Its laughable. That's what happens when you give away junkie music for free.
Wednesday October 20, 4:52 pm Eastern Time
Company Press Release
SOURCE: MP3.com, Inc.
MP3.com Reports Third-Quarter 1999 Financial Results; First Quarter as a Public Company
SAN DIEGO, Oct. 20 /PRNewswire/ -- MP3.com, Inc. (Nasdaq: MPPP - news), the Internet's premier online digital music destination, today announced financial results for its third quarter ended September 30, 1999, its initial reporting period as a public company. Net revenues for the quarter ended September 30 increased to $4,051,399, up from $276,577 for the same period a year ago. Third quarter revenues increased $2,139,851, or 112 percent, over the $1,911,548 in revenues reported for the second quarter of 1999.
The third quarter net loss was $19,869,290 compared with $33,341 for the same period of 1998, and a net loss of $6,343,825 for the second quarter of 1999. On a pro forma basis, excluding certain one-time charges related to employee costs of $1,240,612 and one-time facility relocation charges of $814,921, as well as amortization of deferred compensation of $12,370,465, the 1999 third quarter net loss was $5,443,292.
Net loss per basic and diluted share was $0.33 including the above one-time charges and amortization of deferred compensation, compared with $0.22 for the second quarter of 1999 and $0.00 for the same period one year ago. On a pro forma basis, excluding the above charges and amortization of deferred compensation, basic and diluted net loss per share for the third quarter of 1999 was $0.09. Excluding amortization of deferred compensation of $2,810,861 for the previous quarter, the pro forma basic and diluted net loss per share for the second quarter of 1999 was $0.12.
''One of our most critical accomplishments to date is establishing a definitive online leadership position in the Internet music industry,'' said Michael Robertson, chairman and chief executive officer. ''We continue to build our expanding music catalog and artist community, and capitalize on our strategic business relationships. In addition, significant investments were made in the third quarter to extend our technical leadership and consumer brand awareness worldwide. Our unique business model captures multiple revenue streams from online and offline advertising, as well as e-commerce.''
Key Metrics
One of the driving forces toward better than anticipated revenue growth in the third quarter was the increase in activity on the site, including the escalation in the number of artists and music content posted to the website. The following metrics represent the company's growth in key areas for the period ended September 30.
Aggregate Data As of September 30
# Approved Artists 31,200
# Available and Approved Songs Posted to the Site 180,000
Monthly/Quarterly Data During September 1999 During Q3 99
# of CDs Sold* 16,000 45,200
Est. Average Daily Unique Visitors 436,000 397,000
Est. Page Views Per Month 77,000,000 26,000,000
Est. Page Views Per Unique Visitor 5.9 6.2
* "CDs Sold" has been revised to include all revenue generating CDs;
prior to August 1999, only DAM CDs were reported as "CDs Sold"
**To understand how these key metrics are calculated, please visit our
website at www.mp3.com/investor/.
''We experienced significant growth during the third quarter in all of our key metrics categories with August being exceptionally strong,'' said Robertson. ''We continued this strong momentum through September while factoring in the Labor Day holiday and fewer days.''
Business Highlights
During the third quarter, the Company focused on three key strategies -- increasing its music content and artist community, enhancing brand awareness, and expanding electronic commerce opportunities and strategic partnerships. By the end of the third quarter, MP3.com offered over 180,000 songs from more than 31,000 artists.
Selected business highlights of third quarter 1999 included the following:
-- The Company expanded its online reach by creating the MP3.com Affiliate
Program. This new program provides affiliates of MP3.com with song
lists categorized by popularity and genre. To date, over 14,000
affiliates have signed up linking their websites to MP3.com.
Affiliates earn commissions from MP3.com CDs and other MP3.com-branded
merchandise sales to customers referred to the website.
-- Cox Interactive Media and MP3.com announced the formation of a new
joint venture company, mp3radio.com. Created to provide radio stations
a powerful enhancement to their web sites, this new entity brings
consumers MP3.com music downloads, webcasts, shopping for CDs and
tickets online and affinity programming on co-branded pages -- all from
a single, convenient source.
-- Alanis Morissette and Tori Amos launched their highly anticipated
"5 1/2 Weeks" concert tour. MP3.com teamed up with Best Buy to create
a technology road show to showcase Internet-delivered digital music
technology at 26 tour sites from Ft. Lauderdale to Los Angeles. In
addition, five MP3.com bands, hand-picked by Alanis and Tori, performed
in front of arena-sized crowds opening up their music to tens of
thousands of potential fans.
-- Working in partnership with the William Morris Agency, the Company
commenced its first-ever concert tour combining music and technology.
Headliners the Goo Goo Dolls and Tonic, together with MP3.com artists,
are currently touring 28 college campuses across the United States
through November 17. The Music and Technology Tour combines maximum
exposure to music with information about hardware, software and other
computer-related technology companies.
-- MP3.com teamed up with MusicMatch and RealNetworks in September to give
users easy and dedicated access to MP3.com's extensive music library.
By featuring RealNetworks' RealJukebox and MusicMatch Jukebox as
preferred software applications for downloading, managing and listening
to music, the Company continues its corporate mantra of bringing one of
the largest and diverse selections of music on one of the most robust
systems to consumers and artists everywhere.
-- Introducing an innovative corporate-giving initiative, MP3.com worked
with R&B music group TLC to donate funds to the Sickle Cell Disease
Association. The "Dime-a-Download" program contributed ten cents per
download from a new TLC music track, which established a new trend of
corporate philanthropy.
-- MP3.com was one of the exclusive points of sale for the Internet-only
music soundtrack in conjunction with the release of the Warner
Bros./Village Roadshow motion picture "Three Kings". The Company is
offering an exclusive enhanced CD version of the complete film
soundtrack, with a special enhanced CD multimedia section containing
two different video trailers for the film and a special video interview
with "Three Kings" star Ice Cube.
About MP3.com
MP3.com is pioneering a revolutionary approach to the promotion and distribution of music. The Company's website has grown into a premier online music destination. The Company uses the Internet and file formats that make music files smaller to enable a growing number of artists to distribute and promote their music to a broad audience, and to let consumers conveniently access this expanding music catalogue. The Company's website contains more than 180,000 songs from over 31,000 artists, representing what the company believes to be one of the largest collections of digital music available on the Internet. Consumers can search, preview and download music free of charge.
Statements in this press release that are not strictly historical are ''forward-looking'' statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve a high degree of risk and uncertainty that exist in the Company's operations and business environment. Such statements are predictions only and actual events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include the Company's new and uncertain business model, risks associated with competing for and executing business partnerships or other strategic transactions, uncertainty regarding acceptance of the Company's products and services, the Company's limited operating history and risks associated with the Company's rapid growth. These factors and others are more fully described under ''Risk Factors'' in the Final Prospectus included in the Company's Registration Statement on Form S-1 (File No. 333-78545) as filed with the Securities and Exchange Commission and declared effective by the SEC on July 20, 1999 (http://www.sec.gov). The accompanying condensed consolidated statements of operations and balance sheets are an integral part of this announcement.
MP3.COM, INC.
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
(UNAUDITED)
For The Nine
For The Three Months Ended Months Ended
Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999
Net Revenues $4,051 $277 $6,629
Cost of revenues 1,687 83 2,741
Gross profit 2,364 194 3,888
Operating expenses:
Sales and marketing 8,897 26 12,114
Product development 2,373 67 3,375
General and administrative 3,110 38 5,021
Amortization of deferred
compensation 12,370 83 15,834
Total operating expenses 26,750 214 36,344
Income (loss) from operations (24,386) (20) (32,456)
Interest income (expense), net 4,517 (1) 4,837
Income (loss) before
income taxes (19,869) (21) (27,619)
Provision for income taxes -- 12 --
Net loss $(19,869) $(33) $(27,619)
Net loss per share:
Basic and diluted $(0.33) $(0.00) $(0.54)
Weighted average shares -
basic and diluted 60,333,000 26,179,000 51,272,000
Supplemental Pro Forma Information (1)
Historical net loss $(19,869) $(33) $(27,619)
Add back certain one-time
charges and non-cash costs:
Certain employee related costs 1,241 -- 1,241
Facility relocation costs 815 -- 815
Amortization of deferred
compensation 12,370 83 15,834
Total add back 14,426 83 17,890
Pro forma net income (loss)
excluding certain one-time
charges and non-cash costs $(5,443) $50 $(9,729)
Pro forma net income (loss)
per share:
Basic and diluted $(0.09) $(0.00) $(0.19)
(1)The accompanying supplemental pro forma financial information is
presented for informational purposes only and should not be considered
as a substitute for the historical financial information presented in
accordance with generally accepted accounting principles.
MP3.COM, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
September 30, December 31,
1999 1998
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $166,689 $39
Short term investments 279,851 --
Accounts receivable, net of
allowance for doubtful accounts 1,808 293
Unbilled receivables 781 65
Prepaid expenses and other
current assets 7,023 --
Total current assets 456,152 397
Property and equipment, net of
accumulated depreciation 7,101 52
Long term investments 8,296 --
Other assets 2,904 14
Total assets $474,453 $ 463
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,437 $37
Accrued expenses 4,432 104
Line of credit and capital
lease obligations 1,234 14
Deferred revenues 31,336 15
Deferred income taxes -- 94
Total current liabilities 40,439 264
Deferred revenues 14,000 --
Deferred income taxes -- 4
Stockholders' equity:
Preferred stock, par value $0.001
per share; none authorized at
September 30, 1999 and December 31,
1998; none issued and outstanding
at September 30, 1999 and
December 31, 1999
Convertible preferred stock, par
value $0.001 per share; authorized
15,500,000 and 5,000,000 at
September 30, 1999 and
December 31, 1998, respectively.
Common stock, par value $0.001 per
share; authorized 300,000,000 at
September 30, 1999 and December 31,
1998; 68,376,920 and 29,249,999
issued and outstanding at
September 30, 1999 and December 31,
1998, respectively 68 29
Additional paid in capital 474,673 701
Note receivable from stockholder (258) --
Deferred compensation (26,474) (178)
Unrealized depreciation on
investments available-for-sale (19) --
Accumulated deficit (27,976) (357)
Total stockholders' equity 420,014 195
$474,453 $463
SOURCE: MP3.com, Inc.
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