EX-99.1 2 d248353dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

InfoSpace Announces Third Quarter 2011 Results

BELLEVUE, Wash., October 27, 2011 (BUSINESS WIRE) — InfoSpace, Inc. (NASDAQ: INSP) today announced financial results for the third quarter ended September 30, 2011.

“InfoSpace had a great third quarter,” said Bill Ruckelshaus, President and Chief Executive Officer of InfoSpace. “We continue to execute on our business goals while also generating consistent cash flow from operations. We are pleased with revenue growth, both when compared to the prior quarter and the prior year. Additionally, we remain focused on acquisition opportunities to enhance long-term value for InfoSpace shareholders.”

 

   

Revenues for the third quarter of 2011 were $56.3 million, compared to revenues of $50.5 million for the third quarter of 2010.

 

   

Net income for the third quarter of 2011 was $2.7 million, or $0.07 per diluted share, compared to net loss of $0.1 million, or $0.00 per share, for the third quarter of 2010.

 

   

Adjusted EBITDA, as defined below, was $8.5 million for the third quarter of 2011, compared to $6.6 million for the third quarter of 2010.

 

   

Non-GAAP net income, as defined below, which excludes non-cash income taxes, was $3.8 million, or $0.10 per diluted share for the third quarter of 2011 compared to $1.7 million, or $0.05 per diluted share, for the third quarter of 2010.

 

   

Cash, cash equivalents, and marketable securities as of September 30, 2011 totaled $279.3 million. At the end of the quarter, the Company had no debt obligations.

Fourth Quarter Outlook

For the fourth quarter of 2011, the Company expects revenues to be between $58 million and $61 million, Adjusted EBITDA to be between $7.5 million and $8.5 million, and net income to be between $3.5 million and $4.5 million, or $0.09 to $0.11 per diluted share.

Other Developments

The Company has been informed by its independent registered public accounting firm, Deloitte & Touche LLP, that the Public Company Accounting Oversight Board (“PCAOB”) conducted an inspection of the audit that Deloitte & Touche LLP performed relating to the Company’s financial statements as of and for the year ended December 31, 2010. Deloitte & Touche has also informed the Company that in connection with this inspection the PCAOB has raised certain questions regarding the Company’s accounting treatment of goodwill of $12.7 million relating to its acquisition of Make the Web Better in the second quarter of 2010. As a result, the Company is currently evaluating these questions and considering whether any change to the Company’s


accounting for this transaction would be necessary. If the Company were to determine that a change in the accounting for this transaction is necessary, the Company expects to be required to restate its financial statements for the second quarter of 2010 and all subsequent periods, including its audited financial statements for the year ended December 31, 2010. Any change in the accounting would likely result in a non-cash charge, and the resulting restatement would not affect the Company’s previously reported revenue or Adjusted EBITDA. The Company believes that any such restatement would primarily impact 2010, and that it would not have a material effect on the quarter ended September 30, 2011.

Conference Call and Webcast

A conference call will be held today at 2 p.m. Pacific time / 5 p.m. Eastern time. The live webcast can be accessed in the Investor Relations section of the InfoSpace corporate website, at http://www.infospaceinc.com.

Non-GAAP Financial Measures

InfoSpace’s Adjusted EBITDA is calculated by adjusting net income determined in accordance with generally accepted accounting principles (“GAAP”) to exclude the effects of discontinued operations (including loss from discontinued operations, net of taxes, and loss on sale of discontinued operations, net of taxes),of income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, and other loss, net (which includes such items as adjustments to the fair values of contingent liabilities related to business combinations, gains on resolutions of contingencies, 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 condensed consolidated financial statements (unaudited).

InfoSpace’s management believes that Adjusted EBITDA 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 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. InfoSpace believes that Adjusted EBITDA is a common measure used by investors and analysts to evaluate its performance, that it provides a more complete understanding of the results of operations and trends affecting the Company's business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. A table reconciling the Company's Adjusted EBITDA to net income, which the Company's management believes to be the most comparable GAAP measure, accompanies the preliminary condensed consolidated unaudited financial statements in this release.

InfoSpace's Non-GAAP net income is calculated by adjusting GAAP net income to exclude the effects of discontinued operations (including loss from discontinued operations, net of taxes, and loss on sale of discontinued operations, net of taxes) and non-cash income taxes from continuing operations, as detailed in the accompanying table to the preliminary condensed consolidated financial statements (unaudited). Non-cash income tax expense from continuing operations represents a reduction in cash taxes from continuing operations primarily attributable to the utilization of U.S. net operating losses. InfoSpace’s management believes that this non-GAAP measure provides meaningful supplemental information regarding the Company’s performance.


Adjusted EBITDA and non-GAAP net income should be evaluated in light of the Company's financial results prepared in accordance with GAAP, and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income.

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), InfoSpace.com® (www.infospace.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. In addition, the Company operates an innovative online search engine optimization tool, WebPosition® (www.webposition.com). Additional information may be found at www.infospaceinc.com.

InfoSpace.com, InfoSpace, Dogpile, MetaCrawler, WebCrawler, WebFetch, and other marks are trademarks of InfoSpace, Inc.

###

Investor Contact:

Stacy Ybarra, InfoSpace

(425) 709-8127

stacy.ybarra@infospace.com

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results may differ significantly from management’s expectations due to various risks and uncertainties including, but not limited to: general economic, industry, and market sector conditions; the timing and extent of market acceptance of developed products and services and related costs; our dependence on companies to distribute our products and services; future acquisitions; the successful execution of the Company’s strategic initiatives, operating plans, and marketing strategies; the condition of our cash investments; and the completion of the review of our financial statements for the third quarter of 2011. A more detailed description of these and certain other factors that could affect actual results is included in InfoSpace, Inc.’s most recent Annual Report on Form 10-K and subsequent reports filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. InfoSpace, Inc. undertakes no obligation to update 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 (1)

(Unaudited)

(Amounts in thousands, except per share data)

 

      Three months ended     Nine months ended  
      September 30,     September 30,     September 30,     September 30,  
     2011     2010     2011     2010  

Revenues:

   $ 56,257      $ 50,524      $ 162,199      $ 164,660   

Cost of sales:

     38,237        28,849        105,760        101,550   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     18,020        21,675        56,439        63,110   

Expenses and other income:

        

Engineering and technology (2)

     1,806        2,197        5,254        6,643   

Sales and marketing (2)

     4,888        7,305        16,757        21,101   

General and administrative (2)

     6,513        9,213        16,643        22,719   

Depreciation

     475        804        1,689        2,438   

Other loss, net (3)

     456        493        274        4,152   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses and other loss

     14,138        20,012        40,617        57,053   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

     3,882        1,663        15,822        6,057   

Income tax expense

     (1,204     (81     (4,992     (1,501
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     2,678        1,582        10,830        4,556   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations: (1)

        

Loss from discontinued operations, net of taxes (2)

     —          (1,684     (2,253     (2,444

Loss on sale of discontinued operations, net of taxes

     —          —          (7,674     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 2,678      $ (102   $ 903      $ 2,112   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share - Basic

        

Income from continuing operations

   $ 0.07      $ 0.04      $ 0.29      $ 0.13   

Loss from discontinued operations

     —          (0.04     (0.06     (0.07

Loss on sale of discontinued operations, net of taxes

     —          —          (0.20     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share - Basic

   $ 0.07      $ 0.00      $ 0.03      $ 0.06   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share - Diluted

        

Income from continuing operations

   $ 0.07      $ 0.04      $ 0.28      $ 0.12   

Loss from discontinued operations

     —          (0.04     (0.06     (0.07

Loss on sale of discontinued operations

     —          —          (0.20     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share - Diluted

   $ 0.07      $ 0.00      $ 0.02      $ 0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding used incomputing basic income per share

     38,568        35,969        37,451        35,731   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding used incomputing diluted income per share

     39,158        35,969        38,131        36,770   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

In the nine months ended September 30, 2011, the Company completed the sale of its Mercantila e-commerce business. The operating results of that business have been presented as discontinued operations for all periods presented. Income taxes related to discontinued operations were a benefit of $1.3 million for the nine months ended September 30, 2011. Income taxes related to discontinued operations were $0.6 million and $0.7 million for the three and nine months ended September 30, 2010, respectively. A loss, net of an income tax benefit of $5.1 million, on the sale of the Mercantila business was recorded for the nine months ended September 30, 2011. Revenue, operating expenses and income taxes, loss from discontinued operations and the loss on sale of these discontinued operations are presented below (in thousands):

 

     Three months ended     Nine months ended  
     September 30,      September 30,     September 30,     September 30,  
     2011      2010     2011     2010  

E-Commerce

         

Revenue

   $ —         $ 11,193      $ 16,894      $ 18,232   

Operating expenses and income taxes

        12,877        19,147        20,676   
  

 

 

    

 

 

   

 

 

   

 

 

 

Loss from discontinued operations, net of taxes

   $ —         $ (1,684   $ (2,253   $ (2,444
  

 

 

    

 

 

   

 

 

   

 

 

 

Loss on sale of discontinued operations, net of taxes

   $ —         $ —        $ (7,674   $ —     
  

 

 

    

 

 

   

 

 

   

 

 

 

 

(2)

Stock-based compensation expense for the three and nine months ended September 30, 2011 and 2010 is allocated among the following captions (in thousands):

 

     Three months ended      Nine months ended  
     September 30,      September 30,      September 30,     September 30,  
     2011      2010      2011     2010  

Cost of sales

   $ 37       $ 137       $ 234      $ 390   

Engineering and technology

     251         175         684        1,037   

Sales and marketing

     177         834         829        2,372   

General and administrative

     2,584         1,562         4,673        4,979   

Discontinued operations

     —           354         (159     522   
  

 

 

    

 

 

    

 

 

   

 

 

 

Total stock-based compensation expense

   $ 3,049       $ 3,062       $ 6,261      $ 9,300   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

(3)

In the three and nine months ended September 30, 2011, the Company recorded charges of $0.5 million and $2.0 million, respectively, as a result of the increase in the estimated fair value of a contingent liability related to operation of the assets acquired on April 1, 2010 from Make The Web Better. In the nine months ended September 30, 2011,


InfoSpace, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands)

 

     September 30,     December 31,  
     2011     2010  

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 59,805      $ 155,645   

Short-term investments, available-for-sale

     219,470        98,091   

Accounts receivable, net

     20,095        19,189   

Other receivables, net

     2,170        1,185   

Prepaid expenses and other current assets, net

     1,314        2,163   

Assets of discontinued operations

     —          16,161   
  

 

 

   

 

 

 

Total current assets

     302,854        292,434   

Property and equipment, net

     6,055        7,304   

Goodwill

     57,465        57,465   

Other intangible assets, net

     282        282   

Other long-term assets, net

     3,999        4,258   
  

 

 

   

 

 

 

Total assets

   $ 370,655      $ 361,743   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

    

Current liabilities:

    

Accounts payable

   $ 8,685      $ 2,699   

Accrued expenses and other current liabilities

     20,748        39,518   

Liabilities from discontinued operations

     —          7,777   
  

 

 

   

 

 

 

Total current liabilities

     29,433        49,994   

Other long-term liabilities

     758        955   
  

 

 

   

 

 

 

Total liabilities

     30,191        50,949   

Stockholders’ equity:

    

Common stock

     4        4   

Additional paid-in capital

     1,351,004        1,322,265   

Accumulated deficit

     (1,010,570     (1,011,473

Accumulated other comprehensive income (loss)

     26        (2
  

 

 

   

 

 

 

Total stockholders’ equity

     340,464        310,794   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 370,655      $ 361,743   
  

 

 

   

 

 

 

Summary of cash, cash equivalents, and short-term investments:

    

Cash and cash equivalents

   $ 59,805      $ 155,645   

Short-term investments, available-for-sale

     219,470        98,091   
  

 

 

   

 

 

 

Cash, cash equivalents, and short-term investments

   $ 279,275      $ 253,736   
  

 

 

   

 

 

 


InfoSpace, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)

 

     Nine months ended  
     September 30,     September 30,  
     2011     2010  

Operating activities:

    

Net income

   $ 903      $ 2,112   

Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:

    

Loss on sale of discontinued operations

     7,674        —     

Loss from discontinued operations

     2,253        2,444   

Stock-based compensation

     4,488        8,778   

Warrant-related stock-based compensation

     1,932        —     

Depreciation and amortization of intangible assets

     3,942        5,212   

Earn-out contingent liability adjustments

     2,000        —     

Gain on resolution of contingent liability

     (1,500     —     

Deferred income taxes

     (197     —     

Excess tax benefits from stock-based award activity

     —          (1,097

Amortization of premium on investments, net

     285        1,271   

Loss on disposal of assets

     16        1,180   

Other

     (24     (19

Cash provided (used) by changes in operating assets and liabilities:

    

Accounts receivable

     (882     12,091   

Other receivables

     (985     (140

Prepaid expenses and other current assets

     849        617   

Other long-term assets

     (150     251   

Accounts payable

     5,981        (3,582

Accrued expenses and other current and long-term liabilities

     (13,529     (4,575
  

 

 

   

 

 

 

Net cash provided by operating activities of continuing operations

     13,056        24,543   

Investing activities:

    

Purchases of property and equipment

     (2,507     (1,576

Other long-term assets

     409        —     

Business acquisition, net of cash acquired

     —          (8,000

Proceeds from the sale of assets

     —          307   

Proceeds from sales of investments

     —          52,722   

Proceeds from maturities of investments

     83,141        156,005   

Purchases of investments

     (204,777     (159,091
  

 

 

   

 

 

 

Net cash provided (used) by investing activities of continuing operations

     (123,734     40,367   

Financing activities:

    

Proceeds from stock option exercises and issuance of stock through employee stock

     16,664        2,236   

Proceeds from the sale of common stock

     7,000        —     

Tax payments from shares withheld upon vesting of restricted stock units

     (1,388     (2,891

Earn-out payments for business acquisition

     (423     —     

Repayment of capital lease obligation

     (221     (439

Excess tax benefits from stock-based award activity

     —          1,097   
  

 

 

   

 

 

 

Net cash provided by financing activities of continuing operations

     21,632        3   

Discontinued operations:

    

Net cash used by operating activities attributable to discontinued operations

     (6,156     (4,621

Net cash used by investing activities attributable to discontinued operations

     (638     (8,007
  

 

 

   

 

 

 

Net cash used by discontinued operations

     (6,794     (12,628

Net increase (decrease) in cash and cash equivalents

     (95,840     52,285   

Cash and cash equivalents:

    

Beginning of period

     155,645        83,750   
  

 

 

   

 

 

 

End of period

   $ 59,805      $ 136,035   
  

 

 

   

 

 

 


InfoSpace, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure

Preliminary Adjusted EBITDA Reconciliation (1)

(Unaudited)

(Amounts in thousands)

 

     Three months ended     Nine months ended  
     September 30,      September 30,     September 30,      September 30,  
     2011      2010     2011      2010  

Net income (loss) (2)

   $ 2,678       $ (102   $ 903       $ 2,112   

Discontinued operations

     —           1,684        9,927         2,444   

Depreciation and amortization of intangible assets

     1,115         1,735        3,942         5,212   

Stock-based compensation

     3,049         2,708        6,420         8,778   

Other loss, net (3)

     456         493        274         4,152   

Income tax expense

     1,204         81        4,992         1,501   
  

 

 

    

 

 

   

 

 

    

 

 

 

Adjusted EBITDA (4)

   $ 8,502       $ 6,599      $ 26,458       $ 24,199   
  

 

 

    

 

 

   

 

 

    

 

 

 

InfoSpace, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure

Preliminary Non-GAAP Reconciliation (1)

(Unaudited)

(Amounts in thousands)

 

     Three months ended     Nine months ended  
     September 30,      September 30,     September 30,      September 30,  
     2011      2010     2011      2010  

Net income (loss) (2)

   $ 2,678       $ (102   $ 903       $ 2,112   

Discontinued operations

     —           1,684        9,927         2,444   
  

 

 

    

 

 

   

 

 

    

 

 

 

Income from continuing operations (2)

     2,678         1,582        10,830         4,556   

Non-cash income tax expense from continuing operations(1)

     1,135         167        4,667         1,450   
  

 

 

    

 

 

   

 

 

    

 

 

 

Non-GAAP net income (4)

   $ 3,813       $ 1,749      $ 15,497       $ 6,006   
  

 

 

    

 

 

   

 

 

    

 

 

 

Income from continuing operations- diluted

   $ 0.07       $ 0.04      $ 0.28       $ 0.12   

Non-cash income taxes per share - diluted (4)

     0.03         0.01      $ 0.13         0.04   
  

 

 

    

 

 

   

 

 

    

 

 

 

Non-GAAP net income per share - diluted (4)

   $ 0.10       $ 0.05      $ 0.41       $ 0.16   
  

 

 

    

 

 

   

 

 

    

 

 

 

Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance

(Amounts in thousands)

 

     Ranges for the three months ending  
     December 31, 2011  

Net income

   $ 3,500      $ 4,500   

Depreciation

     1,000        1,000   

Stock-based compensation

     1,000        1,000   

Other income, net (3)

     (100     (100

Income tax expense

     2,100        2,100   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 7,500      $ 8,500   
  

 

 

   

 

 

 

 

(1) 

InfoSpace’s Adjusted EBITDA is calculated by adjusting net income (loss) determined in accordance with generally accepted accounting principles ("GAAP") to exclude the effects of discontinued operations (including loss from discontinued operations, net of taxes, and loss on sale of discontinued operations, net of taxes), income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, and other loss, net (which includes such items as adjustments to the fair values of contingent liabilities related to business combinations, gains on resolutions of contingencies, interest income, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed above. InfoSpace’s management believes that Adjusted EBITDA 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 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. InfoSpace believes that Adjusted EBITDA is a common measure used by investors and analysts to evaluate its performance, that it provides a more complete understanding of the results of operations and trends affecting the Company's business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure.

InfoSpace’s Non-GAAP net income is calculated by adjusting GAAP net income to exclude the effects of discontinued operations (including loss from discontinued operations, net of taxes, and loss on sale of discontinued operations, net of taxes) and the non-cash portion of income tax expense from continuing operations. The non-cash portion of income tax expense from continuing operations represents a reduction to cash taxes payable associated with the utilization of deferred tax assets, which are primarily comprised of U.S. federal net operating losses. Due to the Company’s continued ability to offset a substantial portion of its cash tax liabilities through 2020 provided by these deferred tax assets, management believes that excluding the non-cash portion of income tax expense from continuing operations and the effects of discontinued operations from its GAAP net income provides meaningful supplemental information to investors and analysts regarding the Company’s performance and the valuation of its business.

Adjusted EBITDA and non-GAAP net income (loss) should be evaluated in light of the Company's financial results prepared in accordance with GAAP, and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income .

(2)

As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).

(3)

Other loss, net, primarily consists of adjustments to the fair values of contingent liabilities related to business combinations, gains on resolutions of contingencies, interest income, foreign currency gains or losses, and gains or losses from the disposal of assets.

(4) 

Amounts previously disclosed have been revised to reflect the effect of classifying the Company's Mercantila e-commerce business as discontinued operations.