InfoSpace, Inc. (NASDAQ:INSP) today announced financial results
for the third quarter ended September 30, 2009.
“InfoSpace posted another strong quarter, with good performance
across all of our key financial metrics,” said Will Lansing,
president and chief executive officer of InfoSpace. “Our results
reflect impressive execution by the distribution team, which added
nine new partners, and improved profitability in our core search
business. We are seeing positive trends in the overall search
industry and are optimistic about our continued growth in this
environment.”
Revenues for the third quarter of 2009 were $54.4 million,
reflecting a $14.9 million or 38% increase from the third quarter
of 2008. Distribution revenues represented $41.7 million or 77% of
revenues in the third quarter 2009.
Adjusted EBITDA was $7.1 million for the third quarter of 2009,
compared to Adjusted EBITDA of $6.6 million for the third quarter
of 2008.
Net income for the third quarter of 2009 was $1.8 million, or
$0.05 per share, compared to net loss of $9.9 million, or $0.29 per
share, for the third quarter of 2008.
Cash, cash equivalents, and marketable securities as of
September 30, 2009 totaled $214.1 million, including $8.2 million
of auction rate securities. At the end of the third quarter, the
Company had no debt obligations.
Fourth Quarter 2009 Outlook
For the fourth quarter of 2009, the Company expects revenues
between $57 million and $60 million, Adjusted EBITDA between $7.4
million and $8.4 million, and net income between $3.3 million and
$4.3 million, or $0.09 to $0.12 per share, which includes a
one-time benefit from a net tax refund that increases net income by
$3.3 million and Adjusted EBITDA by $2.4 million.
Conference Call and Webcast
A conference call will be held today at 2 p.m. Pacific / 5 p.m.
Eastern. The live webcast can be accessed in the Investor Relations
section of the InfoSpace corporate Web site, at
http://www.infospaceinc.com. A replay of the call will be available
from approximately one hour after the call through 9 p.m. Pacific
time on November 4, 2009.
Use of Non-GAAP Financial Measures
InfoSpace’s Adjusted EBITDA is calculated by adjusting GAAP net
income (loss) to exclude the effects of discontinued operations,
income taxes, depreciation, amortization of intangible assets,
stock-based compensation expense, loss on investments, net, and
other income, net (including such items as interest income, foreign
currency gains or losses, and gains or losses from the disposal of
assets), as detailed in the accompanying table to the preliminary
unaudited condensed consolidated financial statements.
InfoSpace’s management believes that this non-GAAP financial
measure provides meaningful supplemental information regarding the
Company’s performance by excluding certain expenses and gains that
management believes are not indicative of its core business
operating results. InfoSpace believes that management and investors
benefit from referring to this non-GAAP financial measure in
assessing InfoSpace’s performance. Adjusted EBITDA should be
evaluated in light of the Company's financial results prepared in
accordance with GAAP. A table reconciling the Company's Adjusted
EBITDA to net income (loss) in accordance with GAAP accompanies the
preliminary unaudited condensed consolidated financial statements
included in this release.
About InfoSpace, Inc.
InfoSpace, Inc., a leading developer of metasearch products, is
focused on bringing the best of the Web to Internet users.
InfoSpace's proprietary metasearch technology combines the top
results from several of the largest online search engines,
providing fast and comprehensive search results. InfoSpace sites
include Dogpile® (www.dogpile.com), DoGreatGood™
(www.dogreatgood.com), MetaCrawler® (www.metacrawler.com),
WebCrawler® (www.webcrawler.com), and WebFetch® (www.webfetch.com).
InfoSpace's metasearch technology is also available on nearly 100
partner sites, including content, community, and connectivity
sites. More information may be found at www.infospaceinc.com.
InfoSpace.com, InfoSpace, Dogpile, DoGreatGood, MetaCrawler,
WebCrawler, WebFetch, and other marks are trademarks of InfoSpace,
Inc. The names of other companies and products mentioned herein may
be the trademarks of their respective owners.
This release contains forward-looking statements relating to
InfoSpace, Inc.'s operating results that are subject to certain
risks and uncertainties that could cause actual results to differ
materially from those projected. Words such as "expect," "believe,"
"intend," "anticipate" and "are optimistic," and similar
expressions, identify forward-looking statements, but their absence
does not mean that the statement is not forward looking.
Forward-looking statements include, without limitation: statements
regarding trends in the overall search industry and InfoSpace's
continued growth in this environment and statements regarding
InfoSpace's expectations for financial performance and results of
operations for the fourth quarter of 2009. These statements are not
guarantees of future performance and are subject to certain risks,
uncertainties, and assumptions that are difficult to predict.
Factors that could affect InfoSpace's actual results include: the
completion of the review of the financial statements for the third
quarter of 2009; changes in relationships with customers and
distribution partners on which InfoSpace depends and that represent
a substantial portion of revenues; general economic, industry, and
market sector conditions; the progress and costs of the development
of InfoSpace's products and services; the timing and extent of
market acceptance of those products and services; the ability to
successfully integrate acquired businesses; the successful
execution of InfoSpace's strategic initiatives, operating plans,
and marketing strategies; and the condition of cash investments. A
more detailed description of certain factors that could affect
actual results include, but are not limited to, those discussed in
InfoSpace's most recent Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission, in the section entitled
"Risk Factors" and elsewhere in such document. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this release.
InfoSpace undertakes no obligation to update publicly any
forward-looking statements to reflect new information, events, or
circumstances after the date of this release or to reflect the
occurrence of unanticipated events.
InfoSpace, Inc. Preliminary Condensed Consolidated
Statements of Operations (Unaudited) (Amounts in thousands,
except per share data) Three months
ended Nine months ended September 30,
September 30, September 30, September 30, 2009 2008
2009 2008 Revenues $ 54,356 $ 39,469 $ 137,189 $ 119,979
Operating expenses:(1)
Content and distribution
34,016 18,265 78,702 58,119 Systems and network operations 2,430
3,238 7,220 8,454 Product development 1,207 2,757 4,216 7,895 Sales
and marketing 6,694 6,882 18,776 16,712 General and administrative
6,884 5,940 19,452 18,622 Depreciation and amortization 1,818 2,160
5,440 5,378 Restructuring and other, net - (9 )
- (1,880 ) Total operating expenses
53,049 39,233 133,806
113,300 Operating income 1,307 236 3,383 6,679
Loss on investments, net(2) - (11,046 ) (5,016 ) (22,115 ) Other
income, net 472 1,458 1,545
6,355 Income (loss) from continuing operations
before income taxes 1,779 (9,352 ) (88 ) (9,081 ) Income tax
benefit (expense) 32 (548 ) (251 ) (153
) Income (loss) from continuing operations 1,811
(9,900 ) (339 ) (9,234 ) Discontinued
operations: Loss from discontinued operations, net of taxes
- (12 ) - (1,323 ) Loss on sale of discontinued operations, net of
taxes - (13 ) - (208 )
Net income (loss) $ 1,811 $ (9,925 ) $ (339 ) $ (10,765 ) Earnings
(loss) per share - Basic Income (loss) from continuing
operations $ 0.05 $ (0.29 ) $ (0.01 ) $ (0.27 ) Loss from
discontinued operations - (0.00 ) - (0.04 ) Loss on sale of
discontinued operations - (0.00 ) -
(0.00 ) Net income (loss) per share - Basic $ 0.05 $
(0.29 ) $ (0.01 ) $ (0.31 )
Weighted average shares
outstanding used in computing basic income (loss) per share
35,035 34,479 35,945
34,371 Earnings (loss) per share - Diluted
Income (loss) from continuing operations $ 0.05 $ (0.29 ) $ (0.01 )
$ (0.27 ) Loss from discontinued operations -
(0.00
)
- (0.04 ) Loss on sale of discontinued operations -
(0.00
)
-
(0.00
)
Net income (loss) per share - Diluted $ 0.05 $ (0.29 ) $
(0.01 ) $ (0.31 )
Weighted average shares
outstanding used in computing diluted income (loss) per share
35,766 34,479 35,945
34,371
(1) Stock-based compensation
expense for the three and nine months ended September 30, 2009 and
2008 is allocated among the following captions (in thousands):
Three months ended Nine months ended September 30, 2009
September 30, 2008 September 30, 2009 September 30, 2008
Systems and network operations $ 238 $ 494 $ 552 $ 1,307 Product
development 435 1,080 757 2,720 Sales and marketing 974 1,074 1,423
2,965 General and administrative 2,287 1,535
4,642 4,392 Total stock-based
compensation expense $ 3,934 $ 4,183 $ 7,374 $ 11,384
(2) In the nine months ended
September 30, 2009, the Company recorded net other-than-temporary
impairment charges of $5.0 million relating to the auction rate
securities investments that it holds. In the three and
nine months ended September 30, 2008, the Company recorded
other-than-temporary impairment charges relating to the auction
rate securities investments that it holds of $9.0 million and $21.0
million, respectively. In the three and nine months ended September
30, 2008, the Company recorded a charge of $2.1 million to write
down the carrying value of certain equity investments.
InfoSpace, Inc. Preliminary Condensed Consolidated
Balance Sheets (Unaudited) (Amounts in thousands)
September 30, December 31, 2009 2008
ASSETS Current assets: Cash and cash equivalents $ 93,250 $
49,936 Short-term investments, available-for-sale 112,695 141,592
Accounts receivable, net 21,661 15,423 Notes and other receivables
3,891 1,349 Prepaid expenses and other current assets 2,193
1,767 Total current assets 233,690
210,067 Property and equipment, net 13,650 18,078 Long-term
investments, available-for-sale 8,200 13,916 Goodwill and other
intangible assets, net 45,319 44,123 Other long-term assets
4,431 4,949 Total assets $ 305,290
$ 291,133 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $ 6,620 $ 6,518
Accrued expenses and other current liabilities 27,920 19,707
Liabilities of discontinued operations - 1,109
Total current liabilities 34,540 27,334 Other
long-term liabilities 1,663 1,475
Total liabilities 36,203 28,809 Stockholders' equity:
Common stock 4 3 Additional paid-in capital 1,300,457 1,292,360
Accumulated deficit (1,032,918 ) (1,032,579 ) Accumulated other
comprehensive income 1,544 2,540
Total stockholders' equity 269,087 262,324
Total liabilities and stockholders' equity $ 305,290
$ 291,133 Summary of cash, short-term and
long-term investments: Cash and cash equivalents $ 93,250 $ 49,936
Short-term investments, available-for-sale 112,695 141,592
Long-term investments, available-for-sale 8,200
13,916 Cash, short-term and long-term
investments $ 214,145 $ 205,444
InfoSpace,
Inc. Preliminary Condensed Consolidated Statements of Cash
Flows (Unaudited) (Amounts in thousands)
Nine months ended September 30, September 30, 2009
2008
Operating activities: Net loss $ (339 ) $ (10,765 )
Adjustments to reconcile net loss to net cash provided (used) by
operating activities: Loss from discontinued operations - 1,323
Loss on sale of discontinued operations - 208 Loss on investments,
net 5,016 22,115 Stock-based compensation 7,374 11,384 Depreciation
and amortization 5,440 5,378 Deferred income taxes 186 (1,423 )
Gain on sale of non-core assets, net - (1,897 ) Loss on disposals
of property and equipment 635 - Other 228 34 Cash provided (used)
by changes in operating assets and liabilities: Accounts receivable
(6,234 ) 2,025 Notes and other receivables (3,042 ) 5,927 Prepaid
expenses and other current assets (426 ) (145 ) Other long-term
assets 359 3,278 Accounts payable 144 (464 ) Accrued expenses and
other current and long-term liabilities 6,984
(58,554 ) Net cash provided (used) by operating activities 16,325
(21,576 )
Investing activities: Business acquisition,
net of cash acquired (395 ) - Purchases of property and equipment
(1,654 ) (10,672 ) Other long-term assets 159 (1,003 ) Proceeds
from the sale of assets 611 2,313 Proceeds from sales and
maturities of investments 75,600 43,980 Purchases of investments
(47,317 ) (17,984 ) Net cash provided by investing
activities 27,004 16,634
Financing activities:
Special dividend paid - (299,146 ) Proceeds from stock option
exercises and issuance of stock through employee stock purchase
plan 405 454 Repayment of capital lease obligations (420 )
(96 ) Net cash used by financing activities (15 ) (298,788 )
Discontinued operations: Net cash used by operating
activities attributable to discontinued operations -
(15,361 )
Net increase (decrease) in cash and cash
equivalents 43,314 (319,091 )
Cash and cash
equivalents: Beginning of period 49,936
498,326 End of period $ 93,250 $ 179,235
InfoSpace, Inc. Reconciliations of Non-GAAP
Financial Measures to the Nearest Comparable GAAP Measure
Preliminary Adjusted EBITDA from Continuing Operations
Reconciliation (1) (Unaudited) (Amounts in thousands)
Three months ended Nine months ended
September 30, September 30, September 30, September
30, 2009 2008 2009 2008 Net income (loss) (2) $ 1,811 $ (9,925 ) $
(339 ) $ (10,765 ) Discontinued operations - 25 - 1,531
Depreciation and amortization 1,818 2,160 5,440 5,378 Stock-based
compensation 3,934 4,183 7,374 11,384 Loss on investments, net -
11,046 5,016 22,115 Other income, net (3) (472 ) (1,458 ) (1,545 )
(6,355 ) Income tax expense (benefit) (32 ) 548
251 153 Adjusted EBITDA from
continuing operations $ 7,059 $ 6,579 $ 16,197
$ 23,441
Preliminary Adjusted EBITDA
Reconciliation for Forward-Looking Guidance (Amounts in
thousands) Ranges for the Three months ending December 31,
2009 Net income $ 3,300 $ 4,300 Depreciation and amortization 1,800
1,800 Stock-based compensation 3,300 3,300 Loss on investments - -
Other income, net (3) (1,100 ) (1,100 ) Income tax expense
100 100 Adjusted EBITDA $ 7,400 $ 8,400
(1) Adjusted Earnings before
Interest, Taxes, Depreciation and Amortization ("EBITDA") from
continuing operations is a non-GAAP financial measure and is
reconciled to net income (loss), which the Company's management
believes to be the most comparable generally accepted accounting
principles ("GAAP") measure. Adjusted EBITDA from
continuing operations results are calculated by adjusting GAAP net
income (loss) to exclude the effects of discontinued operations,
income taxes, depreciation, amortization of intangible assets,
stock-based compensation expense, losses on investments, net, and
other income, net (including such items as interest income,
litigation settlements and contingencies, foreign currency gains or
losses, and gains or losses from the disposal of assets), as
detailed above. The Company uses this non-GAAP financial
measure for internal management purposes, when publicly providing
guidance on possible future results, and as a means to evaluate
period-to-period comparisons. The Company's management
believes that this non-GAAP financial measure is a common measure
used by investors and analysts to evaluate its
performance. This non-GAAP financial measure is used in
addition to and in conjunction with results presented in accordance
with GAAP and reflect an additional way of viewing aspects of the
Company's operations that, when viewed with GAAP results and the
accompanying reconciliations to corresponding GAAP financial
measures, provide a more complete understanding of the results of
operations and trends affecting the Company's
business. This non-GAAP financial measure should be
considered as a supplement to, and not as a substitute for, or
superior to, net income (loss) in accordance with GAAP.
(2) As presented in the
Preliminary Condensed Consolidated Statements of Operations
(unaudited).
(3) Other income, net, primarily
consists of interest income, gains or losses from the disposal of
assets, and foreign currency transaction gains or losses.
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