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Subject: CDnow Announces Record Second Quarter and First Six...
Date: Mon, 20 Jul 1998 17:04:19 EDT
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CDnow Announces Record Second Quarter and First Six Months Results
- Second Quarter Revenues Increase 292% -
- First Half Results Up 290% -
JENKINTOWN, Pa., July 20 /PRNewswire/ -- CDnow, Inc. (Nasdaq: CDNW), the
Internet's number one music retailer, today announced financial results for
the second quarter and first six months ended June 30, 1998. Revenue for the
second quarter ended June 30, 1998 was $11.6 million, representing a 292%
increase from $3.0 million for the second quarter ended June 30, 1997. On a
quarter to quarter basis, revenues in the second quarter of 1998 increased by
16% over revenues of $10.0 million for the first quarter of 1998.
The Company added a record 137,000 new customers in the second quarter raising
the total number of customers that have placed orders since inception to
569,000 customers. Approximately 58% of revenues in the second quarter came
from existing customers. Traffic to the CDnow store during the second quarter
increased by 17% when compared to the first quarter of 1998 with average daily
visits in the month of June exceeding 173,000.
Operating expenses increased to $11.6 million for the second quarter of 1998
compared to $1.6 million in the comparable period last year and $10.7 million
in the first quarter of 1998.
The Company's net loss for the second quarter of 1998 was $8.9 million, or
$0.55 per share, compared to a net loss of $1.0 million, or $0.13 per share,
for the second quarter of 1997. On a quarter-to-quarter basis the Company's
net loss for the second quarter declined from the loss in the first quarter of
1998 of $9.2 million, or $0.78 per share.
Revenue for the six months ended June 30, 1998 rose 290% to $21.6 million from
$5.5 million for the six months ended June 30, 1997.
Operating expenses increased to $22.3 million for the first six months of 1998
compared to $2.7 million in the comparable period last year.
The Company's net loss for the six months ended June 30, 1998 was $18.1
million, or $1.29 per share, compared to a net loss of $1.5 million, or $0.20
per share, for the six months ended June 30, 1997.
Jason Olim, CDnow's President and CEO, said, "The results of our first full
quarter as a public company demonstrate our determination to maintain market
leadership while progressing our company toward profitability. We are
particularly excited in having achieved our revenue goals while improving our
margins. We work hard to earn our customers' loyalty, and their repeat
purchases in the quarter prove our success. As our new strategic
relationships with MTV and VH1, Rolling Stone Network and Lycos are
implemented in the third quarter, and we roll out major enhancements to our
store like the recently-announced improved search engine and custom
compilations, we expect substantial further growth in revenue and new customer
acquisition."
CDnow recently entered into a ground-breaking three-year integrated marketing
and content alliance with MTV Networks, a division of Viacom Inc. The
agreement includes on-air and online advertising, event sponsorships, online
music retailing, and content and co-promotions.Cdnow-3
"CDnow is the exclusive online music retail advertiser on the 1998 MTV Video
Music Awards, and a major sponsor of VH1 telecasts. We will create discount
promotions for artists featured on VH1 programs and during the Video Music
Awards in September. Consumers can see their favorite artists on MTV and VH1
and buy their music directly from CDnow. We are very excited about the brand-
building opportunity for the Company," noted Olim.
In June, CDnow began integrating the store into MTV Online and VH1 Online.
Visitors to the MTV and VH1 sites now have access to 250,000 music items
through custom-designed MTV and VH1 online stores on the CDnow site. In
addition, CDnow features MTV and VH1 reviews and music news.
CDnow recently acquired superSonic BOOM, Inc., the first company to offer
customized CDs on the Internet. superSonic BOOM has licensed approximately
60,000 titles, 12,000 of which comprise the current online catalog.
"CDnow consumers will be able to select the music tracks they want, define the
playing sequence, create their own album title and place the order. The
customer's personalized CD is then automatically produced and shipped to their
home. This technology empowers our customers to create unique personal
products for gifts, as well as their own listening pleasure," concluded Olim.
CDnow, Inc. (cdnow.com) is the Internet's number one music store. CDnow
offers more than 250,000 music related items - five times the size of the
average music store. Founded in 1994 by twin brothers Jason and Matthew Olim,
CDnow is building a better music store through intelligent album
recommendations, custom CDs, music samples, and a vast library of reviews,
features from top music writers and exclusive editorial content from Rolling
Stone Network, MTV/VH1 and College Music Journal (CMJ). CDnow is the premier
online music store on Yahoo!, Lycos, Lycos-Bertelsmann, Webcrawler, Tripod,
Geocities, MTV/VH1, Rolling Stone Network and CBS.com.
This release contains statements relating to future results of the Company
(including certain projections and business trends) that are "forward-looking
statements" as defined in the Private Securities Litigation Reform Act of
1995. Actual results may differ materially from those projected as a result
of certain risks and uncertainties, including but not limited to, changes in
political and economic conditions, demand for and market acceptance of new and
existing products, as well as other risks and uncertainties detailed from time
to time in the filings of the Company with the Securities and Exchange
Commission.
CDnow, INC.
CONDENSED UNAUDITED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 DECEMBER 31, 1997
CURRENT ASSETS:
Cash and cash equivalents$47,290,625 $10,686,001
Short-term investments -- 1,003,045
Accounts receivable 326,830 324,411
Prepaid expenses and other 5,423,757 2,457,958
Total current assets 53,041,212 14,471,415
PROPERTY AND EQUIPMENT, net3,855,871 1,884,296
OTHER ASSETS 3,863,069 92,714
60,760,152 $16,448,425
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable -- $ 5,575,288
Current portion of
term loans payable 60,315 54,091
Current portion of
capitalized lease obligations478,810 307,471
Accounts payable 3,510,308 8,981,430
Accrued expenses 1,482,007 579,413
Deferred revenues 83,200 188,466
Advances due to related parties -- 3,261
Total current liabilities 5,614,640 15,689,420
TERM LOANS PAYABLE 104,930 136,293
CAPITALIZED LEASE OBLIGATIONS 994,005 825,851
DEFERRED RENT LIABILITY 145,883 56,717
REDEEMABLE SERIES A AND B CONVERTIBLE
PREFERRED STOCK -- 9,492,594
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, no par value79,281,341 579,549
Additional paid-in capital 4,325,817 1,325,817
Deferred compensation (300,959) (434,776)
Accumulated deficit (29,405,505) (11,223,040)
Total shareholders equity
(deficit) 53,900,694 (9,752,450)
60,760,152 $16,448,425
CDnow, INC.
UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30 June 30
1998 1997 1998 1997
Net Sales 11,610,141 2,964,625 21,624,030 5,546,203
Cost of Sales 9,600,049 2,363,302 18,154,598 4,412,843
Gross profit 2,010,092 601,323 3,469,432 1,133,360
Operating Expenses
Operating and
development 1,684,665 491,156 2,765,714 812,284
Sales and Marketing 8,983,895 704,658 17,769,619 1,121,960
General and
administrative 883,874 404,083 1,734,159 743,385
11,552,434 1,599,897 22,269,492 2,677,629
Operating loss (9,542,342) (998,574) (18,800,060) (1,544,269)
Interest Income 722,012 -- 1,228,051 1,390
Interest Expense (48,400) (6,805) (494,914) (6,805)
Net Loss (8,868,730) (1,005,379) (18,066,923) (1,549,684)
Accretion of Preferred
Stock To Redemption -- -- (115,542) --
Value
Net Loss Applicable To
Common Shareholders(8,868,730) (1,005,379) (18,182,465) (1,549,684)
Net Loss Per Common
Share (.55) (.13) (1.29) (.20)
Weighted Average Number
Of Common Shares
Outstanding 16,074,787 7,845,684 14,044,939 7,845,684
SOURCE CDnow, Inc.
CO: CDnow, Inc.
ST: New York
IN: ENT
SU: ERN
07/20/98 16:56 EDT prnewswire.com
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