WSSI Websidestory (MM)

Company Generates $6.0 Million in Cash in Fourth Quarter SAN DIEGO, Feb. 26 /PRNewswire-FirstCall/ -- WebSideStory, Inc. (NASDAQ:WSSI), a leading provider of real-time customer intelligence solutions, today announced preliminary, unaudited results of operations for the fourth quarter and year ended December 31, 2006. Financial and operating highlights for the quarter and year include: * Non-GAAP earnings per share of $0.17 for the quarter compared to previously issued guidance of $0.15 to $0.16 per share. Non-GAAP earnings per share excludes stock-based compensation expenses, amortization of intangibles and other non-cash items described below. GAAP loss per share of $0.07 with a reconciliation provided in the table below. * Non-GAAP revenue of $19.2 million for the quarter, compared to previously issued guidance of $19.2 million to $19.7 million. Non-GAAP revenue includes $1.0 million in deferred revenue related to the company's merger with Visual Sciences. GAAP revenue of $18.2 million for the quarter. * Non-GAAP earnings per share of $0.55 and non-GAAP revenue of $69.4 million for the year. GAAP loss per share of $0.40 and revenue of $64.3 million for the year. * Record quarterly cash generation, adding $6.0 million in cash and short-term investments to the balance sheet, raising cash and short-term investments at December 31, 2006 to $25.3 million. * Strong year-over-year consolidated non-GAAP revenue growth of 63% on an as-reported basis and 34% organically, with the Visual Sciences division growing at 78%. * More than 115 new customers added in the fourth quarter, expanding the enterprise customer base to over 1,540 customers. * Over 345 new sales bookings in the fourth quarter for various modules of the WebSideStory and Visual Sciences product and service suites. * Announcement of the integration of the company's HBX web analytics solution into Digital Insight's Web Center, a self-service website content management system. The distribution relationship is already helping more than 150 financial institutions manage their online presence. * Selection as a finalist for the 2007 Codie Awards presented by the Software & Information Industry Association (SIIA). WebSideStory was recognized in the Best Enterprise Search Engine category for its new WebSideStory Search 4.0 with Active Browsing. This recognition follows WebSideStory winning the Codie Award in the Best Enterprise Search Engine category for 2006. "In the fourth quarter we focused considerable effort merging our sales, service and marketing groups across our analytics businesses," said Jim MacIntyre, chief executive officer of WebSideStory. "During this period we conducted extensive sales training so that our full sales force could be properly prepared to execute on our technical leadership position in 2007. We did this while achieving record sales bookings in our analytics business in the fourth quarter. At our Search and Content business, we had another record bookings quarter which included a large number of more complex guided search implementations. We did not have enough technical resources for this demand and therefore were unable to recognize some of the revenue on these more complex search arrangements which resulted in our revenue being at the low end of our guidance for the fourth quarter. We are in the process of building our staff in this area so that we will be able to work down this backlog." WebSideStory today also announced that it has entered into a $15.0 million two year senior secured revolving credit facility with Silicon Valley Bank. The company is using cash on hand, together with $5.0 million of borrowings under the credit facility, to repay the $20.0 million in principal amount of notes incurred in connection with the Visual Sciences merger. "The credit facility allows us to repay the Visual Sciences notes and provides an additional source of liquidity to supplement the cash we are generating from operations," said Claire Long, WebSideStory's chief financial officer. The company's guidance for the first quarter and full year of 2007 is as follows: Financial Guidance Q1 2007 Full Year 2007 Low High Low High Revenue Guidance (in millions) Estimated non-GAAP revenue range $19.5 $20.0 $89.5 $91.5 Deferred revenue related to Visual Sciences merger (0.2) (0.2) (0.2) (0.2) Estimated GAAP revenue range $19.3 $19.8 $89.3 $91.3 Earnings per share guidance Estimated non-GAAP EPS range $0.13 $0.14 $0.69 $0.74 Estimated amortization of intangibles (0.06) (0.06) (0.24) (0.24) Estimated stock-based compensation (0.11) (0.09) (0.40) (0.30) Deferred revenue related to Visual Sciences merger (0.01) (0.01) (0.01) (0.01) Estimated non-cash tax benefit (expense) 0.02 0.01 (0.01) (0.04) Estimated non-cash interest expense (0.01) (0.01) (0.01) (0.01) Estimated GAAP EPS range $(0.04) $(0.02) $0.02 $0.14 Estimated shares used in per share calculations 20,500,000 20,500,000 22,125,000 22,125,000 Note on the Use of Non-GAAP Financial Measures Some of the financial measures in this press release, including some of our financial guidance, are non-GAAP financial measures within the meaning of SEC Regulation G. WebSideStory believes that this presentation is useful to investors because it more accurately describes the operating performance of the company on a period-to-period basis, excluding specific costs and expenses that we believe are not indicative of our core operating results. Company management uses these non-GAAP measures as important indicators of the company's past performance and to plan and forecast performance in future periods. In addition, bonus payments to our officers and employees under our corporate bonus plan are based on the achievement of specified non-GAAP revenue and non-GAAP EPS targets. Investors should not consider non-GAAP financial measures in isolation from, or as a substitute for, financial information presented in compliance with GAAP. Quarterly Conference Call and Webcast Information As previously announced, management will host a quarterly conference call and simultaneous webcast to discuss WebSideStory's fourth quarter and year-end results at 1:30 p.m. Pacific time on February 26th. To participate in the call, investors should dial 800.901.5247 (domestic) or 617.786.4501 (international) 10 minutes prior to the scheduled call. The passcode is 11248178. Additionally, a live audio-only webcast of the call may be accessed via the Internet at http://www.websidestory.com/ir. About WebSideStory, Inc. Founded in 1996, WebSideStory, Inc. (NASDAQ:WSSI) is a leading provider of real-time customer intelligence solutions. The services provided by WebSideStory and Visual Sciences deliver comprehensive insight into the lifetime of customer interactions across on-line and multi-channel businesses. More than 1,500 enterprises worldwide rely on the company for innovative solutions, enterprise-class services and a world-class network of partners to improve marketing, sales and operational performance. WebSideStory is headquartered in San Diego, California, and has European headquarters in Amsterdam, The Netherlands. For more information, contact WebSideStory. Voice: 858.546.0040. Fax: 858.546.0480. Address: 10182 Telesis Court, 6th Floor, San Diego, CA 92121. Web site: http://www.websidestory.com/. WebSideStory is a registered trademark of WebSideStory, Inc. Visual Sciences is a registered trademark of Visual Sciences, LLC, which is a wholly owned subsidiary of WebSideStory, Inc. Forward-Looking Statements Statements in this press release that are not a description of historical facts are forward-looking statements. You should not regard any forward-looking statement as a representation by WebSideStory that any of its plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in WebSideStory's business, including, without limitation: WebSideStory's reliance on its web analytics services for the majority of its revenue; blocking or erasing of cookies or limitations on our ability to use cookies; WebSideStory's limited experience with customer intelligence applications beyond web analytics; the risks associated with integrating the operations and products of Avivo Corporation and Visual Sciences, LLC with those of WebSideStory; privacy concerns and laws or other domestic or foreign regulations that may subject WebSideStory to litigation or limit our ability to collect and use Internet user information; WebSideStory's ability to defend itself against claims of patent infringement alleged by NetRatings, Inc.; WebSideStory's ongoing ability to protect its own intellectual property rights and to avoid violating the intellectual property rights of third parties; the highly competitive markets in which we operate that could make it difficult for WebSideStory to acquire and retain customers; the risk that WebSideStory's customers fail to renew their agreements; the risks associated with the company's indebtedness, including the risk of non-compliance with the covenants in our credit facility; the risk that WebSideStory's services may become obsolete in a market with rapidly changing technology and industry standards; and other risks described in WebSideStory's Securities and Exchange Commission filings, including WebSideStory's annual report on Form 10-K for the year ended December 31, 2005 and quarterly reports on Form 10-Q. Do not place undue reliance on these forward-looking statements which speak only as of the date of this news release. All forward-looking statements are qualified in their entirety by this cautionary statement, and WebSideStory undertakes no obligation to revise or update this news release to reflect events or circumstances after the date of this news release. WEBSIDESTORY, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share data) December 31, December 31, 2006 2005 Assets Current assets Cash and cash equivalents $19,726 $19,968 Investments 5,606 11,712 Accounts receivable, net 15,747 7,842 Deferred tax assets 684 507 Prepaid expenses and other current assets 3,904 2,304 Total current assets 45,667 42,333 Property and equipment, net 6,562 2,532 Investments -- 3,276 Goodwill 49,353 21,286 Intangible assets, net 19,732 6,901 Deferred tax assets 14,487 9,166 Other assets 1,356 2,249 $137,157 $87,743 Liabilities and Stockholders' Equity Current liabilities Accounts payable $1,030 $877 Accrued liabilities 9,362 3,880 Deferred revenue 20,936 12,801 Capital lease short-term 38 83 Current maturities of notes payable 19,708 -- Total current liabilities 51,074 17,641 Capital lease long-term 50 90 Other liabilities 781 196 Total liabilities 51,905 17,927 Commitments and contingencies Stockholders' equity Preferred stock, $0.001 par value; 10,000,000 shares authorized and no shares issued and outstanding at December 31, 2006 and December 31, 2005 -- -- Common stock, $0.001 par value; 75,000,000 shares authorized, 19,238,781 and 18,401,180 shares issued and outstanding at December 31, 2006 and December 31, 2005, respectively 19 18 Additional paid-in capital 137,098 114,934 Unearned stock-based compensation (22) (630) Accumulated other comprehensive income 192 103 Accumulated deficit (52,035) (44,609) Total stockholders' equity 85,252 69,816 $137,157 $87,743 WEBSIDESTORY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except share and per share data) Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 Revenues Subscription, hosting and support $14,688 $10,689 $53,388 $36,732 License 1,497 -- 3,524 -- Professional services 1,464 389 5,039 996 Advertising 543 668 2,377 1,724 Total revenues 18,192 11,746 64,328 39,452 Cost of revenues* Cost of revenue 4,348 1,955 15,793 6,574 Amortization of intangible assets 715 76 2,646 202 Total cost of revenues 5,063 2,031 18,439 6,776 Gross profit 13,129 9,715 45,889 32,676 Operating expenses* Sales and marketing 6,530 4,169 26,268 14,654 Technology development 3,346 1,604 12,749 4,955 General and administrative 4,302 1,493 14,299 6,162 Amortization of intangible assets 830 430 3,202 1,147 Total operating expenses 15,008 7,696 56,518 26,918 (Loss) income from operations (1,879) 2,019 (10,629) 5,758 Interest expense (487) (8) (1,761) (34) Interest income 242 272 696 905 Other expense 2 11 4 (43) Total other (expense) income (243) 275 (1,061) 828 (Loss) income before provision for income taxes (2,122) 2,294 (11,690) 6,586 (Benefit from) income taxes (697) (3,278) (4,251) (3,073) (Loss) income before cumulative effect of change in accounting principle (1,425) 5,572 (7,439) 9,659 Cumulative effect of change in accounting principle (net of tax) -- -- 13 -- Net (loss) income $(1,425) $5,572 $(7,426) $9,659 Basic net (loss) income per common share: (Loss) income before cumulative effect of change in accounting principle $(0.07) $0.31 $(0.40) $0.56 Cumulative effect of change in accounting principle -- -- -- -- Basic net (loss) income per common share $(0.07) $0.31 $(0.40) $0.56 Diluted net (loss) income per common share: (Loss) income before cumulative effect of change in accounting principle $(0.07) $0.28 $(0.40) $0.51 Cumulative effect of change in accounting principle -- -- -- -- Diluted net (loss) income per common share $(0.07) $0.28 $(0.40) $0.51 WEBSIDESTORY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - Continued (UNAUDITED) (in thousands, except share and per share data) Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 Shares used in per share calculations: Basic 19,086,837 18,242,596 18,678,099 17,231,411 Diluted 19,086,837 19,883,932 18,678,099 18,774,978 ___________ (*) Stock-based compensation: Cost of revenues $573 $13 $2,149 $58 Sales and marketing 846 42 3,606 183 Technology development 561 113 2,480 334 General and administrative 851 92 2,669 423 WEBSIDESTORY, INC. (UNAUDITED) (in thousands, except share and per share data) Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 Reconciliation of GAAP net (loss) income to Non-GAAP net income Net (loss) income $(1,425) $5,572 $(7,426) $9,659 Amortization of intangibles 1,545 506 5,848 1,349 Stock-based compensation 2,831 260 10,904 998 Deferred revenue related to Visual Sciences merger* 968 -- 5,112 -- Non-cash tax (benefit)/Recovery of NOL valuation reserve (732) (3,417) (4,461) (3,417) Non-cash interest expense 276 -- 968 -- Other non-recurring expenses -- 209 -- 209 Cumulative effect of change in accounting principle -- -- (13) -- Non-GAAP net income $3,463 $3,130 $10,932 $8,798 Reconciliation of GAAP net (loss) income per common share to Non-GAAP income per common share GAAP net (loss) income per common share: Basic $(0.07) $0.31 $(0.40) $0.56 Diluted $(0.07) $0.28 $(0.40) $0.51 Amortization of intangibles 0.08 0.03 0.29 0.07 Stock-based compensation 0.14 0.01 0.55 0.05 Deferred revenue related to Visual Sciences merger* 0.05 -- 0.26 -- Non-cash tax (benefit)/Recovery of NOL valuation reserve (0.04) (0.17) (0.22) (0.18) Non-cash interest expense 0.01 -- 0.05 -- Other non-recurring expenses -- 0.01 -- 0.01 Effect of using non-GAAP dilutive shares -- -- 0.02 -- Cumulative effect of change in accounting principle -- -- -- -- Non-GAAP net income per common share: Diluted $0.17 $0.16 $0.55 $0.46 GAAP weighted-average shares used in per share calculations: Basic 19,086,837 18,242,596 18,678,099 17,231,411 Diluted 19,086,937 19,883,932 18,678,099 18,774,978 Non-GAAP weighted-average shares used in per share calculations: Basic 19,086,837 18,242,596 18,678,099 17,231,411 Diluted 20,387,831 19,883,932 19,963,868 18,774,978 WEBSIDESTORY, INC. (UNAUDITED) (in thousands) Three Months Ended Year Ended December 31, December 31, 2006 2005 2006 2005 Reconciliation of GAAP revenue to Non-GAAP revenue GAAP revenue $18,192 $11,746 $64,328 $39,452 Deferred revenue related to Visual Sciences merger* 968 -- 5,112 -- Non-GAAP revenue $19,160 $11,746 $69,440 $39,452 * In accordance with Statement of Financial Accounting Standards No. 141 "Business Combinations," the deferred revenue obligation on the ending balance sheet of Visual Sciences was reduced to fair value when recorded on the beginning balance sheet within WebSideStory. This fair value adjustment resulted in a write-down of $5.4 million of deferred revenue which would otherwise have been recognized as revenue by Visual Sciences on a stand-alone basis in periods subsequent to the merger date. DATASOURCE: WebSideStory, Inc. CONTACT: Claire Long of WebSideStory, Inc., +1-858-754-2787, Web site: http://www.websidestory.com/

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