JACKSONVILLE, Fla., Nov. 6, 2007 (PRIME NEWSWIRE) -- Website Pros, Inc. (Nasdaq:WSPI), a leading provider of Web and marketing services for small and medium-sized businesses, today announced results of operations for the quarter ended September 30, 2007. The financial results below do not include results for Web.com, which was acquired on September 30, 2007.
Summary of Third Quarter 2007 Results: * Total revenue for the third quarter was a record $17.8 million, an increase of 48% compared to $12.0 million year-over-year. * GAAP operating income, determined in accordance with generally accepted accounting principles (GAAP), for the third quarter was $0.8 million, compared to $0.7 million year-over-year. * GAAP net income for the third quarter was $0.4 million compared to $1.4 million year-over-year. Fully diluted GAAP earnings per share were $0.02 per share for the third quarter of 2007 compared to $0.07 per share year-over-year. GAAP net income and GAAP earnings per share in the third quarter included approximately $2.5 million in non-cash or non-recurring expenses, including an income tax provision of $0.94 million, pre-tax non-cash stock compensation of $0.9 million, pre-tax amortization of acquisition intangibles of $0.4 million, and pre-tax non-recurring restructuring charges of $0.24 million, compared to an income tax provision of $0, pre-tax non-cash stock compensation of $0.56 million, pre-tax amortization of acquisition intangibles of $0.18 million, and pre-tax non-recurring restructuring charges of $0 in the third quarter of 2006. * Non-GAAP operating income for the third quarter was a record $2.4 million, representing a 14% non-GAAP operating margin, and an increase of 74% compared to $1.4 million year-over-year. * Non-GAAP net income for the third quarter was a record $2.9 million, an increase of 39% as compared to $2.1 million year-over-year. * Non-GAAP diluted net income per share for the third quarter was a record $0.15, an increase of 36% from $0.11 year-over-year.
"Our third quarter results were highlighted by solid revenue growth and better-than-expected non-GAAP diluted net income per share, marking the 9th consecutive quarter that profitability has met or exceeded our guidance," stated David Brown, Chairman and CEO of Website Pros. "Equally important, we believe the addition of Web.com creates a clear market leader with a large customer base, powerful and growing brands and an-industry leading array of technology solutions to service the growing base of approximately 27 million small businesses in the United States alone. The market for serving the broad Internet solution needs of the small business market is highly fragmented, and we believe the combination of Website Pros and Web.com positions us well to emerge as the ultimate market winner."
"As a result of the merger, Web.com did not report financials for the third quarter; however, it is important to note that for the fifth consecutive quarter, Web.com continued revenue and subscriber growth driven by both direct marketing and partnerships," stated Jeff Stibel, President of Website Pros. "Looking ahead, we maintain our optimism for the combined company and will continue to identify growth prospects from both inside and outside the new company."
OTHER FINANCIAL HIGHLIGHTS: * On a stand-alone basis, Website Pros' total net subscribers were approximately 82,000 at the end of the third quarter, an increase from approximately 80,700 at the end of the second quarter of 2007. Including Web.com's subscribers, the total number of net subscribers for the combined company was approximately 255,000 at the end of the third quarter 2007. * Churn was 5.2%, down from 6.2% on a year-over-year basis and up from 4.8% in the previous quarter. * On September 30, 2007, Website Pros completed its transaction with Web.com pursuant to the Merger Agreement between the companies dated June 26, 2007.
Conference Call Information
Management will host a conference call to discuss Website Pros' results and other matters related to the Company's business today, November 6, 2007, at 5:00 p.m. (Eastern Time). To access this call, dial 888-663-2242 (domestic) or 913-312-1270 (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 1211438. 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 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" 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," "expects," "anticipates," "intends," "plans," "believes," "seeks," "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 and those risks set forth under the caption "Risk Factors" in Website Pros' Annual Report on Form 10-K for the year ended December 31, 2006 and in Website Pros' Quarterly Report on Form 10-Q for the quarter ended June 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 does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
Website Pros, Inc.
Consolidated Statements of Operations
(in thousands except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2007 2006 2007 2006
-------- -------- -------- --------
Revenue:
Subscription $ 16,820 $ 11,272 $ 48,006 $ 31,881
License 383 442 2,095 2,531
Professional
services 613 325 1,539 1,277
-------- -------- -------- --------
Total revenue 17,816 12,039 51,640 35,689
Cost of revenue
(excluding
depreciation and
amortization shown
separately below):
Subscription (a) 7,124 4,859 21,225 13,945
License 190 190 667 672
Professional services 347 333 947 1,044
-------- -------- -------- --------
Total cost
of revenue 7,661 5,382 22,839 15,661
-------- -------- -------- --------
Gross profit 10,155 6,657 28,801 20,028
Operating expenses:
Sales and
marketing (a) 4,202 2,972 12,413 8,651
Research and
development (a) 915 479 2,637 1,468
General and
administrative (a) 3,271 2,194 9,348 6,993
Restructuring
charges 242 -- 242 --
Depreciation and
amortization 719 339 2,113 1,042
-------- -------- -------- --------
Total operating
expenses 9,349 5,984 26,753 18,154
-------- -------- -------- --------
Income from operations 806 673 2,048 1,874
Other income (expense):
Interest, net 528 710 1,539 1,887
Other -- -- -- --
-------- -------- -------- --------
Income before income
taxes 1,334 1,383 3,587 3,761
Income tax expense (942) -- (2,011) --
-------- -------- -------- --------
Net income $ 392 $ 1,383 $ 1,576 $ 3,761
======== ======== ======== ========
Net income per
common share
Basic $ 0.02 $ 0.08 $ 0.09 $ 0.23
======== ======== ======== ========
Diluted $ 0.02 $ 0.07 $ 0.08 $ 0.19
======== ======== ======== ========
Weighted-average
number of shares
used in per share
amounts:
Basic 17,989 16,846 17,603 16,663
======== ======== ======== ========
Diluted 19,944 19,335 19,768 19,340
======== ======== ======== ========
(a) Stock based compensation
included above:
Subscription
(cost of revenue) $ 57 $ 33 $ 168 $ 90
Sales and
marketing 175 88 508 234
Research and
development 67 54 206 141
General and
administration 618 385 1,718 902
-------- -------- -------- --------
Total $ 917 $ 560 $ 2,600 $ 1,367
======== ======== ======== ========
Website, Pros, Inc.
Consolidated Balance Sheets
(in thousands except per share data)
September 30, December 31,
2007 2006
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 56,622 $ 42,155
Restricted cash 304 --
Accounts receivable, net of
allowance $729 and $280, respectively 7,059 4,202
Other receivables 1,445 --
Inventories net of reserves of
$65 and $48, respectively 30 69
Prepaid expenses 4,398 616
Prepaid marketing fees and other
current assets 1,029 986
Deferred taxes 531 531
--------- ---------
Total current assets 71,418 48,559
Restricted cash 6,438 --
Property and equipment net 7,460 2,337
Goodwill 109,800 31,587
Intangible assets, net 63,900 7,590
Other assets 771 618
Non-current deferred taxes 794 2,669
--------- ---------
Total assets $ 260,581 $ 93,360
========= =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 2,545 $ 920
Accrued expenses 10,574 2,581
Accrued merger costs 25,911 --
Accrued restructuring costs 13,550 --
Deferred revenue 9,215 4,594
Accrued marketing fees 647 681
Notes payable, current 2,070 95
Obligations under capital lease, current -- 52
Other liabilities 159 102
--------- ---------
Total current liabilities 64,671 9,025
Accrued rent expense 126 158
Deferred revenue 115 --
Notes payable, long term 457 162
Obligations under capital leases, long term -- 32
Other long term liabilities 749 27
--------- ---------
Total liabilities 66,118 9,404
Stockholders' equity
Common stock, $0.001 par value;
150,000,000 shares authorized at
September 30, 2007 and December 31, 2006;
27,210,405 shares and 17,331,626 shares
issued and outstanding at June 30, 2007
and December 31, 2006, respectively 27 17
Additional paid-in capital 252,022 143,101
Accumulated deficit (57,586) (59,162)
--------- ---------
Total stockholders' equity 194,463 83,956
--------- ---------
Total liabilities and stockholders' equity $ 260,581 $ 93,360
========= =========
Website, Pros, Inc.
Reconciliation of GAAP to Pro Forma Results
(in thousands except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
Reconciliation of GAAP
net income attributable
to common stockholders
to non-GAAP pro forma
net income
GAAP Net income $ 384 $ 1,383 $ 1,576 $ 3,761
Amortization of
intangibles 448 176 1,322 418
Income tax expense 950 -- 2,011 --
Cash income tax expense (38) -- (92) --
Fair value adjustment
to deferred revenue 32 -- 105 --
Restructuring charges 242 -- 242 --
Stock based compensation 917 560 2,600 1,367
-------- -------- -------- --------
Non-GAAP proforma
net income $ 2,935 $ 2,119 $ 7,764 $ 5,546
======== ======== ======== ========
Reconciliation of GAAP
basic net income per
share to non-GAAP pro
forma net income per share
Basic $ 0.02 $ 0.08 $ 0.09 $ 0.23
Amortization of
intangibles per share 0.03 0.02 0.08 0.02
Income tax expense
per share 0.05 -- 0.11 --
Cash income tax expense
per share (0.00) -- (0.01) --
Fair value adjustment to
deferred revenue per share 0.00 -- 0.01 --
Restructuring charges 0.01 -- 0.01 --
Stock based compensation
per share 0.05 0.03 0.15 0.08
-------- -------- -------- --------
Non-GAAP pro-forma net
income per share
Basic $ 0.16 $ 0.13 $ 0.44 $ 0.33
======== ======== ======== ========
Reconciliation of GAAP
diluted net income per
share to non-GAAP pro
forma net income per
share Fully diluted shares:
Common stock 17,989 16,846 17,603 16,663
Diluted stock options 1,485 2,287 1,695 2,432
Warrants 193 199 192 244
Escrow shares 277 3 278 1
-------- -------- -------- --------
Total 19,944 19,335 19,768 19,340
======== ======== ======== ========
GAAP net income per share
Diluted $ 0.02 $ 0.07 $ 0.08 $ 0.19
Amortization of
intangibles per share 0.02 0.01 0.07 0.03
Income tax expense
per share 0.05 -- 0.10 --
Cash income tax expense
per share (0.00) -- (0.00) --
Fair value adjustment
to deferred revenue
per share 0.00 -- 0.01 --
Restructuring charges 0.01 -- 0.01 --
Stock based compensation
per share 0.05 0.03 0.12 0.07
-------- -------- -------- --------
Non-GAAP pro-forma net
income per share
Diluted $ 0.15 $ 0.11 $ 0.39 $ 0.29
======== ======== ======== ========
Reconciliation of GAAP
operating income to
non-GAAP pro forma
operating income
GAAP operating income $ 806 $ 673 $ 2,048 $ 1,874
Amortization of intangibles 448 176 1,322 418
Fair value adjustment
to deferred revenue 32 -- 105 --
Restructuring charges 242 -- 242 --
Stock based compensation 917 560 2,600 1,367
-------- -------- -------- --------
Non-GAAP proforma
operating income $ 2,445 $ 1,409 $ 6,317 $ 3,659
======== ======== ======== ========
Reconciliation of GAAP
operating margin to
non-GAAP pro forma
operating margin
GAAP operating margin 5% 6% 4% 5%
Amortization of
intangibles 3% 1% 3% 1%
Fair value adjustment
to deferred revenue 0% 0% 0% 0%
Restructuring charges 1% 0% 0% 0%
Stock based compensation 5% 5% 5% 4%
-------- -------- -------- --------
Non-GAAP proforma
operating margin 14% 12% 12% 10%
======== ======== ======== ========
Website, Pros, Inc.
Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2007 2006
-------- --------
Cash flows from operating activities
Net income $ 1,576 $ 3,761
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 2,113 1,042
Stock-based compensation expense 2,600 1,367
Restructuring costs 242 --
Deferred income tax 1,875 --
Changes in operating assets
and liabilities:
Accounts receivable (13) (1,335)
Inventories 39 51
Prepaid expenses and other assets (2) 128
Accounts payable, accrued
expenses and other liabilities 84 (942)
Deferred revenue 341 74
-------- --------
Net cash provided by
operating activities 8,855 4,146
Cash flows from investing activities
Business acquisition, net of
cash received 7,812 (20,008)
Purchase of property and equipment (3,190) (1,022)
Investment in intangible assets (102) --
-------- --------
Net cash provided by (used in)
investing activities 4,520 (21,030)
Cash flows from financing activities
Proceeds from issuance of
common stock, net -- 1,122
Payment of debt obligations (156) (49)
Proceeds from exercise of
stock options 1,248 271
-------- --------
Net cash provided by financing
activities 1,092 1,344
-------- --------
Net increase (decrease) in cash
and cash equivalents 14,467 (15,540)
Cash and cash equivalents,
beginning of period 42,155 55,746
-------- --------
Cash and cash equivalents,
end of period $ 56,622 $ 40,206
======== ========
Supplemental cash flow
information:
Interest paid $ 13 $ --
======== ========
Income tax paid $ 199 $ --
======== ========