LOS ANGELES, CA--(Marketwire - April 28, 2010) - Internet Brands, Inc. (
NASDAQ:
INET)
-- Revenues: $26.4 million in first quarter, year-over-year growth of 12%
-- Net Income: $3.1 million in first quarter, $0.07 per diluted common
share, year-over-year growth of 36%
-- Adjusted EBITDA: $10.5 million in first quarter, year-over-year growth
of 27%
-- Unique Visitor growth of 22% year-over-year
Internet Brands, Inc. (
NASDAQ:
INET) today reported financial results for
the first quarter ended March 31, 2010.
"Our year-over-year revenue growth accelerated to 12% in the first quarter
and we expect the second quarter to be stronger, in the range of 17-22%,"
said Bob Brisco, CEO of Internet Brands. "Our visibility is good and our
momentum is strong: same website revenues, excluding auto e-commerce,
increased by 15% and our unique visitors grew by 22% year-over-year. We are
very pleased with our start to the year, such that we are already slightly
increasing the low end of our full year estimates."
"Our acquisition strategy is also performing very well. In the quarter we
reached agreements to acquire two very strong growth assets, including the
Experthub network, which we announced today," Brisco added.
First Quarter Operating Results
Total revenues for the first quarter of 2010 were $26.4 million, a 12%
increase from $23.5 million in the prior year period.
Consumer Internet advertising revenues increased by $3.1 million in the
first quarter of 2010 as compared to the prior year period, driven
primarily by growth from websites in the Company's Home, Auto Enthusiast,
and Travel verticals. The increase in advertising revenues was partially
offset by a $2.0 million year-over-year decrease in automotive e-commerce
revenues due to continued weakness in demand from automotive dealerships.
Excluding automotive e-commerce, revenues from websites owned more than a
year organically grew by approximately 15% in the first quarter of 2010 as
compared to the prior year period. Overall, Consumer Internet revenues
were $17.3 million in the first quarter of 2010, a 7% increase from $16.2
million in the prior year period.
Licensing revenues were $9.1 million in the first quarter of 2010, a 24%
increase from $7.3 million in the prior year period. The increase was the
result of continued strong sales of vBulletin 4.0 publishing suite and
forum products, as well as new client accounts and the sale of additional
services to existing clients at the Company's Autodata division.
Net income for the first quarter of 2010 was $3.1 million, or $0.07 per
diluted common share, compared to net income of $2.3 million, or $0.05 per
diluted common share, in the prior year period.
For the first quarter of 2010, Adjusted EBITDA grew 27% to $10.5 million
from $8.3 million in the prior year period. Adjusted EBITDA margins in the
first quarter of 2010 expanded 480 basis points year-over-year to 39.9%.
The Company's Adjusted EBITDA margins have continued to expand as a result
of the continued shift from lower margin automotive e-commerce revenues to
higher margin advertising revenues and from the leverage derived from the
Company's common operating platform.
Total monthly unique visitors to the Company's network of websites grew to
a monthly average of 58 million in the first quarter of 2010, a 22%
increase from 47 million in the first quarter of 2009, and a 16% increase
from 50 million in the fourth quarter of 2009. In each period, more than
98% of the traffic to the Company's websites was derived from non-paid
sources.
Second Quarter and Full Year 2010 Guidance
The Company is reaffirming its full year guidance, but slightly raising the
low end of its previously issued guidance. The Company now expects revenues
to be approximately $113.0 to $118.0 million, representing year-over-year
revenue growth of 13-18%. Adjusted EBITDA in 2010 is expected to be
approximately $46.5 to $48.0 million, representing year-over-year Adjusted
EBITDA growth of 16-20%.
For the second quarter of 2010, the Company expects revenues to be
approximately $27.25 to $28.25 million, representing year-over-year revenue
growth of 17-22% and Adjusted EBITDA to be approximately $11.0 to $11.5
million, representing year-over-year Adjusted EBITDA growth of 18-23%.
Balance Sheet and Liquidity
As of March 31, 2010, the Company had $63.1 million of cash and
investments, and no outstanding debt under its $35 million revolving line
of credit.
Net cash provided by operating activities for the quarter ended March 31,
2010 was $10.8 million compared to $10.1 million in the prior year period.
Acquisitions
In a separate press release today, the Company announced the recent
acquisition of Experthub.com, a network of websites that connects consumers
with attorneys and other professionals.
The Company also announced that in the first quarter of 2010 it expanded
its Shopping vertical with the acquisition of three websites. The three
websites include one previously announced acquisition, Tjoos.com, and two
new acquisitions, DoDTracker.com and PursePage.com. The aggregate purchase
price for the websites acquired in the first quarter was approximately $7.6
million.
Total cash spend related to acquisition purchases, earnouts and holdbacks
totaled $4.9 million during the first quarter of 2010. The financial impact
of these acquisitions is included in the Company's 2010 business outlook.
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 (expense); (b) income tax provision
(benefit); and (c) depreciation and amortization. The Company defines
Adjusted EBITDA as a further adjustment of EBITDA to exclude share-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 provide information related to the
Company's ability to provide cash flows for acquisitions, capital
expenditures and working capital requirements. 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 its 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 to not 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 (in thousands):
Three months ended
March, 31
------------------------
2010 2009
----------- -----------
(unaudited)
Net income $ 3,069 $ 2,263
Provision for income taxes 2,091 1,539
Depreciation and amortization 4,407 3,843
Stock-based compensation 1,091 677
Investment and other income (144) (63)
----------- -----------
Adjusted EBITDA $ 10,514 $ 8,259
=========== ===========
Conference Call and Webcast
The Company will host a conference call to discuss its first quarter 2010
financial results beginning at 4:30 pm ET (1:30 pm PT), today, April 28,
2010. Participants may access the call by dialing 877-941-8416 (domestic)
or 480-629-9808 (international). In addition, the call will be broadcast
live over the Internet, hosted at the Investor Relations section of the
Company's website at
www.internetbrands.com and will be archived online
within one hour of the completion of the conference call. A telephone
replay will be available through May 12, 2010. To access the replay, please
dial 800-406-7325 (domestic) or 303-590-3030 (international), passcode
4282775.
About Internet Brands, Inc.
Internet Brands, Inc. (
NASDAQ:
INET) is a unique and leading Internet media
company. INET owns and operates more than 100 websites that are leaders in
their vertical markets. These sides include ApartmentRatings.com,
CarsDirect.com, CruiseReviews.com, DavesGarden.com, DoItYourself.com,
FitDay.com, FlyerTalk.com, HealthNews.org, Loan.com, Wikitravel.org, and
many more. In total, these sites organically attract (without paid
marketing) approximately 58 million unique visitors per month. The vast
majority of these sites have very strong community participation.
INET is also unique in its ability to monetize Internet audiences. The
company's proprietary platform optimizes yields from its more than 40,000
direct advertisers spanning seven vertical categories. The platform is also
core to the company's acquisitions strategy, providing a cost-efficient and
scalable approach to expanding the company's online footprint.
Safe Harbor Statement
This press release includes forward-looking information and statements,
including but not limited to its 2010 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 economy and the automotive
industry in particular 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, 2009, filed with the U.S. Securities and Exchange Commission
(SEC) on March 3, 2010. You should consider these factors in evaluating
forward-looking statements. For additional information regarding the risks
related to our business, see our 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
April 28, 2010 and should not be unduly relied upon because we undertake no
duty to update this information.
INTERNET BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
March 31, December 31,
2010 2009
----------- -----------
Unaudited
ASSETS
Current assets
Cash and cash equivalents $ 41,680 $ 38,408
Investments, available for sale 21,445 21,736
Accounts receivable, less allowances for
doubtful accounts of $617 and $618 at March
31, 2010 and December 31, 2009, respectively 13,957 15,416
Deferred income taxes 11,945 16,184
Prepaid expenses and other current assets 1,026 1,212
----------- -----------
Total current assets 90,053 92,956
Property and equipment, net 15,907 15,125
Goodwill 229,469 223,925
Intangible assets, net 19,308 20,080
Deferred income taxes 42,028 39,255
Other assets 818 602
----------- -----------
Total assets $ 397,583 $ 391,943
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 12,998 $ 13,957
Deferred revenue 5,669 6,414
----------- -----------
Total current liabilities 18,667 20,371
Other liabilities 221 258
Stockholders' equity
Common stock, Class A, $.001 par value;
125,000,000 shares authorized and 42,997,815
and 42,095,325 issued and outstanding
at March 31, 2010 and December 31, 2009 43 42
Common stock, Class B, $.001 par value;
6,050,000 authorized and 3,025,000 shares
issued and outstanding at March 31, 2010
and December 31, 2009 3 3
Additional paid-in capital 616,672 612,528
Accumulated deficit (238,737) (241,806)
Accumulated other comprehensive income 714 547
----------- -----------
Total stockholders' equity 378,695 371,314
----------- -----------
----------- -----------
Total liabilities and stockholders' equity $ 397,583 $ 391,943
=========== ===========
INTERNET BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
Three Months Ended
March 31,
--------------------------
2010 2009
------------ ------------
Revenues
Consumer Internet $ 17,315 $ 16,189
Licensing 9,068 7,339
------------ ------------
Total revenues 26,383 23,528
Costs and operating expenses
Cost of revenues (exclusive of depreciation
and amortization) 5,016 4,783
Sales and marketing (1) 5,035 4,776
Technology (1) 2,346 2,101
General and administrative (1) 4,563 4,286
Depreciation and amortization of intangibles 4,407 3,843
------------ ------------
Total costs and operating expenses 21,367 19,789
------------ ------------
Income from operations 5,016 3,739
Investment and other income 144 63
------------ ------------
Income before income taxes 5,160 3,802
Provision for income taxes 2,091 1,539
------------ ------------
Net income $ 3,069 $ 2,263
============ ============
Basic net income per share - Class A and B $ 0.07 $ 0.05
Diluted net income per share - Class A and B $ 0.07 $ 0.05
Class A weighted average number of shares -
Basic 44,098,249 43,326,372
Class A weighted average number of shares -
Diluted 47,165,444 45,197,966
Stock-based compensation expense by function (1)
Sales and marketing $ 148 $ 85
Technology 83 39
General and administrative 860 553