JACKSONVILLE, Fla., Feb. 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 fourth quarter ended December 31, 2007 and full-year 2007. The fourth quarter financial results discussed below reflect for the first time the operating results, including merger related costs, of Web.com which was acquired on September 30, 2007.
Summary of Fourth Quarter 2007 Results:
* Total revenue for the fourth quarter of 2007 was a record $30.9 million, an increase of 89% compared to $16.4 million for the fourth quarter of 2006. As a result of fair value adjustments to Web.com's deferred revenue in accordance with generally accepted accounting principles (GAAP) for purchase accounting, Website Pros is unable to recognize approximately $0.4 million of revenue for the fourth quarter that would have been recorded by Web.com as revenue had the acquisition not occurred. Had the company been permitted to recognize this revenue, total revenue would have been $31.3 million.
* GAAP operating loss for the fourth quarter of 2007 was $0.6 million, compared to GAAP operating income of $1.1 million for the fourth quarter of 2006, reflecting an increase in non-cash expenses for amortization of intangibles and stock compensation of $2.5 million, due to the Web.com merger, as compared to the prior year.
* GAAP net loss for the fourth quarter of 2007 was $0.2 million compared to GAAP net income of $4.8 million for the fourth quarter of 2006, reflecting an increase in pre-tax non-cash expenses for amortization of intangibles and stock compensation of $2.5 million and an income tax benefit of $3.2 million in the prior year period. GAAP net loss per diluted share was $0.01 per share for the fourth quarter of 2007 compared to GAAP net income per diluted share of $0.25 per share year-over-year.
* Non-GAAP operating income for the fourth quarter was a record $3.5 million, representing an increase of 57% compared to $2.2 million year-over-year.
* Non-GAAP net income for the fourth quarter was a record $3.8 million, an increase of 38% as compared to $2.7 million year-over-year.
* Non-GAAP net income per diluted share for the fourth quarter was $0.13, compared to $0.14 year-over-year.
"The fourth quarter and year end results were highlighted by the addition of Web.com and continued strong non-GAAP net income, marking the 10th consecutive quarter that operating results have met or exceeded our guidance," stated David Brown, Chairman and CEO of Website Pros. "During the quarter, Website Pros successfully ramped up integration efforts with Web.com, including the exploration of several new revenue-generating and cost savings opportunities. As a result of the progress we made during the fourth quarter, we now expect the merger to be accretive to our non-GAAP diluted earnings per share in the first half of 2008 as opposed to later in the year as we have previously stated. Entering 2008, we continue to feel that we are the market leader, well-positioned to provide small and medium-sized businesses with an array of Web and marketing services designed to enhance their business."
Other Highlights:
* Website Pros' total net subscribers were approximately 263,000 at the end of the fourth quarter, up from approximately 255,000 at the end of the third quarter of 2007 on a combined pro-forma basis.
* Churn was 4.0%, down from 4.1% in the previous quarter on a combined pro-forma basis.
Financial Results for the Full Year 2007
Total revenue for the full year 2007 was $82.5 million, an increase of 59% on a year-over-year basis. Total non-GAAP revenue for the full year 2007 was $83.1 million, including approximately $0.4 million that was written off as a result of fair value adjustments to Web.com's deferred revenue in accordance with GAAP purchase accounting. For the full year 2007, subscription revenue increased 66% to $77.7 million, license revenue decreased 32% to $2.4 million, and professional services revenue increased 44% to $2.4 million, compared to the full year 2006.
For the full year 2007, the Company reported net income, determined in accordance with GAAP, of $1.4 million, down from $8.6 million in the full year 2006. Net income for 2007 and 2006 included:
(in millions) 2007 2006 --------------------------------------------------------------------- Pre-tax non-cash amortization expense $3.9 $1.0 --------------------------------------------------------------------- Income tax expense (benefit) $2.1 ($3.2) --------------------------------------------------------------------- Pre-tax stock-based compensation expense $3.6 $2.0 ---------------------------------------------------------------------
GAAP net income per diluted share was $0.06 for the full year 2007, compared to $0.44 per share in the full year 2006. Per share amounts are based on weighted average fully-diluted shares of 22.2 million and 19.4 million for the full year 2007 and 2006, respectively. Website Pros reported record non-GAAP net income of $11.6 million for the full year 2007, an increase of 37% as compared to $8.5 million for the full year 2006. Non-GAAP net income per diluted share was a record $0.52 for the full year 2007, an increase of 18% from $0.44 for the full year 2006.
Business Outlook
"Website Pros continued to diversify its business in 2007 allowing us to maximize our revenue and earnings capabilities moving forward, and as a result of these efforts, we are raising our 2008 outlook," stated Kevin Carney, Chief Financial Officer of Website Pros. "As we look ahead, we intend to continue to explore new opportunities to drive revenue and earnings from both new and existing customer and partner relationships."
Full Year 2008 Guidance
--------------------------------------------------------------
Revenue (in millions) (1) $133 - $137
--------------------------------------------------------------
Non-GAAP Net Income per diluted share (2) $0.78 - $0.82
--------------------------------------------------------------
(1) Non-GAAP revenue excludes the fair value deferred revenue
adjustment
(2) Non-GAAP net income excludes stock-based compensation expense,
amortization expense related to acquisitions, income tax expense,
and the fair value deferred revenue adjustment
Conference Call Information
Management will host a conference call to discuss Website Pros' results and other matters related to the Company's business today, February 12, 2008, at 5:00 p.m. (Eastern Time). To access this call, dial 888-213-3934 (domestic) or 913-312-0976 (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 5945125. 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 excludes stock-based compensation expense, amortization expense related to acquisitions, income tax expense, and includes an estimated cash tax rate to be paid during 2007. A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in the 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 margin 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 from, or in substitution for, financial information presented in compliance with GAAP.
Forward-Looking Statements
This press release includes certain "forward-looking statements" including, without limitation, statements under the heading "Business Outlook" 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 such as "may," "feel," "intends," "plans," "believes," "estimates" 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 could 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' Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, as filed with the Securities and Exchange Commission. These filings are 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 Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
(unaudited) (unaudited) (unaudited) (audited)
--------- -------- -------- --------
Revenue:
Subscription $ 29,670 $ 14,908 $ 77,676 $ 46,789
License 342 1,054 2,437 3,585
Professional services 869 390 2,408 1,667
-------- -------- -------- --------
Total revenue 30,881 16,352 82,521 52,041
Cost of revenue
(excluding
depreciation and
amortization shown
separately below):
Subscription (a) 11,156 6,589 32,381 20,534
License 85 285 751 958
Professional services 351 378 1,299 1,421
-------- -------- -------- --------
Total cost of
revenue 11,592 7,252 34,431 22,913
-------- -------- -------- --------
Gross profit 19,289 9,100 48,090 29,128
Operating expenses:
Sales and
marketing (a) 6,894 3,730 19,308 12,511
Research and
development (a) 2,438 788 5,075 2,256
General and
administrative (a) 7,167 2,789 16,513 9,652
Restructuring charges 1 -- 243 --
Depreciation and
amortization 3,341 670 5,454 1,712
-------- -------- -------- --------
Total operating
expenses 19,841 7,977 46,593 26,131
-------- -------- -------- --------
Income(loss) from
operations (552) 1,123 1,497 2,997
Other income:
Interest, net 397 513 1,938 2,400
Other -- -- -- --
-------- -------- -------- --------
Income(loss) before
income taxes (155) 1,636 3,435 5,397
Income tax (expense)
benefit (66) 3,200 (2,077) 3,200
-------- -------- -------- --------
Net income(loss) $ (221) $ 4,836 $ 1,358 $ 8,597
======== ======== ======== ========
Net income(loss) per
common share
Basic $ (0.01) $ 0.28 $ 0.07 $ 0.51
======== ======== ======== ========
Diluted $ (0.01) $ 0.25 $ 0.06 $ 0.44
======== ======== ======== ========
Weighted-average number
of shares used in per
share amounts:
Basic 26,428 17,119 19,802 16,778
======== ======== ======== ========
Diluted 26,428 19,695 22,224 19,430
======== ======== ======== ========
(a) Stock based
compensation
included above:
Subscription
(cost of revenue) $ 76 $ 47 $ 244 $ 137
Sales and marketing 266 131 774 365
Research and
development 104 80 312 222
General and
administration 519 408 2,238 1,309
-------- -------- -------- --------
Total $ 965 $ 666 $ 3,568 $ 2,033
======== ======== ======== ========
Website, Pros, Inc.
Consolidated Balance Sheets
(in thousands except per share data)
December 31, December 31,
2007 2006
(unaudited) (audited)
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 29,746 $ 42,155
Restricted investments 4,805 --
Accounts receivable, net of
allowance $1.0 million and $280
thousand, respectively 7,393 4,202
Inventories, net of reserves of
$67 and $48, respectively 26 69
Prepaid expenses 4,248 616
Prepaid marketing fees and other
current assets 964 986
Deferred taxes 552 531
--------- ---------
Total current assets 47,734 48,559
Restricted investments 1,675 --
Property and equipment, net 7,153 2,337
Goodwill 104,307 31,587
Intangible assets, net 69,422 7,590
Deferred Taxes 780 2,669
Other assets 752 618
--------- ---------
Total assets $ 231,823 $ 93,360
========= =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,445 $ 920
Accrued expenses 8,754 2,884
Accrued restructuring costs and
other reserves 12,994 --
Deferred revenue 9,102 4,594
Accrued marketing fees 279 378
Notes payable, current 1,093 95
Obligations under capital lease,
current 1 52
Other long-term liabilities 294 102
--------- ---------
Total current liabilities 34,962 9,025
Accrued rent expense 105 158
Deferred revenue 148 --
Notes payable, long term 152 162
Obligations under capital leases,
long term -- 32
Other long term liabilities 25 27
--------- ---------
Total liabilities 35,392 9,404
Stockholders' equity
Common stock, $0.001 par value;
150,000,000 shares authorized at
December 31, 2007 and December
31, 2006; 27,472,686 shares and
17,331,626 shares issued and
outstanding at December 31, 2007
and December 31, 2006,
respectively 27 17
Additional paid-in capital 254,208 143,101
Accumulated deficit (57,804) (59,162)
--------- ---------
Total stockholders' equity 196,431 83,956
--------- ---------
Total liabilities and
stockholders' equity $ 231,823 $ 93,360
========= =========
Website, Pros, Inc.
Reconciliation of GAAP to Pro Forma Results
(in thousands except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
-------- -------- -------- --------
Reconciliation of GAAP
revenue to non-GAAP
revenue
GAAP revenue $ 30,881 $ 16,352 $ 82,521 $ 52,041
Fair value adjustment to
deferred revenue 459 -- 564 --
-------- -------- -------- --------
Non-GAAP proforma revenue $ 31,340 $ 16,352 $ 83,085 $ 52,041
======== ======== ======== ========
Reconciliation of GAAP
net income (loss)
attributable to common
stockholders to
non-GAAP pro forma
net income
GAAP Net income (loss) $ (221) $ 4,836 $ 1,358 $ 8,597
Amortization of
intangibles 2,618 437 3,940 1,031
Income tax expense 66 (3,200) 2,077 (3,200)
Cash income tax expense (97) -- (189) --
Fair value adjustment to
deferred revenue 459 -- 564 --
Restructuring charges 1 -- 243 --
Stock based compensation 965 666 3,568 2,033
-------- -------- -------- --------
Non-GAAP proforma
net income $ 3,791 $ 2,739 $ 11,561 $ 8,461
======== ======== ======== ========
Reconciliation of GAAP
basic net income (loss)
per share to
non-GAAP pro
forma net income
per share
Basic $ (0.01) $ 0.28 $ 0.07 $ 0.51
Amortization of
intangibles per share 0.09 0.03 0.20 0.06
Income tax expense
per share 0.00 (0.19) 0.10 (0.19)
Cash income tax expense
per share (0.00) -- (0.01) --
Fair value adjustment
to deferred revenue
per share 0.02 -- 0.03 --
Restructuring charges 0.00 -- 0.01 --
Stock based compensation
per share 0.04 0.04 0.18 0.12
-------- -------- -------- --------
Non-GAAP pro-forma net
income per share
Basic $ 0.14 $ 0.16 $ 0.58 $ 0.50
======== ======== ======== ========
Reconciliation of GAAP
diluted net income
(loss) per share to
non-GAAP pro forma net
income per share
Fully diluted shares:
Common stock 26,428 17,119 19,802 16,778
Diluted stock options 2,936 2,101 1,983 2,349
Warrants 206 198 196 233
Escrow shares 139 277 243 70
-------- -------- -------- --------
Total 29,709 19,695 22,224 19,430
======== ======== ======== ========
GAAP net income (loss)
per share
Diluted $ (0.01) $ 0.25 $ 0.06 $ 0.44
Amortization of
intangibles per share 0.09 0.02 0.18 0.05
Income tax expense
per share 0.00 (0.16) 0.09 (0.16)
Cash income tax expense
per share (0.00) -- (0.01) --
Fair value adjustment
to deferred
revenue per share 0.02 -- 0.03 --
Restructuring charges 0.00 -- 0.01 --
Stock based compensation
per share 0.03 0.03 0.16 0.11
-------- -------- -------- --------
Non-GAAP pro-forma net
income per share
Diluted $ 0.13 $ 0.14 $ 0.52 $ 0.44
======== ======== ======== ========
Reconciliation of GAAP
operating income (loss)
to non-GAAP pro forma
operating income
GAAP operating income
(loss) $ (552) $ 1,123 $ 1,497 $ 2,997
Amortization of
intangibles 2,618 437 3,940 1,031
Fair value adjustment to
deferred revenue 459 -- 564 --
Restructuring charges 1 -- 243 --
Stock based compensation 965 666 3,568 2,033
-------- -------- -------- --------
Non-GAAP proforma
operating income $ 3,491 $ 2,226 $ 9,812 $ 6,061
======== ======== ======== ========
Reconciliation of GAAP
operating margin to
non-GAAP pro forma
operating margin
GAAP operating margin -2% 7% 2% 6%
Amortization of
intangibles 8% 3% 5% 2%
Fair value adjustment to
deferred revenue 1% 0% 1% 0%
Restructuring charges 0% 0% 0% 0%
Stock based compensation 4% 4% 4% 4%
-------- -------- -------- --------
Non-GAAP proforma
operating margin 11% 14% 12% 12%
======== ======== ======== ========
Website, Pros, Inc.
Consolidated Statement of Cash Flows
(in thousands)
Twelve Months Ended
December 31,
2007 2006
(unaudited) (audited)
--------- ---------
Cash flows from operating
activities
Net income $ 1,358 $ 8,597
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 5,454 1,712
Stock-based compensation expense 3,568 2,033
Restructuring costs 243 --
Deferred income tax 1,868 (3,200)
Changes in operating assets and
liabilities:
Accounts receivable 517 (1,833)
Inventories 43 69
Prepaid expenses and other assets 484 (120)
Accounts payable, accrued
expenses and other liabilities (3,514) (673)
Deferred revenue 261 (115)
--------- ---------
Net cash provided by operating
activities 10,282 6,470
Cash flows from investing
activities
Business acquisition, net of
cash received (18,380) (20,449)
Change in restricted investments 263 --
Purchase of property and equipment (3,807) (1,521)
Investment in intangible assets (2,109) --
--------- ---------
Net cash (used in) investing
activities (24,033) (21,970)
Cash flows from financing
activities
Proceeds from issuance of common
stock, net -- 1,018
Payment of debt obligations (1,437) (49)
Proceeds from exercise of stock
options 2,779 940
--------- ---------
Net cash provided by financing
activities 1,342 1,909
--------- ---------
Net decrease in cash and cash
equivalents (12,409) (13,591)
Cash and cash equivalents,
beginning of period 42,155 55,746
--------- ---------
Cash and cash equivalents,
end of period $ 29,746 $ 42,155
========= =========
Supplemental cash flow information:
Interest paid $ 19 $ 11
========= =========
Income tax paid $ 233 $ --
========= =========
Supplemental disclosure of
non-cash transactions:
Issuance of equity in connection
with acquisitions $ 104,754 $ 3,013
========= =========