Excite Reports Second Quarter Financial Results
REDWOOD CITY, Calif., July 16 /PRNewswire/ -- Excite, Inc. (Nasdaq: XCIT - news) today reported revenue of $33.0 million for the second quarter ended June 30, 1998, more than three times the revenue figure of $10.1 million for the corresponding second quarter of 1997 (all 1997 results have been restated to include revenue and expenses of MatchLogic, which was acquired in a pooling transaction in February of 1998).
On June 29, 1998, the Company declared a 2 for 1 stock split to be effected in the form of a 100% stock dividend to shareholders of record as of the close of business on July 6, 1998. Certificates will be distributed, and stock quotes thereafter reported on a post-split basis, as of July 20, 1998. All share and per share information within this press release reflects the split.
The pro forma net loss for the second quarter of 1998 was $4.6 million, or $0.10 per share. The pro forma net loss for the corresponding quarter of 1997 was $6.4 million, or $0.26 per share. (See Pro Forma Condensed Consolidated Statements of Operations Excluding Merger, Acquisition-related and Other Non-recurring Charges.)
Weighted average shares outstanding of 46,599,573 for the quarter partially reflect the addition of 2,870,000 newly issued common shares in connection with the Company's recently completed Secondary Offering, which priced on June 10, 1998. Net proceeds from the offering totaled approximately $84.3 million.
Pro forma second quarter results exclude the following charges: $56.8 million related to the Netcenter Partnership Agreement that Excite and Netscape entered into in April 1998; $16.2 million for in-process technology charges incurred in connection with the acquisition of Throw, Inc. and $2.6 million in merger-related expenses and other non-recurring charges.
Including these special charges, the net loss for the second quarter of 1998 was $80.2 million, or $1.72 per share. These results compare to $11.4 million, or $0.46 per share, for the prior year.
For the year to date, the Company generated revenue of $56.0 million, a pro forma operating loss of $10.6 million, or $0.24 per share, and a net loss of $87.1 million, or $1.98 per share. For the corresponding period of 1997, the Company generated revenue of $17.6 million, a pro forma operating loss of $10.9 million, or $0.45 per share, and a net loss of $20.2 million, or $0.84 per share.
The Company booked $113 million of new business in the second quarter, up 80% from the amount booked in the first quarter. This brought the Company's total backlog as of June 30 to $250 million, a 60% increase from March 30. This backlog will be recognized as earned revenue ratably over terms of each contract in accordance with the impression delivery provisions of the agreements. Approximately $56 million of this backlog is expected to be recognized as revenue over the balance of 1998. Commerce-related revenue represented 23% of total revenue in the second quarter. Although today's commerce revenue is still impression based, the underlying contracts provide Excite the opportunity to generate incremental revenue by sharing a portion of the advertising customers' transaction revenue in the future. The total number of advertisers rose to 819 in the quarter, up 31% from the previous quarter.
Network traffic rose to 44 million page views per day in June, an increase of 10% over March, consistent with the seasonal pattern experienced over the past two years. AOL NetFind, powered by Excite, generated in excess of 8.0 million page views per day, which are incremental to the 44 million page views attributable to the Excite Network.
The recently announced strategic partnership with Netscape lifts Excite's at home reach to 41.8%, according to May estimates from Media Metrix. The reach of the co-branded pages will be reported under the Excite network reach by Media Metrix for the duration of the agreement between Excite and Netscape. In the first two months of this partnership, Excite, which assumed sales responsibility for all co-branded pages in this new service, booked $39 million in new business. Of this amount, $1.5 million was earned as revenue this quarter. The pace of revenue conversion will depend on the growth in impressions on the new Netscape service.
Overall, registrations for Excite and WebCrawler grew from 6 million as of March 30 to 9 million as of June 30. Excite successfully launched its URS (Universal Registration Service), which allows new registrants to simultaneously register for all Excite services through one registration screen. Excite also expects to eliminate any duplication of historic registrations in the course of the third quarter with the goal of maximizing its subscriber marketing efforts.
''We were pleased with the strong revenue and bookings growth this quarter, fueled in part by our investments in telesales and our early success selling the new co-branded service with Netscape,'' said George Bell, Excite's President and CEO. ''Perhaps even more importantly,'' he added, ''the quarter ended with a show of endorsement of our services when USA Today featured, on July 1, the results of a USA/Intelliquest Web survey which named Excite the 'Best-Liked Site on the Web.' Judged by its entertainment, content, visual appeal and ease-of-use, Excite won the overall consumer experience award to be named the Best-Liked Site on the Web. We believe that the investments we've made to improve the quality of our service have produced a noticeable difference, and we are starting to see broad validation for our efforts.''
Operating Highlights:
Excite/Netscape Launch New Netcenter Portal Service. On May 3, 1998, Excite and Netscape announced a strategic partnership, under which the two companies agreed to build out channels jointly for Netscape's Web site and to create co-branded search, both of which were launched in June. In addition to the incremental revenue potential from Netscape's historically under-leveraged ad inventory, other key benefits to Excite in this partnership include: access to extensive user data, Classifieds2000 as the exclusive provider of classifieds across Netcenter, extensive Excite brand exposure, and a secure and prominent position for Excite in the already popular Net Search rotation for two years at a fixed rate.
Excite Online Powered by AT&T Worldnet Service Launched. Consumers can now obtain, at a $14.95 monthly rate, dial-up access to the personalized online services of Excite. Excite and AT&T also offer Internet-based, multimedia communications services such as click-to-dial directories, anonymous voice chat, and conference calling controlled from the Web. AT&T and Excite will jointly market the new service to consumers, distributing more than 5 million bill stuffers promoting Excite online, among other efforts.
A Major Evolution in Search. Three years of consumer research indicate that traditional search results often frustrate users because they fail to find the information they are really looking for. Leveraging its Jango technology and other programming capabilities, beginning with the categories of sports and publicly traded companies, Excite now augments traditional search results with updated, relevant content such as stock quotes, company information, events schedules, game scores, current news and product information on its search results pages. A New York Times reviewer wrote, ''when I tried out Excite's (new) system, searching suddenly seemed fun.''
Excite's Recently Acquired Classifieds2000 Unveils New Online Auctions Service. With more than 1.7 million listings, Classifieds2000 (www.classifieds2000.com) is one of the largest marketplaces on the Web today. It has been rated by Relevant Knowledge as the ''Most Visited Classifieds Service on the Internet''. Now Classifieds2000 has introduced a fun and interactive auction service (www.excite.com/auctions). Users can bid online in real-time for a wide range of merchandise. The new service will be free to users for the first two months.
Excite Shopping Search Extended to Channels. Excite's powerful product search technology, acquired with Netbot, Inc., has now been customized for and made available initially in the Autos Channel (www.exite.com/autos/cars) and the Computers & Internet Channel (www.excite.com/computing), creating a head-to-head listing of comparative prices, product information and the ability to purchase chosen items immediately. Users can perform a specific search for a Dell computer, for example, that contains a 166-Mhz Pentium chip or a wider search for all Apple computers. Searches can also be run with specific product names and model numbers, or by pre-determined price ranges.
Excite Launches Event Finder. In another application of Excite's powerful Jango technology, Excite Event Finder was launched in June. Now available in Excite's Travel Channel (located at www.city.net), the event finder draws listings and information from more than 20 web sites including Ticket Master, EventCal, and Playbill giving users a simple interface to find out about thousands of events across the country, providing in-depth information including locations, dates, times and links directly to event sites for reservations and ticket purchases.
Excite Partners in International Markets. An important aspect of Excite's international strategy has been to team up with strong partners in each market. In June, Excite and Telecom Italia, the world's fifth largest telecommunications carrier, announced their intent to form a joint venture to create the most popular Italian navigational hub. Telecom Italia has over 225,000 ISP accounts, all of which will be exposed to a personalized Excite-branded front-end service by year end. In another move, Excite and Sinanet, the premier Internet portal for Chinese users around the world, have formed an alliance to provide Excite Search capability to Chinese users. Excite's technology gives users the power to search by both traditional Chinese characters used in Taiwan, Hong Kong and other Asian countries and simplified Chinese characters used in Mainland China. Both versions are available at chinese.excite.com. In May, Excite and AOL agreed to distribute localized versions of the AOL NetFind product, powered by Excite, on the AOL Japan and AOL Canada services. Partner initiatives in the UK, Germany and Australia are underway. Details will be announced as agreements are finalized.
Throw, Inc. Acquired to Speed Development of Next Generation Communities Products. On April 9, 1998, Excite acquired Throw, Inc. for stock valued at $16.4 million, an acquisition accounted for as a purchase. In Throw, Excite acquired a team of six employees, who have moved to Excite's Redwood City, CA headquarters; and technology, which when implemented later this year, will enable Excite to offer the next generation of community products. A number of community sites have been successful in attracting large audiences. Generating significant revenue has proven to be much harder. With the Throw features and functionality being integrated with Excite, the Company expects to develop a successful business model around community services online.
Excite Expands Game Channel. Excite Games is one of the Company's most popular channels, attracting a vibrant, dedicated community of gamers. In a new alliance with Total Entertainment [OTC BB:TTLN - news] Network (TEN), a leading online gaming service, Excite and TEN, have introduced a java-based gaming area supporting multi-player classic games at no cost to consumers and with virtually no download or installation delays. Additional enhancements under development will include expanded games, user performance evaluations, official tournaments and tournament results.
Excite Appoints Jeffrey Berg to its Board of Directors and Andy Halliday Vice President of Commerce. Jeffrey Berg, who has been Chairman and CEO of International Creative Management, Inc. (''ICM'') for 18 years, has been appointed to Excite's Board of Directors. ICM is a talent and literary agency representing clients in the fields of publishing, motion pictures, television, music, theater, news and public affairs. Mr. Berg also represents media and telecommunications companies in developing strategies for the future. Mr. Berg also sits on the Board of Oracle Corporation [Nasdaq:ORCL - news]. Mr. Halliday will drive the Company's e-commerce efforts and expand the Company's aggressive strategy of creating the best consumer shopping experience on the Web. Mr. Halliday is a 15-year veteran of retail and commerce business, most recently as co-president of Simon Brand Ventures, a strategic business unit of Simon DeBartolo Group, Inc. the world's largest mall developer. |
