New digs....
Anyone see this?
Maybe when they understand us, they'll lower their prices.
Has anyone's lightbulb lit up yet?
(COMTEX) B: CDNOW ANNOUNCES RECORD THIRD QUARTER AND NINE MONTHS RESU
B: CDNOW ANNOUNCES RECORD THIRD QUARTER AND NINE MONTHS RESULTS
- Third Quarter Revenues Increase 255% -
JENKINTOWN, Pa., Oct. 23 /PRNewswire/ -- CDnow, Inc., (Nasdaq: CDNW),
the Internet's number one music retailer, today announced financial
results for the third quarter and nine months ended September 30, 1998.
Revenue for the third quarter ended September 30, 1998 was $13.9
million, representing a 255% increase from $3.9 million for the third
quarter ended September 30, 1997. On a quarter to quarter basis,
revenues in the third quarter of 1998 increased by 20% over revenues of
$11.6 million for the second quarter of 1998. Approximately 59% of
revenues in the third quarter came from existing customers.
As of the end of the third quarter, a total of 738,000 customers had
purchased from CDnow since inception. Traffic to the CDnow store
during the third quarter increased by 16% when compared to the second
quarter of 1998. Average daily visits in the month of September
exceeded 215,000, an increase of 24% compared to June.
Operating expenses increased to $16.4 million for the third quarter of
1998 compared to $3.5 million in the comparable period last year and
$11.9 million in the second quarter of 1998.
The Company's net loss for the third quarter of 1998 was $12.8 million,
or $0.74 per share, compared to a net loss of $2.6 million, or $0.36
per share, for the third quarter of 1997. On a quarter-to-quarter
basis, the Company's net loss for the third quarter compares to a loss
in the first and second quarters of 1998 of $0.78 per share and $0.55
per share, respectively.
Revenue for the nine months ended September 30, 1998 rose 276% to $35.5
million from $9.5 million for the nine months ended September 30, 1997.
Operating expenses increased to $39.2 million for the first nine months
of 1998 compared to $6.3 million in the comparable period last year.
The Company's net loss for the nine months ended September 30, 1998 was
$30.8 million, or $2.10 per share, compared to a net loss of $4.1
million, or $0.56 per share, for the nine months ended September 30,
1998.
During the quarter ended September 30, 1998, the Company changed its
method for classifying credit card processing fees from a cost of sales
to a Sales & Marketing expense to conform to industry standards. If
credit card fees were included in cost of sales, gross profit margins
would have been 18.5% instead of 20.9% as reported for the three months
ended September 30, 1998 and 16.9% instead of 19.6% as reported for the
nine months ended September 30, 1998. Prior periods have also been
restated to reflect this change.
Jason Olim, CDnow's President and CEO, said, "We are truly gratified by
what we achieved in this quarter, certainly our most competitive ever.
Revenue continued to grow 20% over the prior quarter, with both a
record number of new customers and strong customer retention, as
exhibited by the 59% of our revenues that came from repeat sales to
existing customers. Our international sales continued to grow well,
and included the launch of our European distribution capability and
global marketing. CDnow achieved double-digit brand recognition among
Internet users, was rated the fourth most recognized e-commerce brand,
and founded a network of leading online specialty retailers scheduled
to launch in November. Most importantly, we maintained our disciplined
business model, achieving our planned gross profit and bettering gross
margin and net loss expectations."
The third quarter of 1998 was CDnow's most innovative quarter ever with
the launch or announcement of:
-- My CDnow: personalization features that enable consumers to create
their own music store.
-- Fast Forward Rewards: a proprietary frequent buyer rewards program,
with points customers can redeem for music and merchandise.
-- Improved Search Capabilities: utilizing Verity, Inc.'s K2 search
technology.
-- Cosmic Credit Program: our affiliate network program exceeded 100,000
members and became our largest single source for new customers.
-- Online Shopping Network: scheduled to launch in November, it will
enable consumers to find quality goods and services from the
Internet's best-known and trusted brands: CDnow, Cyberian Outpost,
eToys, and Reel.com.
CDnow's store, brand and customer service received high ratings in
the third quarter:
-- EMarketer, a New York-based consulting firm and authority on business
online, ranked CDnow the number one music store online.
-- BizRate, the Internet leader in monitoring online customer
satisfaction, rated CDnow a Buyers' Best Winner for both product
selection and customer support.
-- USA TODAY reported that CDnow was the fourth most recognized
electronic commerce brand in a recent survey of Internet users.
Earlier today, N2K Inc. (Nasdaq: NTKI) and CDnow Inc. (Nasdaq:
CDNW), jointly announced the signing of a definitive merger agreement.
CDnow, Inc. (cdnow.com) is the Internet's number one music store.
CDnow offers more than 300,000 music related items -- ten 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, a vast
library of reviews and features from top music writers and exclusive
editorial content from Rolling Stone Network, MTV/VH1 and CMJ New Music
Monthly. 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 CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 DECEMBER 31, 1997
(unaudited)
CURRENT ASSETS:
Cash and cash
equivalents $59,563,026 $10,686,001
Short-term investments -- 1,003,045
Accounts receivable 811,175 324,411
Prepaid expenses and
other 9,170,725 2,457,958
Total current assets 69,544,926 14,471,415
PROPERTY AND EQUIPMENT,
net 4,129,299 1,884,296
OTHER ASSETS 3,897,161 92,714
$77,571,386 $16,448,425
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable -- $5,575,288
Current portion of long
term debt 635,160 361,562
Accounts payable 9,324,304 8,981,430
Accrued expenses 2,821,178 579,413
Other current liabilities 100,295 191,727
Total current
liabilities 12,880,937 15,689,420
LONG TERM DEBT 1,130,484 962,144
DEFERRED RENT LIABILITY 160,990 56,717
REDEEMABLE SERIES A AND B
CONVERTIBLE PREFERRED STOCK -- 9,492,594
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock, no par
value 101,482,736 579,549
Additional paid-in
capital 4,325,817 1,325,817
Deferred compensation (246,679) (434,776)
Accumulated deficit (42,162,899) (11,223,040)
Total shareholders equity
(deficit) 63,398,975 (9,752,450)
$77,571,386 $16,448,425
CDnow, INC.
UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
Net Sales 13,879,775 3,906,661 35,503,805 9,452,864
Cost of Sales 10,980,974 3,059,849 28,549,562 7,333,069
Gross profit 2,898,801 846,812 6,954,243 2,119,795
Operating Expenses
Operating and
Development 2,390,004 631,727 5,155,718 1,444,011
Sales and
Marketing 12,938,039 2,341,655 31,293,668 3,603,238
General and
Administrative 1,047,175 522,911 2,781,334 1,266,296
16,375,218 3,496,293 39,230,720 6,313,545
Operating loss (13,476,417) (2,649,481) (32,276,477) (4,193,750)
Interest Income 787,183 92,655 2,015,234 94,045
Interest Expense 68,160 23,156 563,074 29,961
Net Loss (12,757,394) (2,579,982) (30,824,317) (4,129,666)
Accretion of Preferred
Stock To Redemption
Value -- (263,748) (115,542) (263,748)
Net Loss Applicable To
Common
Shareholders (12,757,394) (2,843,730) (30,939,859) (4,393,414)
Net Loss Per Common
Share (.74) (.36) (2.10) (.56)
Weighted Average Number
Of Common Shares
Outstanding 17,141,221 7,845,684 14,764,870 7,845,684
SOURCE CDnow, Inc.
-0- 10/23/98 /CONTACT: Joel Sussman,
VP-CFO of CDnow, Inc., 215-517-7325; Investor Relations - Carl Hymans
of G.S. Schwartz & Co., 212-725-4500, for CDnow, Inc.; or Media
Relations - Curtis Hougland of Middleberg & Assoc., 212-888-6610, for
CDnow, Inc./
(CDNW)
CO: CDnow, Inc. ST: Pennsylvania IN: CPR MLM REA SU: ERN
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