network is a unified set of Web sites that attracts a diverse audience by offering a variety of services, including leading Web navigation resources, homepage building and other Web community services and a comprehensive shopping center. The Lycos Network is composed of premium sites: Lycos.com, Tripod, WhoWhere, Angelfire, MailCity, HotBot, HotWired, Wired News, Webmonkey, Suck.com and MyTime.com. Lycos.com , "Your Personal Internet Guide," is dedicated to helping each individual user locate, retrieve and manage information tailored to his or her personal interests. Headquartered near Boston in Waltham, Mass., Lycos, Inc. is a global Internet leader with a major presence throughout the U.S., Europe and Asia.
1999 Lycos, Inc. - Lycos is a registered trademark of Carnegie Mellon University. All other product or service marks mentioned herein are those of Lycos or their respective owners. All rights reserved.
LYCOS, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING MERGER AND ACQUISITION-RELATED EXPENSES (1)
(Unaudited)
Three Months Ended Nine Months Ended
April 30, April 30,
----------------------- ------------------------
1999 1998 1999 1998
----------------------- ------------------------
(Unaudited) (Unaudited)
Revenues:
Advertising $23,631,513 $11,686,820 $61,794,642 $27,671,120
E-Commerce,
license and other 11,450,035 3,442,413 28,623,206 9,363,983
----------------------- ------------------------
Total revenues 35,081,548 15,129,233 90,417,848 37,035,103
Cost of revenues 7,142,436 4,747,367 18,882,567 9,245,487
----------------------- ------------------------
Gross profit 27,939,112 10,381,866 71,535,281 27,789,616
Operating expenses:
Research and
development 6,473,341 2,704,426 17,832,265 5,873,027
Sales and
marketing 20,599,392 10,172,414 54,815,923 22,959,128
General and
administrative 3,315,360 1,507,550 8,903,105 3,429,284
----------------------- ------------------------
Total operating
expenses, excluding
merger and
acquisition-related
expenses 30,388,093 14,384,390 81,551,293 32,261,439
----------------------- ------------------------
Pro forma operating
loss, excluding merger
and acquisition-related
expenses (2,448,981) (4,002,524) (10,016,012) (4,471,823)
Interest income, net 1,420,909 524,349 4,932,523 1,629,088
----------------------- ------------------------
Pro forma net
loss, excluding
merger and
acquisition-related
expenses $(1,028,072) $(3,478,175) $(5,083,489) $(2,842,735)
======================= ========================
Pro forma basic and
diluted net loss per
share, excluding
merger and
acquisition-related
expenses $(0.02) $(0.11) $(0.12) $(0.10)
======================= ========================
Weighted average
shares used in computing pro
forma net loss per share
excluding merger and
acquisition-related
expenses(2) 43,282,836 31,015,906 42,710,173 29,276,530
======================= ========================
(1) The financial statements exclude merger and acquisition
related expenses, including the amortization of purchased intangible
assets and other non-recurring items. They do not purport to be
financial statements prepared in accordance with Generally Accepted
Accounting Principles.
(2) Weighted average shares used in computing basic and diluted
net loss per share for the three and nine months ended April 30, 1999
include Lycos common stock from the conversion of WhoWhere, Inc.
common stock, preferred stock and warrants on August 13, 1998.
LYCOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
April 30, April 30,
------------------------- ------------------------
1999 1998 1999 1998
------------------------- ------------------------
(Unaudited) (Unaudited)
Revenues:
Advertising $23,631,513 $ 11,686,820 $61,794,642 $27,671,120
E-Commerce,
license
and other 11,450,035 3,442,413 28,623,206 9,363,983
------------------------- ------------------------
Total revenues 35,081,548 15,129,233 90,417,848 37,035,103
Cost of revenues 7,142,436 4,747,367 18,882,567 9,245,487
------------------------- ------------------------
Gross profit 27,939,112 10,381,866 71,535,281 27,789,616
Operating
expenses:
Research and
development 6,473,341 2,704,426 17,832,265 5,873,027
In process
research
and development -- 16,280,000 -- 16,280,000
Sales and
marketing 20,599,392 10,172,414 54,815,923 22,959,128
General and
administrative 3,315,360 1,507,550 8,903,105 3,429,284
Amortization of
intangible
assets 12,274,020 2,293,829 35,687,017 2,520,670
------------------------- ------------------------
Total operating
expenses 42,662,113 32,958,219 117,238,310 51,062,109
------------------------- ------------------------
Operating loss (14,723,001) (22,576,353) (45,703,029) (23,272,493)
Interest income,
net 1,420,909 524,349 4,932,523 1,629,088
Gain on sale of
investments -- -- 10,119,831 --
------------------------- ------------------------
Net loss $(13,302,092) $(22,052,004) $(30,650,675)$(21,643,405)
========================= ========================
Basic and diluted
net loss
per share $ (0.31) $ (0.71) $ (0.72) $ (0.74)
========================= ========================
Weighted average
shares used in
computing net
loss per
share (1) 43,282,836 31,015,906 42,710,173 29,276,530
========================= ========================
(1) Weighted average shares used in computing basic and diluted net
loss per share for the three and nine months ended April 30, 1999
include Lycos common stock from the conversion of WhoWhere, Inc.
common stock, preferred stock and warrants on August 13, 1998.
LYCOS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
April 30, July 31,
1999 1998
------------ ------------
(Unaudited)
Assets
Cash and cash equivalents $132,381,243 $153,728,200
Accounts receivable, net 15,256,997 10,958,470
License fees receivable 147,871,435 51,761,357
Property and equipment, net 5,407,606 3,960,059
Intangible assets 203,422,710 78,787,554
Other assets, net 34,150,254 18,039,696
------------ ------------
Total assets $538,490,245 $317,235,336
============ ============
Liabilities and stockholders' equity
Accounts payable and accrued expenses $ 11,674,158 $ 22,150,470
Deferred revenues 148,030,455 57,571,993
Other liabilities 2,445,473 349,199
------------ ------------
Total liabilities 162,150,086 80,071,662
------------ ------------
Stockholders' equity 376,340,159 237,163,674
------------ ------------
Total liabilities and
stockholders' equity $538,490,245 $317,235,336
============ ============
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