Lycos Reports 152% Increase in Revenues During Fiscal Year 1998
Business Wire - August 19, 1998 16:25
WALTHAM, Mass.--(BUSINESS WIRE)--Aug. 19, 1998--
36% Increase in Unduplicated Reach during Fiscal Year
Cash Flow Positive for Fourth Quarter and Fiscal Year
26% Increase in Revenues from Previous Quarter
20% Sequential Growth in Quarterly Traffic
Lycos, Inc. (NASDAQ:LCOS), the fourth most popular Web network, today announced financial results for its fourth quarter and fiscal year ended July 31, 1998.
Revenues for the quarter were $19.0 million, representing an increase of 26% over the previous quarter ended April 30, 1998 and a 145% increase over the quarter
ended July 31, 1997. Before amortization and one time merger-related expenses, the Company reported a loss of $1.6 million or $0.09 per share for the quarter as
compared to a net loss of $2.4 million or $0.15 per share for the previous quarter ended April 30, 1998. For the fiscal year ended July 31, 1998, revenues were
$56.1 million as compared to $22.3 million for the previous fiscal year, representing a 152% increase. Before amortization and one time merger-related expenses,
net loss for the year ended July 31, 1998 was $3.6 million or $0.23 per share as compared to a net loss of $6.6 million or $0.48 per share for the year ended July
31, 1997. Net loss for the quarter and year ended July 31, 1998 after amortization and one-time charges was $0.32 and $6.27, respectively.
"Fiscal year 1998 was a period of tremendous growth and achievement for us and this quarter was no exception. We continue to experience strong growth in every
key metric, including revenue and operating results, once again significantly exceeding Wall Street's expectations," said Edward M. Philip, Lycos' Chief Financial
Officer and Chief Operating Officer. "We also continued to grow our traffic, unique users and unduplicated reach which allowed Lycos to attract top advertisers,
e-commerce partners and other strategic alliances. Our already substantial growth and progress is accelerated by the recent acquisition of WhoWhere?, further
solidifying our position as one of the world's pre-eminent online services."
Lycos recently announced the acquisition of WhoWhere?, catapulting the Lycos network to the fourth most popular Web destination with a reach of more than 32%
(MediaMetrix 7/98). The Lycos network now includes three of the top 10 Web sites, lycos.com, tripod.com and angelfire.com, making it the only company owning
more than one top 10 site. Furthermore, the Lycos network is now the largest online community including the fastest-growing site on the Web, Angelfire, which
combined with Tripod and Guestworld creates the Web's largest community with more than 4 million registered users.
"Lycos reshaped the Internet landscape in fiscal year 1998, establishing itself as a premiere new media company further advancing our portal positioning by adding
the Web's largest community and its associated loyalty," said Robert J. Davis, President and CEO of Lycos. "Lycos is the world's fastest-growing, most diverse,
full-service hub on the Web, combining search, directory, community, personalization and shopping. We are extremely well-positioned to achieve our mission of
becoming the world's most visited online destination."
Key accomplishments for Lycos in the fourth quarter 1998:
-- Completed secondary stock offering of 2.3 million shares of common stock in June 1998 raising approximately $115 million.
-- Declared two for one stock split payable August 25, 1998 to stockholders of record August 14, 1998.
-- In June, the Company acquired Guestworld, the Web's largest provider of free online guestbook services which allows visitors to register and comment on a
person's homepage and automatically compiles visitors' e-mail addresses, making it easy for a homepage owner to stay in touch with guests, respond to comments,
and inform them of site updates.
-- Tripod, the popular online community site, was named the fastest growing top 10 Web site in terms of users accessing the Internet from work (MediaMetrix).
-- The Lycos agreement with Barnes and Noble was expanded to include barnesandnoble.com as the exclusive bookseller on Tripod.
-- E-commerce agreements included Fragrances Online, Test Drive, GetSmart, and Realtor.com
-- Lycos continued its European expansion in conjunction with media powerhouse Bertelsmann, now offering localized content in 11 European countries. Lycos
Europe has signed over $15 million in electronic commerce agreements further solidifying its position as the number one pan-European Internet search and navigation
platform.
-- Lycos, Inc. was selected by America Online as their exclusive search service for the largest European markets: France, the UK and Germany.
-- In July, Lycos was named the content provider for Juno Web, a new Internet access service by Juno Online Services, L.P. Juno is a top Internet service provider
with more than 5.5 million accounts.
-- Lycos Online Powered by AT&T WorldNet Service is launched offering new users 150 hours of Internet access per month at a special trial price of $12.95 per
month for the first three months.
-- In June, Lycos was issued a patent by the U. S. Patent and Trademark Office covering the company's "spider" technology. The patent recognizes the proprietary
and unique nature of the Lycos spider technology and gives Lycos exclusive rights to its spider search capability.
-- In August, Lycos was issued a Notice of Allowance for a patent application that was filed by WiseWire Corporation, prior to Lycos' acquisition of WiseWire in
April. The WiseWire technology gives Lycos highly effective directory-building and enhanced search capabilities.
Key accomplishments for Lycos in fiscal year 1998:
Financial Milestones
-- Increased revenue by 152% for the year.
-- Increased deferred revenue more than 238% from $17 million to $57 million.
-- Experienced significant growth while generating positive cash flow.
-- Maintained strong balance sheet with over $153 million in cash.
Acquisitions and Investments
-- In February, the Company acquired Tripod, a leading online community that has nearly doubled in size to 1.9 million registered members since the acquisition.
-- In April, Lycos acquired a minority equity interest in Sage, Inc., owner of PlanetAll, a company that offers unique contact management technology and services. In
August, this interest was acquired by Amazon.com at a premium of over five times Lycos' initial investment.
-- In April, the Company acquired WiseWire Corporation and its proprietary technology for directory building on the Internet. This acquisition establishes Lycos as
the only online service to offer an automated Web directory integrated with Internet search results.
-- Subsequent to year-end, in August, the Company acquired WhoWhere?, which offers a complete line of Web-based applications, including its leading directory
services, popular e-mail service with over 9.3 million registered users and Angelfire, a leading Web community with more than 1.3 million members. The stand alone
reach of the WhoWhere? Network exceeds 17.9% (MediaMetrix 7/98).
E-commerce and Advertising
-- During fiscal year 1998, the Company signed over $100 million in e-commerce agreements.
-- CDnow became the exclusive retailer of CDs and music-related products in a landmark $18.5 million, three-year agreement.
-- Preview Travel agreed to a two year, $4.25 million deal that showcases their online booking capabilities for air, hotel and car reservations.
-- Other e-commerce agreements included AutoConnect, E-loan, and Homeshark.
-- AT&T and Lycos announced a three-year agreement to create a new generation online service, "Lycos Online Powered by AT&T WorldNet Service," through
which the companies will develop and offer a range of new Internet-based consumer communications services.
-- Lycos, Inc. more than doubled the number of advertisers in fiscal year 1998. The Company now has over 850 advertisers.
New Products
Expanded the Company's product offerings with the introduction of a variety of new products and services such as:
-- SafetyNet - an optional free service which allows users to block unwanted adult content on the Web.
-- Personal Home Page Publishing - Lycos offers the most innovative tools for building home pages and caters to both the inexperienced and elite page builders.
-- WiseWire Directories - the premier index technology on the Web, organizing large topics into manageable categories for the user and providing links to the top
sites.
-- Personal Guide - helps users customize their start page, track contacts, and organize their day; also a quick conduit to explore the Web, Lycos' free e-mail and
chat.
-- Image Gallery - brings search results to life with comprehensive files of pictures.
-- Lycos Games - a free service for users featuring classic card, board and video games. Lycos Games offers users unique opportunities to participate in automated
tournaments, receive and review detailed player ratings, chat and send instant messages to other players.
International Expansion
-- Lycos partnered with Sumitomo Corporation, one of Japan's largest trading companies, and Internet Initiative Japan, Japan's largest ISP, to form Lycos Japan, a
local language version of the Lycos service.
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are
cautioned that all forward-looking statements involve risks and uncertainties, including, without limitation to, the level of usage of the Internet and traffic to the
Company's Internet site, continued acceptance of the Company's products, demand for Internet advertising, seasonal trends in advertising sales, the advertising
budgeting cycles of individual advertisers, capital expenditures and other costs relating to the expansion of operations, the introduction of new products or services
by the Company or its competitors, the mix of the services sold and the channels through which those services are sold, pricing changes, general economic conditions
and specific economic conditions in the Internet industry and other risks detailed in the Company's filings with the Securities and Exchange Commission.
About Lycos, Inc. (http://www.lycos.com)
Founded in 1995, Lycos, Inc. (NASDAQ:LCOS) is a New Generation Online Service that combines all aspects of community, leading Web navigation resources
and cutting-edge business and consumer e-commerce solutions. Located at lycos.com, Lycos - "Your Personal Internet Guide" -- is the hub of the
Lycos network dedicated to helping each individual user locate, retrieve and manage information tailored to his or her personal interests. Through its acquisitions of
Tripod, Inc. and WhoWhere?, Inc. in 1998, the Lycos network has become the most full-featured community-oriented online service on the Internet. Today, the
Lycos network includes lycos.com, tripod.com, angelfire.com, whowhere.com and mailcity.com. Headquartered near Boston in Waltham, MA, Lycos maintains
U.S. offices in New York City, Pittsburgh, Dallas, Chicago, Atlanta, Los Angeles, Mountain View, San Francisco and Williamstown, MA. International offices are
located in Germany, Italy, France, Japan, the UK, Spain and The Netherlands.
(c) 1998 Lycos, Inc. all rights reserved. Lycos(R) is a trademark of Carnegie Mellon University. All other product or service marks mentioned herein are those of
respective owners.
LYCOS, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
EXCLUDING MERGER AND ACQUISITION-RELATED EXPENSES (1) (2)
(Unaudited)
Three Months Ended Fiscal Year Ended
July 31 July 31
1998 1997 1998 1997
(Unaudited) (Unaudited)
Revenues:
Advertising $ 14,097,487 $ 5,817,253 $41,768,607 $ 17,417,388
License,
product
and other 4,927,715 1,935,568 14,291,698 4,855,654
Total
revenues 19,025,202 7,752,821 56,060,305 22,273,042
Cost of revenues 4,439,774 1,584,975 12,753,167 4,731,599
Gross profit 14,585,428 6,167,846 43,307,138 17,541,443
Operating expenses:
Research and
development 3,607,022 1,193,481 9,486,547 4,304,183
Sales and
marketing 12,074,889 5,220,095 35,044,593 19,130,305
General and
administrative 1,945,263 857,016 5,412,087 2,856,617
Total operating
expenses,
excluding
merger and
acquisition-
related expenses 17,627,174 7,270,592 49,943,227 26,291,105
Pro forma
operating
loss, excluding
merger
and acquisition
-related
expenses (3,041,746) (1,102,746) (6,636,089) (8,749,662)
Other income 1,422,659 527,394 3,051,747 2,130,472
Pro forma net
loss,
excluding
merger
and
acquisition-
related
expenses $ (1,619,087) $ (575,352) $(3,584,342) $ (6,619,190)
Pro forma basic and
diluted net loss
per share,
excluding
merger and
acquisition-related
expenses $ (0.09) $ (0.04) $ (0.23) $ (0.48)
Shares used in
computing pro
forma net loss
per excluding
merger and
acquisition-related
expenses (3) 18,005,184 13,796,620 15,466,491 13,794,743
The financial statements exclude merger and acquisition related
expenses, including the amortization of purchased intangible assets
and other non-recurring costs. They do not purport to be financial
statements prepared in accordance with Generally Accepted Accounting
Principles.
All share and per share amounts do not reflect the Company's two
for one stock split, payable August 25, 1998 to stockholders of record
as of August 14, 1998.
Shares used in computing pro forma basic and diluted net loss per
share for the three and twelve months ended July 31, 1998 include
Lycos common stock from the conversion of Tripod, Inc. and WiseWire
Corporation common and preferred stock on February 11, 1998 and April
30, 1998, respectively.
LYCOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(Unaudited)
Three Months Ended Fiscal Year Ended
July 31 July 31
1998 1997 1998 1997
(Unaudited) (Unaudited) Revenues: Advertising $ 14,097,487 $ 5,817,253 $ 41,768,607 $ 17,417,388 License, product and other 4,927,715 1,935,568
14,291,698 4,855,654 Total revenues 19,025,202 7,752,821 56,060,305 22,273,042
Cost of revenues 4,862,233 1,584,975 13,404,968 4,731,599
Gross profit 14,162,969 6,167,846 42,655,337 17,541,443
Operating expenses: Research and development 3,601,518 1,193,481 9,477,708 4,304,183 In process research and development and other one-time merge
related charges 3,651,108 -- 92,479,081 -- Sales and marketing 12,069,385 5,220,095 35,035,754 19,130,305 General and administrative 2,066,775 857,016
5,631,104 2,856,617 Total operating expenses 21,388,786 7,270,592 142,623,647 26,291,105 Operating loss (7,225,817) (1,102,746) (99,968,310)
(8,749,662)
Other income 1,422,659 527,394 3,051,747 2,130,472
Net loss $ (5,803,158) $ (575,352)$ (96,916,563)$ (6,619,190)
Basic and diluted net loss per share $ (0.32) $ (0.04)$ (6.27)$ (0.48)
Basic and diluted shares used in computing net loss per share (2) 18,005,184 13,796,620 15,466,491 13,794,743
(1) All share and per share amounts do not reflect the Company's two for one stock split, payable August 25, 1998 to stockholders of record as of August 14,
1998.
(2) Shares used in computing basic and diluted net loss per share for the three and twelve months ended July 31, 1998 include Lycos common stock from the
conversion of Tripod, Inc. and WiseWire Corporation common and preferred stock on February 11, 1998 and April 30, 1998, respectively.
LYCOS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
July 31, July 31,
1998 1997
(Unaudited) Assets Cash and cash equivalents $153,728,200 $ 40,766,258 Accounts receivable, net 10,958,470 6,634,262 License fees receivable 51,761,357
9,715,806 Property and equipment, net 3,960,059 2,397,600 Intangible assets 10,310,475 1,243,050 Other assets, net 18,039,696 4,662,033
Total assets $248,758,257 $ 65,419,009
Liabilities and stockholders'equity Accounts payable and accrued expenses $ 22,322,253 $ 10,677,220 Deferred revenues 57,571,993 17,028,990 Other liabilities
177,416 65,772
Total liabilities 80,071,662 27,771,982
Stockholders' equity 168,686,595 37,647,027
Total liabilities and stockholders'
equity $248,758,257 $ 65,419,009 |
