INPC Inphonic (MM)

InPhonic Adds Full-Year Statement of Operations and Balance Sheet Announces Record Revenues and Raises 2005 Revenue and EPS Guidance WASHINGTON, Feb. 9 /PRNewswire-FirstCall/ -- InPhonic, Inc. (NASDAQ:INPC), a leading online seller of wireless services, today reported record revenues and raises 2005 Revenue and EPS Guidance above current analyst estimates. Fourth Quarter 2004 Results GAAP Results: Revenues were $60.0 million in the fourth quarter 2004, compared with $54.7 million in the fourth quarter 2003, an increase of 10% year over year. Net loss was $(1.4) million or $(0.37) per basic and diluted shares, in the fourth quarter 2004, reflecting a decrease of $(9.7) million compared with net income of $8.3 million, or $0.25 per diluted shares, in the fourth quarter 2003. The fourth quarter 2003 results included the effects of the one-time recognition of $17.3 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial Statement. This one-time recognition impacted both revenues and net income for the quarter. Non-GAAP Results: Revenues were $60.0 million in the fourth quarter 2004, compared with revenues of $37.4 million excluding the effects of the one-time recognition of $17.3 million in revenues in the fourth quarter 2003, an increase of 60% year over year. For the fourth quarter 2004, Adjusted EBITDA of $3.4 million, compared with $(5.0) million in the fourth quarter 2003, an improvement of $8.4 million year over year. Adjusted Earnings before Taxes ("Adjusted EBT") of $1.9 million in the fourth quarter 2004 or $0.05 per pro forma diluted share reflecting an improvement of $12.1 million compared with adjusted EBT of $(10.2) million or $(0.39) per pro forma diluted share. The components of Adjusted EBITDA and Adjusted EBT are discussed below under "Non- GAAP Financial Measures". This performance exceeded average analysts' expectations of revenue of $54.1 million, Adjusted EBITDA of $2.6 million and Adjusted EBT of $0.03 per pro forma diluted share for the fourth quarter 2004. Full Year 2004 Results GAAP Results: Revenues were $204.2 million for 2004, compared with $136.1 million for 2003, an increase of 50% year over year. Net loss was $(10.2) million or $(2.30) per diluted share in 2004, reflecting an increase of $10.0 million, compared with net loss of $(20.2) million, or $(2.46) per basic and diluted shares in 2003. The 2003 results included the effects of the one-time recognition of $13.6 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial Statements. This one-time recognition impacted both revenues and net income for the year. Non-GAAP Results: Revenues were $204.2 million for 2004, compared with $122.5 million excluding the effects of the one-time recognition of $13.6 million in revenues for 2003, an increase of 67% year over year. For 2004, Adjusted EBITDA of $4.4 million, compared with $(21.3) million in 2003, an improvement of $25.7 million year over year. Adjusted Earnings before Taxes ("Adjusted EBT") of $(1.1) million for 2004 or $(0.04) per pro forma diluted share, reflecting an improvement of $26.3 million compared with adjusted EBT of $(28.0) million or $(1.11) per pro forma diluted share. This performance exceeded average analysts' expectations of revenue of $198.3 million, Adjusted EBITDA of $3.4 million and Adjusted EBT of $(0.11) per pro forma diluted share for 2004. "We are very pleased with our strong 2004 and fourth quarter performance as we posted record top line growth and bottom-line improvement. We believe that our financial performance reflects the growing strength of our business and the compelling value proposition we provide to our customers." said David Steinberg, Chief Executive Officer. Operating Highlights -- Acquired substantially all of the assets of A1 Wireless, one of the largest online activators of wireless devices over the internet; -- Added distribution clients including Motorola, CNET, eCost, Sanyo, and Radio Shack; -- Expanded our Mobile Virtual Network Enabler or "MVNE" services by adding AT&T as a premier client. We were selected by AT&T to deliver a systems platform for procurement, activation, billing and customer care; -- Named the No. 1 fastest-growing private company in the United States on the 2004 Inc. 500 list, included in the 2004 "Best of the Web" by Forbes magazine; and -- Completed our Initial Public Offering on November 16, 2004. Other GAAP Fourth Quarter Financial Updates -- Cash and marketable securities were $101.0 million at December 31, 2004. -- Capital expenditures in the fourth quarter totaled $2.1 million, compared to $1.8 million in the fourth quarter of 2003. See "Non-GAAP Financial Measures" for additional information. 2005 Outlook Q1 2005 Guidance Forward-looking guidance for the first quarter ending March 31, 2005, is as follows: Revenue is expected to be between $52 million and $54 million; up from analysts' original guidance of $44 million to $46 million which was raised to $46 million to $48 million after giving effects for the results of the A-1 acquisition. This projected result can be compared to Revenues of $40.1 million achieved in Q1 2004. Adjusted EBITDA is expected to be between $1.5 million and $1.6 million; up from analysts' previous guidance of $0.5 million to $0.6 million, which was raised $0.8 million to $0.9 million after giving effects for the results of the A-1 acquisition. This projected result can be compared to Adjusted EBITDA of $(2.8) million achieved in Q1 2004. Adjusted Earnings before Taxes ("Adjusted EBT") is expected to be between $0.00 to $0.01 per share; up from analysts' previous guidance of $(0.01) to $(0.02). This projected result can be compared to Adjusted EBT per share of $(0.40) achieved in Q1 2004. Full Year 2005 Guidance Forward-looking guidance for the full-year ending December 31, 2005, is as follows: Revenue is expected to be between $315 million to $325 million; up from analysts' previous guidance of $250 million to $260 million which was raised to $280 million to $290 million after giving effects for the results of the A-1 acquisition. This projected result can be compared to Revenues of $204 million achieved in 2004. Adjusted EBITDA is expected to be between $35 million and $36 million; up from analysts' previous guidance of $28 million to $30 million which was raised to $32 million to $33 million after giving effects for the results of the A-1 acquisition. This projected result can be compared to Adjusted EBITDA of $4.4 million achieved in 2004. Adjusted Earnings before Taxes ("Adjusted EBT") is expected to be between of $0.74 to $0.76 per share, up from analysts' previous guidance of $0.67 to $0.69. This projected result can be compared to Adjusted EBT per share of $0.07 achieved in 2004. Forward-Looking Statements This press release contains forward-looking statements, including, without limitation, all statements related to future financial performance, plans to grow our business and build our brand. Words such as "expect," "anticipate" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon our current expectations. Forward-looking statements involve risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to our fluctuating operating results, seasonality in our business, our ability to acquire products on reasonable terms, our online business model, demand for our products, the strength of our brand, competition, our ability to fulfill orders and other risks detailed in our filings with the Securities and Exchange Commission, including the Prospectus with respect to our initial public offering filed pursuant to Rule 424(b)(4) on November 16, 2004. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and InPhonic undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof. Conference Call Company management held a conference call to discuss its fourth quarter and full year 2004 financial results on Tuesday, February 8, 2005 at 5:00 PM Eastern Time. An audio archive of the call is available on the Company's site at http://www.inphonic.com/ in the Investor Relations Section. Non-GAAP Financial Measure To supplement the Company's consolidated financial statements, which are presented in accordance with GAAP, InPhonic uses Non-GAAP measures of certain components of financial performance, including Non-GAAP revenues in the fourth quarter 2003, Non-GAAP earnings before interest, taxes, depreciation and amortization and stock-based compensation ("EBITDA"), Non-GAAP net income per diluted share excluding stock-based compensation and depreciation and amortization related to acquisitions, Non-GAAP gross profit and Non-GAAP free cash flow generated by operations. Non-GAAP revenues in the fourth quarter 2003. InPhonic uses the calculation of Non-GAAP revenues in the fourth quarter of 2003 to ensure accurate comparison of revenues to future period revenues. In the fourth quarter of 2003, InPhonic recognized $17.3 million of revenues previously deferred under SAB 101 and this amount is excluded from Non-GAAP fourth quarter 2003 revenues for comparative purposes. Similarly, InPhonic uses the calculation of Non-GAAP revenues for the full year 2003 to ensure accurate comparison to future period revenues. InPhonic excludes $13.6 million in 2003 revenues previously deferred under SAB 101 in calculating non-GAAP revenue for the full year 2003. Adjusted EBITDA -- Earnings before Interest, Taxes, Depreciation and Amortization adjusted for Stock-based Compensation Adjusted EBT -- Net Income (loss) excluding stock-based compensation and depreciation and amortization related to acquisitions Adjusted EBT per pro forma diluted share - per share value of adjusted EBT on fully-diluted basis. These measures should be considered in addition to results prepared in accordance with generally accepted accounting principles, but should not be considered a substitute for, or superior to, GAAP results. The Company has reconciled Non-GAAP financial measures included in this press release to the nearest GAAP measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these Non-GAAP financial measures to their most directly comparable GAAP financial measure. Contact: InPhonic, Inc. Adam Handelsman Tripp Donnelly Sr. VP Vice President 5W Public Relations Corporate Communications 212.999.5585 (202) 333-0001 Reconciliation of non-GAAP results of operations measures to the nearest comparable GAAP measures (Unaudited) The following table presents certain non-GAAP results before material non- recurring items (in millions): Three months ended Three months ended December 31, 2003 December 31, 2004 Non- Non- GAAP GAAP Actual Adjustments Results Actual Adjustments Results Net sales $54.7 $(17.3) (a) $37.4 $60.0 $60.0 Operating income (loss) $8.4 $(17.3) (a) $(8.9) $(1.2) $(1.2) $(17.3) (a) $2.8 (c) $0.1 (c) $0.1 (d) Net income (loss) $8.3 $(17.2) $(8.9) $(1.4) $2.9 $1.5 Year ended Year ended December 31, 2003 December 31, 2004 Non- Non- GAAP GAAP Actual Adjustments Results Actual Adjustments Results Net sales $136.1 $(13.6) (b) $122.5 $204.2 $204.2 Operating income (loss) $(19.1) $(13.6) (b) $(32.7) $(9.6) $(9.6) $(13.6) (b) $7.4 (c) $3.6 (c) $0.1 (d) Net income (loss) $(20.2) $(10.0) $(30.2) $(10.2) $7.5 $(2.7) Three Months Ended March 31, 2004 Non- GAAP Actual Adjustments Results Net sales $40.1 $40.1 Operating income (loss) $(4.7) $(4.7) $0.2 (c) Net income (loss) $(4.8) $0.2 $(4.6) (a) One-time recognition of $17.3 million in revenues that were deferred prior to Q4 2004 in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. (b) One-time recognition of $13.6 million in revenues that were deferred prior to 2004 in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. (c) Non-GAAP net income excludes stock-based compensation (d) Non-GAAP net income excludes depreciation and amortization related to a non-recurring Q4 2004 asset acquisition. Reconciliation of non-GAAP measures to the nearest comparable GAAP measures (Unaudited) in millions Adjusted EBITDA: Three Months Ended December 31, December 31, 2003 2004 Net income (loss) $8.3 $(1.4) Non-recurring revenue adjustment (17.3)(a) Add Back: Net interest and other expense (income) 0.1 0.2 Taxes - - Stock-based compensation 0.2 2.8 Impairment of goodwill and intangibles 2.0 Depreciation and amortization 1.7 1.8 Adjusted EBITDA: $(5.0) $3.4 Year Ended December 31, December 31, 2003 2004 Net income (loss) $(20.2) $(10.2) Non-recurring revenue adjustment (13.6)(b) Add Back: Net Interest expense (income) 1.1 0.6 Taxes - - Stock-based compensation 3.6 7.4 Impairment of goodwill and intangibles 2.4 0.2 Depreciation and amortization 5.4 6.4 Adjusted EBITDA: $(21.3) $4.4 Three Months Ended March 31, 2004 Net income (loss) $(4.8) Non-recurring revenue adjustment - Add Back: Net interest and other expense (income) 0.1 Taxes - Stock-based compensation 0.2 Impairment of goodwill and intangibles - Depreciation and amortization 1.6 Non-GAAP EBITDA $(2.8) (a) One-time recognition of $17.3 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. (b) One-time recognition of $13.6 million in revenues that were deferred prior to 2004 in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. Reconciliation of non-GAAP measures to the nearest comparable GAAP measures (Unaudited) in millions except share and per share amounts Non-GAAP EBT: Three Months Ended December 31, December 31, 2003 2004 Net income (loss) $8.3 $(1.4) Non-recurring revenue adjustment (17.3)(a) Add Back: Net interest and other expense (income) 0.1 0.2 Taxes - - Stock-based compensation 0.2 2.8 Depreciation and amortization of acquisitions (1.5) 0.3 Non-GAAP EBT $(10.2) $1.9 EBT per share $(0.39) $0.05 Basic Weighted Average Shares 11,547,511 21,385,595 Add: Diluted shares 14,546,485 15,664,882 Weighted Average Diluted Shares 26,093,996 37,050,477 Treasury shares used in per share calculation 26,093,996 37,050,477 Year Ended December 31, December 31, 2003 2004 Net income (loss) $(20.2) $(10.2) Non-recurring revenue adjustment (13.6)(b) - Add Back: Net interest and other expense (income) 1.1 0.6 Taxes - - Stock-based compensation 3.6 7.4 Depreciation and amortization of acquisitions 1.1 1.1 Non-GAAP EBT $(28.0) $(1.1) EBT Per Share $(1.11) $(0.04) Basic Weighted Average Shares 11,204,791 14,016,753 Add: Diluted shares 13,989,167 18,847,307 Weighted Average Diluted Shares 25,193,958 32,864,060 Shares used in per share calculation - Treasury Method Shares 25,193,958 32,864,060 (a) One-time recognition of $17.3 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. (b) One-time recognition of $13.6 million in revenues that were deferred prior to 2004 in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. Reconciliation of non-GAAP measures to the nearest comparable GAAP measures (Unaudited) in millions Three Months Ended December 31, December 31, 2003 2004 Net income (loss) $8.3 $(1.4) Non-recurring revenue adjustment $(17.3) (a) Non-GAAP net income (loss) $(9.0) $(1.4) Depreciation and amortization $1.7 (c) $1.8 (c) Stock based compensation $0.2 (d) $2.8 (d) Free cash flow $(7.1) $3.2 Year Ended December 31, December 31, 2003 2004 Net income $(20.2) $(10.2) Non-recurring revenue adjustment $(13.6) (b) Non-GAAP net income $(33.8) $(10.2) Depreciation and amortization $5.4 (c) $6.4 (c) Stock based compensation $3.6 (d) $7.4 (d) Free cash flow $(24.8) $3.6 (a) One-time recognition of $17.3 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. (b) One-time recognition of $13.6 million in revenues that were previously deferred in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. (c) Free cash flow excludes depreciation and amortization (d) Free cash flow excludes stock-based compensation INPHONIC, INC. & SUBSIDIARIES Consolidated Statement of Operations Years ended December 31, Three-months ended December 31, December 31, 2002 2003 2004 2003 2004 (unaudited) (unaudited) In thousands, In thousands, except for per share except for per share and share amounts and share amounts Revenues: Activations and services $51,889 $119,091 $165,401 $50,679 $47,092 Equipment 11,119 17,045 38,799 4,067 12,869 Total revenues 63,008 136,136 204,200 54,746 59,961 Cost of revenues, excluding depreciation and amortization: Activations and services 8,367 21,203 24,338 6,433 5,352 Equipment 31,026 55,310 91,566 15,833 28,664 Total cost of revenues 39,393 76,513 115,904 22,266 34,016 Operating expenses: General and administrative expenses, excluding depreciation and amortization 28,583 40,259 44,154 10,840 10,607 Sales and marketing expenses, excluding depreciation and amortization 17,678 30,600 47,168 9,501 14,691 Depreciation and amortization 2,600 5,434 6,444 1,681 1,827 Impairment of goodwill and intangibles - - 150 2,045 - Total operating expenses 48,861 76,293 97,916 24,067 27,125 Income (loss) from operations (25,246) (16,670) (9,620) 8,413 (1,180) Other income (expense): Interest income 289 287 536 82 321 Interest expense (737) (1,408) (1,155) (158) (531) Total other income (expense) (448) (1,121) (619) (76) (210) Net income (loss) (25,694) $(17,791) $(10,239) $8,337 $(1,390) Preferred stock dividends and accretion to preferred redemption values $(8,048) $(7,309) $(22,049) $(1,759) $(6,520) Net income (loss) attributable to common stockholders $(33,742) $(25,100) $(32,288) $6,578 $(7,910) Basic and diluted net loss per share $(3.24) $(2.24) $(2.30) $0.25 $(0.37) Basic weighted average shares 10,406,584 11,204,791 14,016,753 11,547,511 21,385,595 Diluted average shares - 14,546,485 Basic and diluted weighted average shares outstanding, if not dilutive 10,406,584 11,204,791 14,016,753 26,093,996 21,385,595 Stock-based Compensation Three-months ended Years ended December 31, December 31, 2002 2003 2004 2003 2004 (unaudited) (unaudited) In thousands In thousands General and administrative $4,995 $3,356 $5,494 $136 $1,487 Sales and marketing 100 255 1,887 16 1,289 Total stock-based compensation $5,095 $3,611 $7,381 $152 $2,776 INPHONIC, INC. & SUBSIDIARIES Segment Information Three-months ended Years ended December 31, December 31, 2002 2003 2004 2003 2004 (unaudited) (unaudited) In thousands In thousands Revenues: Wireless activations and services $49,166 $91,168 $147,527 $40,684 $46,961 MVNO services 5,621 36,060 49,332 12,164 11,245 Data services 8,221 8,908 7,341 1,898 1,755 Total revenues $63,008 $136,136 $204,200 $54,746 $59,961 Cost of revenues, excluding depreciation and amortization: Wireless activations and services $30,130 $45,359 $83,061 $12,856 $26,940 MVNO services 3,427 27,222 31,078 8,854 6,684 Data services 5,836 3,932 1,765 556 392 Total cost of revenues $39,393 $76,513 $115,904 $22,266 $34,016 Condensed Consolidated Balance Sheets As of December 31, (unaudited) In thousands 2003 2004 Cash & cash equivalents $29,048 $100,986 Other current assets 16,900 43,724 Total current assets 45,948 144,710 Property and equipment, net 5,169 5,975 Goodwill, intangibles and other assets 12,423 13,105 Total assets $63,540 $163,790 Accounts payable $16,493 $16,922 Deferred revenue 12,758 10,723 Other current liabilities 19,122 23,574 Total current liabilities 48,373 51,219 Long term liabilities 2,804 469 Stockholders' equity 12,363 112,102 Total liabilities and stockholders equity $63,540 $163,790 DATASOURCE: InPhonic, Inc. CONTACT: Tripp Donnelly, Vice President, Corporate Communications, +1-202-333-0001, or ; or Adam Handelsman, Sr. VP, 5W Public Relations, +1-212-999-5585, or Web site: http://www.inphonic.com/

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