StarMedia reports on earnings:
biz.yahoo.com
Tuesday October 26, 5:19 pm Eastern Time
Company Press Release
StarMedia Network Announces Third Quarter
1999 Financial Results
NEW YORK--(BUSINESS WIRE)--Oct. 26, 1999--StarMedia Network, Inc.
(NASDAQ: STRM - news, www.starmedia.com - news), the leading Internet media
company for Spanish- and Portuguese- speaking audiences worldwide, and the first Internet company focused on the
Latin American market to be listed on NASDAQ, today announced financial results for the third quarter ended
September 30, 1999.
Revenues for the quarter reached $5.6 million, a 250% increase over the same period in 1998 and a 44% increase
over the previous quarter.
Page views during the quarter increased to 1.17 billion*, 680% higher than the same period in 1998 and a 71%
increase over the previous quarter.
Customers increased to 259; 936% higher than the same period one year ago, and 62% higher than the previous
quarter.
StarMedia reported $5.6 million in total revenues for the quarter ended September 30, 1999, a 250% increase over total
revenues of $1.6 million for the quarter ended September 30, 1998. Total revenues for the quarter ended September 30,
1999 increased 44% over revenues of $3.9 million for the quarter ended June 30, 1999. StarMedia's customer base
grew by 62% during the third quarter, to reach a cumulative total of 259, versus the second quarter's total of 160.
Year-over- year growth was 936%.
StarMedia reported a net loss of $24.6 million for the quarter ended September 30, 1999, excluding $590,000 in
one-time charges from its acquisition of Webcast Solutions, Inc. This amounts to a diluted net loss per share of $0.42, on
a pro forma basis, excluding the one-time charge. Including the one-time charges, the net loss for the third quarter was
$25.2 million or $0.43 per share. This compares to a net loss of $9.6 million, or a diluted net loss per share of $0.29, on
a pro forma basis, for the quarter ended September 30, 1998, and a net loss of $22.1 million or a diluted net loss per
share of $0.43, on a pro forma basis, for the quarter ended June 30, 1999. Financial statements have been restated to
include pooling of interests from the Webcast merger.
``The positive results of the quarter as evidenced in our traffic growth, exceptional operational performance and
strengthened financial position are very much in line with our business model,' said Fernando Espuelas, Chairman and
Chief Executive Officer, StarMedia Network, Inc. ``During the third quarter, we worked diligently to build a truly
comprehensive, leveragable and integrated platform of media, communication and commerce, extending our position as
the leading Internet media company for the Spanish and Portuguese-speaking markets worldwide. This quarter saw many
new strategic initiatives that are part of our larger plan to effectively position StarMedia as a full-service new media
company.'
Audience Growth
StarMedia's audience continued to grow during the third quarter, a result of the Company's enhanced product offerings,
marketing efforts, and strong brand identity, as well as increasing Internet use within StarMedia's target markets. Page
views in the quarter ended September 30, 1999 increased to 1.17 billion(a), a 71% increase over page views of 686
million in the quarter ended June 30, 1999. Active e-mail accounts grew to approximately 1.6 million in the quarter ended
September 30, 1999, an 804% increase over the 177 thousand active e-mail accounts in the third quarter 1998, and a
33% increase over the 1.2 million active e-mail accounts in the quarter ended June 30, 1999.
(a) The third quarter page view figure has been audited by ABC Interactive, the interactive auditing unit of the Audit
Bureau of Circulations (ABC), which provides Internet traffic auditing services for StarMedia Network. ABC Interactive
provides such services for leading Internet companies worldwide.
Enhanced Content
Throughout the quarter, StarMedia continued to add to its rich content offerings with the launch of Periscopio
(www.periscopio.com), a powerful new information portal for Spanish speakers worldwide. Using advanced proprietary
search and personalization tools, Periscopio contains more than 110 million indexed documents that can be found by
language, country and date and is organized into four sections: Canales (channels), Comunidad (Community), Guia
(Guide), and Mi Pagina (My Page). Periscopio has created strategic alliances with Reuters, Agencia EFE, DyN, Eshare,
WeatherLabs, and Inktomi. The portal's launch was sponsored by IBM (NYSE:IBM - news).
Additions to the starmedia.com site included the launch of the StarMedia fitness channel (www.starmedia.com/fitness), an
interactive channel combining encyclopedic information with the latest concepts on nutrition, natural medicine, exercises
and anatomy. Also this quarter, StarMedia introduced StarMedia Juegos Multiplayer, a new Spanish-language gaming
service that allows several users to play games with each other and exchange real-time voice conversations. Built in
cooperation with Mpath (NASDAQ: MPTH - news), StarMedia Juegos MultiPlayer combines Internet games such as
Reversi, Backgammon, and Hearts with the latest Internet communications tools, including an instant messaging service, a
text chatroom section, and real-time voice chat. These significant additions during the quarter reflect the Company's
determination to build deeper, cutting-edge offerings for users in order to make StarMedia their primary destination on the
Internet.
Commerce
Electronic Commerce represents a significant revenue opportunity in Latin America, and for StarMedia. According to a
recently published report by eMarketer (eGlobal, July 1999), e-Commerce revenues in Latin America are projected to
increase from approximately $740 million in 1999 to over $84 billion in 2003. During the third quarter, StarMedia, in
partnership with Hewlett-Packard, introduced a plan to provide Latin American merchants with the region's first
integrated e-Commerce solution that will allow merchants to rapidly create a Web-based store.
Distribution Platforms
Consistent with the Company's strategy to make StarMedia's services accessible to users anywhere at any time,
StarMedia announced during the third quarter the creation of two new divisions, StarMedia Broadband and StarMedia
Mobile. StarMedia Broadband allows StarMedia to deliver streaming audio and video services and programming in
Spanish and Portuguese. The Company's recent acquisition of Webcast Solutions, Inc. will serve as the cornerstone of
this initiative.
Additionally, this quarter StarMedia Network announced that it acquired the business of PageCell International Holdings,
Inc., which will form the core of StarMedia Mobile. The integration of PageCell's mobile technologies, including mobile
Internet platforms, wireless portal services and wireless messaging services will allow StarMedia to deliver its Internet
content and features to wireless devices such as cell phones, pagers and personal digital assistants.
Lastly, StarMedia, in conjunction with AT&T (NYSE:T - news) Global Network Services, launched its premium Internet
access service in Latin America, which began in Brazil during the third quarter. StarMedia Acesso/Acceso leverages
AT&T's network infrastructure, operational, billing, and customer service capabilities, which combined with StarMedia's
powerful brand, services and products, offers Latin Americans a comprehensive end-to-end solution on the Web.
Follow-on Offering
During the third quarter, StarMedia Network, Inc. filed a registration statement with the United States Securities and
Exchange Commission to offer for sale 6 million shares of common stock in the Company to the public. The initial price to
public of the common stock was $34 per share and commenced on October 15, 1999, after the close of the quarter. The
net proceeds to the Company, before expenses, were approximately $193 million dollars.
About StarMedia Network
StarMedia Network is the leading Internet media company targeting Latin America and other Spanish- and
Portuguese-speaking markets worldwide. The Company is committed to providing Spanish and Portuguese speakers with
a complete selection of services and products that take full advantage of Internet technologies. StarMedia Network
operates StarMedia (www.starmedia.com), the leading global online community for Spanish and Portuguese speakers;
Periscopio (www.periscopio.com), a new, powerful information portal for Spanish speakers worldwide; LatinRed
(www.latinred.com), one of the largest Spanish language online communities; OpenChile (www.openchile.cl), a local
Chilean portal; Zeek! (www.zeek.com.br) and Cade? (www.cade.com.br), two of the leading online directories in Brazil;
StarMedia Acceso/Acesso, a premium Internet access service in Latin America; StarMedia Broadband, StarMedia
Network's new broadband services arm; and StarMedia Mobile, the Company's wireless division. StarMedia Network
provides advertisers and merchants targeted access to Spanish- and Portuguese-speaking Internet users. Some of
StarMedia Network's strategic relationships include Netscape Communications, Real Networks, CDNOW, Reuters,
eBay, National Broadcasting Company, Hearst Communications, and Fininvest. Founded in 1996, the Company has
operations in Argentina, Brazil, Chile, Colombia, Mexico, Puerto Rico, Spain, Uruguay, Venezuela, and major U.S. cities,
and has over 500 employees.
StarMedia, and StarMedia's logos, product and service names are registered trademarks of StarMedia Network, Inc.
This press release contains statements of a forward-looking nature relating to future events or future financial results of
StarMedia. Investors are cautioned that such statements are only predictions and that actual events or results may differ
materially. In calculating such statements, investors should specifically consider various factors which could cause actual
events or results to differ materially from those indicated from such forward-looking statements, including the matters set
forth in StarMedia's reports and documents filed from time to time with the Securities and Exchange Commission.
StarMedia Network, Inc.
Condensed Consolidated Statements of Operations(b)
(Unaudited)
Three Months Ended Nine Months Ended
------------ ------------ ------------ ------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
Revenues $ 5,618,000 $ 1,646,000 $ 11,092,000 $ 2,496,000
Operating
expenses:
Product &
technology
development 9,987,000 1,761,000 20,006,000 4,939,000
Sales &
marketing 14,274,000 7,735,000 37,200,000 13,750,000
General &
administration 3,902,000 956,000 9,544,000 1,989,000
Non-recurring
charges 590,000 -- 1,613,000
Depreciation &
amortization 1,684,000 211,000 3,328,000 459,000
Stock-based
compensation
expense 1,848,000 666,000 4,860,000 3,916,000
------------ ------------ ------------ ------------
Total operating
expenses 32,285,000 11,329,000 76,551,000 25,053,000
------------ ------------ ------------ ------------
Loss from
operations (26,667,000) (9,683,000) (65,459,000) (22,557,000)
Interest income 1,785,000 44,000 3,189,000 163,000
Interest expense (238,000) 25,000 (507,000) (4,000)
------------ ------------ ------------ ------------
Net loss before
provision for
income taxes (25,120,000) (9,614,000) (62,777,000) (22,398,000)
Provision for
income taxes (116,000) -- (116,000) --
------------ ------------ ------------ ------------
Net loss (25,236,000) (9,614,000) (62,893,000) (22,398,000)
Preferred stock
dividends
and accretion -- (1,908,000) (4,266,000) (2,628,000)
------------ ------------ ------------ ------------
Net loss
available
to common
shareholders $(25,236,000) $(11,522,000) $(67,159,000) $(25,026,000)
============ ============ ============ ============
Historical
basic and
diluted net
loss per
common share $ (0.43) $ (0.96) $ (1.97) $ (2.31)
============ ============ ============ ============
Historical
number of
shares used
in computing
basic and
diluted net
loss per share 58,142,334 12,041,161 34,131,502 10,834,299
============ ============ ============ ============
Pro Forma
Net loss $(25,236,000) $ (9,614,000) $(62,893,000) $(22,398,000)
============ ============ ============ ============
Net loss per
share on a
pro forma
basis $ (0.43) $ (0.29) $ (1.23) $ (0.84)
============ ============ ============ ============
Number of
shares used in
calculating
net loss per
share on a pro
forma basis 58,142,334 32,805,944 51,243,272 26,647,815
============ ============ ============ ============
Pro Forma
excluding
non-recurring
charges
Net loss
excluding
non-recurring
charges $(24,646,000) $ (9,614,000) $(61,280,000) $(22,398,000)
============ ============ ============ ============
Net loss per
share on a
pro forma
basis $ (0.42) $ (0.29) $ (1.20) $ (0.84)
============ ============ ============ ============
Number of
shares used
in calculating
net loss per
share on a pro
forma basis 58,142,334 32,805,944 51,243,272 26,647,815
============ ============ ============ ============
Pro Forma calculations assume that all outstanding Redeemable
Convertible Preferred Shares have been converted to Common Shares on a
1:1 basis on day issued.
(b) Financial statements have been restated to include pooling of
interests from the Webcast merger.
StarMedia Network, Inc.
Condensed Consolidated Balance Sheets
September 30, June 30, December 31,
1999 1999 1998
------------- ------------- -------------
ASSETS (unaudited) (audited) (audited)
Current assets:
Cash and cash
equivalents $ 133,501,000 $ 164,719,000 $ 53,147,000
Account receivables, net 3,381,000 2,180,000 511,000
Other current assets 3,860,000 2,397,000 1,712,000
------------- ------------- -------------
Total current assets 140,742,000 169,296,000 55,370,000
Fixed assets, net 16,085,000 10,687,000 5,478,000
Intangible assets, net 2,110,000 583,000 179,000
Goodwill, net 15,398,000 7,429,000 --
Other assets 5,521,000 4,471,000 129,000
------------- ------------- -------------
$ 179,856,000 $ 192,466,000 $ 61,156,000
============= ============= =============
LIABILITIES and STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 5,486,000 $ 3,858,000 $ 346,000
Accrued expenses 9,126,000 8,767,000 6,489,000
Other current
liabilities 2,086,000 2,681,000 1,035,000
------------- ------------- -------------
Total current
liabilities 16,698,000 15,306,000 7,870,000
Long term liabilities 3,304,000 3,713,000 131,000
Series A Redeemable
convertible preferred
stock -- -- 4,218,000
Series B Redeemable
convertible preferred
stock -- -- 12,944,000
Series C Redeemable
convertible preferred
stock -- -- 79,332,000
Stockholders' equity (deficit):
Common stock 58,000 58,000 13,000
Additional paid-in capital 291,673,000 281,588,000 19,693,000
Deferred compensation (10,034,000) (11,609,000) (8,666,000)
Other comprehensive loss (337,000) (320,000) (32,000)
Accumulated deficit (121,506,000) (96,270,000) (54,347,000)
------------- ------------- -------------
Total stockholders' equity
(deficit) 159,854,000 173,447,000 (43,339,000)
------------- ------------- -------------
Total liabilities and
stockholders' deficit $ 179,856,000 $ 192,466,000 $ 61,156,000
============= ============= ============= |
