Go2Net Reports Third Quarter Financial Results
Third Quarter Pro Forma Income of $0.22 Per Share, 302% Revenue Growth Over Comparable Period of Previous Fiscal Year
July 17, 2000 04:05 PM Eastern Time
SEATTLE, July 17 /PRNewswire/ -- Go2Net, Inc. GNET , one of the Internet's leading providers of applications and technologies, today announced operating results for the fiscal quarter ended June 30, 2000. Revenue for the quarter ended June 30, 2000 was $23,015,093, representing an increase of 302% from the comparable quarter for the previous fiscal year, and an increase of 23% from the previous quarter ended March 31, 2000.
For the quarter, the company reported pro forma net income of $10,082,701, or $0.22 per share, excluding amortization of intangibles and stock compensation. This compares to pro forma net income of $3,057,258 or $.07 per share, excluding the effects of a one-time, non-cash preferred stock dividend, for the comparable quarter of the previous fiscal year.
Gross profit as a percentage of revenue increased to 84.2% for the quarter ended June 30, 2000, as compared to 79.0% from the comparable period of the previous fiscal year. Pro forma operating income increased by 929% from the comparable period of the previous fiscal year, and pro forma operating income as a percentage of revenue increased to 29.2% from 11.4% for the comparable period of the previous fiscal year.
"This was another super quarter for Go2Net, as we posted our sixth consecutive quarter of increasing operating profits," said Russell C. Horowitz, Go2Net Chairman and Chief Executive Officer. "We grew revenue significantly and increased our operating profit margins, while continuing to invest heavily in our infrastructure and expanding our product offerings."
Horowitz continued: "Go2Net is uniquely positioned to capitalize on the dramatic growth of broadband. By 2004, industry sources estimate that the number of Internet-enabled devices worldwide will increase ten-fold to more than 2 billion. Of these 2 billion devices, we believe more than one-third will be broadband-enabled, including PCs, TVs, and wireless. To address this fast-growing market, Go2Net will continue to leverage our core competencies to seamlessly deliver our applications and infrastructure technologies across all broadband devices."
John Keister, Go2Net President, added: "In the June quarter, Go2Net's continued focus on scalable, high-margin businesses led to tremendous progress across all operating metrics and revenue streams. We saw especially strong growth in licensing and transaction-based commerce, which now represent a majority of our revenue."
Overview of company's quarter:
Electronic commerce and usage highlights
-- Go2Net's commerce platforms enabled more than $310 million in
electronic commerce revenue during the quarter, up from $265 million in
the March 2000 quarter and $190 million in the December 1999 quarter.
-- Go2Net's Authorize.Net , a leading global
Internet payment processing platform for businesses, increased its
merchant base to more than 82,000 by adding 12,000 new merchants during
the quarter.
-- Average daily page views on the Go2Net Network grew to 37.5 million in
June 2000, compared to an average of 18.5 million page views per day in
June 1999. This represents annual growth of 103%.
-- Announced that membership in Go2Net's HyperMart Network
of small business Web hosting and e-
business services has surpassed one million members.
Strategic investments and partnerships
-- Announced a strategic alliance in which Go2Net and Vulcan Ventures led
a $20 million investment in imandi.com, an industry leader in the
rapidly growing reverse marketplace category. The agreement brings
Go2Net a co-branded, reverse marketplace service, which will be
integrated across the Go2Net Network, with emphasis on the HyperMart
Network. The agreement also includes a multi-million dollar marketing
and promotion component.
-- Finalized an agreement in which Go2Net and Vulcan Ventures invested a
total of $20 million in Sandbox.com, a leading provider of interactive
sports and entertainment games. As part of the agreement, Sandbox will
offer selected versions of its games through Go2Net's PlaySite
and Silicon Investor
, while Go2Net will deploy selected
Sandbox games in broadband versions of PlaySite. The agreement also
includes a multi-million dollar marketing and promotion component, in
which Sandbox.com will be prominently featured throughout the Go2Net
Network.
-- Announced an agreement in which Go2Net's Authorize.Net will provide
First Savings Bank's merchants with a payment-processing platform for
Internet credit and debit card transactions. First Savings Bank
Merchant Division is one of the country's largest and fastest growing
electronic transaction processors with more than 25,000 merchants and
annualized processing volume of more than $1.5 billion.
Advertiser growth
-- Increased the number of Go2Net's advertisers to 597 as of June 30,
2000, from 358 advertisers for the comparable period in the previous
fiscal year.
Product and corporate development
-- Added multi-currency processing, tax calculation and search engine
submission services to Go2Net's Authorize.Net payment processing
platform.
-- Introduced a private-label portal offering to provide enterprises and
service providers with a full set of customizable services including
search, finance, communications, and commerce. The portal enables
companies to integrate proprietary corporate content and applications
with Go2Net's content and commerce services.
-- Launched a new HyperMart Business Resource Center, featuring small
business services and content from more than 20 business partners, to
help small businesses grow online and to run their e-businesses more
efficiently.
-- Added several key new management hires during the quarter, including
Rick Thompson, who joined Go2Net as Chief Financial Officer after a 12-
plus year career at Microsoft Corporation, including a post as vice
president of Microsoft's Hardware Division.
Go2Net, Inc. Unaudited Pro Forma Condensed Consolidated Statements of Operations (A)
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
Revenue $23,015,093 $5,726,004 $54,994,862 $12,651,287
Cost of revenue 3,630,110 1,205,310 9,002,838 2,832,068
Gross profit 19,384,983 4,520,694 45,992,024 9,819,219
Operating expenses:
Sales and
marketing 6,123,228 1,481,248 15,287,451 3,618,551
General and
administrative 3,798,989 1,751,192 10,025,265 3,697,917
Product
development 2,737,940 634,711 6,277,352 1,452,403
Total operating
expenses 12,660,157 3,867,151 31,590,068 8,768,871
Income from
operations 6,724,826 653,543 14,401,956 1,050,348
Interest income, net 4,298,039 2,422,248 12,284,259 3,151,426
Pro forma income
before taxes 11,022,865 3,075,791 26,686,215 4,201,774
Income tax expense 940,164 18,533 940,164 18,533
Pro forma income $10,082,701 $3,057,258 $25,746,051 $4,183,241
Diluted pro forma
income per common
share (B) $0.22 $0.07 $0.55 $0.12
Shares used in computing
diluted pro forma
income per common
share (B) 46,197,775 41,050,743 46,829,664 36,413,782
(A) These financial statements exclude amortization of intangibles,
merger expenses, stock compensation, cumulative change in accounting
principle and non-cash preferred stock dividend which are summarized
in the following table. They do not purport to be financial statements
prepared in accordance with Generally Accepted Accounting Principles.
The cumulative change in accounting principle is a result of the
Company adopting SAB101 in the current quarter. The following table
reconciles the pro forma net income excluding these charges to net
loss for the periods presented.
(B) Pro forma basic net income per share is $0.32 and $0.12 for the
three months ended June 30, 2000 and June 30, 1999, respectively.
Go2Net, Inc.
Unaudited Reconciliation of Pro Forma Income to Net Loss
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
Pro forma
income $10,082,701 $3,057,258 $25,746,051 $4,183,241
Merger related
costs -- -- -- 650,257
Stock
compensation
expense 497 883,441 3,186 960,708
Amortization of
intangibles 20,359,253 2,740,763 59,965,499 2,740,763
Cumulative
change in
accounting
principle -- -- 488,748 --
Preferred stock
dividend -- 107,000,447 -- 159,930,733
Net loss
applicable
to common
shareholders $(10,277,049) $(107,567,393) $(34,711,382) $(160,099,220)
Go2Net, Inc.
Unaudited Condensed Consolidated Balance Sheets
June 30, September 30,
Assets 2000 1999
Current assets:
Cash and cash equivalents $16,166,219 $66,786,513
Short-term investments 211,084,740 151,000,000
Trade accounts receivables, net 10,558,766 5,712,977
Other accounts receivable 2,686,331 3,818,410
Deferred tax asset, net 8,889,952 2,144,637
Prepaid expenses and other current
assets 1,517,651 750,848
Total current assets 250,903,659 230,213,385
Property and equipment, net 11,566,978 3,254,594
Other assets 1,216,492 1,164,553
Long-term investments 55,773,858 53,771,208
Other long-term investments 98,917,725 21,676,129
Deposits 200,000 250,000
Intangibles, net 163,782,232 197,929,199
Total assets $582,360,944 $508,259,068
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $2,298,997 $1,253,843
Accrued expenses 4,622,186 3,139,409
Accrued compensation and benefits 1,359,698 2,425,013
Deferred revenue 19,679,077 3,072,755
Total current liabilities 27,959,958 9,891,020
Deferred revenue 5,370,343 530,796
Deferred tax liability 26,213,534 16,905,877
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock 450,832,439 450,927,510
Common stock 93,536,026 42,721,806
Accumulated other comprehensive
income 28,378,305 2,500,337
Accumulated deficit (49,929,661) (15,218,278)
Total stockholders' equity 522,817,109 480,931,375
Total liabilities and
stockholders' equity $582,360,944 $508,259,068
Go2Net, Inc.
Unaudited Condensed Consolidated Statements of Operations
Three Months Ended Nine Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
Revenue $23,015,093 $5,726,004 $54,994,862 $12,651,287
Cost of
revenue 3,630,110 1,205,310 9,002,838 2,832,068
Gross profit 19,384,983 4,520,694 45,992,024 9,819,219
Operating
expenses:
Sales and
marketing 6,123,228 1,481,248 15,287,451 3,618,551
General and
admini-
strative 3,799,486 2,634,633 10,028,451 4,658,625
Product
development 2,737,940 634,711 6,277,352 1,452,403
Merger related
costs -- -- -- 650,257
Amortization
of
intangibles 20,359,253 2,740,763 59,965,499 2,740,763
Total
operating
expenses 33,019,907 7,491,355 91,558,753 13,120,599
Loss from
operations (13,634,924) (2,970,661) (45,566,729) (3,301,380)
Interest
income, net 4,298,039 2,422,248 12,284,259 3,151,426
Loss before
taxes (9,336,885) (548,413) (33,282,470) (149,954)
Income tax
expense 940,164 18,533 940,164 18,533
Cumulative change
in accounting
principle -- -- 488,748 --
Net loss (10,277,049) (566,946) (34,711,382) (168,487)
Preferred stock
dividend -- 107,000,447 -- 159,930,733
Net loss
applicable
to common
shareholders $(10,277,049) $(107,567,393) $(34,711,382) $(160,099,220)
Basic and
diluted net
loss per
common share $(0.33) $(4.07) $(1.13) $(6.23)
Shares used
in computing
basic and
diluted net
loss per
common
share 31,290,624 26,401,610 30,668,756 25,668,028
Diluted pro
forma income
per common
share
before
nonrecurring
charges and
non cash
charges $0.22 $0.07 $0.55 $0.12
Shares used in
computing
diluted pro
forma income
per common
share 46,197,775 41,050,743 46,829,664 36,413,782
About Go2Net, Inc.
Go2Net (http://www.go2net.com/) is one of the Internet's leading providers of Internet applications and infrastructure technologies for both narrowband and broadband devices. The Go2Net Network features many of the Internet's leading destinations, including MetaCrawler, Silicon Investor, the HyperMart Network, PlaySite, Dogpile and 100Hot. Go2Net's HyperMart Network offers small business hosting and e-commerce solutions to more than one million members worldwide. Go2Net's Authorize.Net payment processing platform enables more than 80,000 merchants to securely process transactions online. Go2Net licenses its applications and technologies to strategic partners such as Hasbro, National Discount Brokers, Allegiance Telecom and Digeo Broadband, a joint venture among Go2Net, Charter Communications and Vulcan Ventures.
This announcement contains forward-looking statements that involve risks and uncertainties, including those relating to the company's ability to grow its user and customer base. 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 limited operating history, the competitive environment in which the company competes, the early stage of the Web as an advertising and electronic commerce medium, the company's dependence on advertising, sponsorship, licensing and commerce revenues, the company's dependence on strategic relationships to drive traffic to its Web sites, consumer acceptance of the company's new products and services, the company's ability to develop and integrate new technologies and services into its existing services and into new platforms, such as broadband, and the increased use of the Web for commerce. More information about the potential factors that could affect the company's business and financial results is included in the company's Annual Report on Form 10-K for the year ended September 30, 1999, and Quarterly Report on Form 10-Q for the quarters ended December 31, 1999 and March 31, 2000, which are on file with the Securities and Exchange Commission.
CONTACT: Mark S. Peterson, Vice President of Public Relations, 206-447-1595 or mark@go2net.com; or, Investor Relations, Dan Coleman, danc@go2net.com, or John Ruljancich, johnr@go2net.com, 206-447-1595; all of Go2Net, Inc.
SOURCE Go2Net, Inc. |
