NetZero Reports First-Quarter Results; First-Quarter Revenue
NetZero Reports First-Quarter Results; First-Quarter Revenues Up 107% Over the
Preceding Quarter; Registered Users Approach 2 Million
Business Editors & Consumer Reporters
WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Oct. 25, 1999--NetZero
Inc. (Nasdaq:NZRO), a leading national provider of free Internet
access and free e-mail, today reported revenues of $7.7 million for
its first fiscal quarter ended Sept. 30, 1999, up 107% over the
$3.7 million reported in the preceding quarter ended June 30, 1999.
The company's net loss was $14.9 million for the September 1999
quarter, vs. $8.2 million for the June 1999 quarter.
The loss from operations for the September quarter, before
stock-based compensation charges, was $13.7 million, as compared with
a loss of $7.4 million in the preceding quarter ended June 30, 1999.
The pro forma loss from operations for the September quarter was $0.13
per share, calculated on a basis consistent with the analyst consensus
estimate of a loss of $0.19 per share as reported on First Call.
The analyst consensus estimate was calculated assuming that the
common shares issued and the preferred stock converted in the
company's Sept. 24, 1999, initial public offering were outstanding
for the entire quarter and includes outstanding shares subject to
repurchase.
The company's shares outstanding at Sept. 30, 1999, were
104,552,000. Excluding the pro forma adjustments, the company's
weighted average shares outstanding for the September quarter were
14,365,000.
Since NetZero launched its free Internet service in October 1998,
its registered user base has grown to 1.98 million at Sept. 30,
1999. Total registered users increased 69% in the September quarter,
from 1.17 million at June 30, 1999.
Registered users accessing NetZero's service during September
1999 totaled 1.02 million, vs. 613,000 during June 1999. Total
advertising impressions delivered during the September quarter were
3.6 billion, or a daily average of 39 million impressions. This was
nearly double the total advertising impressions delivered in the June
1999 quarter of 1.8 billion, or a daily average of 20 million
impressions.
"We're delighted to report these results in our first quarter as
a public company," said Mark Goldston, NetZero chairman and chief
executive officer. "This performance reflects the tremendous
excitement among consumers about NetZero's service, as well as the
company's ability to grow its revenue base.
"NetZero has made tremendous strides in the one year since we
launched our services," Goldston added. "We attracted over
2 million users, established a nationwide telecommunications network,
and raised nearly $230 million in public and private capital to help
further grow our business. These achievements, combined with our
tremendous revenue growth, have established NetZero as a major online
consumer services provider."
NetZero's service is currently available in more than 1,600
cities throughout the United States. In its efforts to provide
high-quality connectivity to its users, the company contracts with
multiple third-party telecommunications providers, including GTE,
Level3 and Navinet.
During the September quarter, NetZero established new
telecommunications relationships with PSINet, ICG Communications and
ZipLink Inc. that are expected to continue to expand the company's
access service capacity. Establishing multiple relationships with
quality telecommunications providers allows for scalability and
redundancy, while helping the company to maintain a competitive cost
structure. During the September quarter, the company's cost of
telecommunications services purchased averaged less than $0.30 per
hour.
In August 1999, NetZero introduced an enhanced version of The
ZeroPort, a unique navigational tool that provides users with "speed
dial" to key destinations on the Internet. The ZeroPort offers easy
access to shopping, auctions, e-commerce and other consumer services,
along with essential functions such as e-mail, search and browse.
It also includes a ticker that can be customized to display news,
sports and stock quotes specified by the user. The ZeroPort also
provides new placement opportunities, as well as more precision
targeting capabilities for advertisers.
Sponsors on The ZeroPort include well-known names such as ebay,
priceline.com, Cisco Systems, Ameritrade and DLJ direct. Most
recently, the company added LAUNCH Media Inc. as the exclusive music
content sponsor on The ZeroPort.
"The functionality and convenience of The ZeroPort is designed to
appeal to the first-time Internet user, as well as the experienced
surfer," said Goldston. "The enhanced ZeroPort also adds valuable
desktop 'real estate' that enables us to further expand our sponsor
and advertiser base.
"We recognize that it takes a strong sales force to grow
revenues, and it's been a priority to build an outstanding team of
professionals," Goldston added. "We've shown our commitment to this
goal by more than tripling the size of our sales force during the
quarter."
Committed to building its brand and increasing awareness among
consumers and advertisers, NetZero rolled out its first nationwide
advertising campaign in late August. The consumer campaign, utilizing
the tag line "Defenders of the Free World," covers major metropolitan
areas and includes television, radio, newspaper and outdoor
advertising.
Advertisers will be reached through a series of ads running in
major trade publications through the end of the year. NetZero is also
reaching consumers through software bundling and distribution
agreements with Compaq and Xerox. Most recently, the company signed an
agreement with Fleet Credit Card Services that includes distributing
NetZero's software to Fleet customers.
NetZero is pioneering a new Internet service model that
provides consumers with free access to the Internet, while offering
online advertisers an effective way to target those users. NetZero
offers consumers free and unlimited nationwide Internet access, as
well as free e-mail and navigational tools.
For advertisers, the service offers a powerful online direct
marketing tool with features and functionality that have distinct
advantages over traditional forms of online advertising. Between
NetZero's October 1998 launch and Sept. 30, 1999, nearly 2 million
users registered for its service. NetZero's services are offered in
more than 1,600 cities nationwide.
More information about the company is available on its Web site
at www.netzero.net.
This announcement may contain forward-looking statements that
involve risks and uncertainties. Actual results may differ materially
from the results predicted, and reported results should not be
considered as an indication of future performance. The potential risks
and uncertainties include, among others, the company's unproven
business model and limited operating history; the company's ability to
grow its user base, generate advertising revenues and decrease
telecommunications costs; the effects of competition for users and
advertisers; the loss of key customers; technological problems or
developments; and governmental regulation. More information about
potential factors that could affect the company's business and
financial results is included in the company's Form S-1, which was
declared effective Sept. 23, 1999, including (without limitation)
information under the captions "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Risk Factors."
This S-1 is on file with the Securities and Exchange Commission
(http://www.sec.gov). The accompanying Results of Operations are an
integral part of this announcement.
NOTE: NetZero(TM), Defenders of the Free World(TM), the NetZero logo,
and The ZeroPort(TM) are trademarks of NetZero Inc. All other names
are trademarks and/or registered trademarks of their respective
owners.
-0-
*T
NETZERO INC.
Results of Operations
(In thousands, except per share amounts)
Three Months Ended
Sept. 30, 1999 June 30, 1999
Revenues $ 7,720 $ 3,731
Cost of revenues 12,093 7,377
Gross loss (4,373) (3,646)
Operating expenses:
Sales and marketing 4,872 817
Product development 762 475
General and administrative 3,344 2,304
Stock-based compensation 1,303 892
Depreciation and amortization 337 150
Total operating expenses 10,618 4,638
Loss from operations (14,991) (8,284)
Interest and other income, net 64 91
Net loss $(14,927) $(8,193)
Basic and diluted net loss per
share $ (1.04) $ (0.72)
Shares used to calculate basic
and diluted net loss per share 14,365 11,413
Sept. 30, 1999 June 30, 1999
Balance Sheet Data:
Cash and cash equivalents $181,718 $ 24,035
Working capital 171,055 16,097
Total assets 217,176 47,501
Capital leases and notes payable, less
current portion 5,727 3,527
Redeemable convertible preferred stock - 2,140
Deferred stock compensation (9,263) (7,783)
Total stockholders' equity 189,281 30,954
Sept. 30, 1999 June 30, 1999
Other Operating Data:
Total registered users 1,978 1,169
Registered users active in the last
month of the quarter 1,023 613
Total impressions delivered in the
quarter 3,596,000 1,811,000 |
