JACKSONVILLE, Fla., May 12, 2008 (PRIME NEWSWIRE) -- Website Pros, Inc. (Nasdaq:WSPI), a leading provider of Web and marketing services for small and medium-sized businesses, today announced results for the first quarter ended March 31, 2008.
Summary of First Quarter 2008 Results:
* Total revenue for the first quarter of 2008 was $30.9 million, an increase of 88% compared to $16.4 million for the first quarter of 2007. * GAAP operating income for the first quarter of 2008 was $0.9 million, an increase from GAAP operating income of $0.7 million for the first quarter of 2007. * GAAP net income for the first quarter of 2008 was $0.6 million, consistent with GAAP net income of $0.6 million for the first quarter of 2007. GAAP net income per diluted share was $0.02 per share for the first quarter of 2008 compared to GAAP net income per diluted share of $0.03 per share for the first quarter of 2007. * Non-GAAP operating income for the first quarter of 2008 was a record $4.6 million, representing a non-GAAP operating margin of 15% and an increase of 142% compared to $1.9 million for the first quarter of 2007. * Non-GAAP net income for the first quarter of 2008 was a record $4.8 million, an increase of 102% compared to $2.4 million for the first quarter of 2007. * Non-GAAP net income per diluted share for the first quarter of 2008 was $0.16, an increase of 33% compared to $0.12 for the first quarter of 2007.
"The first quarter of 2008 was highlighted by continued momentum in subscriber growth, gross margin and operating margin expansion and strong earnings growth that was at the high-end of our expectations," stated David Brown, Chairman and CEO of Website Pros. "Web and online marketing services for small and medium-sized businesses represents a substantial market opportunity, and we believe Website Pros is well positioned based on our growing suite of solutions, diversified sales channels and large customer base. With the progress we have made with the integration of Web.com, growing profitability and expanding programs and partnerships, we continue to be optimistic looking ahead."
Other Highlights:
* Website Pros' total net subscribers were approximately 270,000 at the end of the first quarter, up from approximately 263,000 at the end of the fourth quarter of 2007 on a combined pro forma basis. * Customer churn was 4.1%, compared to 4.0% in the previous quarter on a combined pro-forma basis.
Conference Call Information
Management will host a conference call to discuss Website Pros' results and other matters related to the Company's business today, May 12, 2008, at 5:00 p.m. (Eastern Time). To access this call, dial 888-215-6894 (domestic) or 913-312-1297 (international). A replay of this conference call will be available for a limited time at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 4874885. A webcast of this conference call will also be available for a limited time on the "Investor Relations" page of the Company's Web site, www.websitepros.com.
All per share numbers for non-GAAP net income per share are expressed on a weighted-average diluted per share basis. Non-GAAP net income exclude stock-based compensation expense, amortization expense related to acquisitions, the deferred revenue adjustment due to purchase accounting, income tax expense, and includes an estimated cash tax rate to be paid during 2008. Non-GAAP operating income excludes stock-based compensation expense, amortization expense related to acquisitions and the deferred revenue adjustment related to purchase accounting. A reconciliation of GAAP financial measures to non-GAAP financial measures results has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Use of Non-GAAP Financial Measures."
About Website Pros
Website Pros, Inc. (Nasdaq:WSPI) is a leading provider of Do-It-For-Me and Do-It-Yourself website building tools, Internet marketing, lead generation and technology solutions that enable small and medium-sized businesses to maintain an effective Internet presence. Website Pros offers a full range of Web services, including website design and publishing, Internet marketing and advertising, search engine optimization, lead generation, home contractor specific leads and shopping cart solutions, meeting the needs of these businesses anywhere along their lifecycles - from those just establishing a Web presence to those requiring more sophisticated online eCommerce sites. For more information on the company, please visit http://www.websitepros.com or http://www.web.com or call 1-800-GETSITE.
Note to Editors: Website Pros and Web.com are registered trademarks of Website Pros, Inc.
Use of Non-GAAP Financial Measures
Some of the measures in this press release are non-GAAP financial measures within the meaning of the SEC Regulation G. Website Pros believes presenting non-GAAP net income attributable to common stockholders and non-GAAP net income per share attributable to common stockholders and non-GAAP operating income is useful to investors, because it describes the operating performance of the company and helps investors gauge the company's ability to generate cash flow, excluding some recurring charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Company management uses these non-GAAP measures as important indicators of the company's past performance and to plan and forecast performance in future periods. The non-GAAP financial information Website Pros presents may not be comparable to similarly-titled financial measures used by other companies, and investors should not consider non-GAAP financial measures in isolation fro m, or in substitution for, financial information presented in compliance with GAAP. You are encouraged to review the reconciliation of non-GAAP financial measures to GAAP financial measures included elsewhere in this press release.
Forward-Looking Statements
This press release includes certain "forward-looking statements" including, without limitation, statements regarding Website Pros' expectations about its future performance, that are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts. These statements are sometimes identified by words and phrases such as "believe," "continue to be," "see" or words of similar meaning. As a result of the ultimate outcome of such risks and uncertainties, Website Pros' actual results could differ materially from those anticipated in these forward-looking statements. These statements are based on our current beliefs or expectations, and there are a number of important factors that cou ld cause the actual results or outcomes to differ materially from those indicated by these forward-looking statements, including, without limitation, our ability to integrate the Website Pros and Web.com businesses, our ability to maintain our sales efficiency, our ability to maintain our existing, and develop new, strategic relationships, the number of our net subscriber additions and our monthly customer turnover. These and other risk factors are set forth under the caption "Risk Factors" in Website Pros' Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission. This filing is available on a website maintained by the Securities and Exchange Commission at www.sec.gov. Website Pros expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein as a result of new information, future events or otherwise.
Website Pros, Inc.
Consolidated Statements of Operations
(in thousands except per share data)
Three Months Ended
March 31,
2008 2007
(unaudited) (unaudited)
---------- ----------
Revenue:
Subscription $ 29,731 $ 15,138
License 449 1,028
Professional services 681 258
---------- ----------
Total revenue 30,861 16,424
Cost of revenue (excluding depreciation and
amortization shown separately below):
Subscription (a) 10,903 6,815
License 93 298
Professional services 375 301
---------- ----------
Total cost of revenue 11,371 7,414
---------- ----------
Gross profit 19,490 9,010
Operating expenses:
Sales and marketing (a) 7,463 3,947
Research and development (a) 2,638 778
General and administrative (a) 5,102 2,908
Depreciation and amortization 3,349 681
---------- ----------
Total operating expenses 18,552 8,314
---------- ----------
Income from operations 938 696
Other income:
Interest, net 256 502
---------- ----------
Income before income taxes 1,194 1,198
Income tax expense (644) (566)
---------- ----------
Net income $ 550 $ 632
========== ==========
Net income per common share
Basic $ 0.02 $ 0.04
========== ==========
Diluted $ 0.02 $ 0.03
========== ==========
Weighted-average number of shares
used in per share amounts:
Basic 27,549 17,339
========== ==========
Diluted 30,619 19,672
========== ==========
(a) Stock based compensation included above:
Subscription (cost of revenue) $ 80 $ 42
Sales and marketing 210 109
Research and development 103 59
General and administration 538 583
---------- ----------
Total $ 931 $ 793
========== ==========
Website, Pros, Inc.
Consolidated Balance Sheets
(in thousands except per share data)
March 31, Dec. 31,
2008 2007
(unaudited) (audited)
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 33,554 $ 29,746
Restricted investments 498 4,805
Accounts receivable, net of
allowance $715 and $791
thousand, respectively 6,560 6,204
Inventories, net of reserves of
$67 and $67, respectively 23 26
Prepaid expenses 1,499 4,248
Prepaid marketing fees 775 793
Deferred taxes 1,137 1,723
Other current assets 737 759
---------- ----------
Total current assets 44,783 48,304
Restricted investments 305 1,675
Property and equipment, net 6,878 7,153
Goodwill 108,448 107,933
Intangible assets, net 66,840 69,422
Other assets 520 526
---------- ----------
Total assets $ 227,774 $ 235,013
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,196 $ 2,445
Accrued expenses 7,061 8,686
Accrued restructuring costs and
other reserves 4,358 10,484
Deferred revenue 8,686 8,501
Accrued marketing fees 234 279
Notes payable, current 110 1,186
Obligations under capital lease,
current -- 1
Other liabilities 131 197
---------- ----------
Total current liabilities 22,776 31,779
Accrued rent expense 84 105
Deferred revenue 149 147
Notes payable, long term 30 59
Accrued restructuring costs and
other reserves, long term 2,656 3,116
Deferred tax liabilites, long term 3,351 3,351
Other long term liabilities 85 25
---------- ----------
Total liabilities 29,131 38,582
Stockholders' equity
Common stock, $0.001 par value;
150,000,000 shares authorized;
27,625,200 shares and 27,472,686
shares issued and outstanding at
March 31, 2008 and December 31,
2007, respectively 28 27
Additional paid-in capital 255,869 254,208
Accumulated deficit (57,254) (57,804)
---------- ----------
Total stockholders' equity 198,643 196,431
---------- ----------
Total liabilities and stockholders'
equity $ 227,774 $ 235,013
Website, Pros, Inc.
Reconciliation of GAAP to Pro Forma Results
(in thousands except per share data)
(unaudited)
Three Months Ended
March 31,
2008 2007
---------- ----------
Reconciliation of GAAP revenue to
non-GAAP revenue
GAAP revenue $ 30,861 $ 16,424
Fair value adjustment to deferred
revenue 140 --
---------- ----------
Non-GAAP proforma revenue $ 31,001 $ 16,424
========== ==========
Reconciliation of GAAP net income
(loss) attributable to common
stockholders to non-GAAP pro
forma net income
GAAP Net income (loss) $ 550 $ 632
Amortization of intangibles 2,617 422
Income tax expense 644 566
Cash income tax expense (59) (27)
Fair value adjustment to deferred
revenue 140 --
Stock based compensation 931 793
---------- ----------
Non-GAAP proforma net income $ 4,823 $ 2,386
========== ==========
Reconciliation of GAAP basic net
income (loss) per share to
non-GAAP pro forma net income
per share
Basic $ 0.02 $ 0.04
Amortization of intangibles per
share 0.10 0.02
Income tax expense per share 0.02 0.03
Cash income tax expense per share (0.00) (0.00)
Fair value adjustment to deferred
revenue per share 0.01 --
Stock based compensation per share 0.03 0.05
---------- ----------
Non-GAAP pro-forma net income per
share
Basic $ 0.18 $ 0.14
========== ==========
Reconciliation of GAAP diluted net
income (loss) per share to
non-GAAP pro forma net income
per share
Fully diluted shares:
Common stock 27,549 17,339
Diluted stock options 2,730 1,864
Warrants 201 192
Escrow shares 139 277
---------- ----------
Total 30,619 19,672
========== ==========
GAAP net income (loss) per share
Diluted $ 0.02 $ 0.03
Amortization of intangibles per
share 0.09 0.02
Income tax expense per share 0.02 0.03
Cash income tax expense per share (0.00) (0.00)
Fair value adjustment to deferred
revenue per share 0.00 --
Stock based compensation per share 0.03 0.04
---------- ----------
Non-GAAP pro-forma net income per
share
Diluted $ 0.16 $ 0.12
========== ==========
Reconciliation of GAAP operating
income (loss) to non-GAAP pro
forma operating income
GAAP operating income (loss) $ 938 $ 696
Amortization of intangibles 2,617 422
Fair value adjustment to deferred
revenue 140 --
Stock based compensation 931 793
---------- ----------
Non-GAAP proforma operating income $ 4,626 $ 1,911
========== ==========
Reconciliation of GAAP operating
margin to non-GAAP pro forma
operating margin
GAAP operating margin 3% 4%
Amortization of intangibles 8% 3%
Fair value adjustment to deferred
revenue 1% 0%
Stock based compensation 3% 5%
---------- ----------
Non-GAAP proforma operating margin 15% 12%
========== ==========
Website, Pros, Inc.
Consolidated Statement of Cash Flows
(in thousands)
Three Months Ended
March 31,
2008 2007
(unaudited) (unaudited)
---------- ----------
Cash flows from operating activities
Net income $ 550 $ 632
Adjustments to reconcile net
income to net cash (used in)
provided by operating activities:
Depreciation and amortization 3,349 681
Loss on disposal of assets 3 --
Stock-based compensation expense 931 793
Deferred income tax 586 539
Changes in operating assets and
liabilities:
Accounts receivable (360) 226
Inventories 3 35
Prepaid expenses and other assets 2,818 37
Accounts payable, accrued
expenses and other liabilities (9,084) (1,071)
Deferred revenue 185 313
---------- ----------
Net cash (used in) provided by
operating activities (1,019) 2,185
Cash flows from investing
activities
Business acquisition, net of cash
received (8) (2,374)
Proceeds from sale of investment 5,500 --
Purchase of investment (996) --
Change in restricted investments 1,228 --
Purchase of property and equipment (522) (415)
Investment in intangible assets (1) (100)
---------- ----------
Net cash provided by (used in)
investing activities 5,201 (2,889)
Cash flows from financing activities
Stock issuance costs (5) --
Payment of debt obligations (1,106) (31)
Proceeds from exercise of stock
options 737 39
---------- ----------
Net cash (used in) provided by
financing activities (374) 8
---------- ----------
Net increase (decrease) in cash
and cash equivalents 3,808 (696)
Cash and cash equivalents,
beginning of period 29,746 42,155
---------- ----------
Cash and cash equivalents, end of
period $ 33,554 $ 41,459
========== ==========
Supplemental cash flow information:
Interest paid $ 21 $ 5
========== ==========
Income tax paid $ 73 $ 37
========== ==========