LOS ANGELES, CA--(Marketwire - July 29, 2010) - Internet Brands, Inc. (
NASDAQ:
INET)
-- Record Revenues: $28.1 million in second quarter, year-over-year growth
of 21%
-- Record Adjusted EBITDA: $11.7 million in second quarter, year-over-year
growth of 25%
-- Net Income: $4.6 million in second quarter, $0.10 per diluted common
share; includes one-time, non-cash gain increasing net income by $0.02;
year-over-year growth of 80%
-- Unique Visitor growth of 30% year-over-year
Internet Brands, Inc. (
NASDAQ:
INET) today reported financial results for
the three and six months ended June 30, 2010.
"Our business continues to grow strongly," said Bob Brisco, CEO of Internet
Brands. "The two main drivers of our performance are organic growth and
acquisitions. Once again, we are succeeding in both areas."
"Our organic revenue growth rate for websites owned more than a year
increased by 15% -- and this increase continues to be driven by large
increases in organic, non-paid traffic. Further, our acquisition program
continues to gain momentum as we complete tuck-in acquisitions on our
platform which are strongly and immediately accretive," Brisco added.
Second Quarter Operating Results
Total revenues for the second quarter of 2010 were $28.1 million, a 21%
increase from $23.2 million in the prior year period.
Consumer Internet advertising revenues increased by $4.5 million in the
second quarter of 2010 as compared to the prior year period, driven
primarily by growth from websites in the Company's Auto Enthusiast, Home,
Travel and Legal verticals. The increase in advertising revenues was
partially offset by a $1.1 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 grew organically by approximately 15% in the second
quarter of 2010 as compared to the prior year period. Overall, Consumer
Internet revenues were $19.1 million in the second quarter of 2010, a 21%
increase from $15.8 million in the prior year period.
Licensing revenues were $8.9 million in the second quarter of 2010, a 20%
increase from $7.4 million in the prior year period. The increase was
primarily the result of new client accounts and the sale of additional
services to existing clients at the Company's Autodata division.
Net income for the second quarter of 2010 was $4.6 million, or $0.10 per
diluted common share, which includes a one-time, non-cash gain of $0.9
million, tax effected, associated with foreign exchange translation in our
vBulletin business in the U.K. Net income for the second quarter of 2009
was $2.5 million, or $0.06 per diluted common share.
For the second quarter of 2010, Adjusted EBITDA grew 25% to $11.7 million
from $9.3 million in the prior year period. Adjusted EBITDA margins in the
second quarter of 2010 expanded 140 basis points year-over-year to 41.6%.
The Company's Adjusted EBITDA margins have expanded as a result of the
continued leverage derived from the Company's common operating platform and
from the shift from lower margin automotive e-commerce revenues to higher
margin advertising revenues.
Total monthly unique visitors to the Company's network of websites grew to
a monthly average of 62 million in the second quarter of 2010, a 30%
increase from 48 million in the second quarter of 2009, and an 8% increase
from 58 million in the first quarter of 2010. In each period, more than
98% of the traffic to the Company's websites was derived from non-paid
sources.
First Half 2010 Operating Results
Total revenues for the first half of 2010 were $54.5 million, a 16%
increase from $46.8 million in the prior year period.
Consumer Internet advertising revenues increased by $7.7 million in the
first half of 2010 as compared to the prior year period, driven primarily
by growth from websites in the Company's Auto Enthusiast, Home, and Travel
verticals. The increase in advertising revenues was partially offset by a
$3.2 million year-over-year decrease in automotive e-commerce revenues due
to continued weakness in demand from automotive dealerships. Overall,
Consumer Internet revenues were $36.5 million in the first half of 2010, a
14% increase from $32.0 million in the prior year period.
Licensing revenues were $18.0 million in the first half of 2010, a 22%
increase from $14.8 million in the prior year period. The increase was the
result of new client accounts and the sale of additional services to
existing clients at the Company's Autodata division, as well as strong
sales of vBulletin 4.0 publishing suite and forum products.
Net income for the first half of 2010 was $7.6 million, or $0.16 per
diluted common share, compared to net income of $4.8 million, or $0.11 per
diluted common share, in the prior year period.
For the first half of 2010, Adjusted EBITDA grew 26% to $22.2 million from
$17.6 million in the same period last year. Adjusted EBITDA margins for
the six-month period ended June 30, 2010 expanded 320 basis points to
40.8%.
Third Quarter and Full Year 2010 Guidance
The Company is refining its full year revenue and Adjusted EBITDA guidance.
The Company expects revenues to be approximately $114.0 to $117.0 million,
representing year-over-year revenue growth of 14-17%. Adjusted EBITDA in
2010 is expected to be approximately $46.75 to $48.0 million, representing
year-over-year growth of 17-20%.
For the third quarter of 2010, the Company expects revenues to be
approximately $28.5 to $29.5 million and Adjusted EBITDA to be
approximately $11.8 to $12.3 million.
Balance Sheet and Liquidity
As of June 30, 2010, the Company had $58.7 million of cash and investments,
and no outstanding debt under its $35 million revolving line of credit.
Net cash provided by operating activities in the first half of 2010 was
$22.1 million compared to $19.5 million in the prior year period.
Acquisitions
During the second quarter of 2010, the Company acquired six websites for an
aggregate purchase price of approximately $8.6 million. The acquisitions
include the previously-announced Experthub.com, a network of websites that
connects consumers with attorneys and other professionals, as well as five
additional websites that are tuck-ins to the Company's Money, Legal and
Business vertical and Health vertical.
For the first half of 2010, the Company completed nine website-related
acquisitions for an aggregate purchase price of approximately $16.2
million. Total cash spend related to acquisition purchases, earnouts and
holdbacks totaled $15.3 million in the first half 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 Six months ended
June 30, June 30,
------------------ -------------------
2010 2009 2010 2009
-------- --------- -------- ---------
(unaudited)
Net income $ 4,572 $ 2,545 $ 7,642 $ 4,808
Provision for income taxes 3,136 1,807 5,226 3,346
Depreciation and amortization 4,374 3,983 8,780 7,826
Stock-based compensation 1,448 869 2,539 1,544
Investment and other income
(expense) (1,844) 140 (1,988) 77
-------- --------- -------- ---------
Adjusted EBITDA $ 11,686 $ 9,344 $ 22,199 $ 17,601
======== ========= ======== =========
Conference Call and Webcast
The Company will host a conference call to discuss its second quarter 2010
financial results beginning at 4:30 pm ET (1:30 pm PT), today, July 29,
2010. Participants may access the call by dialing 877-941-2322 (domestic)
or 480-629-9715 (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 August 12, 2010. To access the replay,
please dial 877-870-5176 (domestic) or 858-384-5517 (international),
passcode 4328711.
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 websites 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 62 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 July
29, 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)
June 30, December 31,
2010 2009
------------ ------------
Unaudited
ASSETS
Current assets
Cash and cash equivalents $ 37,286 $ 38,408
Investments, available for sale 21,411 21,736
Accounts receivable, less allowances for
doubtful accounts of $571 and $618 at June
30, 2010 and December 31, 2009, respectively 14,248 15,416
Deferred income taxes 12,079 16,184
Prepaid expenses and other current assets 1,390 1,212
------------ ------------
Total current assets 86,414 92,956
Property and equipment, net 17,470 15,125
Goodwill 240,261 223,925
Intangible assets, net 17,149 20,080
Deferred income taxes 39,298 39,255
Other assets 577 602
------------ ------------
Total assets $ 401,169 $ 391,943
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 13,179 $ 13,957
Deferred revenue 5,368 6,414
------------ ------------
Total current liabilities 18,547 20,371
Other liabilities 182 258
Stockholders' equity
Common stock, Class A, $.001 par value;
125,000,000 shares authorized and
43,118,611 and 42,095,325 issued and
outstanding at June 30, 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 June 30, 2010 and
December 31, 2009 3 3
Additional paid-in capital 617,850 612,528
Accumulated deficit (234,164) (241,806)
Accumulated other comprehensive (loss)
income (1,292) 547
------------ ------------
Total stockholders' equity 382,440 371,314
------------ ------------
Total liabilities and stockholders' equity $ 401,169 $ 391,943
============ ============
INTERNET BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2010 2009 2010 2009
----------- ---------- ----------- ----------
Revenues
Consumer Internet $ 19,142 $ 15,787 $ 36,457 $ 31,976
Licensing 8,925 7,441 17,993 14,780
----------- ---------- ----------- ----------
Total revenues 28,067 23,228 54,450 46,756
Costs and operating expenses
Cost of revenues 5,089 4,406 10,105 9,189
Sales and marketing 5,379 4,561 10,415 9,337
Technology 2,529 2,305 4,875 4,406
General and
administrative 4,832 3,481 9,395 7,767
Depreciation and
amortization of
intangibles 4,374 3,983 8,780 7,826
----------- ---------- ----------- ----------
Total costs and operating
expenses 22,203 18,736 43,570 38,525
----------- ---------- ----------- ----------
Income from operations 5,864 4,492 10,880 8,231
Investment and other
(expense) income 1,844 (140) 1,988 (77)
----------- ---------- ----------- ----------
Income before income taxes 7,708 4,352 12,868 8,154
Provision for income taxes 3,136 1,807 5,226 3,346
----------- ---------- ----------- ----------
Net income $ 4,572 $ 2,545 $ 7,642 $ 4,808
=========== ========== =========== ==========
Basic net income per share
- Class A and B $ 0.10 $ 0.06 $ 0.17 $ 0.11
Diluted net income per
share - Class A and B $ 0.10 $ 0.06 $ 0.16 $ 0.11
Class A and B weighted
average number of shares
- Basic 44,619,664 43,383,805 44,360,397 43,588,113
Class A and B weighted
average number of shares
- Diluted 48,111,286 46,083,250 47,615,336 45,781,327
Stock-based compensation
expense by function
Sales and marketing $ 215 $ 108 $ 362 $ 194
Technology 125 57 208 94
General and
administrative 1,108 704 1,969 1,256