* Content & Media Revenues Increase 29% and Expand to 38% of Total Revenues
* Record Quarterly Growth of 278,000 Content & Media Pay Accounts
* Consolidated Advertising Revenues Increase 32%
WOODLAND HILLS, Calif., Aug. 7, 2007 (PRIME NEWSWIRE) -- United Online, Inc. (Nasdaq:UNTD), a leading provider of consumer Internet and media services, today reported financial results for its second quarter ended June 30, 2007.
"United Online delivered another strong quarter, particularly in our growing Content & Media segment that now represents 38% of total revenues and nearly 55% of total pay accounts," said Mark R. Goldston, chairman, president and chief executive officer. "Content & Media revenues increased an impressive 13% sequentially, reflecting our second consecutive quarter of record growth in Content & Media pay accounts and continuing strong performance in advertising sales."
"Our Communications segment continued to generate significant adjusted operating income before depreciation and amortization (OIBDA), highlighting the efficiency of our business model," said Neil P. Edwards, Interim Chief Financial Officer. "Our strong cash flow and operating profitability from both segments have enabled us to invest significantly in new growth initiatives while continuing to return cash to shareholders."
Summary Results:
----------------
The following table summarizes key financial results for the second
quarter ended June 30, 2007:
(in millions, except per share
and account figures)
Financial Highlights Q2 2007 Q2 2006 % Change
-------------------- ------- ------- --------
Content & Media revenues $ 49.7 $ 38.7 29%
Communications revenues 81.7 96.2 -15%
------- -------
Consolidated revenues $ 131.4 $ 134.9 -3%
======= =======
GAAP operating income $ 24.7 $ 22.3 11%
Adjusted OIBDA(1) $ 36.3 $ 38.0 -4%
GAAP net income $ 16.2 $ 11.6 40%
GAAP net income per diluted $ 0.23 $ 0.18 28%
share
Adjusted net income(2) $ 19.4 $ 20.4 -5%
Adjusted net income per
diluted share(2) $ 0.27 $ 0.30 -10%
Change in total pay accounts(3) +134,000 (97,000)
* Consolidated advertising revenues were $34.3 million, an increase
of 32% versus the year-ago quarter.
* The year-over-year increase in Content & Media revenues reflects
growth in advertising revenues and billable services revenues.
Adjusting for the MyPoints acquisition in April 2006, organic
revenue growth in Content & Media was approximately 24 percent.
* GAAP net income in the 2007 second quarter reflects a 38% effective
tax rate compared to a 50% effective tax rate for GAAP net income
in the second quarter of 2006 due to the re-measurement of certain
deferred tax assets in both periods which led to significant
variability in the company's effective tax rates.
* Pay accounts(3) and active accounts(3) totaled 5.1 million and 15.9
million, respectively, at June 30, 2007.
"Our investments in Content & Media continued to deliver solid results, as demonstrated by our growth of 278,000 Content & Media pay accounts during the second quarter," Goldston said. "Importantly, we continue to develop new features for our social networking members, including our recent launch of Classmates Dating and an enhanced Events and Reunions Center."
Cash Flow, Balance Sheet and Dividend Highlights:
-------------------------------------------------
* United Online generated $35.8 million in cash flows from
operations and $31.1 million in free cash flow(4) during the second
quarter of 2007.
* Cash balances at June 30, 2007 increased to $191.4 million from
$168.0 million at March 31, 2007, including cash, cash equivalents
and short-term investments.
* During the second quarter of 2007, the company paid $14.4 million
in dividends and repurchased $1.1 million in common stock (to
satisfy tax withholding on vested restricted stock units).
* As previously announced, the company's Board of Directors has
declared a regular quarterly cash dividend of $0.20 for the tenth
consecutive quarter. The record date of the dividend is August 14,
2007, and the dividend is payable on August 31, 2007.
Second Quarter 2007 Segment Results:
------------------------------------
Content & Media:
----------------
(in millions, except percentages)
Financial Highlights Q2 2007 Q2 2006 % Change
-------------------- ------- ------- --------
Billable services revenues $ 26.9 $ 21.7 24%
Advertising revenues 22.8 17.0 35%
------- -------
Segment revenues $ 49.7 $ 38.7 29%
======= =======
% of consolidated revenues 37.8% 28.7%
Segment income from operations $ 7.8 $ 7.4 7%
Segment adjusted OIBDA(1) $ 8.2 $ 7.4 12%
as % of segment revenues(1) 16.6% 19.0%
* Content & Media pay accounts(3) increased by 278,000 during the
second quarter to 2.8 million, almost entirely due to growth in
social networking pay accounts.
* The segment represented 54.7% of total pay accounts(3) at June 30,
2007.
Communications:
---------------
(in millions, except percentages)
Financial Highlights Q2 2007 Q2 2006 % Change
-------------------- ------- ------- --------
Billable services revenues $ 70.2 $ 87.2 -19%
Advertising revenues 11.5 9.1 26%
------- -------
Segment revenues $ 81.7 $ 96.2 -15%
======= =======
% of consolidated revenues 62.2% 71.3%
Segment income from operations $ 32.8 $ 35.6 -8%
Segment adjusted OIBDA(1) $ 32.8 $ 35.6 -8%
as % of segment revenues(1) 40.1% 37.0%
* Communications pay accounts(3) declined by 144,000 to 2.3 million.
* The segment represented 45.3% of total pay accounts(3) at June 30,
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) totaled ($4.7) million, versus
($4.9) million in the year-ago quarter.
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 September 2007 quarter and the year ending December 31, 2007 (in millions):
Prior 2007
Q3 2007 2007 Estimate
--------------- --------------- ---------------
Revenues $124.0 - $128.0 $512.0 - $520.0 $510.0 - $520.0
Operating income $20.1 - $22.1 $90.1 - $94.1 $86.2 - $90.2
Depreciation 5.3 20.7 18.5
Amortization 3.1 12.8 12.8
Stock-based
compensation 6.0 19.0 24.5
Restructuring
charges -- 0.4 1.0
--------------- --------------- ---------------
Adjusted OIBDA(1) $34.5 - $36.5 $143.0 - $147.0 $143.0 - $147.0
=============== =============== ===============
Weighted average
diluted shares 71.0 - 72.0 70.5 - 71.5 70.5 - 71.5
=============== =============== ===============
(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. Reconciliations to net income and net income per diluted share are 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, social networking (including Classmates International free accounts but excluding The Names Database free accounts) 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 MyPoints members who earned points or spent points within the preceding 90 days. In anticipation of the previously announced curtailment of our photo sharing and VoIP services, the company has excluded the free accounts associated with these services from our active accounts reporting at June 30, 2007. In addition, to better reflect the activity level of our membership base, we have updated our active accounts definition to include Classmates International free accounts and exclude The Names Database and Web hosting free accounts.
(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.
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 online 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 June 30,
-----------------------------
2007 2006
--------- ----------
Revenues $ 131,417 $ 134,900
Operating expenses:
Cost of revenues(a) 30,409 31,146
Sales and marketing(a) 42,712 46,137
Product development(a) 13,065 13,385
General and administrative(a) 16,900 17,422
Amortization of intangible assets 3,204 4,552
Restructuring charges 394 -
----------- -----------
Total operating expenses 106,684 112,642
----------- -----------
Operating income 24,733 22,258
Interest and other income, net 1,881 1,354
Interest expense (372) (411)
----------- -----------
Income before income taxes 26,242 23,201
Provision for income taxes 10,034 11,616
----------- -----------
Net income $ 16,208 $ 11,585
=========== ===========
Basic net income per share $ 0.24 $ 0.18
=========== ===========
Diluted net income per share $ 0.23 $ 0.18
=========== ===========
Shares used to calculate basic net
income per share 66,685 63,782
=========== ===========
Shares used to calculate diluted net
income per share 69,351 65,955
=========== ===========
Shares outstanding at end of period 67,462 64,835
=========== ===========
(a) Stock-based compensation was allocated as follows:
Cost of revenues $ 254 $ 256
Sales and marketing 943 1,072
Product development 1,211 1,645
General and administrative 366 2,891
----------- -----------
Total stock-based compensation $ 2,774 $ 5,864
=========== ===========
UNITED ONLINE, INC.
Reconciliation of Non-GAAP Financial Data
(in thousands)
Reconciliation of Operating Income to Adjusted Operating Income
Before Depreciation and Amortization(1)
Quarter Ended June 30,
----------------------
2007 2006
------- -------
Operating income $24,733 $22,258
Depreciation 5,234 5,345
Amortization 3,204 4,552
------- -------
Operating income before depreciation and
amortization 33,171 32,155
Stock-based compensation 2,774 5,864
Restructuring charges 394 --
------- -------
Adjusted operating income before depreciation
and amortization $36,339 $38,019
======= =======
Reconciliation of Segment Income from Operations to Adjusted OIBDA(1)
Quarter Ended June 30,
----------------------
2007 2006
------- -------
Content & Media:
Segment income from operations $ 7,844 $ 7,357
Restructuring charges 394 --
------- -------
Adjusted operating income before depreciation
and amortization $ 8,238 $ 7,357
======= =======
Communications:
Segment income from operations $32,787 $35,574
Restructuring charges -- --
------- -------
Adjusted operating income before depreciation
and amortization $32,787 $35,574
======= =======
UNITED ONLINE, INC.
Reconciliation of Net Income to Adjusted Net Income(2)
(in thousands, except per share amounts)
Quarter Ended June 30,
---------------------
2007 2006
-------- --------
Net income $ 16,208 $ 11,585
Add (deduct):
Stock-based compensation 2,774 5,864
Amortization of intangible assets 3,204 4,552
Restructuring charges 394 --
-------- --------
22,580 22,001
Income tax effect of adjusting entries (2,483) (2,938)
Re-measurement of certain deferred tax assets (658) 1,319
-------- --------
Adjusted net income $ 19,439 $ 20,382
======== ========
Adjusted basic net income per share $ 0.29 $ 0.32
======== ========
Adjusted net income per diluted share $ 0.27 $ 0.30
======== ========
Shares used to calculate adjusted basic net
income per share 66,685 63,782
======== ========
Shares used to calculate adjusted net income
per diluted share(a) 70,873 67,029
======== ========
---------------------------------------------------------------------
(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)
June 30, Dec. 31,
2007 2006
-------- --------
ASSETS
Cash, cash equivalents and short-term
investments $191,401 $162,362
Accounts receivable, net 30,259 32,226
Deferred tax assets, net 71,068 71,360
Property and equipment, net 36,803 34,296
Goodwill and intangible assets, net 179,679 186,671
Other assets 20,428 16,104
-------- --------
Total assets $529,638 $503,019
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 43,523 $ 36,550
Accrued liabilities 27,711 39,547
Member redemption liability 22,817 19,989
Deferred revenue 65,639 56,348
Capital leases 22 30
Other liabilities 4,765 3,589
-------- --------
Total liabilities 164,477 156,053
-------- --------
Stockholders' equity 365,161 346,966
-------- --------
Total liabilities and stockholders' equity $529,638 $503,019
======== ========
UNITED ONLINE, INC.
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Quarter Ended
June 30,
--------------------
2007 2006
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 16,208 $ 11,585
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and stock-based
compensation 11,212 15,761
Provision for doubtful accounts 1,299 (58)
Deferred taxes and other 1,250 1,986
Tax benefits from stock-based compensation 2,541 1,697
Excess tax benefits from stock-based
compensation (1,665) (1,169)
Change in operating assets and liabilities
(excluding the effects of acquisitions):
Accounts receivable (819) 581
Other assets (3,264) 2,228
Accounts payable and accrued liabilities 3,412 6,186
Member redemption liability 1,636 870
Deferred revenue 4,046 (970)
Other liabilities (16) (48)
-------- --------
Net cash provided by operating activities 35,840 38,649
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (6,766) (6,892)
Purchases of short-term investments (85,014) (56,188)
Proceeds from maturities and sales of
short-term investments 64,541 83,001
Cash paid for acquisitions, net of
cash acquired -- (49,538)
Proceeds from sales of assets, net 7 --
-------- --------
Net cash used for investing activities (27,232) (29,617)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital leases (4) (96)
Proceeds from exercises of stock options 4,954 2,415
Proceeds from employee stock purchase plan 3,485 2,965
Repurchases of common stock (1,125) (314)
Payments for dividends (14,447) (13,374)
Excess tax benefits from stock-based
compensation 1,665 1,169
-------- --------
Net cash used for financing activities (5,472) (7,235)
-------- --------
Effect of exchange rate changes on cash and
cash equivalents (23) (4)
Change in cash and cash equivalents 3,113 1,793
Cash and cash equivalents, beginning of period 16,585 22,569
-------- --------
Cash and cash equivalents, end of period $ 19,698 $ 24,362
======== ========
UNITED ONLINE, INC.
Reconciliation of Net Cash Provided by Operating Activities
to Free Cash Flow(4)
(in thousands)
Quarter Ended June 30,
---------------------
2007 2006
-------- --------
Free Cash Flow
Net cash provided by operating activities $ 35,840 $ 38,649
Add (deduct):
Capital expenditures (6,766) (6,892)
Excess tax benefits from stock-based
compensation(a) 1,665 1,169
Cash paid for restructuring charges 394 --
-------- --------
Free cash flow $ 31,133 $ 32,926
======== ========
---------------------------------------------------------------------
(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 June 30, 2007
-----------------------------------------------
Unallocated
Content Corporate
& Media Communications Expenses Total
-------- -------------- -------- --------
Billable services $ 26,905 $ 70,220 $ -- $ 97,125
Advertising 22,807 11,485 -- 34,292
-------- -------------- -------- --------
Total revenues 49,712 81,705 -- 131,417
-------- -------------- -------- --------
Operating expenses:
Cost of revenue 10,963 19,192 254 30,409
Sales and marketing 21,044 20,725 943 42,712
Product development 4,336 7,518 1,211 13,065
General and
administrative 7,298 4,475 5,127 16,900
Amortization of
intangible assets 2,989 215 -- 3,204
Restructuring charges 394 -- -- 394
-------- -------------- -------- --------
Total operating
expenses 47,024 52,125 7,535 106,684
-------- -------------- -------- --------
Operating income
(loss) 2,688 29,580 (7,535) 24,733
-------- -------------- -------- --------
Depreciation 2,167 2,992 75 5,234
Amortization 2,989 215 -- 3,204
-------- -------------- -------- --------
Operating income before
depreciation and
amortization 7,844 32,787 (7,460) 33,171
Stock-based
compensation -- -- 2,774 2,774
Restructuring charges 394 -- -- 394
-------- -------------- -------- --------
Adjusted operating
income before depre-
ciation and
amortization $ 8,238 $ 32,787 $ (4,686) $ 36,339
======== ============== ======== ========
Quarter Ended June 30, 2006
-----------------------------------------------
Unallocated
Content Corporate
& Media Communications Expenses Total
-------- -------------- -------- --------
Billable services $ 21,697 $ 87,161 $ -- $108,858
Advertising 16,955 9,087 -- 26,042
-------- -------------- -------- --------
Total revenues 38,652 96,248 -- 134,900
-------- -------------- -------- --------
Operating expenses:
Cost of revenue 8,522 22,368 256 31,146
Sales and marketing 16,840 28,225 1,072 46,137
Product development 3,589 8,151 1,645 13,385
General and
administrative 4,735 4,884 7,803 17,422
Amortization of
intangible assets 3,868 684 -- 4,552
-------- -------------- -------- --------
Total operating
expenses 37,554 64,312 10,776 112,642
-------- -------------- -------- --------
Operating income (loss) 1,098 31,936 (10,776) 22,258
-------- -------------- -------- --------
Depreciation 2,391 2,954 -- 5,345
Amortization 3,868 684 -- 4,552
-------- -------------- -------- --------
Operating income before
depreciation and
amortization 7,357 35,574 (10,776) 32,155
Stock-based
compensation -- -- 5,864 5,864
-------- -------------- -------- --------
Adjusted operating
income before depre-
ciation and
amortization $ 7,357 $ 35,574 $ (4,912) $ 38,019
======== ============== ======== ========
UNITED ONLINE, INC.
Selected Quarterly Historical Financial Data and Key Metrics(a)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2007 2007 2006 2006 2006
-------- -------- -------- -------- --------
Revenues (in
thousands):
Content & Media $ 49,712 $ 44,175 $ 43,592 $ 37,483 $ 38,652
Communications 81,705 85,676 87,194 92,153 96,248
-------- -------- -------- -------- --------
Total $131,417 $129,851 $130,786 $129,636 $134,900
======== ======== ======== ======== ========
Net income
(in thousands) $ 16,208 $ 13,028 $ 4,559 $ 13,436 $ 11,585
Net income per
diluted share $ 0.23 $ 0.19 $ 0.07 $ 0.20 $ 0.18
Pay accounts(3) (in
thousands) 5,118 4,984 4,854 4,912 4,996
Active accounts(3)(b)
(in millions) 15.9 20.1 20.1 20.8 20.7
Number of employees
at end of period 985 1,008 1,006 1,023 1,016
---------------------------------------------------------------------
(a) More information on the financial results for these quarters
can be found in the company's filings with the Securities and
Exchange Commission.
(b) In anticipation of the previously-announced curtailment of
photo sharing and VoIP services, the company has excluded the
free accounts associated with these services from active accounts
reporting at June 30, 2007. The company has also updated its
active accounts definition to include Classmates International
free accounts and exclude The Names Database and Web hosting free
accounts.
UNITED ONLINE, INC.
Analysis of Pay Accounts (3)
(in thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2007 2007 2006 2006 2006
----- ----- ----- ----- -----
Content & Media(a)
Social networking 2,710 2,433 2,169 2,079 2,029
Other 88 87 86 85 81
----- ----- ----- ----- -----
Total 2,798 2,520 2,255 2,164 2,110
----- ----- ----- ----- -----
Communications(b)
Access 2,016 2,158 2,282 2,425 2,556
Other 304 306 317 323 330
----- ----- ----- ----- -----
Total 2,320 2,464 2,599 2,748 2,886
----- ----- ----- ----- -----
Total pay
accounts(3) 5,118 4,984 4,854 4,912 4,996
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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.