INSP Blucora, Inc. (MM)

InfoSpace, Inc. (NASDAQ:INSP) today announced financial results for the second quarter ended June 30, 2009.

“I am extremely pleased with our results in the second quarter,” said Will Lansing, president and chief executive officer of InfoSpace. “We achieved revenue growth and greater profitability in a tough economy. At the same time, we continue to invest in new product initiatives including the launch of two new metasearch sites in the quarter.”

Revenues for the second quarter of 2009 were $43.8 million, reflecting a $5.4 million or 14% increase from the second quarter of 2008.

Adjusted EBITDA was $5.4 million for the second quarter of 2009, compared to Adjusted EBITDA of $9.7 million for the second quarter of 2008.

Net income for the second quarter of 2009 was $2.9 million, or $0.08 per share, compared to net income of $1.9 million, or $0.06 per share for the second quarter of 2008.

Cash, cash equivalents, and marketable securities as of June 30, 2009 totaled $208.3 million, including $8.2 million of auction rate securities. At the end of the second quarter, the Company had no debt obligations.

Second Quarter Highlights and Recent Developments

InfoSpace:

• Re-launched InfoSpace.com, a search engine that further expands the value of metasearch with new content and features; key upgrades include the addition of real-time Twitter results and the ability to filter results by search engine provider,
• Introduced DoGreatGood.com, a new philanthropic search engine that generates donations for charities, and
• Signed nine new distribution partners.

Third Quarter 2009 Outlook

For the third quarter of 2009, the Company expects revenue to be between $47 million and $49 million, Adjusted EBITDA to be between $4.5 million and $5.5 million, and operating results to be between a net loss of $0.5 million and net income of $0.5 million, or a net loss of $0.01 per share to net income of $0.01 cents per share.

Conference Call and Webcast

A conference call will be held today at 2 p.m. Pacific / 5 p.m. Eastern. The live Webcast can be accessed in the Investor Relations section of the InfoSpace corporate Web site, at http://www.infospaceinc.com. A replay of the call will be available approximately one hour after the call through 9 p.m. Pacific on August 12, 2009 and 12:00 a.m. Eastern on August 13, 2009.

Use of Non-GAAP Financial Measures

InfoSpace’s Adjusted EBITDA is calculated by adjusting GAAP net income (loss) to exclude the effects of discontinued operations, income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, gain (loss) on investments, and other income, net (including such items as interest income, resolution of gain contingencies, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed in the accompanying table to the preliminary unaudited condensed consolidated financial statements.

InfoSpace’s management believes that this non-GAAP financial measure provides meaningful supplemental information regarding the Company’s performance by excluding certain expenses and gains that are not indicative of its core business operating results. InfoSpace believes that management and investors benefit from referring to this non-GAAP financial measure in assessing InfoSpace’s performance. Adjusted EBITDA should be evaluated in light of the Company's financial results prepared in accordance with GAAP. A table reconciling the Company's Adjusted EBITDA to net income (loss) in accordance with GAAP accompanies the preliminary unaudited condensed consolidated financial statements in this release.

About InfoSpace, Inc.

InfoSpace, Inc., a leading developer of metasearch products, is focused on bringing the best of the Web to Internet users. InfoSpace's proprietary metasearch technology combines the top results from several of the largest online search engines, providing fast and comprehensive search results on InfoSpace sites including Dogpile® (www.dogpile.com), DoGreatGood™ (www.dogreatgood.com), MetaCrawler® (www.metacrawler.com), WebCrawler® (www.webcrawler.com), and WebFetch® (www.webfetch.com). InfoSpace's metasearch technology is also available on nearly 100 partner sites, including content, community, and connectivity sites. More information may be found at www.infospaceinc.com.

InfoSpace.com, InfoSpace, Dogpile, DoGreatGood, MetaCrawler, WebCrawler, and WebFetch and other marks are trademarks of InfoSpace, Inc. The names of other companies and products mentioned herein may be the trademarks of their respective owners.

This release contains forward-looking statements relating to InfoSpace, Inc.'s operating results that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "believe," "expect," "intend," "anticipate," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward looking. Forward-looking statements include, without limitation: statements regarding our expectation that we will continue to focus on improving efficiency, managing costs and developing new initiatives for future growth and profitability; and statements regarding our expectations for our financial performance and results of operations for the third quarter of 2009. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Factors that could affect InfoSpace's actual results include: the completion of the review of our financial statements for the second quarter of 2009; general economic, industry, and market sector conditions; the progress and costs of the development of our products and services; the timing and extent of market acceptance of those products and services; our dependence on companies to distribute our products and services; the ability to successfully integrate acquired businesses; the successful execution of the Company’s strategic initiatives, operating plans, and marketing strategies; and the condition of our cash investments. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in InfoSpace's most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q as filed from time to time, in the section entitled "Risk Factors" and elsewhere in such documents. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. InfoSpace undertakes no obligation to update publicly any forward-looking statements to reflect new information, events, or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

InfoSpace, Inc. Preliminary Condensed Consolidated Statements of Operations (Unaudited) (Amounts in thousands, except per share data)       Three months ended Six months ended June 30, June 30, June 30, June 30,   2009     2008     2009     2008   Revenues $ 43,763 $ 38,328 $ 82,833 $ 80,510   Operating expenses: (1)   Content and distribution 24,309 18,062 44,686 39,854 Systems and network operations 2,369 2,774 4,790 5,216 Product development 1,603 2,929 3,009 5,138 Sales and marketing 5,139 6,041 12,082 9,830 General and administrative 6,366 4,960 12,568 12,682 Depreciation and amortization 1,811 1,731 3,622 3,218 Restructuring and other, net   -     (2,011 )   -     (1,871 )   Total operating expenses   41,597     34,486     80,757     74,067     Operating income 2,166 3,842 2,076 6,443   Gain (loss) on investments, net(2) 335 (4,362 ) (5,016 ) (11,069 ) Other income, net   466     2,654     1,073     4,897     Income (loss) from continuing operations before income taxes 2,967 2,134 (1,867 ) 271   Income tax benefit (expense)   (82 )   577     (283 )   395     Income (loss) from continuing operations   2,885     2,711     (2,150 )   666     Discontinued operations:   Loss from discontinued operations, net of taxes - (821 ) - (1,311 ) Gain (loss) on sale of discontinued operations, net of taxes   -     43     -     (195 )   Net income (loss) $ 2,885   $ 1,933   $ (2,150 ) $ (840 ) Earnings (loss) per share - Basic   Income (loss) from continuing operations $ 0.08 $ 0.08 $ (0.06 ) $ 0.02 Loss from discontinued operations - (0.02 ) - (0.04 ) Gain (loss) on sale of discontinued operations   -     0.00     -     (0.00 )   Net income (loss) per share - Basic $ 0.08   $ 0.06   $ (0.06 ) $ (0.02 )  

Weighted average shares outstanding used in computing basic income (loss) per share

 

  35,044     34,334     34,949     34,316     Earnings (loss) per share - Diluted   Income (loss) from continuing operations $ 0.08 $ 0.08 $ (0.06 ) $ 0.02 Loss from discontinued operations - (0.02 ) - (0.04 ) Gain (loss) on sale of discontinued operations   -     0.00     -     0.00     Net income (loss) per share - Diluted $ 0.08   $ 0.06   $ (0.06 ) $ (0.02 )  

Weighted average shares outstanding used in computing diluted income (loss) per share

 

  35,069     34,755     34,949     34,628    

(1) Stock-based compensation expense for the three and six months ended June 30, 2009 and 2008 is allocated among the following captions (in thousands):

  Three months ended Six months ended June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008 Systems and network operations $ 105 $ 446 $ 314 $ 813 Product development 9 1,047 322 1,640 Sales and marketing 85 1,038 449 1,891 General and administrative   1,190     1,643     2,355     2,857   Total stock-based compensation expense $ 1,389   $ 4,174   $ 3,440   $ 7,201    

(2) In the three and six months ended June 30, 2009, the Company recorded a gain of $0.3 million and net other-than-temporary impairment charges of $5.0 million, respectively, relating to the auction rate securities investments that it holds.  In the three and six months ended June 30, 2008, the Company recorded other-than-temporary impairment charges relating to the auction rate securities investments that it holds of $4.4 million and $11.1 million, respectively.

  InfoSpace, Inc. Preliminary Condensed Consolidated Balance Sheets (Unaudited) (Amounts in thousands)   June 30, December 31,   2009     2008   ASSETS   Current assets: Cash and cash equivalents $ 64,175 $ 49,936 Short-term investments, available-for-sale 135,906 141,592 Accounts receivable, net 18,188 15,423 Notes and other receivables 2,197 1,349 Prepaid expenses and other current assets   2,590     1,767     Total current assets 223,056 210,067   Property and equipment, net 14,821 18,078 Long-term investments, available-for-sale 8,200 13,916 Goodwill and other intangible assets, net 45,367 44,123 Other long-term assets   4,598     4,949     Total assets $ 296,042   $ 291,133     LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities: Accounts payable $ 4,918 $ 6,518 Accrued expenses and other current liabilities 26,518 19,707 Liabilities of discontinued operations   -     1,109     Total current liabilities 31,436 27,334   Other long-term liabilities   1,155     1,475     Total liabilities 32,591 28,809   Stockholders' equity: Common stock 4 3 Additional paid-in capital 1,296,358 1,292,360 Accumulated deficit (1,034,729 ) (1,032,579 ) Accumulated other comprehensive income   1,818     2,540     Total stockholders' equity   263,451     262,324     Total liabilities and stockholders' equity $ 296,042   $ 291,133     Summary of cash, short-term and long-term investments: Cash and cash equivalents $ 64,175 $ 49,936 Short-term investments, available-for-sale 135,906 141,592 Long-term investments, available-for-sale   8,200     13,916     Cash, short-term and long-term investments $ 208,281   $ 205,444     InfoSpace, Inc. Preliminary Condensed Consolidated Statements of Cash Flows (Unaudited) (Amounts in thousands) Six months ended June 30,   June 30,   2009     2008   Operating activities: Net loss $ (2,150 ) $ (840 ) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Loss from discontinued operations - 1,311 Loss on sale of discontinued operations - 195 Loss on investments, net 5,016 11,069 Stock-based compensation 3,440 7,201 Depreciation and amortization 3,622 3,218 Deferred income taxes 186 (819 ) Gain on sale of non-core assets - (1,897 ) Loss on disposals of property and equipment 613 1 Other 7 65 Cash provided (used) by changes in operating assets and liabilities: Accounts receivable (2,757 ) 847 Notes and other receivables (1,097 ) 5,741 Prepaid expenses and other current assets (823 ) 114 Other long-term assets 247 2,442 Accounts payable (1,200 ) (991 ) Accrued expenses and other current and long-term liabilities   4,839     (55,030 ) Net cash provided (used) by operating activities 9,943 (27,373 )   Investing activities: Business acquisition, net of cash acquired (395 ) - Purchases of property and equipment (1,448 ) (5,715 ) Other long-term assets 104 (1,003 ) Proceeds from the sale of assets 320 2,316 Proceeds from sales and maturities of investments 43,700 27,300 Purchases of investments   (38,144 )   (17,984 ) Net cash provided by investing activities 4,137 4,914   Financing activities: Special dividend paid - (299,146 ) Proceeds from stock option exercises - 15 Proceeds from issuance of stock through employee stock purchase plan 252 219 Repayment of capital lease obligations   (93 )   (32 ) Net cash provided (used) by financing activities 159 (298,944 )   Discontinued operations: Net cash used by operating activities attributable to discontinued operations   -     (15,299 )   Net increase (decrease) in cash and cash equivalents 14,239 (336,702 )   Cash and cash equivalents: Beginning of period   49,936     498,326   End of period $ 64,175   $ 161,624     InfoSpace, Inc. Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure Preliminary Adjusted EBITDA from Continuing Operations Reconciliation (1) (Unaudited) (Amounts in thousands)       Three months ended Six months ended June 30, June 30, June 30, June 30,   2009     2008     2009     2008   Net income (loss) (2) $ 2,885 $ 1,933 $ (2,150 ) $ (840 ) Discontinued operations - 778 - 1,506 Depreciation and amortization 1,811 1,731 3,622 3,218 Stock-based compensation 1,389 4,174 3,440 7,201 Loss (gain) on investments, net (335 ) 4,362 5,016 11,069 Other income, net (3) (466 ) (2,654 ) (1,073 ) (4,897 ) Income tax expense (benefit)   82     (577 )   283     (395 ) Adjusted EBITDA from continuing operations $ 5,366   $ 9,747   $ 9,138   $ 16,862       Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance (Amounts in thousands)   Ranges for the Three months ending September 30, 2009 Net income (loss) $ (500 ) $ 500 Depreciation and amortization 1,900 1,900 Stock-based compensation 3,400 3,400 Loss on investments - - Other income, net (3) (500 ) (500 ) Income tax expense   200     200   Adjusted EBITDA $ 4,500   $ 5,500    

(1) Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") from continuing operations is a non-GAAP financial measure and is reconciled to net income (loss), which the Company's management believes to be the most comparable generally accepted accounting principles ("GAAP") measure.  Adjusted EBITDA from continuing operations results are calculated by adjusting GAAP net income (loss) to exclude the effects of discontinued operations, income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, gains or losses on investments, net, and other income, net (including such items as interest income, resolution of gain contingencies, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed above.  The Company uses this non-GAAP financial measure for internal management purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons.  The Company's management believes that this non-GAAP financial measure is a common measure used by investors and analysts to evaluate its performance.  This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the results of operations and trends affecting the Company's business.  This non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, or superior to, net income (loss) in accordance with GAAP.

 

(2) As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).

 

(3) Other income, net, primarily consists of interest income, resolution of gain contingencies, gains or losses from the disposal of assets, and foreign currency transaction gains or losses.