InfoSpace, Inc. INSP today announced financial results for the first quarter ended March 31, 2012 as well as preliminary TaxACT results for the 2011 tax season.
“We are pleased with our strong operating results in the first quarter,” said Bill Ruckelshaus, President and Chief Executive Officer of InfoSpace. “The acquisition of TaxACT in January represents a significant milestone for our company, and substantially diversifies our overall business operations. We are pleased with the performance in both our search and tax preparation businesses and feel positive about our combined Company growth and profitability outlook.”
| Summary Financial Performance: 1Q 2012 | |||||||||
| ($ in millions except per share amounts) | |||||||||
| Q1 2012* | Q1 2011 | Growth | |||||||
| Revenue | $115.7 | $51.7 | 124% | ||||||
| Search | $75.3 | $51.7 | 46% | ||||||
| Tax Preparation | $40.4 | N/A | N/A | ||||||
| Adjusted EBITDA | $31.7 | $9.0 | 254% | ||||||
| Non-GAAP Net Income | $28.5 | $7.4 | 284% | ||||||
| Non-GAAP EPS | $0.70 | $0.20 | 250% | ||||||
| Net Income | $11.4 | $1.3 | 762% | ||||||
| GAAP Diluted EPS | $0.28 | $0.04 | 600% | ||||||
|
* Q1 results include results for TaxACT from acquisition through March 31, 2012. |
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See reconciliation of non-GAAP to GAAP measures in the accompanying financial statements. |
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Segment Information
During the first quarter of 2012, the Company acquired TaxACT, a leading provider of online tax solutions. As a result of the acquisition, the Company has changed its reporting to reflect how it measures the operating performance of its combined business. InfoSpace will now report two segments: Search and Tax Preparation. The Search segment includes all businesses operated by InfoSpace prior to the acquisition of TaxACT. The Tax Preparation segment represents the TaxACT business.
The operating segments exclude allocations for corporate operating expenses (certain general, administrative, and other overhead costs), depreciation, amortization of intangible assets, and other charges and non-operating gains or losses.
Search
Search revenue for the first quarter of 2012 was $75.3 million, up 46 percent from the first quarter of 2011. Search revenue reflects strong growth from search distribution, which increased 75 percent over the prior year and was driven by growth from both existing and new partners. Search segment income was $13.4 million, up 21 percent over first quarter of 2011.
Tax Preparation
The Company completed its acquisition of TaxACT on January 31, 2012. First quarter results include results for TaxACT from the acquisition through March 31, 2012.
Tax Preparation revenue for the first quarter of 2012 was $40.4 million. Tax Preparation segment income was $22.1 million or 55 percent of segment revenue for the first quarter of 2012.
Tax Season Update
TaxACT expects revenue growth for the tax season of 10 percent. Through April 18, 2012, total TaxACT consumer DDIY federal e-files were 5.0 million, up 8 percent compared to the same period last year.
"We are encouraged with the performance for the full season, and we believe we maintained share in the growing digital do-it-yourself market,” said Ruckelshaus. "TaxACT professional preparer and consumer DDIY offerings represent outstanding value propositions for our customers. Our performance demonstrates that the message is resonating. Combined TaxACT offerings assisted more than 6 million filers this year.”
Corporate Operating Expenses
Unallocated corporate operating expenses for the first quarter of 2012 were $3.8 million. Expenses include $1.1 million in transaction costs related to the TaxACT acquisition.
Second Quarter Outlook
For the second quarter of 2012, the Company expects revenues to be between $92.5 million and $96.5 million, Adjusted EBITDA to be between $20.0 million and $21.5 million, Non-GAAP Net Income to be between $16.9 million and $18.3 million, or $0.40 to 0.44 per diluted share, and Net Income to be between $5.5 million and $6.5 million, or $0.13 to $0.16 per diluted share.
Conference Call and Webcast
A conference call will be held today at 2 p.m. Pacific time / 5 p.m. Eastern time. The live webcast and supplemental materials are included in a current report on form 8-K and can be accessed in the Investor Relations section of the InfoSpace corporate website at http://www.infospaceinc.com.
About InfoSpace, Inc.
InfoSpace operates two business units. Our search business delivers online search solutions to a global network of distribution partners, and directly to consumers through our portfolio of branded web properties. Our tax software business operates under the name TaxACT and is a leading provider of online tax solutions, reliably serving millions of consumers and professionals for over a decade. Additional corporate information may be found at www.infospaceinc.com and iSpaceBlog.com. You may also follow and connect with InfoSpace on LinkedIn, Google Plus, Facebook, Twitter, and YouTube.
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results may differ significantly from management's expectations due to various risks and uncertainties including, but not limited to: general economic, industry, and market sector conditions; the timing and extent of market acceptance of developed products and services and related costs; our dependence on companies to distribute our products and services; the ability to successfully integrate acquired businesses; future acquisitions; the successful execution of the Company's strategic initiatives, operating plans, and marketing strategies; the condition of our cash investments; and the completion of the review of our financial statements for the first quarter of 2012. A more detailed description of these and certain other factors that could affect actual results is included in InfoSpace, Inc.'s most recent Annual Report on Form 10-K and subsequent reports filed with or furnished to the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. InfoSpace, Inc. undertakes no obligation to update 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 Comprehensive Income(1) |
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| (Unaudited) | ||||||||||
| (Amounts in thousands, except per share data) | ||||||||||
| Three months ended | ||||||||||
| March 31 | March 31 | |||||||||
| 2012 | 2011 | |||||||||
| Revenues | $ | 115,696 | $ | 51,650 | ||||||
|
Cost of sales (includes amortization of acquired intangible assets of $1,511 and 958)(2) |
59,547 | 32,674 | ||||||||
| Gross profit | 56,149 | 18,976 | ||||||||
| Expenses and other income: | ||||||||||
|
Engineering and technology(2) |
2,573 | 1,664 | ||||||||
|
Sales and marketing(2) |
19,443 | 6,967 | ||||||||
|
General and administrative(2) |
11,066 | 5,160 | ||||||||
| Depreciation | 535 | 662 | ||||||||
| Amortization of intangible assets | 2,113 | - | ||||||||
|
Other loss (income) net(3) |
1,555 | (75 | ) | |||||||
| Total expenses and other loss (income) | 37,285 | 14,378 | ||||||||
| Income from continuing operations before income taxes | 18,864 | 4,598 | ||||||||
| Income tax expense | (7,458 | ) | (1,702 | ) | ||||||
| Income from continuing operations | 11,406 | 2,896 | ||||||||
|
Discontinued operations:(1) |
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|
Loss from discontinued operations, net of taxes(2) |
- | (1,573 | ) | |||||||
| Net income | $ | 11,406 | $ | 1,323 | ||||||
| Earnings per share - Basic | ||||||||||
| Income from continuing operations | $ | 0.29 | $ | 0.08 | ||||||
| Loss from discontinued operations | - | (0.04 | ) | |||||||
| Net income per share - Basic | $ | 0.29 | $ | 0.04 | ||||||
| Earnings per share - Diluted | ||||||||||
| Income from continuing operations | $ | 0.28 | $ | 0.08 | ||||||
| Loss from discontinued operations | - | (0.04 | ) | |||||||
| Net income per share - Diluted | $ | 0.28 | $ | 0.04 | ||||||
|
Weighted average shares outstanding used in
computing basic income per share |
39,692 | 36,339 | ||||||||
|
Weighted average shares outstanding used in
computing diluted income per share |
40,978 | 37,084 | ||||||||
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(1) In the year ended December 31, 2011, the Company completed the sale of its Mercantila e-commerce business. The operating results of that business have been presented as discontinued operations for all periods presented. In the three months ended March 31, 2011, the Company recorded a $0.7 million income tax benefit related to discontinued operations. Revenue, operating expenses and income taxes, and loss from discontinued operations are presented below (in thousands): |
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| Three months ended | ||||||||||
| March 31 | March 31 | |||||||||
| E-Commerce | 2012 | 2011 | ||||||||
| Revenue | $ | - | $ | 9,979 | ||||||
| Operating expenses and income taxes | - | 11,552 | ||||||||
| Loss from discontinued operations, net of taxes | $ | - | $ | (1,573 | ) | |||||
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(2) In the three months ended March 31, 2011, $5.2 million in stock-based compensation expense was recorded in association with the modification of the terms of a warrant and the vesting of a non-employee performance-based equity award, which were both triggered by the acquisition of the TaxACT business, and the related expense was allocated to general and administrative expense. Stock-based compensation expense for the three months ended March 31, 2012 and 2011 is allocated among the following captions (in thousands): |
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| Three months ended | ||||||||||
| March 31 | March 31 | |||||||||
| 2012 | 2011 | |||||||||
| Cost of sales | $ | 80 | $ | 144 | ||||||
| Engineering and technology | 256 | 255 | ||||||||
| Sales and marketing | 414 | 429 | ||||||||
| General and administrative | 5,958 | 1,205 | ||||||||
| Discontinued operations | - | 377 | ||||||||
| Total stock-based compensation expense | $ | 6,708 | $ | 2,410 | ||||||
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(3) In the three months ended March 31, 2012, the Company recorded a $0.8 million charge for interest payments on the $100 million credit facility used to help fund the acquisition and a $0.3 million charge for amortization of the debt origination costs and a $0.1 million charge for amortization of the debt discount related to the credit facility. In the three months ended March 31, 2011, the Company recorded a $1.5 million charge as a result of the increase in the estimated fair value of a contingent liability related to operation of the assets acquired on April 1, 2010 from Make The Web Better, and recorded a $1.5 million gain on the resolution of a contingency. |
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| InfoSpace, Inc. | ||||||||||
| Preliminary Condensed Consolidated Balance Sheets | ||||||||||
| (Unaudited) | ||||||||||
| (Amounts in thousands) | ||||||||||
| March 31, | December 31, | |||||||||
| 2012 | 2011 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 101,840 | $ | 81,897 | ||||||
| Short-term investments, available-for-sale | 28,028 | 211,654 | ||||||||
| Accounts receivable, net | 31,438 | 25,019 | ||||||||
| Other receivables | 1,121 | 542 | ||||||||
| Prepaid expenses and other current assets, net | 5,125 | 1,958 | ||||||||
| Total current assets | 167,552 | 321,070 | ||||||||
| Property and equipment, net | 5,878 | 5,277 | ||||||||
| Goodwill | 230,980 | 44,815 | ||||||||
| Deferred tax asset, net | 21,165 | 19,102 | ||||||||
| Other intangible assets, net | 148,391 | 1,032 | ||||||||
| Other long-term assets | 2,134 | 3,560 | ||||||||
| Total assets | $ | 576,100 | $ | 394,856 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 35,561 | $ | 28,947 | ||||||
| Accrued expenses and other current liabilities | 15,876 | 10,250 | ||||||||
| Derivative instrument | 6,490 | - | ||||||||
| Short-term portion of long-term debt, net of discount of $211 | 6,914 | - | ||||||||
| Total current liabilities | 64,841 | 39,197 | ||||||||
| Long-term liabilities: | ||||||||||
| Long-term debt, net of discount of $607 | 77,268 | - | ||||||||
| Deferred tax liability | 50,188 | - | ||||||||
| Other long-term liabilities | 2,732 | 837 | ||||||||
| Total long-term liabilities | 130,188 | 837 | ||||||||
| Total liabilities | 195,029 | 40,034 | ||||||||
| Stockholders' equity: | ||||||||||
| Common stock | 4 | 4 | ||||||||
| Additional paid-in capital | 1,368,557 | 1,353,971 | ||||||||
| Accumulated deficit | (987,496 | ) | (998,902 | ) | ||||||
| Accumulated other comprehensive income | 6 | 32 | ||||||||
| Total stockholders' equity | 381,071 | 355,105 | ||||||||
| Total liabilities and stockholders' equity | $ | 576,100 | $ | 395,139 | ||||||
| Summary of cash, cash equivalents, and short-term investments: | ||||||||||
| Cash and cash equivalents | $ | 101,840 | $ | 81,897 | ||||||
| Short-term investments, available-for-sale | 28,028 | 211,654 | ||||||||
| Cash, cash equivalents, and short-term investments | $ | 129,868 | $ | 293,551 | ||||||
| InfoSpace, Inc. | ||||||||||
| Preliminary Condensed Consolidated Statements of Cash Flows | ||||||||||
| (Unaudited) | ||||||||||
| (Amounts in thousands) | ||||||||||
| Three months ended | ||||||||||
| March 31, | March 31, | |||||||||
| 2012 | 2011 | |||||||||
| Operating activities: | ||||||||||
| Net income | $ | 11,406 | $ | 1,323 | ||||||
| Adjustments to reconcile net income to net cash provided (used) by operating activities of continuing operations: | ||||||||||
| Loss from discontinued operations | - | 1,573 | ||||||||
| Stock-based compensation | 2,422 | 2,033 | ||||||||
| Warrant-related stock-based compensation | 4,286 | - | ||||||||
| Loss on derivative instrument | 272 | - | ||||||||
| Depreciation and amortization of intangible assets | 4,575 | 2,409 | ||||||||
| Excess tax benefits from stock-based award activity | (12,058 | ) | (787 | ) | ||||||
| Deferred income taxes | (5,462 | ) | 1 | |||||||
| Unrealized amortization of premium or accretion of discount on investments, net | (327 | ) | 105 | |||||||
| Amortization of prepaid financing costs | 331 | - | ||||||||
| Amortization of debt discount | 135 | - | ||||||||
| Earn-out contingent liability adjustments | - | 1,500 | ||||||||
| Gain on resolution of contingent liability | - | (1,500 | ) | |||||||
| Other | 26 | (33 | ) | |||||||
| Cash provided (used) by changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 2,971 | (1,117 | ) | |||||||
| Other receivables | 657 | 235 | ||||||||
| Prepaid expenses and other current assets | (1,564 | ) | 351 | |||||||
| Other long-term assets | 1,863 | (245 | ) | |||||||
| Accounts payable | (3,713 | ) | 8,950 | |||||||
| Accrued expenses and other current and long-term liabilities | 13,228 | (16,326 | ) | |||||||
| Net cash provided (used) by operating activities of continuing operations | 19,048 | (1,528 | ) | |||||||
| Investing activities: | ||||||||||
| Business acquisition, net of cash acquired | (279,386 | ) | - | |||||||
| Purchases of property and equipment | (193 | ) | (1,191 | ) | ||||||
| Change in restricted cash | 767 | 168 | ||||||||
| Proceeds from sales of investments | 163,883 | - | ||||||||
| Proceeds from maturities of investments | 20,020 | 30,486 | ||||||||
| Purchases of investments | - | (33,186 | ) | |||||||
| Net cash used by investing activities of continuing operations | (94,909 | ) | (3,723 | ) | ||||||
| Financing activities: | ||||||||||
| Proceeds from loan, net of debt issuance costs of $2,343 and debt discount of $953 | 96,704 | - | ||||||||
| Repayment of debt | (15,000 | ) | - | |||||||
| Excess tax benefits from stock-based award activity | 12,058 | 787 | ||||||||
| Proceeds from stock option exercises and issuance of stock through employee stock purchase plan | 2,252 | 2,473 | ||||||||
| Tax payments from shares withheld upon vesting of restricted stock units | (210 | ) | (299 | ) | ||||||
| Earn-out payments for business acquisition | - | (423 | ) | |||||||
| Repayment of capital lease obligation | - | (151 | ) | |||||||
| Net cash provided by financing activities of continuing operations | 95,804 | 2,387 | ||||||||
| Discontinued operations: | ||||||||||
| Net cash used by operating activities attributable to discontinued operations | - | (3,684 | ) | |||||||
| Net cash used by investing activities attributable to discontinued operations | - | (44 | ) | |||||||
| Net cash used by discontinued operations | - | (3,728 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | 19,943 | (6,592 | ) | |||||||
| Cash and cash equivalents: | ||||||||||
| Beginning of period | 81,897 | 155,645 | ||||||||
| End of period | $ | 101,840 | $ | 149,053 | ||||||
| InfoSpace, Inc. | ||||||||||||||
| Preliminary Segment Information | ||||||||||||||
| (Unaudited) | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Three months ended | ||||||||||||||
| March 31, | March 31, | |||||||||||||
| 2012 | 2011 | |||||||||||||
| Search: | ||||||||||||||
| Revenue | $ | 75,295 | $ | 51,650 | ||||||||||
|
Cost of revenue(1) |
53,106 | 29,185 | ||||||||||||
| Operating expenses | 8,816 | 11,370 | ||||||||||||
| Search segment income | 13,373 | 11,095 | ||||||||||||
| Search segment margin | 18 | % | 22 | % | ||||||||||
| Tax Preparation: | ||||||||||||||
| Revenue | 40,401 | - | ||||||||||||
|
Cost of revenue(2) |
2,579 | - | ||||||||||||
| Operating expenses | 15,687 | - | ||||||||||||
| Tax Preparation segment income | 22,135 | - | ||||||||||||
| Tax Preparation segment margin | 55 | % | - | |||||||||||
| Total segment: | ||||||||||||||
| Total revenue | 115,696 | 51,650 | ||||||||||||
| Total cost of revenue | 55,685 | 29,185 | ||||||||||||
| Total segment operating expenses | 24,503 | 11,370 | ||||||||||||
| Total segment income | 35,508 | 11,095 | ||||||||||||
| Total segment margin | 31 | % | 22 | % | ||||||||||
| Corporate: | ||||||||||||||
| Operating expense | 3,806 | 2,130 | ||||||||||||
| Stock-based compensation | 6,708 | 2,033 | ||||||||||||
| Depreciation | 951 | 1,451 | ||||||||||||
| Amortization of other intangible assets | 3,624 | 958 | ||||||||||||
| Other income, net | 1,555 | (75 | ) | |||||||||||
| Income tax expense, net | 7,458 | 1,702 | ||||||||||||
| Disc ops, net of tax | - | 1,573 | ||||||||||||
| Total corporate | 24,102 | 9,772 | ||||||||||||
| Net income | $ | 11,406 | $ | 1,323 | ||||||||||
(1) Amounts do not include amortization of acquired technology and costs associated with the operation of the Company's data centers that serve its search business, including depreciation, personnel expenses (including stock-based compensation expense), energy, and bandwidth costs.
(2) Amounts do not include amortization of acquired technology and costs associated with the operation of the Company's data center that serves its tax preparation business, including depreciation, personnel expenses (including stock-based compensation expense), energy, and bandwidth costs, and personnel costs associated with customer service.
| InfoSpace, Inc. | |||||||||
| Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure | |||||||||
|
Preliminary Adjusted EBITDA Reconciliation(1) |
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| (Unaudited) | |||||||||
| (Amounts in thousands) | |||||||||
| Three months ended | |||||||||
| March 31, | March 31, | ||||||||
| 2012 | 2011 | ||||||||
|
Net income(2) |
$ | 11,406 | $ | 1,323 | |||||
| Discontinued operations | - | 1,573 | |||||||
| Depreciation and amortization of intangible assets | 4,575 | 2,409 | |||||||
| Stock-based compensation | 6,708 | 2,033 | |||||||
|
Other loss (income), net(3) |
1,555 | (75 | ) | ||||||
| Income tax expense | 7,458 | 1,702 | |||||||
|
Adjusted EBITDA(4) |
$ | 31,702 | $ | 8,965 | |||||
| InfoSpace, Inc. | ||||||||||
| Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure | ||||||||||
|
Preliminary Non-GAAP Reconciliation(1) |
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| (Unaudited) | ||||||||||
| (Amounts in thousands) | ||||||||||
| Three months ended | ||||||||||
| March 31, | March 31, | |||||||||
| 2012 | 2011 | |||||||||
|
Net income(2) |
$ | 11,406 | $ | 1,323 | ||||||
| Discontinued operations | - | 1,573 | ||||||||
|
Income from continuing operations(2) |
11,406 | 2,896 | ||||||||
| Stock-based compensation | 6,708 | 2,033 | ||||||||
| Amortization of acquired intangible assets | 3,624 | 958 | ||||||||
| Loss on derivatives | 272 | - | ||||||||
| Cash tax impact of GAAP adjustments | (90 | ) | (43 | ) | ||||||
|
Non-cash income tax expense from continuing operations(1) |
6,597 | 1,589 | ||||||||
|
Non-GAAP net income(4) |
$ | 28,517 | $ | 7,433 | ||||||
| Income from continuing operations- diluted | $ | 0.28 | $ | 0.08 | ||||||
| Stock-based compensation - diluted | $ | 0.16 | $ | 0.05 | ||||||
| Amortization of acquired intangible assets - diluted | $ | 0.09 | $ | 0.03 | ||||||
| Loss on derivatives - diluted | $ | 0.01 | $ | - | ||||||
| Cash tax impact of GAAP adjustments - diluted | $ | 0.00 | $ | 0.00 | ||||||
|
Non-cash income taxes per share - diluted(4) |
$ | 0.16 | $ | 0.04 | ||||||
|
Non-GAAP net income per share - diluted(4) |
$ | 0.70 | $ | 0.20 | ||||||
| Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance | ||||||||
| (Amounts in thousands) | ||||||||
| Ranges for the three months ending | ||||||||
| June 30, 2012 | ||||||||
| Net income | 5,500 | 6,500 | ||||||
| Depreciation and amortization of acquired intangible assets | 6,400 | 6,400 | ||||||
| Stock-based compensation | 2,100 | 1,900 | ||||||
| Other loss (income), net | 1,400 | 1,400 | ||||||
| Income tax expense | 4,600 | 5,300 | ||||||
| Adjusted EBITDA | $ | 20,000 | $ | 21,500 | ||||
| Preliminary Non-GAAP Reconciliation for Forward-Looking Guidance | ||||||||
| (Amounts in thousands) | ||||||||
| Ranges for the three months ending | ||||||||
| June 30, 2012 | ||||||||
| Net income | 5,500 | 6,500 | ||||||
| Stock-based compensation | 2,100 | 1,900 | ||||||
| Amortization of acquired intangible assets | 5,200 | 5,200 | ||||||
| Non-cash income tax expense from continuing operations | 4,100 | 4,700 | ||||||
| Non-GAAP net income | $ | 16,900 | $ | 18,300 | ||||
(1) InfoSpace's Adjusted EBITDA is calculated by adjusting net income determined in accordance with generally accepted accounting principles ("GAAP") to exclude the effects of loss from discontinued operations, net of taxes, income taxes, depreciation, amortization of acquired intangible assets, stock-based compensation expense, and other loss (income), net (which includes such items as interest expense, interest income, derivative instrument gains or losses, foreign currency gains or losses, gains or losses from the disposal of assets, adjustments to the fair values of contingent liabilities related to business combinations, and gains on resolutions of contingencies), as detailed above. InfoSpace's management believes that Adjusted EBITDA 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 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. InfoSpace believes that Adjusted EBITDA is a common measure used by investors and analysts to evaluate its performance, that it provides a more complete understanding of the results of operations and trends affecting the Company's business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure.
InfoSpace's Non-GAAP net income and Non-GAAP earnings per share is calculated by adjusting GAAP net income to exclude the effects of discontinued operations, net of taxes, stock-based compensation expense, amortization of acquired intangible assets, gain or loss on derivatives, the cash tax impact of those adjustments to GAAP net income, and non-cash portion of income tax expense from continuing operations, as detailed in the accompanying table to the preliminary condensed consolidated financial statements (unaudited). The Company excludes the non-cash portion of income tax expense because of its ability to offset a substantial portion of its cash tax liabilities by using these deferred tax assets. The majority of these deferred tax assets will expire if unutilized in 2020.
InfoSpace's management believes that non-GAAP net income and non-GAAP earnings per share provide meaningful supplemental information to management, investors and analysts regarding the Company's performance and the valuation of its business by excluding items in the statement of operations that management does not consider part of the Company's ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, InfoSpace's management believes that non-GAAP net income and non-GAAP earnings per share are common measures used by investors and analyst to evaluate the Company's performance and the valuation of its business.
Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per share should be evaluated in light of the Company's financial results prepared in accordance with GAAP, and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income.
(2) As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).
(3) Other loss (income), net, includes such items as interest expense, interest income, derivative instrument gains or losses, foreign currency gains or losses, gains or losses from the disposal of assets, adjustments to the fair values of contingent liabilities related to business combinations, and gains on resolutions of contingencies.
(4) Amounts previously disclosed have been revised to reflect the effect of classifying the Company's Mercantila e-commerce business as discontinued operations.
(5) Other loss, net, primarily consists of interest expense, interest income, derivative instrument gains or losses, and gains or losses from the disposal of assets.
| InfoSpace, Inc. | ||||||||||||||||||||
| Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure | ||||||||||||||||||||
|
Preliminary Non-GAAP Income Reconciliation(1) |
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| (Unaudited) | ||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
| Year ended | ||||||||||||||||||||
| June 30, | September 30, | December 31, | December 31, | |||||||||||||||||
| 2011 | 2011 | 2011 | 2011 | |||||||||||||||||
|
Net income(2) |
$ | (4,678 | ) | $ | 2,075 | $ | 22,874 | $ | 21,594 | |||||||||||
| Discontinued operations | 8,354 | - | - | 9,927 | ||||||||||||||||
|
Income from continuing operations(2) |
3,676 | 2,075 | 22,874 | 31,521 | ||||||||||||||||
| Stock-based compensation | 1,338 | 3,049 | 1,268 | 7,688 | ||||||||||||||||
| Amortization of acquired intangible assets | 772 | 518 | 347 | 2,595 | ||||||||||||||||
| Cash impact of GAAP adjustments | 1 | (18 | ) | 20 | (40 | ) | ||||||||||||||
|
Non-cash income tax expense from continuing operations(1) |
1,803 | 1,221 | (17,613 | ) | (13,000 | ) | ||||||||||||||
|
Non-GAAP net income(3) |
$ | 7,590 | $ | 6,845 | $ | 6,896 | $ | 28,764 | ||||||||||||
| Income from continuing operations per share - diluted | $ | 0.10 | $ | 0.05 | $ | 0.57 | $ | 0.82 | ||||||||||||
| Stock-based compensation - diluted | $ | 0.04 | $ | 0.08 | $ | 0.03 | $ | 0.19 | ||||||||||||
| Amortization of acquired intangible assets - diluted | $ | 0.02 | $ | 0.01 | $ | 0.01 | $ | 0.07 | ||||||||||||
| Cash tax impact of GAAP adjustments - diluted | $ | - | $ | - | $ | - | $ | - | ||||||||||||
|
Non-cash income taxes per share - diluted(3) |
0.04 | 0.03 | (0.44 | ) | (0.34 | ) | ||||||||||||||
|
Non-GAAP net income per share - diluted(3) |
$ | 0.20 | $ | 0.17 | $ | 0.17 | $ | 0.74 | ||||||||||||
| $ | - | $ | - | $ | - | $ | - | |||||||||||||
(1) InfoSpace's Non-GAAP net income and Non-GAAP earnings per share is calculated by adjusting net income determined in accordance with generally accepted accounting principles ("GAAP") to exclude the effects of discontinued operations, net of taxes, stock-based compensation expense, amortization of acquired intangible assets, gain or loss on derivatives, the cash tax impact of those adjustments to GAAP net income, and non-cash portion of income tax expense from continuing operations, as detailed in the accompanying table to the preliminary condensed consolidated financial statements (unaudited). The Company excludes the non-cash portion of income tax expense because of its ability to offset a substantial portion of its cash tax liabilities by using these deferred tax assets. The majority of these deferred tax assets will expire if unutilized in 2020.
InfoSpace's management believes that non-GAAP net income and non-GAAP earnings per share provide meaningful supplemental information to management, investors and analysts regarding the Company's performance and the valuation of its business by excluding items in the statement of operations that management does not consider part of the Company's ongoing operations or have not been, or are not expected to be, settled in cash. Additionally, InfoSpace's management believes that non-GAAP net income and non-GAAP earnings per share are common measures used by investors and analysts to evaluate the Company's performance and the valuation of its business.
Non-GAAP net income and non-GAAP earnings per share should be evaluated in light of the Company's financial results prepared in accordance with GAAP, and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income.
(2) As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).
(3) Amounts previously disclosed have been revised to reflect the effect of classifying the Company's Mercantila e-commerce business as discontinued operations.
InfoSpace, Inc.
Stacy Ybarra, 425-709-8127
stacy.ybarra@infospace.com
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