Internet Brands, Inc. (NASDAQ: INET) today reported financial results
for the first quarter ended March 31, 2008.
First Quarter Operating Results
Total revenues for the first quarter of 2008 were $24.9 million, an
increase of 30.3% compared to $19.1 million in the prior year period.
Consumer Internet revenues were $16.3 million in the first quarter of
2008, a 13.8% increase compared to $14.3 million in the prior year
period, due to an increase in advertising revenue from existing and
acquired websites. This was partially offset by a reduction in
advertiser spend from automotive dealers and manufacturers in response
to continued weakness in the automotive industry.
Licensing revenues were $8.6 million for the first quarter of 2008, a
79.5% increase from $4.8 million in the prior year period, due to
continued organic growth, contributions from Jelsoft Enterprises
Limited, which was acquired in June 2007, and a $1.1 million benefit
from the accelerated completion of a long-term project.
Net income attributable to common stockholders for the first quarter of
2008 was $3.0 million, or $0.07 per diluted share. By comparison, net
income attributable to common stockholders in the prior year period was
$1.4 million, or $0.07 per diluted common share.
For the first quarter of 2008, Adjusted EBITDA grew by 35% year over
year. Adjusted EBITDA, which the Company defines as earnings before
investment and other income, income taxes, depreciation and amortization
and stock-based compensation, was $7.9 million, compared to $5.9 million
in the same period last year.
“We’ve started the
year strongly and believe we are solidly on track for the full year,”
said Bob Brisco, CEO. “After a slightly slower
start than anticipated in January, we’ve seen
revenue growth significantly improve, including into April.”
“Our acquired websites are performing very
well, and our acquisition pipeline is deeper and more economically
attractive than ever before,” Brisco added.
The Company is reiterating its full year guidance of revenues in the
range of $100 to $110 million and Adjusted EBITDA to be in the range of
$32 to $36 million. For the second quarter of 2008, the Company
anticipates revenues and Adjusted EBITDA to be comparable to the first
quarter 2008 or slightly better.
Recent Developments
From April 1 through May 6, 2008, the Company acquired websites for an
aggregate purchase price of $12.2 million. The acquisitions included two
significant internet businesses, the MySummerCamps.com network of
websites and CreditorWeb.com.
The MySummerCamps.com network of websites is by far the leader in
helping parents find summer camps in the United States and Canada. The
network lists summer camps, camp jobs and camps for sale. The
MySummerCamps network consists of more than 20 sites, including
MySummerCamps.com, Summer-DayCamps.com, and AllensGuide.com.
CreditorWeb.com is a leading credit card comparison site that allows
consumers to easily find the best credit card offers. The site features
original articles, tools to understand the cost of credit card debt, and
a credit card search engine that compares card offers. Each card is
objectively reviewed by industry experts and is ranked on a five-star
rating scale.
“We continue to scale our Consumer Internet
platform very quickly,” said Brisco. “These
sites are leaders. They bring extremely targeted audiences, and they
offer strong opportunities to advertise.”
The financial impact of these acquisitions is included in the Company’s
2008 business outlook.
Q1 2008 Key Metrics
-
Total monthly unique visitors to the Company’s
network of owned websites grew to 34 million in March 2008, an
increase of 68% compared to 20 million in March 2007
-
Total page views for the Company’s network
of owned websites were 458 million in March 2008, an increase of 89%
compared to 243 million in March 2007
-
The Company completed 12 website-related acquisitions in the first
quarter of 2008 for an aggregate purchase price of approximately $23.3
million
Balance Sheet and Liquidity
As of March 31, 2008, the Company had $76.9 million of cash and
investments, and no debt.
Net cash provided by operating activities in the first quarter of 2008
was $5.5 million compared to $10.9 million in the prior year period.
$3.9 million, or 72%, of the variance reflects a change in working
capital requirements resulting from our growth.
Non-GAAP Financial Measures
This press release includes a discussion of "Adjusted EBITDA," which is
a non-GAAP financial measure. The Company defines EBITDA as net income
before (a) investment and other income, net; (b) provision for income
taxes (benefit); and (c) depreciation and amortization. The Company
defines Adjusted EBITDA as a further adjustment of EBITDA to exclude
stock-based compensation expense related to the Company's grant of stock
options and other equity instruments.
The Company believes these non-GAAP financial measures provide important
supplemental information to management and investors. These non-GAAP
financial measures reflect an additional way of viewing aspects of the
Company's operations that, when viewed with the GAAP results and the
accompanying reconciliations to corresponding GAAP financial measures,
provide a more complete understanding of factors and trends affecting
the Company's business and results of operations.
Management uses EBITDA and Adjusted EBITDA as measurements of the
Company's operating performance because they assist in comparisons of
the Company's operating performance on a consistent basis by removing
the impact of items not directly resulting from core operations.
Internally, these non- GAAP measures are also used by management for
planning purposes, including the preparation of internal budgets; to
allocate resources to enhance financial performance; to evaluate the
effectiveness of operational strategies; and to evaluate the Company's
capacity to fund capital expenditures and to expand its business. The
Company also believes that analysts and investors use EBITDA and
Adjusted EBITDA as supplemental measures to evaluate the overall
operating performance of companies in our industry.
These non-GAAP financial measures are used in addition to and in
conjunction with results presented in accordance with GAAP and should
not be relied upon to the exclusion of GAAP financial measures.
Management strongly encourages investors to review the Company's
consolidated financial statements in their entirety and not to rely on
any single financial measure. Because non-GAAP financial measures are
not standardized, it may not be possible to compare these financial
measures with other companies' non-GAAP financial measures having the
same or similar names. In addition, the Company expects to continue to
incur expenses similar to the non-GAAP adjustments described above, and
exclusion of these items from the Company's non-GAAP measures should not
be construed as an inference that these costs are unusual, infrequent or
non-recurring.
The table below reconciles net income and Adjusted EBITDA for the
periods presented:
Conference Call and Webcast
The Company will host a conference call to discuss its first quarter
2008 financial results beginning at 5:00 pm ET (2:00 pm PT), today, May
7, 2008. The call, which will be hosted by Bob Brisco, President and
Chief Executive Officer, and Alex Hansen, Chief Financial Officer, will
be broadcast live over the Internet and accessible through the Investor
Relations section of the Company’s website at www.internetbrands.com.
The webcast will also be archived online within one hour of the
completion of the conference call and available at the Investor
Relations section of the Company’s website at www.internetbrands.com.
About Internet Brands, Inc.
Los Angeles-based Internet Brands, Inc. (NASDAQ:INET) is a leading
Internet media company that operates community and e-commerce web sites
in automotive, travel and leisure, and home related categories. With a
flexible and scalable platform, Internet Brands operates a rapidly
growing network of more than 69 principal Web sites that are often
leaders in their categories. Internet Brands was founded in 1998 as
CarsDirect.com and added the parent company name of Internet Brands in
2005.
Safe Harbor Statement
This press release includes forward-looking information and
statements, including but not limited to its 2008 business outlook,
management comments and guidance, that are subject to risks and
uncertainties that could cause actual results to differ materially. Forward-looking
statements include information concerning our possible or assumed future
results of operations, business strategies, competitive position,
industry environment, potential growth opportunities and the effects of
regulation. These statements are based on our management’s
current expectations and beliefs, as well as a number of assumptions
concerning future events. Such forward-looking statements are
subject to known and unknown risks, uncertainties, assumptions and other
important factors, many of which are outside our management’s
control that could cause actual results to differ materially from the
results discussed in the forward-looking statements. These risks,
uncertainties, assumptions and other important factors include, but are
not limited to, our pursuit of an acquisition-based growth strategy
entailing significant execution, integration and operational risks, the
impact of the recent downturn in the automotive industry on our revenues
from automotive dealers and manufacturers, our ability to compete
effectively against a variety of Internet and traditional offline
competitors, and our reliance on the public to continue to contribute
content without compensation to our websites that depend on such content.
These and other risks are described more fully in our Annual Report
on Form 10-K for the annual period ended December 31, 2007, filed
with the U.S. Securities and Exchange Commission (SEC) on March 12, 2008.
You should consider these factors in evaluating forward-looking
statements. Fore additional information regarding the risks
related to our business, see its prospectus in the Registration
Statement, and other related documents, that we have filed with the SEC.
You may get these documents for free by visiting EDGAR on the SEC
website at http://www.sec.gov.
All information provided in this release is as of May 7, 2008 and
should not be unduly relied upon because we undertake no duty to update
this information.
