It is amazing to me that the only things that are worth a damn in this company - came from Go2net. This is especially true if you factor in all the cash GNET brought to the table!
InfoSpace Announces Second Quarter 2003 Results; Revenue Increases 15% Year Over Year
July 30, 2003 4:22:00 PM ET
BELLEVUE, Wash.--(BUSINESS WIRE)--July 30, 2003--InfoSpace, Inc. INSP today announced financial results for the second quarter ended June 30, 2003.
Revenues for the second quarter of 2003 were $38.3 million, reflecting a $5.1 million (or 15.2%) increase over the second quarter of 2002. In accordance with Generally Accepted Accounting Principles (GAAP), net loss for the second quarter of 2003 was $15.0 million, or $0.48 per basic share, versus a net loss of $13.7 million, or $0.45 per basic share in the second quarter of 2002.
In the second quarter of 2003, the Company recorded net charges of $18.3 million. The Company recorded a restructuring charge of $10.5 million, comprised of employee separation costs of $4.0 million and a charge of $6.5 million related to excess facilities. In addition, the Company recorded a charge of $12.6 million as a result of the disposition and impairment of certain equity investments, and recognized a $4.7 million gain from a litigation settlement and other items. For the second quarter of 2002, the Company recorded a net charge of $0.8 million for the settlement of a litigation matter and a reserve on a note receivable.
Cash, cash equivalents, and marketable investments at the end of the second quarter of 2003 totaled $301.1 million, reflecting an increase of $13.2 million from the first quarter of 2003. The Company had no debt obligations at the end of the quarter.
"During the quarter we reorganized the company to sharpen our business focus and further align costs with revenues," said Jim Voelker, chairman and chief executive officer of InfoSpace, Inc. "Each of our three businesses contributed to another quarter of positive free cash-flow."
Segment Information
During the second quarter of 2003, the Company reorganized around three businesses: Search and Directory, Payment Solutions and Wireless. As announced last quarter, services falling outside of these areas are in the process of being sold or disposed. As a result of this reorganization, the Company has changed its segment reporting to better reflect how it measures the operating performance of the segments.
-- Search and Directory revenues were $21.4 million in the second quarter of 2003, an increase of $5.2 million or 31.8% from the second quarter of 2002. The revenue increase is primarily due to growth in the number of paid searches and greater revenue per search. Total paid searches during the quarter, including both Search and Directory, were approximately 136 million, generating average revenue per paid search of approximately $0.13. Search and Directory segment income was $11.8 million or 54.9% of revenues for the second quarter of 2003.
-- Payment Solutions revenues were $6.6 million in the second quarter of 2003, an increase of $1.5 million or 27.9% from the second quarter of 2002. The revenue increase is due to growth in the number of merchants using the Authorize.Net service and an increase in the number of transactions. At the end of the second quarter, approximately 83,000 active gateway merchants were using the Authorize.Net service, generating an average of approximately $23.40 in monthly revenue per active merchant. Payment Solutions segment income totaled $1.3 million or 19.5% of revenues for the second quarter of 2003.
-- Wireless revenues were $6.9 million in the second quarter of 2003, a decrease of $0.6 million or 8.3% from the second quarter of 2002. The decrease in revenue is primarily a result of the previously reported loss of a major customer in 2002. Wireless segment income totaled $2.0 million or 29.7% of revenues for the second quarter of 2003.
For each segment, the historical financial results for the first quarter of 2002 through the first quarter of 2003 are presented in a manner consistent with the Company's new reporting segments, which required the Company to allocate historical costs to each segment based on the manner in which the Company currently operates. The revised financial information for the new segments was based on management's estimates and assumptions for comparative purposes, is not indicative of how the Company managed its business or operated the segments in the past, and is different than the segment results previously presented. Segment income for each reportable operating segment does not include allocations for general, administrative and other overhead costs, depreciation and amortization expense, restructuring and other charges and non-operating gains or losses.
Outlook
As a result of the sale or disposition of certain non-core services, pricing declines in the wireless segment and seasonality in Internet usage during the summer months, the Company expects a sequential decline in revenue. For the third quarter of 2003, the Company expects revenue to be between $32 million and $34 million and a net loss excluding any one-time gains or losses. The Company will not be providing additional forward-looking guidance for 2003.
A conference call will be Webcast live today at 2 p.m. Pacific Time/5 p.m. Eastern and can be accessed in the Investor Relations section of the InfoSpace corporate Web site at www.infospaceinc.com. A replay of the call will be available approximately one hour after the call until August 7, 2003 at 10 p.m. Pacific Time.
All information in this release is as of July 30, 2003. InfoSpace undertakes no duty to update any forward-looking statements to actual results or changes in the Company's expectations.
About InfoSpace, Inc.
InfoSpace, Inc. INSP provides wireless and Internet software and application services. The company develops software technologies that enable customers to efficiently offer a broad array of network-based services under their own brand to any device. InfoSpace corporate information can be found at www.infospaceinc.com.
This release contains forward-looking statements relating to the development of InfoSpace, Inc.'s products and services and future operating results that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "believe," "expect," "intend," "anticipate," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Forward-looking statements include without limitation statements regarding the expected results of the Company's strategic plan, the timing and success of the plan to exit non-strategic businesses, expected seasonality in Internet usage and continued pricing pressure in the wireless segment, and the expected revenue in the third quarter of 2003. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect InfoSpace's actual results include the progress and costs of the development of our products and services, the timing and extent of market acceptance of those products and services and the successful execution of the Company's reorganization of its business units. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in InfoSpace's most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, in the section entitled "Factors Affecting Our Operating Results, Business Prospects and Market Price of Stock." Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. InfoSpace undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.
InfoSpace, Inc.
Consolidated Statements of Operations
(Amounts in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $ 38,334 $ 33,266 $ 74,934 $ 66,410
Operating expenses:
Cost of revenues 7,394 9,721 15,558 19,384
Product development 5,513 9,516 12,795 18,943
Sales, general and
administrative 21,777 22,691 40,065 49,787
Amortization of
other intangible
assets 1,623 5,750 3,245 11,664
Other (A) (149) 849 3,807 799
Restructuring
charges (B) 10,463 - 10,630 -
--------- --------- --------- ---------
Total operating
expenses 46,621 48,527 86,100 100,577
--------- --------- --------- ---------
Loss from operations (8,287) (15,261) (11,166) (34,167)
Loss on equity
investments (C) (12,427) (345) (12,014) (17,256)
Other income, net (D) 5,659 1,981 6,888 4,059
--------- --------- --------- ---------
Loss before income tax
expense and
cumulative effect of
change in accounting
principle (15,055) (13,625) (16,292) (47,364)
Income tax benefit
(expense) 63 (96) (7) (240)
--------- --------- --------- ---------
Loss before cumulative
effect of change in
accounting principle (14,992) (13,721) (16,299) (47,604)
Cumulative effect of
change in
accounting
principle - - - (206,619)
--------- --------- --------- ---------
Net loss $ (14,992) $ (13,721) $ (16,299) $(254,223)
========= ========= ========= =========
Basic and diluted net
loss per share (E) $ (0.48) $ (0.45) $ (0.52) $ (8.32)
Shares used in
computing basic and
diluted net loss per
share (E) 31,153 30,627 31,067 30,572
(A) During the second quarter of 2003, the Company recorded a gain of
$0.1 million on the sale of one of its non-core services. During
the first quarter of 2003, the Company reached a settlement
agreement with the Internal Revenue Service regarding the audit of
its payroll tax returns for the year 2000. The audit included a
review of tax withholding on stock options exercised by certain
former employees. Pursuant to the settlement agreement, the
Company expects to pay $4.0 million, including penalties and
interest, which is reflected in the results for the six months
ended June 30, 2003, and is relieved of any further withholding
tax liability with respect to those certain former employees.
(B) During the second quarter of 2003, the Company recorded a
restructuring charge of $10.5 million, which included employee
separation costs of $4.0 million and a charge of $6.5 million
related to excess facilities.
(C) During the second quarter of 2003, the Company recorded a net
charge of $12.4 million, which primarily consists of a $12.6
million charge to write down the carrying value and disposition of
certain equity investments. Additionally, during the first
quarter of 2003, the Company recognized a gain of $0.4 million
related to the disposition of certain equity investments.
(D) During the second quarter of 2003, the Company recognized a $4.7
million gain from a litigation settlement and other items.
(E) Effective September 13, 2002, the Company's shareholders approved
a one-for-ten reverse stock split of all outstanding shares of
common stock, as recommended and approved by the Company's Board
of Directors. Accordingly, InfoSpace shareholders received one
share of the Company's common stock for each ten shares of common
stock held as of the effective date of the reverse split. This
split is retroactively applied to prior year share data for
calculation of earnings per share.
InfoSpace, Inc.
Consolidated Balance Sheets
(Amounts in thousands)
June 30, December 31,
2003 2002
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 134,125 $ 136,672
Short-term investments, available-for-sale 166,915 138,895
Marketable securities 1,216 -
Accounts receivable, net 21,919 21,027
Notes and other receivables, net 7,460 6,442
Payroll tax receivable 13,214 13,214
Prepaid expenses and other current assets 4,344 2,921
----------- -----------
Total current assets 349,193 319,171
Long-term investments, available-for-sale 105 651
Property and equipment, net 18,488 26,252
Other long-term assets 637 659
Other investments 1,484 25,836
Goodwill 97,899 97,844
Other intangible assets, net 7,738 10,983
----------- -----------
Total assets $ 475,544 $ 481,396
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,846 $ 4,688
Funds due to merchants 3,857 2,516
Accrued expenses and other current
liabilities 23,669 15,570
Deferred revenue 9,433 9,169
----------- -----------
Total current liabilities 40,805 31,943
Long-term liabilities:
Long-term deferred revenue 1,243 1,317
----------- -----------
Total liabilities 42,048 33,260
Stockholders' equity:
Preferred stock - -
Common stock 3 3
Additional paid-in capital 1,704,976 1,704,123
Accumulated deficit (1,272,274) (1,255,975)
Deferred expense - warrants - (39)
Unearned compensation - restricted stock (53) (543)
Accumulated other comprehensive income 844 567
----------- -----------
Total stockholders' equity 433,496 448,136
----------- -----------
Total liabilities and stockholders' equity $ 475,544 $ 481,396
=========== ===========
Summary of cash and marketable investments:
Cash and cash equivalents $ 134,125 $ 136,672
Short-term investments,
available-for-sale 166,915 138,895
Long-term investments,
available-for-sale 105 651
----------- -----------
Total cash and marketable investments $ 301,145 $ 276,218
=========== ===========
InfoSpace, Inc.
Consolidated Statements of Cash Flows
(Amounts in thousands)
Six months ended
June 30,
2003 2002
(unaudited) (unaudited)
-----------------------
Operating Activities:
Net loss $ (16,299) $ (254,223)
Adjustments to reconcile net loss to
net cash provided (used) by
operating activities:
Depreciation and amortization 10,423 21,635
Warrant and stock-related revenue (135) (1,393)
Warrant and stock-based compensation expense 305 5,314
Bad debt (recovery) expense (74) (251)
Loss on equity investments 12,014 17,256
Other (46) -
Loss on disposal of assets 278 314
Gain on sale of non-core services (113) -
Asset impairment restructuring charges 2,059 -
Cumulative effect of change in accounting
principle - 206,619
Cash provided (used) by changes in operating
assets and liabilities:
Accounts receivable (897) (10,521)
Notes and other receivables (972) 1,464
Prepaid expenses and other current assets (1,423) 318
Other long-term assets 22 486
Accounts payable (842) (3,033)
Funds due to merchants 1,341 1,153
Accrued expenses and other current
liabilities 8,926 (5,085)
Deferred revenue 325 (2,142)
--------- ----------
Net cash provided (used) by operating
activities 14,892 (22,089)
Investing Activities:
Business acquisitions (270) (2,512)
Purchase of intangible assets (55) (100)
Purchases of property and equipment (1,690) (3,986)
Proceeds from the sale of non-core services 220 -
Proceeds from the sale of equity
investments 11,131 -
Short-term investments, net (28,398) (38,742)
Long-term investments, net 546 42,981
--------- ----------
Net cash provided (used) by investing
activities (18,516) (2,359)
Financing activities:
Proceeds from exercise of options 603 61
Proceeds from issuance of stock through
employee stock purchase plan 474 549
--------- ----------
Net cash provided by financing activities 1,077 610
--------- ----------
Net increase (decrease) in cash and cash
equivalents (2,547) (23,838)
Cash and cash equivalents:
Beginning of period 136,672 118,561
--------- ----------
End of period $ 134,125 $ 94,723
========= ==========
Supplemental disclosure of non-cash activities:
Non-cash activities resulting from purchase
transactions:
Common stock issued $ - $ 1,895
Net assets (liabilities) acquired (assumed) - 1,910
InfoSpace, Inc
Segment Information
(Amounts in thousands)
Three Months Three Months Six months
Ended Ended Ended
March 31, June 30, June 30,
2003 2003 2003
----------------------------------
Search & Directory
Revenue $ 20,354 $ 21,421 $ 41,775
Operating expense 8,181 9,664 17,845
--------- -------- --------
Segment income 12,173 11,757 23,930
Payment Solutions
Revenue 6,317 6,647 12,964
Operating expense 5,061 5,349 10,411
--------- -------- --------
Segment income 1,255 1,298 2,553
Wireless
Revenue 6,116 6,856 12,973
Operating expense 5,482 4,820 10,302
--------- -------- --------
Segment income 635 2,036 2,671
Non-Core Services
Revenue 3,814 3,409 7,223
Operating expense 2,294 1,687 3,981
--------- -------- --------
Income 1,520 1,722 3,241
Total
Total segment revenue 36,600 38,334 74,934
Total segment operating
expense 21,018 21,521 42,539
--------- -------- --------
Total segment income 15,582 16,813 32,395
Corporate
Operating expense 9,116 9,585 18,701
Depreciation 3,600 3,577 7,178
Amortization of other
intangible assets 1,622 1,622 3,245
Restructuring charges 167 10,463 10,630
Other 3,956 (149) 3,807
Loss on investments,
net (413) 12,426 12,014
Other income, net (1,229) (5,659) (6,888)
Income tax expense 70 (62) 7
--------- -------- --------
(16,889) (31,804) (48,693)
----------------------------------
Total Consolidated
Net Loss $ (1,307) $(14,992) $(16,299)
========= ======== ========
Three Three Three Three
Months Months Months Months Year
Ended Ended Ended Ended ended
March June September December December
31, 30, 30, 31, 31,
2002 2002 2002 2002 2002
-----------------------------------------------
Search & Directory
Revenue $ 17,206 $ 16,253 $ 15,901 $ 19,175 $ 68,535
Operating expense 8,983 8,564 6,468 7,860 31,875
--------- -------- -------- -------- ---------
Segment income 8,222 7,689 9,433 11,315 36,659
Payment Solutions
Revenue 4,745 5,197 5,340 5,888 21,170
Operating expense 4,602 4,807 4,719 5,276 19,404
--------- -------- -------- -------- ---------
Segment income 144 390 620 612 1,766
Wireless
Revenue 6,580 7,473 8,501 6,652 29,207
Operating expense 9,716 8,638 6,861 6,211 31,426
--------- -------- -------- -------- ---------
Segment income (loss) (3,136) (1,165) 1,640 442 (2,219)
Non-Core Services
Revenue 4,614 4,343 3,829 4,446 17,231
Operating expense 2,311 2,389 1,753 2,309 8,761
--------- -------- -------- -------- ---------
Income 2,303 1,955 2,075 2,137 8,470
Total
Total segment revenue 33,144 33,266 33,570 36,161 136,142
Total segment operating
expense 25,612 24,398 19,802 21,656 91,467
--------- -------- -------- -------- ---------
Total segment income 7,532 8,869 13,769 14,506 44,675
Corporate
Operating expense 15,745 12,393 12,132 10,776 51,047
Depreciation 4,830 5,137 4,661 4,436 19,065
Impairment of goodwill
and other intangible
assets - - 15,474 60,911 76,385
Amortization of other
intangible assets 5,914 5,750 3,120 2,091 16,875
Restructuring charges - - 1,056 758 1,814
Other (50) 849 22 3,346 4,167
Loss on investments,
net 16,911 345 5,532 (1,848) 20,940
Other income, net (2,078) (1,981) (1,705) (1,652) (7,416)
Income tax expense 144 96 93 97 430
Cumulative effect of
changes in accounting
principle 206,619 - - - 206,619
--------- -------- -------- -------- ---------
(248,034) (22,590) (40,386) (78,916) (389,925)
-----------------------------------------------
Total Consolidated
Net Loss $(240,502)$(13,721)$(26,617)$(64,410)$(345,250)
========= ======== ======== ======== =========
During the second quarter of 2003, the Company narrowed its focus to three core businesses: Search and Directory, Payment Solutions, and Wireless. Businesses outside of these areas are in the process of being sold or disposed. As a result of the reorganization the Company has changed its segment reporting to better reflect how it measures the operating performance of its segments. For each segment, the historical financial results for the first quarter of 2002 through the first quarter of 2003 are presented in a manner consistent with the Company's new reporting segments, which required the Company to allocate historical costs by each segment based on the manner in which the Company currently operates. The revised financial information for the new segments was based on management's estimates and assumptions for comparative purposes, is not indicative of how the Company managed its business or operated the segments in the past, and are different than the segment results previously presented. Segment income for each reportable operating segment does not include allocations for general, administrative and other overhead costs, depreciation and amortization expense, restructuring and other charges and other non-operating gains or losses.
Contact Information:
InfoSpace, Inc.
Adam Whinston, 425-201-8946
adam.whinston@infospace.com
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