* Content & Media Grows to 51% of All Pay Accounts and 34% of
Total Revenues
* Record Quarterly Growth of 265,000 Content & Media Pay Accounts
* Strong Growth in Advertising Revenues
WOODLAND HILLS, Calif., May 1, 2007 (PRIME NEWSWIRE) -- United Online, Inc. (Nasdaq:UNTD), a leading provider of consumer Internet and media services, today reported financial results for its first quarter ended March 31, 2007.
"United Online delivered an impressive first quarter, which was particularly strong for our growing Content & Media segment that now represents 34% of total revenues and 51% of total pay accounts," commented Mark R. Goldston, chairman and chief executive officer. "Eclipsing the 50% threshold in our pay account mix is another important milestone in our Content & Media diversification strategy that began in 2004. Importantly, our Communications segment continued to generate strong adjusted OIBDA, enabling us to invest significantly in the Content & Media segment while continuing to return cash to shareholders."
Summary Results:
The following table summarizes key financial results for the first quarter ended March 31, 2007:
(in millions, except per share
and account figures)
Financial Highlights Q1 2007 Q1 2006 % Change
--------------------- ------- ------- --------
Content & Media revenues $44.2 $27.0 64%
Communications revenues 85.7 100.3 -15%
------ ------
Consolidated revenues $129.9 $127.3 2%
====== ======
GAAP operating income $22.1 $20.6 8%
Adjusted OIBDA(1) $34.4 $34.6 -1%
GAAP net income $13.0 $12.7 3%
GAAP net income per
diluted share $0.19 $0.20 -5%
Adjusted net income(2) $18.5 $18.1 2%
Adjusted net income per
diluted share(2) $0.27 $0.27 --
Change in total
pay accounts(3) +130,000 +84,000
* Advertising revenues were $33.5 million, an increase of 107%
versus the year-ago quarter.
* Content & Media revenue growth reflects a combination of
organic growth and the impact of the April 2006 acquisition
of MyPoints.
* GAAP net income was $0.19 per diluted share, versus $0.20 per
diluted share in the prior year quarter, which included a positive
$0.02 adjustment from the cumulative effect of change in accounting
principle.
* The slight decline in adjusted OIBDA reflects increased
investment in the Content & Media growth opportunity,
including investment in sales and marketing initiatives.
* Pay accounts and active accounts totaled 5.0 million and
20.1 million, respectively, at March 31, 2007.
"Our continued investment in Content & Media enabled United Online to deliver improved results," Goldston continued. "We added 265,000 Content & Media pay accounts during the first quarter, representing record performance for segment organic growth. The large increase in pay accounts is primarily attributable to the success of several new features introduced during the past few months. We were also pleased that Content & Media revenues grew on a sequential basis in the first quarter, despite the period being seasonally slower for advertising sales relative to the fourth-quarter holiday period."
Cash Flow, Balance Sheet and Dividend Highlights:
* United Online generated $25.2 million in cash flows from
operations and $20.3 million in free cash flow(4) during the
first quarter of 2007.
* Cash balances at March 31, 2007 increased to $168.0 million
from $162.4 million at December 31, 2006, including cash,
cash equivalents and short-term investments.
* During the first quarter of 2007, the company paid $13.7
million in dividends and repurchased $2.7 million in common
stock (to satisfy tax withholding on vested restricted stock
units).
* As announced separately today, the company's Board of
Directors has declared a regular quarterly cash dividend of
$0.20 for the ninth consecutive quarter. The record date of
the dividend is May 14, 2007, and the dividend is payable on
May 31, 2007.
First Quarter 2007 Segment Results:
Content & Media:
(in millions, except percentages)
%
Financial Highlights Q1 2007 Q1 2006 Change
-------------------- ------- ------- ------
Billable services
revenues $ 23.4 $ 20.5 14%
Advertising revenues 20.8 6.5 221%
------- -------
Segment revenues $44.2 $ 27.0 64%
======= ======
% of consolidated 34.0% 21.2%
revenues
Segment income from
operations $ 5.8 $ 6.3 -8%
Segment adjusted
OIBDA(1) $ 5.8 $ 6.3 -8%
as % of segment
revenues(1) 13.1% 23.3%
* Content & Media pay accounts increased by 265,000 during the
first quarter to 2.5 million. The segment represented 50.6%
of total pay accounts at March 31, 2007.
* The decline in segment adjusted OIBDA primarily reflects
increased investment spending, particularly in sales and
marketing initiatives.
Communications:
(in millions, except percentages)
%
Financial Highlights Q1 2007 Q1 2006 Change
-------------------- ------- ------- ------
Billable services
revenues $ 73.0 $ 90.7 -20%
Advertising revenues 12.7 9.7 31%
------ ------
Segment revenues $ 85.7 $100.3 -15%
====== ======
% of consolidated
revenues 66.0% 78.8%
Segment income from
operations $ 32.8 $33.5 -2%
Segment adjusted
OIBDA(1) $ 32.8 $33.5 -2%
as % of segment
revenues(1) 38.3% 33.4%
* Communications pay accounts declined by 135,000 to 2.5 million,
and represented 49.4% of total pay accounts at March 31, 2007.
* The increase in segment adjusted OIBDA as a percentage of
segment revenues reflects the company's focus on managing
the Communications segment for profitability and cash flow.
Other:
* Other reconciling items (unallocated corporate expenses) to
arrive at consolidated adjusted OIBDA(1) were ($4.2) million,
versus ($5.1) million in the year-ago quarter.
United Online President and Chief Financial Officer Charles S. Hilliard commented, "The combination of Content & Media diversification and financial discipline enabled us to deliver solid profitability as we manage our maturing Communications segment. We are also pleased with our strong cash flow, as consolidated free cash flow more than doubled from the year-ago quarter."
"With our outstanding Q1 performance," Hilliard continued, "we are increasing our 2007 operating income and adjusted OIBDA guidance and initiating formal revenue guidance for the year."
Business Outlook:
The following forward-looking information includes certain projections made by management as of the date of this press release. United Online does not intend to revise or update this information and may not provide this type of information in the future. Due to a variety of factors, actual results may differ significantly from those projected. Factors include, without limitation, the factors referenced later in this announcement under the caption "Cautionary Information Regarding Forward-Looking Statements." These and other factors are discussed in more detail in the company's filings with the Securities and Exchange Commission. In addition, the stock-based compensation and weighted average diluted shares projections are based on estimated equity grants for 2007, and actual grants could vary significantly from those currently estimated.
Below is the company's guidance for the June 2007 quarter and the year ending December 31, 2007 (in millions):
Prior 2007
Q2 2007 2007 Estimate
--------------- --------------- -------------
(See
Revenues $128.0 - $132.0 $510.0 - $520.0 Footnote 5)
Operating
income $18.8 - $20.8 $86.2 - $90.2 $78.5 - $83.5
Depreciation 4.6 18.5 21.0
Amortization 3.2 12.8 19.0
Stock-based
compensation 6.4 24.5 21.0
Restructuring
charges 1.0 1.0 1.5
--------------- ---------------- ----------------
Adjusted
OIBDA(1) $34.0 - $36.0 $143.0 - $147.0 $141.0 - $146.0
============= =============== ===============
Weighted average
diluted
shares 70.0 - 71.0 70.5 - 71.5 70.0 - 71.0
============= =============== ===============
(1) Adjusted operating income before depreciation and amortization (adjusted OIBDA) is defined by the company as operating income before depreciation; amortization; stock-based compensation; restructuring charges; and impairment of goodwill, intangible assets and long-lived assets. Management believes that because adjusted OIBDA excludes (1) certain non-cash expenses (such as depreciation, amortization, stock-based compensation and impairment of goodwill, intangible assets and long-lived assets); and (2) expenses that are not reflective of the company's core operating results over time, this measure provides investors with additional useful information to measure the company's performance, particularly with respect to changes in performance from period to period. Management uses adjusted OIBDA to measure the company's performance. The company's board of directors uses this measure in determining certain compensation incentives for certain members of the company's management. Adjusted OIBDA is not determined in accordance with accounting principles generally accepted in the United States of America (GAAP) and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. A limitation associated with the use of adjusted OIBDA is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the company's business. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures and purchase accounting. An additional limitation associated with this measure is that it does not include stock-based compensation expenses related to the company's workforce. Management compensates for this limitation by providing supplemental information about stock compensation expense on the face of the consolidated statements of operations. A further limitation associated with the use of this measure is that it does not reflect the costs of restructuring charges and impairment charges. Management compensates for this limitation by providing information about restructuring charges and impairment charges. Management does not believe any of these limitations are material, particularly when such measure is disclosed with its most comparable GAAP financial measure, operating income. A reconciliation to operating income is provided in the accompanying tables.
Adjusted OIBDA for each of the company's segments is defined by the company as segment income from operations as set forth in the company's Form 10-Ks and Form 10-Qs before restructuring charges and impairment of goodwill, intangible assets and long-lived assets. Management believes that because segment adjusted OIBDA and segment adjusted OIBDA as a percentage of such segment's revenues exclude certain non-cash expenses and expenses that are not reflective of the segment's core operating results over time, these measures provide investors with additional useful information to measure the company's segment performance, particularly with respect to changes in performance from period to period. Segment adjusted OIBDA and segment adjusted OIBDA as a percentage of such segment's revenues are not determined in accordance with GAAP and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. A limitation associated with the use of these measures is that they do not reflect the costs of restructuring charges and impairment charges related to an operating segment. Management compensates for this limitation by providing information about restructuring charges and impairment charges by segment. Management does not believe this limitation is material, particularly when such measure is disclosed with its most comparable GAAP financial measure, segment income from operations. A reconciliation to segment income from operations is provided in the accompanying tables.
(2) Adjusted net income is defined by the company as net income before the after-tax effect of amortization of intangible assets; stock-based compensation; restructuring charges; impairment of goodwill, intangible assets and long-lived assets; and the cumulative effect of a change in accounting principle as a result of the adoption of FAS 123R, and the re-measurement of certain deferred tax assets. Management believes that adjusted net income and adjusted net income per diluted share provide investors with additional useful information to measure the company's financial performance, particularly from period to period, because these measures are exclusive of (1) certain non-cash expenses (such as amortization, stock-based compensation and impairment of goodwill, intangible assets and long-lived assets) and (2) expenses that are not reflective of the company's core results over time. Management also uses adjusted net income and adjusted net income per diluted share for this purpose. Adjusted net income and adjusted net income per diluted share are not determined in accordance with accounting principles generally accepted in the United States of America (GAAP) and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The limitations of adjusted net income and adjusted net income per diluted share are that, similar to adjusted OIBDA, they do not include certain costs, and the terms adjusted net income and adjusted net income per diluted share do not have standardized meanings. Therefore, other companies may use the same or similarly named measures but exclude different items or use different computations, which may not provide investors a comparable view of the company's performance in relation to other companies in the same industry. Management compensates for this limitation by presenting the most comparable GAAP measure, net income and net income per diluted share, directly ahead of adjusted net income and adjusted net income per diluted share in this earnings release and by providing a reconciliation that shows and describes the adjustments made. Management does not believe these limitations are material, particularly when such measures are disclosed with the most comparable GAAP financial measure, net income and net income per diluted share. A reconciliation to net income is provided in the accompanying tables.
(3) A pay account represents a unique billing relationship with a customer who subscribes to one or more of the company's services. A pay account does not equate to a unique subscriber since one subscriber could have several pay accounts. Active accounts are defined as all free access, VoIP, social-networking and email users that logged on to our services at least once during the preceding 31 days, together with all pay accounts. Additionally, active accounts include the number of free Web sites that received at least one unique visitor within the preceding 90 days; the number of free photo-sharing users that logged on to the service at least once within the preceding 90 days; and the number of MyPoints members who earned points or spent points within the preceding 90 days.
(4) Free cash flow is defined by the company as net cash provided by operating activities, less capital expenditures and including the excess tax benefits from stock-based compensation and cash paid for restructuring charges. Management believes that this measure of free cash flow provides investors with additional useful information to measure operating liquidity because it reflects the company's operating cash flows after investing in capital assets. This measure is used by management, and may also be useful for investors, to assess the company's ability to pay its quarterly dividend, repay debt obligations, generate cash flow for a variety of strategic opportunities, including reinvestment in the business, and effect potential acquisitions and share repurchases. Free cash flow is not determined in accordance with accounting principles generally accepted in the United States of America (GAAP) and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. The limitation of free cash flow is that it does not represent the total increase or decrease in cash during the period. Management does not believe that this is a material limitation, particularly when such measure is disclosed with its most comparable GAAP financial measure, net cash provided by operating activities. A reconciliation to net cash provided by operating activities is provided in the accompanying tables.
(5) The company previously provided guidance of "a slight to moderate decline in total revenues for fiscal year 2007 when compared to total revenues for fiscal year 2006."
Conference Call
United Online will host a conference call today at 2:00 p.m. PDT (5:00 p.m. EDT) to discuss its quarterly results. A live Web cast of the call can be accessed through the Investors section of the company's Web site at www.unitedonline.com. A recording of the call will be available on the site for seven days.
About United Online
United Online, Inc. (Nasdaq:UNTD) is a leading provider of consumer Internet and media services. The company's Content & Media services include social networking (Classmates) and online loyalty marketing (MyPoints). Its Communications services include Internet access (NetZero, Juno) and email. United Online is headquartered in Woodland Hills, CA, with offices in New York, NY; Fort Lee, NJ; Renton, WA; San Francisco, CA; Schaumburg, IL; Orem, UT; Erlangen, Germany; and Hyderabad, India. For more information about United Online, please visit www.unitedonline.com.
Cautionary Information Regarding Forward-Looking Statements
This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, as amended. Statements containing words such as "guidance," "may," "believe," "will," "expect," "project," "projections," "business outlook" and "estimate" or similar expressions constitute forward-looking statements. These statements include, without limitation, expectations regarding future financial performance; weighted average diluted shares; depreciation and amortization; stock-based compensation and restructuring charges. Any such forward-looking statements are not guarantees of future performance or results, and involve risks and uncertainties that may cause actual performance and results to differ materially from those predicted and reported results should not be considered an indication of future performance. Potential risks and uncertainties include, among others: the effect of competition, including adoption of broadband services and changes in the company's pricing or competitors' pricing, and the use of promotional offers to acquire or retain subscribers; the company's inability to retain its existing subscribers and the rate at which new subscribers sign up for the company's services; changes in pay accounts and the mix of pay accounts; the effects of changes in marketing expenditures or shifts in marketing expenditures to support existing and new products and services; the effects of seasonality; changes in Internet usage; changes in the projected number of weighted average diluted shares due to the issuance of stock, restricted stock units and stock options, stock repurchases, fluctuations in the company's stock price or other factors; changes in stock-based compensation; changes in the projected amortization and depreciation figures due to capital spending or other factors; potential impairment of goodwill and intangibles; that the company will incur additional restructuring charges or currently anticipated restructuring charges will be greater than anticipated; risks associated with the commercialization of new services; changes in tax laws, the company's business or other factors that would impact anticipated tax benefits; changes in usage by subscribers, additional telecommunications costs or other factors negatively impacting the company's cost of revenue; changes in active accounts; the company's inability to maintain, renew, or enter into new agreements with telecommunications providers on attractive terms; the company's ability to successfully integrate acquisitions; problems associated with the company's billing systems; the company's inability to retain key customers and key personnel; technological problems or developments; risks associated with litigation; and governmental regulation. From time to time, the company considers acquisitions or divestitures that, if consummated, could be material. Forward-looking statements regarding financial metrics are based upon the assumption that no such acquisition or divestiture is consummated during the relevant periods. If an acquisition or divestiture were consummated, actual results could differ materially from any forward-looking statements. More information about potential factors that could affect the company's business and financial results is included in the company's annual and quarterly reports filed with the Securities and Exchange Commission (http://www.sec.gov), including, without limitation, information under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors."
UNITED ONLINE, INC.
Unaudited Consolidated Statements of Operations
(in thousands, except per share amounts)
---------------------------
Quarter Ended March 31,
---------------------------
2007 2006
--------- ----------
Revenues $ 129,851 $ 127,332
Operating expenses:
Cost of revenues(a) 29,247 29,890
Sales and marketing(a) 46,025 43,419
Product development(a) 13,471 12,816
General and administrative(a) 15,489 16,246
Amortization of intangible
assets 3,495 4,389
--------- ---------
Total operating expenses 107,727 106,760
--------- ---------
Operating income 22,124 20,572
Interest and other income, net 1,700 1,716
Interest expense (360) (1,716)
--------- ---------
Income before income taxes 23,464 20,572
Provision for income taxes 10,436 8,921
--------- ---------
Income before cumulative effect
of change in accounting principle 13,028 11,651
Cumulative effect of change in
accounting principle, net of tax -- 1,041
--------- ---------
Net income $ 13,028 $ 12,692
========= =========
Basic net income per share
Income before cumulative effect
of change in accounting
principle $ 0.20 $ 0.19
Cumulative effect of change
in accounting principle, net
of tax -- 0.01
--------- ---------
Basic net income per share $ 0.20 $ 0.20
========= =========
Diluted net income per share
Income before cumulative effect
of change in accounting
principle $ 0.19 $ 0.18
Cumulative effect of change in
accounting principle, net of tax -- 0.02
--------- ---------
Diluted net income per share $ 0.19 $ 0.20
========= =========
Shares used to calculate basic net
income per share 65,627 62,511
========= =========
Shares used to calculate diluted
net income per share 68,080 64,889
========= =========
Shares outstanding at end of period 66,420 63,527
========= =========
(a) Stock-based compensation was
allocated as follows:
Cost of revenues $ 194 $ 237
Sales and marketing 892 944
Product development 1,245 1,466
General and administrative 1,716 2,322
--------- ---------
Total stock-based compensation $ 4,047 $ 4,969
========= =========
UNITED ONLINE, INC.
Reconciliation of Non-GAAP Financial Data
(in thousands)
Quarter Ended March 31,
---------------------------
2007 2006
---------- ---------
Adjusted Operating Income Before
Depreciation and Amortization(1)
Operating income $ 22,124 $ 20,572
Depreciation 4,745 4,707
Amortization 3,495 4,389
--------- ---------
Operating income before depreciation
and amortization 30,364 29,668
Stock-based compensation 4,047 4,969
--------- ---------
Adjusted operating income before
depreciation and amortization $ 34,411 $ 34,637
========= =========
Reconciliation of Segment Income from Operations to Adjusted OIBDA(1)
Quarter Ended March 31,
---------------------------
2007 2006
---------- ---------
Content & Media:
Segment income from operations $ 5,765 $ 6,294
Restructuring charges -- --
Impairment of goodwill, intangible
assets and long-lived assets -- --
--------- ---------
Adjusted operating income before
depreciation and amortization $ 5,765 $ 6,294
========== =========
Communications:
Segment income from operations $ 32,834 $ 33,468
Restructuring charges -- --
Impairment of goodwill, intangible
assets and long-lived assets -- --
--------- ---------
Adjusted operating income before
depreciation and amortization $ 32,834 $ 33,468
========= =========
UNITED ONLINE, INC.
Reconciliation of Net Income to Adjusted Net Income(2)
(in thousands, except per share amounts)
Quarter Ended March 31,
--------------------------
2007 2006
-------- ---------
Net income $ 13,028 $ 12,692
Add (deduct):
Stock-based compensation 4,047 4,969
Amortization of intangible assets 3,495 4,389
Cumulative effect of change in
accounting principle -- (1,041)
-------- --------
20,570 21,009
Income tax effect of adjusting entries (2,049) (2,923)
-------- --------
Adjusted net income $ 18,521 $ 18,086
======== ========
Adjusted basic net income per share $ 0.28 $ 0.29
======== ========
Adjusted net income per diluted share $ 0.27 $ 0.27
======== ========
Shares used to calculate adjusted
basic net income per share 65,627 62,511
======== ========
Shares used to calculate adjusted net
income per diluted share(a) 69,089 65,817
======== ========
----------------------------------------------------------------------
(a) Includes the adjustment of shares used to calculate net income per
diluted share resulting from the elimination of stock-based compensation.
UNITED ONLINE, INC.
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2007 2006
---------- -----------
ASSETS
Cash, cash equivalents and
short-term investments $ 168,011 $ 162,362
Accounts receivable, net 30,739 32,226
Deferred tax assets, net 71,747 71,360
Property and equipment, net 35,339 34,296
Goodwill and intangible assets, net 183,180 186,671
Other assets 17,164 16,104
--------- ---------
Total assets $ 506,180 $ 503,019
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 37,806 $ 36,550
Accrued liabilities 30,016 39,547
Member redemption liability 21,182 19,989
Deferred revenue 61,593 56,348
Capital leases 26 30
Other liabilities 4,782 3,589
--------- ---------
Total liabilities 155,405 156,053
--------- ---------
Stockholders' equity 350,775 346,966
--------- ---------
Total liabilities and stockholders'
equity $ 506,180 $ 503,019
========= =========
UNITED ONLINE, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
-------------------------
Quarter Ended March 31,
-------------------------
2007 2006
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,028 $ 12,692
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation, amortization and
stock-based compensation 12,287 14,065
Deferred taxes and other (192) 1,135
Tax benefits from stock-based
compensation 1,169 1,873
Excess tax benefits from stock-based
compensation (868) (1,414)
Cumulative effect of change in
accounting principle, net of tax -- (1,041)
Change in operating assets and
liabilities (excluding the effects of
acquisitions):
Accounts receivable 1,486 1,394
Other assets (1,060) (730)
Accounts payable and accrued
liabilities (7,028) (15,541)
Member redemption liability 1,193 --
Deferred revenue 5,246 1,846
Other liabilities (55) (40)
--------- ---------
Net cash provided by operating
activities 25,206 14,239
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (5,797) (7,061)
Purchases of rights, patents and
trademarks -- (509)
Purchases of short-term investments (79,491) (124,121)
Proceeds from maturities and sales of
short-term investments 71,040 115,320
Cash paid for acquisitions, net of
cash acquired -- (10,990)
Proceeds from sales of assets, net 14 --
--------- ---------
Net cash used for investing
activities (14,234) (27,361)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term loan -- (54,209)
Payments on capital leases (4) (50)
Proceeds from exercises of stock
options 1,883 2,622
Repurchases of common stock (2,657) (1,643)
Payments for dividends (13,727) (12,868)
Excess tax benefits from stock-based
compensation 868 1,414
--------- ---------
Net cash used for financing
activities (13,637) (64,734)
--------- ---------
Effect of exchange rate changes on
cash and cash equivalents (2) 28
Change in cash and cash equivalents (2,667) (77,828)
Cash and cash equivalents, beginning
of period 19,252 100,397
--------- ---------
Cash and cash equivalents, end of
period $ 16,585 $ 22,569
========= =========
UNITED ONLINE, INC.
Reconciliation of Non-GAAP Financial Data
(in thousands)
Quarter Ended March 31,
--------------------------
2007 2006
-------- --------
Free Cash Flow(4)
Net cash provided by operating
activities $ 25,206 $ 14,239
Add (deduct):
Capital expenditures (5,797) (7,061)
Excess tax benefits from stock-based
compensation(a) 868 1,414
--------- --------
Free cash flow $ 20,277 $ 8,592
========= ========
---------------------------------------------------------------------
(a) In accordance with FAS 123R, certain tax benefits from exercised
stock options that were previously reflected in the operating section
of the statement of cash flows are now presented in the financing
section.
UNITED ONLINE, INC.
Supplemental Schedule of Segment Information
(in thousands)
Quarter Ended March 31, 2007
---------------------------------------------------
Content Unallocated
& Communi- Corporate
Media cations Expenses Total
-------- -------- -------- --------
Billable
services $23,354 $ 72,966 $ -- $ 96,320
Advertising 20,821 12,710 -- 33,531
------- -------- -------- --------
Total
revenues 44,175 85,676 -- 129,851
------- -------- -------- --------
Operating
expenses:
Cost of
revenue 10,102 18,951 194 29,247
Sales and
marketing 21,007 24,126 892 46,025
Product
development 4,373 7,853 1,245 13,471
General and
administrative 5,102 4,464 5,923 15,489
Amortization
of
intangible
assets 3,280 215 -- 3,495
------- -------- -------- --------
Total
operating
expenses 43,864 55,609 8,254 107,727
------- -------- -------- --------
Operating
income
(loss) 311 30,067 (8,254) 22,124
------- -------- -------- --------
Depreciation 2,174 2,552 19 4,745
Amortization 3,280 215 -- 3,495
------- -------- -------- --------
Operating
income
before
depreciation
and
amortization 5,765 32,834 (8,235) 30,364
Stock-based
compensation -- -- 4,047 4,047
------- -------- -------- --------
Adjusted
operating
income
before
depreciation
and
amortization $ 5,765 $ 32,834 $ (4,188) $ 34,411
======= ======== ======== ========
Quarter Ended March 31, 2006
---------------------------------------------------
Content Unallocated
& Communi- Corporate
Media cations Expenses Total
-------- -------- -------- --------
Billable
services $20,497 $ 90,659 $ -- $111,156
Advertising 6,493 9,683 -- 16,176
------- -------- -------- --------
Total
revenues 26,990 100,342 -- 127,332
------- -------- -------- --------
Operating
expenses:
Cost of
revenue 4,072 25,581 237 29,890
Sales and
marketing 12,133 30,342 944 43,419
Product
development 2,722 8,628 1,466 12,816
General and
administrative 3,639 5,160 7,447 16,246
Amortization
of
intangible
assets 3,705 684 -- 4,389
------- -------- -------- --------
Total
operating
expenses 26,271 70,395 10,094 106,760
------- -------- -------- --------
Operating
income
(loss) 719 29,947 (10,094) 20,572
------- -------- -------- --------
Depreciation 1,870 2,837 -- 4,707
Amortization 3,705 684 -- 4,389
------- -------- -------- --------
Operating
income
before
depreciation
and
amortization 6,294 33,468 (10,094) 29,668
Stock-based
compensation -- -- 4,969 4,969
------- -------- -------- --------
Adjusted
operating
income
before
depreciation
and
amortization $ 6,294 $ 33,468 $ (5,125) $ 34,637
======= ======== ======== ========
UNITED ONLINE, INC.
Selected Quarterly Historical Financial Data and Key Metrics(a)
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
2007 2006 2006 2006 2006
-------- -------- -------- -------- --------
Revenues
(in thousands):
Content &
Media $ 44,175 $ 43,592 $ 37,483 $ 38,652 $ 26,990
Commun-
ications 85,676 87,194 92,153 96,248 100,342
-------- -------- -------- -------- --------
Total $129,851 $130,786 $129,636 $134,900 $127,332
======== ======== ======== ======== ========
Net income
(in thousands) $ 13,028 $ 4,559 $ 13,436 $ 11,585 $ 12,692
Net income
per diluted
share $ 0.19 $ 0.07 $ 0.20 $ 0.18 $ 0.20
Pay
accounts(3)
(in thousands) 4,984 4,854 4,912 4,996 5,093
Active
accounts(3)
(in millions) 20.1 20.1 20.8 20.7 18.7
Number of
employees
at end of
period 1,008 1,006 1,023 1,016 912
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(a) More information on the financial results for these quarters
can be found in the company's filings with the Securities and
Exchange Commission.
UNITED ONLINE, INC.
Analysis of Pay Accounts (3)
(in thousands)
Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
2007 2006 2006 2006 2006
-------- -------- -------- -------- --------
Content &
Media(a)
Social
networking 2,433 2,169 2,079 2,029 1,945
Other 87 86 85 81 76
-------- -------- -------- -------- --------
Total 2,520 2,255 2,164 2,110 2,021
-------- -------- -------- -------- --------
Communi-
cations(b)
Access 2,158 2,282 2,425 2,556 2,751
Other 306 317 323 330 321
-------- -------- -------- -------- --------
Total 2,464 2,599 2,748 2,886 3,072
-------- -------- -------- -------- --------
Total pay
accounts(3) 4,984 4,854 4,912 4,996 5,093
======== ======== ======== ======== ========
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(a) Content & Media includes social networking, Web hosting and photo
sharing.
(b) Communications includes Internet access, VoIP, premium content,
premium email and security suite.