EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

InterSearch Announces First Quarter 2006 Results

SAN FRANCISCO—May 11, 2006—InterSearch Group, Inc. (OTC:IGPN), a leading provider of Internet search services and operator of industry specific destination portals, today reported financial results for the first quarter ended March 31, 2006.

First Quarter 2006 Consolidated Financial Results:

 

  •   First quarter revenue was $8.0 million, a 99% increase relative to the $4.0 million reported in the first quarter of 2005;

 

  •   Gross margins were 69% as compared to 48% in the first quarter a year ago;

 

  •   Operating income was $3.5 million, up 400% compared to the same quarter of fiscal 2005;

 

  •   GAAP1 earnings available to common stockholders were $2.1 million or $0.08 per diluted share as compared to net earnings of $0.2 million or $0.02 per diluted share in the first quarter of 2005;

 

  •   Cash flows from operations were $1.8 million as compared to $0.3 million in the first quarter of fiscal 2005;

 

  •   Earnings before interest, taxes, depreciation and amortization (EBITDA) was $3.8 million, representing an increase of approximately 400% as compared to the same quarter of fiscal 20052;

 

  •   Operating income before amortization (OIBA) increased to $3.7 million, from $0.7 million in the first quarter of 20052.

 

1 Generally accepted accounting principles in the United States of America.
2 EBITDA and OIBA are non-GAAP financial measures. These measures may be different from non-GAAP financial measures used by other companies. We encourage investors to review the section below entitled “Non-GAAP Financial Measures” and to review the reconciling adjustments between the GAAP and non-GAAP measures attached to this press release.

First Quarter Business Highlights

 

  •   Generated 25 million paid clicks as compared to 13 million in the first quarter of 2005.

 

  •   Increased revenue contribution from the proprietary traffic to 70%, up from 43% in the first quarter of 2005.

 

  •   Generated $2.8 million in revenues from www.irs.com reflecting an increase in excess of 100%, on a pro forma basis, as compared to the first quarter of 2005.

 

  •   Enhanced the revenue model of tax-related domains by converting the arrangements with direct advertisers to Pay-per-Click (PPC) from mainly revenue sharing.

 

  •   Signed a major provider of online tax preparation services as a new direct advertising client.

In commenting on the results InterSearch President and CEO, Dan O’Donnell, said,” First quarter performance was strong reflecting the significant growth potential that we believe is inherent in our business model. Our revenue nearly doubled year-over-year, driven by a combination of organic growth and contribution from irs.com, which we acquired in September of 2005. Dramatically increasing irs.com revenues in the first full quarter after the acquisition reinforces our confidence in our ability to replicate this success with other domains. The direct navigation industry is undergoing a large scale consolidation, and we believe that InterSearch is well positioned to be a major participant and beneficiary of this trend.”

Business Outlook and Financial Guidance

Said InterSearch CFO, Gary Bogatay, “As we discussed in our fiscal 2005 earnings release, this year our business will be characterized by pronounced seasonality due to the large revenue contribution from the www.irs.com domain. First quarter was seasonally strong driven by the tax season, whereas its impact on the second quarter was limited to 17 days – from April 1st to April 17th. The second quarter guidance reflects this trend.”

InterSearch provides the following guidance for the second quarter of 2006, ending June 30:

 

Q2 2006 Revenue Range

    $ 5.5 – $6.0 Million

Q2 2006 EBITDA Range

    $ 1.2 – $1.5 Million

The company expects to be profitable and generate positive cash flow from operations in the second quarter of 2006 and for the rest of fiscal year 2006.

Continued Gary Bogatay, “Despite a decline expected in the second quarter, we believe that our full-year revenue growth will be in the range of 40 to 50% as compared to fiscal year 2005. These expectations do not include any new acquisitions.”

Conference Call

InterSearch Group will host a conference call today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), during which Dan O’Donnell, President and Chief Executive Officer, and Gary Bogatay, Chief Financial Officer, will further discuss financial results, execution milestones and the company’s strategy.

To listen to the call and have the opportunity to ask questions, please dial 888-396-2369 (domestic) or 617-847-8710 (International) five to ten minutes before the call and reference the passcode (55265255). A simultaneous live Webcast of the call will be available at the Investor Relations section of the InterSearch website at http://www.intersearch.com. An online playback of the Webcast will be available on the company’s website for at least 90 days following the call. This press release will also be available on the InterSearch website.

Questions for the conference call will also be taken via email at stockwatch@intersearch.com and can be sent anytime prior to the conference call’s starting time.

About InterSearch Group, Inc.

InterSearch is a leading provider of Internet search services through a combination of traffic aggregation and proprietary websites, such as www.irs.com. The company operates in the fastest growing segments of Internet commerce including paid search, direct navigation and online marketing driving high quality traffic to advertisers and providing users with quick access to pertinent products and services. Through its InterSearch Corporate Services division, the company also provides IT and Internet strategy consulting to large corporations, predominantly in the financial services market. InterSearch is headquartered in San Francisco, California at 222 Kearny Street, Suite 550, and can be reached via telephone at 415-962-9700. More information about InterSearch Group, Inc. can be found at http://www.intersearch.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. Forward-looking statements, which are based on management’s current expectations, are generally identifiable by the use of terms, such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions. The forward-looking statements in this press release are contained principally in the section entitled “Business Outlook and Financial Guidance” The potential risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein include, among others, the Company’s ability to raise additional debt or equity financing, the Company’s relationships with its current and future advertising and distribution network partners, the Company’s ability to achieve anticipated results from acquisitions, and market development of Internet advertising and paid search services. Further information on the factors that could affect the Company’s financial results is included in the Company’s SEC filings, including the most recent registration statement filed with the SEC under the heading “Risk Factors.” Except as required by law, InterSearch Group assumes no obligation to update these forward-looking statements publicly, even if new information becomes available in the future.

Non-GAAP Financial Measures

This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: EBITDA (earnings before interest, tax, depreciation and amortization) and OIBA (operating income before amortization). The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. See “Reconciliation of GAAP Net Earnings to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)” and “Reconciliation of GAAP Net Earnings to Operating Income Before Amortization (OIBA)” tables included in this press release for further information regarding these non-GAAP financial measures.

InterSearch’s management evaluates and monitors performance for InterSearch primarily through earnings before interest, income taxes, depreciation and amortization (“EBITDA”) and operating income before amortization (“OIBA”). In addition, EBITDA is presented because management believes it is frequently used by securities analysts, investors and others in the evaluation of companies. EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization. OIBA is calculated by adding income taxes, interest expense, amortization and loss on derivative to net earnings. EBITDA and OIBA are not defined under GAAP and should not be considered in isolation or as a substitute for net earnings and other consolidated earnings data prepared in accordance with GAAP or as a measure of InterSearch’s profitability. A reconciliation of EBITDA and OIBA is provided in the tables below.

INTERSEARCH GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

 

     Three Months Ended
March 31,
     2006    2005

Revenues:

      

Internet search services

    $ 7,199,472    3,433,336

Corporate services

      824,344    609,145
           

Total revenues

      8,023,816    4,042,481
           

Cost of revenues:

      

Traffic acquisition cost

      1,939,871    1,628,218

Cost of consulting services

      579,547    467,894
           

Total cost of revenues

      2,519,418    2,096,112
           

Gross profit

      5,504,398    1,946,369
           

Operating expenses:

      

Sales and marketing expense

      273,857    162,667

General and administrative expense

      1,705,520    1,080,046
           

Total operating expenses

      1,979,377    1,242,713
           

Earnings from operations

      3,525,021    703,656

Interest expense

      27,065    36,482

Loss on derivative instrument

      19,321    —  
           

Earnings before income taxes

      3,478,635    667,174

Income taxes

      1,401,231    361,721
           

Net earnings

      2,077,404    305,453

Preferred stock dividends

      —      157,200
           

Net earnings available to common stockholders

      2,077,404    148,253
           

Basic earnings per share

      0.08    0.04
           

Diluted earnings per share

      0.08    0.02
           

Unaudited proforma tax and earnings available to common stockholders and per share information for S Corporation periods

      

Net earnings available to common stockholders

       148,253

Proforma income tax expense adjustment

       31,454
       

Proforma net earnings

       116,799
       

Proforma basic earnings per share

       0.03
       

Proforma diluted earnings per share

       0.01
       

INTERSEARCH GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

 

     March 31,
2006		     December 31,
2005		  

Assets

     

Current assets:

     

Cash

    $ 895,237     576,096  

Accounts receivable

      4,055,035     3,205,880  

Prepaid expenses and other

      351,141     227,168  

Deferred income taxes

      21,246     —    
              

Total current assets

      5,322,659     4,009,144  

Office equipment, net

      271,983     257,565  

Patents and trademarks, net

      69,169     71,022  

Domains, net

      12,479,057     12,694,213  

Goodwill

      573,123     573,123  

Deferred income taxes

      483,665     553,638  
              

Total Assets

    $ 19,199,656     18,158,705  
              

Liabilities and Stockholders’ Equity

     

Current liabilities:

     

Revolving line of credit

      —       726,000  

Accrued liabilities

      2,259,354     1,830,931  

Accounts payable

      1,415,858     1,226,053  

Deferred revenue

      103,088     300,000  

Deferred income taxes

      —       89,525  

Note payable

      847,000     1,540,000  

Common stock subject to mandatory redemption

      6,150,000     6,150,000  

Common stock warrants

      —       3,263,814  
              

Total current liabilities

      10,775,300     15,126,323  
              

Stockholders’ equity:

     

Preferred Stock

      —       —    

Common Stock

      25,226     25,220  

Additional paid-in capital

      7,368,972     4,054,408  

Retained earnings (accumulated deficit)

      1,095,014     (982,390 )

Notes receivable for common stock issued

      (64,856 )   (64,856 )
              

Total stockholders’ equity

      8,424,356     3,032,382  
              

Total liabilities and stockholders’ equity

    $ 19,199,656     18,158,705  
              

INTERSEARCH GROUP, INC. AND SUBSIDIARIES

Reconciliation of GAAP Net Earnings to Earnings Before

Interest, Taxes, Depreciation, and Amortization (EBITDA)

(Unaudited)

 

     Three Months Ended
March 31,
     2006    2005

Net earnings available to common stockholders

    $ 2,077,404      148,253

Preferred Stock Dividends

      —        157,200
             

Net earnings

      2,077,404      305,453

Income taxes

      1,401,231      361,721
             

Earnings before income taxes

      3,478,635      667,174

Interest expense

      27,065      36,482
             

Earnings from operations

      3,505,700      703,656

Depreciation

      35,870      26,529

Amortization

      217,009      —  
             

Earnings before interest, taxes, depreciation, amortization (EBITDA)

    $ 3,758,579    $ 730,185
             

INTERSEARCH GROUP, INC. AND SUBSIDIARIES

Reconciliation of GAAP Net Earnings to Operating

Income Before Amortization (OIBA)

(Unaudited)

 

     Three Months Ended
March 31,
     2006    2005

Net earnings available to common stockholders

    $ 2,077,404      148,253

Preferred Stock Dividends

      —        157,200
             

Net earnings

      2,077,404      305,453

Income taxes

      1,401,231      361,721
             

Earnings before income taxes

      3,478,635      667,174

Loss on derivative instrument

      19,321      —  

Interest expense

      27,065      36,482
             

Earnings from operations

      3,525,021      703,656

Amortization

      217,009      —  
             

Operating income before amortization (OIBA)

    $ 3,742,030    $ 703,656
             

CONTACT:

Investor Relations

Kate Sidorovich, 415-962-9780

ksidorovich@intersearch.com

SOURCE: InterSearch Group, Inc.