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InfoSpace Announces Record Fourth Quarter and Full Year 2004 Results
BELLEVUE, Wash.--(BUSINESS WIRE)--Jan. 25, 2005--InfoSpace, Inc. (NASDAQ:INSP) today announced financial results for the fourth quarter and full year ended December 31, 2004.
Revenues for the fourth quarter of 2004 were $79.7 million, reflecting a $40.6 million (or 104%) increase over the fourth quarter of 2003. Net income for the fourth quarter of 2004 was $18.9 million, or $0.50 per diluted share, versus net income of $9.9 million, or $0.29 per diluted share, in the fourth quarter of 2003.
Revenues for the full year 2004 were $249.4 million, reflecting a $117.1 million (or 89%) increase over the full year 2003. Net income for 2004, which includes the gain from the sale of its Payment Solutions business, was $82.4 million, or $2.26 per diluted share, versus a net loss of $6.3 million, or $0.20 per diluted share in 2003. Excluding the sale of Payment Solutions, income from continuing operations for 2004 was $51.0 million, or $1.40 per diluted share, versus a loss from continuing operations of $9.1 million, or $0.29 per diluted share, in 2003.
Cash, cash equivalents, and marketable investments at December 31, 2004, totaled $321.8 million, reflecting an increase of $26.5 million from December 31, 2003. The Company had no debt obligations at the end of the year.
"The fourth quarter of 2004 continued our trend of strong growth and profitability," said Jim Voelker, chairman and chief executive officer of InfoSpace, Inc. "Throughout the year, we improved our market position with strategic acquisitions, broader distribution and new partnerships. We enter 2005 with operating momentum, attractive opportunities and the resources to capitalize on them."
2004 Highlights and Recent Developments
-- Directory acquisition: InfoSpace acquired Switchboard Inc., a
leading provider of local online advertising solutions and
internet-based yellow pages, for approximately $109 million in
cash. The acquisition nearly doubled the Company's share of
total online yellow pages searches. Additionally, InfoSpace
signed an agreement with Dex Media to add its yellow pages
listings to Switchboard results.
-- Mobile acquisitions: InfoSpace acquired three mobile gaming
companies - Atlas Mobile, IOMO Limited and Elkware GmbH, for
an aggregate cost of approximately $47 million in cash. The
companies provide InfoSpace with a large portfolio of high
quality J2ME and BREW gaming titles, core development and
publishing capabilities, and distribution relationships with
major mobile operators and handset manufacturers in North
America and Europe, including Vodafone, O2, Orange, T-Mobile,
Telefonica Moviles, 3, TIM, Nokia, Siemens and Motorola.
-- Sale of Payment Solutions: InfoSpace narrowed its focus to two
businesses in 2004 after successfully completing the sale of
its Payment Solutions business in March 2004 for $82 million
in cash.
-- Settlement agreement: InfoSpace reached a combined Settlement
Agreement in the Dreiling v. Jain, et al. derivative lawsuit,
the Dreiling v. Jain, et. al. Section 16(b) case, and certain
other lawsuits involving the Company. Pending final court
approval, the Settlement Agreement contemplates (among other
consideration) a cash payment to the Company of approximately
$83 million, including insurance proceeds.
Segment Information and Adjusted EBITDA
Segment income for each reportable operating segment does not include allocations for general, administrative and other overhead costs, depreciation and amortization expense, restructuring and other charges and non-operating gains or losses.
Search & Directory
Search & Directory revenues were $47.2 million in the fourth quarter of 2004, an increase of $18.8 million or 66% from the fourth quarter of 2003. During the fourth quarter, total paid searches in North America for both Search and Directory were approximately 205 million, an increase of 32% from the prior year fourth quarter. Average revenue per paid search was approximately $0.19, an increase of 27% over the prior year fourth quarter. Search & Directory segment income was $21.7 million or 46% of revenues for the fourth quarter of 2004.
Mobile
Mobile revenues were $32.5 million in the fourth quarter of 2004, an increase of $23.2 million or 250% from the fourth quarter of 2003. The increase in revenue is due primarily to growth in the Company's media download business. Mobile segment income totaled $8.1 million or 25% of revenues for the fourth quarter of 2004.
Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization ("Adjusted EBITDA")
Adjusted EBITDA was $21.7 million in the fourth quarter of 2004, an increase of $4.6 million or 27% from the third quarter of 2004. The Adjusted EBITDA results should be evaluated in the light of the Company's financial results prepared in accordance with GAAP. A table reconciling the Company's Adjusted EBITDA to income from continuing operations in accordance with GAAP is included in a table accompanying the condensed consolidated financial statements in this release. InfoSpace's Adjusted EBITDA results are calculated by adjusting income from continuing operations in accordance with GAAP to exclude the effects of interest income, income taxes, depreciation & amortization, litigation settlements, foreign currency gains or losses, and gains or losses from the disposal of assets, as detailed in the accompanying table to the condensed consolidated financial statements.
Outlook
The Company's guidance excludes the impact of stock option expense, litigation settlements and any other future one-time gains or losses. The Adjusted EBITDA guidance below has been prepared in a manner consistent with the historical Adjusted EBITDA data provided above and the table accompanying the financial statements in this release. The 2005 guidance includes an estimate of $14 million of increased expense, or $0.35 per share, consisting of a $10 million increase in non-cash depreciation and amortization expense primarily from the recent Mobile acquisitions and a $4 million increase in tax expense (see accompanying guidance reconciliation table).
First Quarter 2005 Outlook
For the first quarter of 2005, the Company expects revenue to be between $84 million and $86 million. The Company expects that Adjusted EBITDA will be between $19 million and $20 million, net income to be between $13.0 million and $13.5 million, and fully diluted earnings per share to be between $0.34 and $0.35 (based on 38.5 million fully diluted shares). First quarter guidance includes an estimate of $3.5 million of increased expense, or $0.09 per share, consisting of a $2.5 million increase in non-cash depreciation and amortization expense primarily from the recent Mobile acquisitions and a $1 million increase in tax expense (see accompanying guidance reconciliation table).
Full Year 2005 Outlook
For full year 2005, the Company expects revenue to be between $375 million and $395 million, comprised of $200 million to $210 million in Search & Directory revenue, and $175 million to $185 million in Mobile revenue. The Company expects that Adjusted EBITDA will be between $92 and $100 million, net income to be between $67 million and $75 million, and fully diluted earnings per share to be between $1.75 and $1.95 (based on 38.5 million fully diluted shares). The 2005 guidance includes an estimate of $14 million of increased expense, or $0.35 per share, consisting of a $10 million increase in non-cash depreciation and amortization expense primarily from the recent Mobile acquisitions and a $4 million increase in tax expense (see accompanying guidance reconciliation table).
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 www.infospaceinc.com. A replay of the call will be available approximately one hour after the call through February 8, 2005 at 7:30 p.m. Pacific/ 10:30 p.m. Eastern.
All information in this release is as of January 25, 2005. InfoSpace undertakes no duty to update any forward-looking statements to actual results or changes in the Company's expectations.