InfoSpace Announces Strong First Quarter Financial Results and Raises Full-Year 2004 Guidance
BELLEVUE, Wash.--(BUSINESS WIRE)--April 28, 2004--InfoSpace, Inc. (Nasdaq:INSP) today announced financial results for the three months ended March 31, 2004.
Revenues for the first quarter of 2004 were $48.1 million, reflecting a $17.8 million (or 59%) increase over the first quarter of 2003. In accordance with Generally Accepted Accounting Principles (GAAP), income from continuing operations for the first quarter of 2004 was $5.4 million, or $0.15 per diluted share, versus a net loss from continuing operations of $1.9 million, or $0.06 per diluted share, in the first quarter of 2003.
Due to the recent sale of the Payment Solutions business, Payment Solutions is treated as a discontinued operation for the first quarter of 2004 and all prior periods. As a result, Payment Solutions is not included in revenue or operating results but did contribute to first quarter net income as a discontinued operation. GAAP net income for the first quarter of 2004 (which includes a gain of $29.0 million from the sale of Payment Solutions) was $36.7 million, or $1.03 per diluted share, versus a net loss of $1.3 million, or $0.04 per diluted share, in the first quarter of 2003. If Payment Solutions had remained part of continuing operations of InfoSpace for the quarter, it would have contributed $8.4 million in revenue and $2.8 million in segment income.
Cash, cash equivalents, and marketable investments at March 31, 2004 totaled $379.7 million, reflecting an increase of $84.4 million from December 31, 2003. The increase is primarily attributable to the sale of Payment Solutions for $82 million in cash during the quarter. The Company had no debt obligations at the end of the quarter.
"Both Search & Directory and Mobile delivered strong results this quarter, driven by dramatic growth in paid searches and mobile media downloads," said Jim Voelker, chairman and chief executive officer of InfoSpace, Inc. "We will continue to invest in these growing markets, both in organic efforts and through acquisition. Recently we agreed to acquire Switchboard, which will nearly double our online directory traffic and establish us as a leading online directory provider in the U.S."
First Quarter Highlights and Recent Developments
-- InfoSpace announced a definitive agreement to acquire Switchboard Incorporated, a leading provider of local online advertising solutions and internet-based yellow pages, for $7.75 per share or approximately $160 million in cash. As of December 31, 2003, Switchboard had approximately $55.8 million in cash and marketable securities and no debt.
-- InfoSpace extended its agreement to distribute Google search results through its network of Web search properties and partner web sites until 2006. The agreement includes distribution of Google's award-winning indexed Web search results, as well as targeted advertising from the Google AdWords(TM) Program. InfoSpace's metasearch technology searches the Web's leading engines and delivers the best results from each.
-- The Company completed the sale of its Payment Solutions business to Lightbridge, Inc. for $82 million in cash. As previously announced, the Company tightened its strategic focus to two businesses: Search & Directory and Mobile.
Segment Information
Segment income for each reportable operating segment does not include allocations for general, administrative and other overhead costs, depreciation and amortization expense, restructuring and other charges and non-operating gains or losses.
Search & Directory
Search & Directory revenues were $33.3 million in the first quarter of 2004, an increase of $12.9 million (or 63%) from the first quarter of 2003. The increase in revenue is primarily due to growth in the number of paid searches coming from our distribution partners. Total paid searches in North America during the quarter, including both Search and Directory, were approximately 173 million, generating average revenue per paid search of approximately $0.16. Search & Directory segment income was $13.8 million or 41.5% of revenues for the first quarter of 2004.
Mobile
Mobile revenues were $14.8 million in the first quarter of 2004, an increase of $8.7 million (or 142%) from the first quarter of 2003. The increase in revenue is a result of revenues attributable to media downloads. Mobile segment income totaled $3.8 million or 25.5% of revenues for the first quarter of 2004.
Other Items
During the quarter, the Company recorded a net charge of $1.0 million relating to restructuring and other costs, and a net gain of $0.4 million related to certain minority investments.
Outlook
The Company's guidance excludes the potential impact of any one-time gains or losses, and excludes operating results from Payment Solutions.
Second Quarter 2004 Outlook (excluding Switchboard)
Due to expected seasonality and limited operating history, for the second quarter of 2004 the Company expects revenue to be between $46.0 million and $49.0 million and income from continuing operations to be between $4.0 million and $6.0 million.
Full Year 2004 Outlook (excluding Switchboard)
As a result of strong performance from each of its business units, the Company is increasing guidance for full year 2004. For the full year 2004, the Company expects revenue to be between $195.0 million and $205.0 million (up from previous guidance of $163.0 to $171.0 million), comprised of $135.0 million to $140.0 million in Search & Directory revenue (up from previous guidance of $120.0 million to $125.0 million) and $60.0 million to $65.0 million in Mobile revenue (up from previous guidance of $43.0 million to $46.0 million). The Company expects income from continuing operations to be between $23.0 million and $27.0 million for full year 2004.
Switchboard Outlook
Subject to stockholder approval and other conditions, the previously announced Switchboard transaction is expected to close in the second half of 2004. Assuming the acquisition closes on or near July 1, 2004, InfoSpace anticipates Switchboard will contribute approximately $10.0 million to $12.0 million in revenue and $4.0 million to $5.0 million in Search & Directory segment income for the second half of 2004.
A conference call will be held today at 2 p.m. Pacific Time/5 p.m Eastern. To access the conference call please dial 800-238-9007 (U.S.and Canada) or 719-457-2622 (International). The live webcast can be accessed in the Investor Relations section of the InfoSpace corporate Web site at www.infospaceinc.com. A replay of the call will be available approximately one hour after the call until Wednesday, May 5th, 2004 at 10 p.m. Pacific Time.
All information in this release is as of April 28, 2004. InfoSpace undertakes no duty to update any forward-looking statements to actual results or changes in the Company's expectations.
About InfoSpace, Inc.
InfoSpace, Inc. (Nasdaq:INSP) is a diversified technology and services company that develops Internet and wireless solutions for a wide range of customers. InfoSpace Search & Directory provides Web search and online directory products that help users find the information they need while creating opportunities for merchants. InfoSpace Mobile develops infrastructure, tools and applications that enable carriers and content providers to efficiently develop and deliver mobile data services across multiple devices. More information can be found at http://www.infospaceinc.com.
This release contains forward-looking statements relating to InfoSpace, Inc.'s products and services and future operating results, including the Company's proposed acquisition of Switchboard Incorporated, that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "believe," "expect," "intend," "anticipate," variations of such words, 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 the projected results of the Company's strategic plan and efforts to achieve long-term sustainable growth; the Company's plan to acquire Switchboard Incorporated; projected consolidated revenue and net income for the Company for the second quarter and full year 2004; projected revenue for the Company's Search and Directory and Mobile units for 2004; and potential revenue and segment income contributions for the second half of 2004 from the proposed acquisition of Switchboard Incorporated. 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 progress and costs of the development of our products and services, the timing and extent of market acceptance of those products and services, our dependence on companies to distribute our products and services, the ability to successfully integrate acquired businesses and the successful execution of the Company's strategic initiatives. 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 Annual Report on Form 10-K, in the section entitled "Factors Affecting Our Operating Results, Business Prospects and Market Price of Stock." 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.
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