INPC Inphonic (MM)

InPhonic Announces Record First Quarter 2005 Financial Results and Raises Guidance - Reports Revenue of $76.6 million for Q1 2005, up 91% year over year - WASHINGTON, April 27 /PRNewswire-FirstCall/ -- InPhonic, Inc. (NASDAQ:INPC), a leading online seller of wireless services, today reported financial results for its first quarter ended March 31, 2005. "This was a very strong quarter for InPhonic. We started 2005 by delivering record revenue, exceeding our guidance in all areas including revenues, Adjusted EBITDA and Adjusted EBT per share, and continuing to take advantage of the Internet as the fastest growing means for consumers to purchase products and services," said David A. Steinberg, chairman and chief executive officer of InPhonic. "Through the investments we have made this quarter, InPhonic is in an excellent position to deliver both on a top line and the profit goals we've set out for 2005." Consolidated Financial Results GAAP Results * Revenues were $76.6 million for the first quarter 2005, compared to $40.1 million for the first quarter of 2004, an increase of 91% year over year. * Net loss was $(7.0) million or $(0.21) per basic and diluted share for the quarter, and included stock-based compensation of $(7.0) million or $(0.21) per basic and diluted share and depreciation and amortization of $(1.8) million or $(0.05) per basic and diluted share. This compares to a net loss of $(4.8) million, or $(0.60) per basic and diluted share, for the first quarter of 2004, which included stock- based compensation of $(0.2) million or $(0.02) per basic and diluted share and depreciation and amortization of $(1.6) million or $(0.14) per basic and diluted share. * General and administrative costs for the quarter were $18.0 million, including stock-based compensation of $6.4 million. * Sales and marketing costs for the quarter were $18.4 million, including stock-based compensation of $0.6 million. * Cash and marketable securities were $89.7 million at March 31, 2005, compared to $101.0 million at December 31, 2004. * Capital expenditures for the quarter totaled $2.1 million, compared to $1.4 million for the first quarter of 2004. Non-GAAP Results * Revenues were $76.6 million for the first quarter of 2005, compared to revenues of $38.0 million, excluding the effects of the one-time recognition of $2.1 million in revenues for the first quarter of 2004 that were previously deferred in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements, an increase of 102% year over year. * Adjusted EBITDA for the quarter was $1.8 million, compared to $(5.0) million for the first quarter 2004, an improvement of $6.8 million year over year. * Adjusted Earnings before Taxes ("Adjusted EBT") of $0.2 million for the quarter, or $0.01 per pro forma diluted share, reflected an improvement of $6.4 million compared with adjusted EBT of $(6.2) million, or $(0.21) per pro forma diluted share for the first quarter 2004. * General and administrative costs for the quarter were $11.6 million, excluding stock-based compensation of $6.4 million and was 15% of revenue for the quarter, compared to 25% for the first quarter of 2004. * Sales and marketing costs for the quarter were $17.8 million, excluding stock-based compensation of $0.6 million and was 23% of revenue for the quarter, compared to 25% for the first quarter 2004. The components of Adjusted EBITDA and Adjusted EBT are discussed below under "Non-GAAP Financial Measures." Operating Highlights * Completed acquisition of certain assets of A1 Wireless USA, Inc, one of the largest activators of wireless devices over the Internet; * Acquired substantially all of the assets of VMC Satellite in April 2005, a leading online marketer of digital broadcast satellite services; * Entered wireless peripherals market with the launch of wireless accessories product category; * Launched Spanish-language MVNO, Viva Liberty(SM), as an extension of its successful wholly owned subsidiary MVNO, Liberty Wireless; * Awarded Wireless Week magazine's 2005 Retail Strategies Excellence Award; and, * Received T-Mobile Internet Partner of the Year and Sprint Newcomer of the Year awards. Business Outlook The following business outlook is based on current information and expectations as of April 27, 2005. InPhonic's business outlook as of today will be available on the Company's Investor Relations Web site throughout the current quarter. It is currently expected the outlook will not be updated until the release of InPhonic's next quarterly earnings announcement, notwithstanding subsequent developments; however, InPhonic may update the outlook or any portion thereof at any time. InPhonic is providing guidance for the second quarter 2005 and increasing guidance for the full year 2005. Second Quarter 2005 Outlook * Revenues are expected to be between $80 million and $82 million. This compares to non-GAAP Revenues of $49.1 million achieved for Q2 2004, excluding the effects of the one-time recognition of $1.0 million in revenues for the second quarter 2004 that were previously deferred in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. * Adjusted EBITDA is expected to be between $6.0 million and $6.5 million. This compares to Adjusted EBITDA of $0.5 million achieved for Q2 2004, excluding the effects of the one-time recognition of $1.0 million in revenues for the second quarter 2004 that were previously deferred in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. * Adjusted Earnings before Taxes ("Adjusted EBT") is expected to be between $0.10 and $0.12 per share. This compares to Adjusted EBT per share of $(0.03) achieved for Q2 2004, excluding the effects of the one-time recognition of $1.0 million in revenues for the second quarter of 2004, that were previously deferred in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. Full Year 2005 Outlook * Revenues are expected to be between $345 million and $355 million. This compares with our previous guidance for 2005 revenues of between $315 million and $325 million, and compares to non-GAAP Revenues of $204 million achieved for 2004, excluding the effects of the one-time recognition of revenues that were previously deferred in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. * Adjusted EBITDA is expected to be between $36 million and $37 million. This compares with our previous guidance for Adjusted EBITDA of between $35 million and $36 million and compares to Adjusted EBITDA of $4.4 million achieved for 2004. * Adjusted Earnings before Taxes is expected to be between $0.75 and $0.78 per share. This compares to our previous guidance for Adjusted EBT of between $0.74 and $0.76 per share and compares to Adjusted EBT per share of $(0.04) achieved for 2004. Forward-Looking Statements This press release contains forward-looking statements, including, without limitation, all statements related to future financial performance, plans to grow our business and build our brand. Words such as "expect," "anticipate" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon our current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to our fluctuating operating results, seasonality in our business, our ability to acquire products on reasonable terms, our online business model, demand for our products, the strength of our brand, competition, our ability to fulfill orders and other risks detailed in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K as of and for the Year ended December 31, 2004. You are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and InPhonic undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof. Conference Call Company management will be holding a conference call to discuss its first quarter 2005 financial results Today, Wednesday, April 27, 2005 after the close of the day's trading on the NASDAQ Stock Market. InPhonic will host a conference call, open to the general public, at 5:00 PM Eastern Time to discuss financial results and provide a Company update. The conference call can be accessed by the following: * 800-819-9193 (Domestic) or 913-981-4911 (International); passcode 5041038. * The replay will be available through May 6, 2005 by dialing 888-203- 1112 (Domestic) or 719-457-0820 (International); passcode 5041038. * The Company will also audio web cast the call. * A link to the audio web cast will be available on the Company's website at http://www.inphonic.com/ in the Investor Relations section. * More call information and an audio archive following the call will be available on the Company's website at http://www.inphonic.com/ in the Investor Relations section. * Individual investors can listen to the call at http://www.earnings.com/, Thomson/CCBN's individual investor portal. * Institutional investors can access the call via the password-protected event management site, http://www.streetevents.com/. Non-GAAP Financial Measures To supplement the Company's unaudited consolidated financial statements, which are presented in accordance with GAAP, InPhonic uses Non-GAAP measures of certain components of financial performance, including Non-GAAP earnings before interest, taxes, depreciation and amortization, stock-based compensation, and non-recurring restructuring costs ("Adjusted EBITDA") and Non-GAAP net income per diluted share excluding stock-based compensation, depreciation and amortization related to acquisitions and non-recurring restructuring costs. Adjusted EBITDA - Earnings before interest, taxes, depreciation and amortization adjusted for stock-based compensation and non-recurring restructuring costs. Adjusted EBT - Net Income (loss) excluding stock-based compensation, interest and depreciation and amortization related to acquisitions and non- recurring restructuring costs. Adjusted EBT per pro forma diluted share - per share value of Adjusted EBT on fully-diluted basis. The Company believes that the presentation of Adjusted EBITDA, Adjusted EBT and Adjusted EBT per pro forma diluted share provides useful information to management and investors regarding certain additional financial and business trends relating to its financial condition and results of operations. The Company believes when GAAP net income and GAAP net income per share are viewed in conjunction with these Non-GAAP measures, investors are provided with a more meaningful understanding of the Company's ongoing operating performance. In addition, the Company's management uses these measures for reviewing our financial results. These measures should be considered in addition to results prepared in accordance with U.S. generally accepted accounting principles, but should not be considered a substitute for, or superior to, GAAP results. The Company has reconciled Non-GAAP financial measures included in this press release to the nearest GAAP measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these Non-GAAP financial measures to their most directly comparable GAAP financial measure. About InPhonic Headquartered in Washington, D.C., InPhonic, Inc. (NASDAQ:INPC) is a leading online seller of wireless services and products. InPhonic sells these services and devices, and provides world-class customer service through websites that it creates and manages for online businesses, national retailers, member-based organizations and associations under their own brands. InPhonic also operatesWirefly, a leading mobile phones and wireless plans comparison site that was awarded "Best of the Web" by Forbes magazine in 2004. Today, InPhonic owns and operates Liberty Wireless, a leading MVNO and can deliver a full range of mobility solutions to enterprise clients through its Mobile Virtual Network Enablement (MVNE) platform. In 2004, InPhonic was selected #1 company of the year on the Inc. 500 - Inc. Magazine's list of the fastest-growing privately held companies in the United States. More recently, InPhonic was named T-Mobile's Internet Partner of the Year for 2004. For more information on the company, its products and services, visit the InPhonic Corporate website at http://www.inphonic.com/. INPHONIC, INC. & SUBSIDIARIES Unaudited Condensed Consolidated Statement of Operations (in thousands, except per share and share amounts) Three Months Ended March 31, 2004 2005 Revenues: Activations and services $33,422 $57,242 Equipment 6,654 19,365 Total revenues 40,076 76,607 Cost of revenues, excluding depreciation and amortization Activation and services 6,029 5,337 Equipment 16,947 40,097 Total cost of revenues 22,976 45,434 Operating expenses: General and administrative expenses, excluding depreciation and amortization 10,143 17,994 Sales and marketing expenses, excluding depreciation and amortization 10,020 18,406 Depreciation and amortization 1,609 1,777 Restructuring and severance costs - 264 Total operating expenses 21,772 38,441 Loss from operations (4,672) (7,268) Other income (expense): Interest income 65 482 Interest expense (177) (208) Total other expense (112) 274 Net loss (4,784) (6,994) Preferred stock dividends and accretion to preferred redemption value (2,115) - Net loss attributable to common stockholders $(6,899) $(6,994) Basic and diluted net loss per share $(0.60) $(0.21) Basic and diluted weighted average shares outstanding 11,547,514 32,901,398 Three-Months Ended March 31, 2004 2005 Stock-based compensation is allocated as follows: General and Administrative $206 $6,361 Sales and Marketing 18 643 Total stock-based compensation $224 $7,004 SEGMENT REVENUES Three Months Ended March 31, 2004 2005 Revenue: Wireless activation and services $25,573 $65,531 MVNO services 12,520 9,646 Data services 1,983 1,430 Total revenues $40,076 $76,607 Cost of revenues, excluding depreciation and amortization: Wireless activation and services $14,612 $38,950 MVNO services 7,692 6,227 Data services 672 257 Total cost of revenues $22,976 $45,434 INPHONIC, INC & SUBSIDIARIES Unaudited Condensed Consolidated Balance Sheets (in thousands, except share amounts) December 31, March 31, 2004 2005 Assets (unaudited) Current assets: Cash and cash equivalents 100,986 84,776 Short-term Investments - 4,967 Accounts receivable, net 19,039 29,014 Inventory, net 10,860 15,989 Prepaid expenses 11,434 2,050 Deferred costs and other current assets 2,391 2,588 Total current assets 144,710 139,384 Restricted cash and cash equivalent 500 500 Property and equipment, net 5,975 6,790 Goodwill 9,479 19,740 Intangible assets, net 1,490 5,745 Deposits and other assets 1,635 1,784 Total assets 163,789 173,943 Liabilities and Stockholders' Equity Current liabilities: Accounts payable 16,922 20,309 Accrued expenses and other liabilities 23,502 22,376 Short term capital lease 279 238 Deferred revenue 10,723 14,426 Total current liabilities 51,426 57,349 Long term capital lease 261 222 Total liabilities 51,687 57,571 Stockholders' equity: Common stock, $0.01 par value Authorized 200,000,000 shares at December 31, 2004 and March 31, 2005; issued and outstanding 32,252,573 and 33,017,626 shares at December 31, 2004 and March 31, 2005, respectively; 324 332 Additional paid-in capital 238,241 249,497 Accumulated deficit (126,463) (133,457) Total stockholders' equity 112,102 116,372 Total liabilities and stockholders' equity 163,789 173,943 INPHONIC, INC & SUBSIDIARIES Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) Three Months Ended March 31, 2005 (unaudited) Cash flows from operating activities: Net loss (6,994) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 1,777 Non-cash interest expense, net 162 Stock-based compensation 7,004 Changes in operating assets and liabilities, net of assets and liabilities received from business acquisition: Accounts receivable (9,975) Inventory (2,304) Prepaid expenses (1,316) Deferred costs & other assets (508) Accounts payable 3,387 Accrued expenses (4,112) Deferred revenue 3,703 Net cash used in operating activities (9,176) Cash flows from investing activities: Net cash paid for acquisitions (354) Note receivable from stockholder - Net purchase of short-term investments (4,967) Capitalized expenditures (2,078) Net cash used in investing activities (7,399) Cash flows from financing activities: Principal repayments on debt (80) Proceeds from exercise of warrants and options 647 Capitalized costs of initial public offering (202) Net cash (used in) provided by financing activities 365 Net decrease in cash and cash equivalents (16,210) Cash and cash equivalents at December 31, 2004 100,986 Cash and cash equivalents at March 31, 2005 84,776 Reconciliation of non-GAAP measures to the nearest comparable GAAP measures (Unaudited, in millions) Non-GAAP revenues: Three months ended March 31, Three months ended March 31, 2004 2005 Non- Non-GAAP GAAP Actual Adjustments Results Actual Adjustments Results Revenues $40.1 $(2.1) (a) $38.0 $76.6 $ - $76.6 The following table reconciles non-GAAP Q2 2004 measures, which are used only for comparative purposes against Q2 2005 Guidance: Three months ended June 30, 2004 Non-GAAP Actual Adjustments Results Revenues $50.1 $(1.0) (b) $49.1 (a) One-time recognition of $2.1 million in revenues that were deferred prior to Q1 2004 in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. (b) One-time recognition of $1.0 million in revenues that were deferred prior to Q2 2004 in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. Reconciliation of non-GAAP measures to the nearest comparable GAAP measures (Unaudited in millions) Adjusted EBITDA: Three-Months Ended March 31, March 31, 2004 2005 Net income (loss) $(4.8) $(7.0) Non-recurring revenue adjustment (2.1) (b) - Add Back: Net interest and other expense (income) 0.1 (0.3) Taxes - - Stock-based compensation 0.2 7.0 Restructuring and severance costs - 0.3 (a) Depreciation and amortization 1.6 1.8 Adjusted EBITDA: $(5.0) $1.8 The following table reconciles non- GAAP Q2 2004 measures, which are used only for comparative purposes against Q2 2005 Guidance: Three-Months Ended June 30, 2004 Net income (loss) $(2.9) Non-recurring revenue adjustment $(1.0) (c) Add Back: Net interest and other expense (income) 0.1 Taxes - Stock-based compensation 2.7 Loss on investment 0.2 Depreciation and amortization 1.4 Non-GAAP EBITDA $0.5 (a) Restructuring costs related to the integration of A-1 Wireless USA, Inc and the related restructuring of the Company's workforce of $0.15 million and severance costs of $0.11 million (b) One-time recognition of $2.1 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. (c) One-time recognition of $1.0 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. Reconciliation of non-GAAP measures to the nearest comparable GAAP measures (Unaudited, in millions except share and per share amounts) March 31, 2004 March 31, 2005 Net income (loss) $(4.8) $(7.0) Non-recurring revenue adjustment (2.1)(b) - Add Back: Net interest and other expense (income) 0.1 (0.3) Taxes - - Stock-based compensation 0.2 7.0 Restructuring costs - 0.3 (a) Depreciation and amortization of acquisitions 0.4 0.2 Non-GAAP EBT $(6.2) $0.2 EBT per share $(0.21) $0.01 Basic Weighted Average Shares 11,547,514 32,901,398 Add: Diluted shares 18,289,896 8,130,260 Weighted Average Diluted Shares 29,837,410 41,031,658 Diluted shares used in per share calculation 29,837,410 41,031,658 The following table reconciles non-GAAP Q2 2004 measures, which are used only for comparative purposes against Q2 2005 Guidance: Three-Months Ended June 30, 2004 Net income (loss) $(2.9) Non-recurring revenue adjustment $(1.0)(c) Add Back: Net interest and other expense (income) 0.1 Taxes - Stock-based compensation 2.7 Depreciation and amortization of acquisitions 0.3 Non-GAAP EBT $(0.8) EBT per share $(0.03) Basic Weighted Average Shares 11,576,364 Add: Diluted shares 20,187,038 Weighted Average Diluted Shares 31,763,402 Diluted shares used in per share calculation 31,763,402 (a) Restructuring costs related to the integration of A-1 Wireless USA, Inc and the related restructuring of the Company's workforce of $0.15 million and severance costs of $0.11 million (b) One-time recognition of $2.1 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. (c) One-time recognition of $1.0 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements. DATASOURCE: InPhonic, Inc. CONTACT: Tripp Donnelly VP, Corporate Communications of InPhonic, Inc., +1-202-333-0001, Web site: http://www.inphonic.com/

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