INSP Blucora, Inc. (MM)

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

“InfoSpace posted another strong quarter, with good performance across all of our key financial metrics,” said Will Lansing, president and chief executive officer of InfoSpace. “Our results reflect impressive execution by the distribution team, which added nine new partners, and improved profitability in our core search business. We are seeing positive trends in the overall search industry and are optimistic about our continued growth in this environment.”

Revenues for the third quarter of 2009 were $54.4 million, reflecting a $14.9 million or 38% increase from the third quarter of 2008. Distribution revenues represented $41.7 million or 77% of revenues in the third quarter 2009.

Adjusted EBITDA was $7.1 million for the third quarter of 2009, compared to Adjusted EBITDA of $6.6 million for the third quarter of 2008.

Net income for the third quarter of 2009 was $1.8 million, or $0.05 per share, compared to net loss of $9.9 million, or $0.29 per share, for the third quarter of 2008.

Cash, cash equivalents, and marketable securities as of September 30, 2009 totaled $214.1 million, including $8.2 million of auction rate securities. At the end of the third quarter, the Company had no debt obligations.

Fourth Quarter 2009 Outlook

For the fourth quarter of 2009, the Company expects revenues between $57 million and $60 million, Adjusted EBITDA between $7.4 million and $8.4 million, and net income between $3.3 million and $4.3 million, or $0.09 to $0.12 per share, which includes a one-time benefit from a net tax refund that increases net income by $3.3 million and Adjusted EBITDA by $2.4 million.

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 from approximately one hour after the call through 9 p.m. Pacific time on November 4, 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, loss on investments, net, and other income, net (including such items as interest income, 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 management believes 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 included 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. InfoSpace sites include 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, 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. Words such as "expect," "believe," "intend," "anticipate" and "are optimistic," 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 trends in the overall search industry and InfoSpace's continued growth in this environment and statements regarding InfoSpace's expectations for financial performance and results of operations for the fourth 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 the financial statements for the third quarter of 2009; changes in relationships with customers and distribution partners on which InfoSpace depends and that represent a substantial portion of revenues; general economic, industry, and market sector conditions; the progress and costs of the development of InfoSpace's products and services; the timing and extent of market acceptance of those products and services; the ability to successfully integrate acquired businesses; the successful execution of InfoSpace's strategic initiatives, operating plans, and marketing strategies; and the condition of 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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission, in the section entitled "Risk Factors" and elsewhere in such document. 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     Nine months ended September 30,     September 30, September 30,     September 30, 2009 2008 2009   2008 Revenues $ 54,356 $ 39,469 $ 137,189 $ 119,979  

Operating expenses:(1)

 

Content and distribution

34,016 18,265 78,702 58,119 Systems and network operations 2,430 3,238 7,220 8,454 Product development 1,207 2,757 4,216 7,895 Sales and marketing 6,694 6,882 18,776 16,712 General and administrative 6,884 5,940 19,452 18,622 Depreciation and amortization 1,818 2,160 5,440 5,378 Restructuring and other, net   -   (9 )   -     (1,880 )   Total operating expenses   53,049   39,233     133,806     113,300     Operating income 1,307 236 3,383 6,679   Loss on investments, net(2) - (11,046 ) (5,016 ) (22,115 ) Other income, net   472   1,458     1,545     6,355     Income (loss) from continuing operations before income taxes 1,779 (9,352 ) (88 ) (9,081 )   Income tax benefit (expense)   32   (548 )   (251 )   (153 )   Income (loss) from continuing operations   1,811   (9,900 )   (339 )   (9,234 )   Discontinued operations:   Loss from discontinued operations, net of taxes - (12 ) - (1,323 ) Loss on sale of discontinued operations, net of taxes   -   (13 )   -     (208 )   Net income (loss) $ 1,811 $ (9,925 ) $ (339 ) $ (10,765 ) Earnings (loss) per share - Basic   Income (loss) from continuing operations $ 0.05 $ (0.29 ) $ (0.01 ) $ (0.27 ) Loss from discontinued operations - (0.00 ) - (0.04 ) Loss on sale of discontinued operations   -   (0.00 )   -     (0.00 )   Net income (loss) per share - Basic $ 0.05 $ (0.29 ) $ (0.01 ) $ (0.31 )  

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

 

  35,035   34,479     35,945     34,371     Earnings (loss) per share - Diluted   Income (loss) from continuing operations $ 0.05 $ (0.29 ) $ (0.01 ) $ (0.27 ) Loss from discontinued operations -

(0.00

)

- (0.04 ) Loss on sale of discontinued operations   -  

(0.00

)

  -    

(0.00

)

  Net income (loss) per share - Diluted $ 0.05 $ (0.29 ) $ (0.01 ) $ (0.31 )  

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

 

  35,766   34,479     35,945     34,371    

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

  Three months ended Nine months ended September 30, 2009 September 30, 2008 September 30, 2009   September 30, 2008 Systems and network operations $ 238 $ 494 $ 552 $ 1,307 Product development 435 1,080 757 2,720 Sales and marketing 974 1,074 1,423 2,965 General and administrative   2,287   1,535     4,642     4,392   Total stock-based compensation expense $ 3,934 $ 4,183   $ 7,374   $ 11,384    

(2) In the nine months ended September 30, 2009, the Company recorded net other-than-temporary impairment charges of $5.0 million relating to the auction rate securities investments that it holds.  In the three and nine months ended September 30, 2008, the Company recorded other-than-temporary impairment charges relating to the auction rate securities investments that it holds of $9.0 million and $21.0 million, respectively. In the three and nine months ended September 30, 2008, the Company recorded a charge of $2.1 million to write down the carrying value of certain equity investments.

 

  InfoSpace, Inc. Preliminary Condensed Consolidated Balance Sheets (Unaudited) (Amounts in thousands)         September 30,     December 31, 2009 2008 ASSETS   Current assets: Cash and cash equivalents $ 93,250 $ 49,936 Short-term investments, available-for-sale 112,695 141,592 Accounts receivable, net 21,661 15,423 Notes and other receivables 3,891 1,349 Prepaid expenses and other current assets   2,193     1,767     Total current assets 233,690 210,067   Property and equipment, net 13,650 18,078 Long-term investments, available-for-sale 8,200 13,916 Goodwill and other intangible assets, net 45,319 44,123 Other long-term assets   4,431     4,949     Total assets $ 305,290   $ 291,133     LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities: Accounts payable $ 6,620 $ 6,518 Accrued expenses and other current liabilities 27,920 19,707 Liabilities of discontinued operations   -     1,109     Total current liabilities 34,540 27,334   Other long-term liabilities   1,663     1,475     Total liabilities 36,203 28,809   Stockholders' equity: Common stock 4 3 Additional paid-in capital 1,300,457 1,292,360 Accumulated deficit (1,032,918 ) (1,032,579 ) Accumulated other comprehensive income   1,544     2,540     Total stockholders' equity   269,087     262,324     Total liabilities and stockholders' equity $ 305,290   $ 291,133     Summary of cash, short-term and long-term investments: Cash and cash equivalents $ 93,250 $ 49,936 Short-term investments, available-for-sale 112,695 141,592 Long-term investments, available-for-sale   8,200     13,916     Cash, short-term and long-term investments $ 214,145   $ 205,444     InfoSpace, Inc. Preliminary Condensed Consolidated Statements of Cash Flows (Unaudited) (Amounts in thousands)       Nine months ended September 30,     September 30, 2009 2008 Operating activities: Net loss $ (339 ) $ (10,765 ) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Loss from discontinued operations - 1,323 Loss on sale of discontinued operations - 208 Loss on investments, net 5,016 22,115 Stock-based compensation 7,374 11,384 Depreciation and amortization 5,440 5,378 Deferred income taxes 186 (1,423 ) Gain on sale of non-core assets, net - (1,897 ) Loss on disposals of property and equipment 635 - Other 228 34 Cash provided (used) by changes in operating assets and liabilities: Accounts receivable (6,234 ) 2,025 Notes and other receivables (3,042 ) 5,927 Prepaid expenses and other current assets (426 ) (145 ) Other long-term assets 359 3,278 Accounts payable 144 (464 ) Accrued expenses and other current and long-term liabilities   6,984     (58,554 ) Net cash provided (used) by operating activities 16,325 (21,576 )   Investing activities: Business acquisition, net of cash acquired (395 ) - Purchases of property and equipment (1,654 ) (10,672 ) Other long-term assets 159 (1,003 ) Proceeds from the sale of assets 611 2,313 Proceeds from sales and maturities of investments 75,600 43,980 Purchases of investments   (47,317 )   (17,984 ) Net cash provided by investing activities 27,004 16,634   Financing activities: Special dividend paid - (299,146 ) Proceeds from stock option exercises and issuance of stock through employee stock purchase plan 405 454 Repayment of capital lease obligations   (420 )   (96 ) Net cash used by financing activities (15 ) (298,788 )   Discontinued operations: Net cash used by operating activities attributable to discontinued operations   -     (15,361 )   Net increase (decrease) in cash and cash equivalents 43,314 (319,091 )   Cash and cash equivalents: Beginning of period   49,936     498,326   End of period $ 93,250   $ 179,235     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 Nine months ended September 30,   September 30, September 30,   September 30, 2009 2008 2009 2008 Net income (loss) (2) $ 1,811 $ (9,925 ) $ (339 ) $ (10,765 ) Discontinued operations - 25 - 1,531 Depreciation and amortization 1,818 2,160 5,440 5,378 Stock-based compensation 3,934 4,183 7,374 11,384 Loss on investments, net - 11,046 5,016 22,115 Other income, net (3) (472 ) (1,458 ) (1,545 ) (6,355 ) Income tax expense (benefit)   (32 )   548     251     153   Adjusted EBITDA from continuing operations $ 7,059   $ 6,579   $ 16,197   $ 23,441       Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance (Amounts in thousands)   Ranges for the Three months ending December 31, 2009 Net income $ 3,300 $ 4,300 Depreciation and amortization 1,800 1,800 Stock-based compensation 3,300 3,300 Loss on investments - - Other income, net (3) (1,100 ) (1,100 ) Income tax expense   100     100   Adjusted EBITDA $ 7,400   $ 8,400    

(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, losses on investments, net, and other income, net (including such items as interest income, litigation settlements and 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, gains or losses from the disposal of assets, and foreign currency transaction gains or losses.