SOURCE: Think Partnership, Inc.

November 01, 2007 16:05 ET

Think Partnership Third Quarter 2007 Financial Results

EBITDA Up 45% Sequentially to $3.0 Million

CLEARWATER, FL--(Marketwire - November 1, 2007) - Think Partnership Inc. (AMEX: THK), an international leader in interactive performance-based marketing and related Internet technologies, reported financial results for the third quarter ended September 30, 2007.

As compared to the previous quarter and the same period a year ago:

--  Revenues totaled $18.9 million, an increase of 11% from $16.9 million
    in the previous quarter and a decrease of 13% from $21.6 million a year
    ago.
--  Net income was $30 thousand, an improvement from a loss of $0.3
    million in the previous quarter and a decrease from $0.9 million a year
    ago.
--  Basic and fully diluted earnings per common share was $0.00, an
    improvement from a loss of ($0.01) in both the previous quarter and a year
    ago.
--  Earnings before interest, taxes, depreciation and amortization
    expenses ("EBITDA") was $3.0 million, an increase of 45% from $2.1 million
    reported in the previous quarter and a decrease of 21% from $3.8 million
    reported a year ago.
    

Q3 2007 Event Highlights

--  Kowabunga!, the company's affiliate network operated through its Think
    Network division, added 17 new clients during the quarter, including
    marquee clients Langham Hotels and Jitterbug, as well as two of the world's
    largest computer manufacturers and a leading interactive media company.
    This success was largely due to a reorganization of operations during the
    quarter that focused on client base growth, improved efficiencies, and
    customer service. Two more programs were also launched on the Microsoft
    network.
--  Released PrimaryAds UK, a localized version of the PrimaryAds CPA
    (cost per acquisition) affiliate network. PrimaryAds UK is designed to
    connect advertisers to a quality network of email, search and website
    affiliates and to drive traffic to lead-based offers and sale transactions
    across Europe. The network operates on a pay-for-performance model where
    advertisers offer affiliates a commission for every sale or lead they
    refer.
--  Commissions paid by PrimaryAds increased 34% from Q2 to Q3,
    demonstrating increased value of the network was recognized by affiliates.
    With greater attention on new offers and escalating affiliates usage of the
    network, the company increased the number of offers earning affiliate
    commissions through PrimaryAds by 13% from Q2 to Q3.
--  In September, the company's Think Network division reported record
    results for key performance measures of its ValidClick click fraud
    protected pay-per-click (PPC) search distribution channel. Quarter over
    quarter total number of searches grew by 101% from Q1 to Q2 and by 33% from
    Q2 to Q3. Searches in September alone exceeded the three months combined
    total for Q1. Clicks also increased 19% from Q2 to Q3. Both searches and
    clicks were at record levels in September. This dramatic improvement was
    attributed to the company expanding distribution through new publishers and
    adding inventory from existing publishers, and was reflected in gross
    revenue increasing 49% from Q2 to Q3.
--  Think Direct reported revenue in its life-stage niche marketing
    business increased 40% from Q2 to Q3. It also launched the company's first
    mobile business product, DailySurplus.com, a premium SMS service.
--  Think Advertising's MSA business generated record revenues since
    becoming part of Think Partnership, increasing 33% from Q2 to Q3.
--  The company consolidated Think Network's staff and operations from
    Michigan, Missouri, and New Jersey to the company's headquarters in
    Clearwater, Florida. Think Direct's Canadian-based online dating operations
    were also moved to Florida.
    

"As anticipated, we are beginning to see substantial improvement in this second half across the board, with overall revenue, net income, and EBITDA realizing healthy gains over the second quarter," said Scott P. Mitchell, president and chief executive officer of Think Partnership. "This reflected sequential quarter revenue gains in all three of our market segments as we expanded our offerings and attracted new premier clients. Our ValidClick network was the highlight for the quarter, which continued to show dramatic improvement through October."

"With our Think Network and Think Direct dating operations now consolidated under one roof, we see this adding overall greater efficiency and profitability to our operations," continued Mitchell. "This will help keep us on course for further gains in the final quarter of 2007."


Q3 2007 Financial Details


During the third quarter the company operated in three market segments: Think Network, Think Direct, and Think Advertising. To provide transparency into the performance of these segments, the company reports its financial results accordingly:


                      Net Revenue by Industry Segment

                                Three months ended September 30
                               2007                        2006
                    --------------------------  --------------------------
Segment                Amount       Percent        Amount       Percent
                    ------------  ------------  ------------  ------------
  Network           $  5,147,150         27.29  $  5,264,785         24.42
  Direct               9,163,239         48.58     9,553,373         44.31
  Advertising          4,960,160         26.30     7,023,294         32.57
  Elimination           (409,573)        (2.17)     (280,731)        (1.30)
                    ------------  ------------  ------------  ------------
Total Revenue       $ 18,860,976        100.00  $ 21,560,721        100.00
                    ------------  ------------  ------------  ------------


Think Network

The company addresses this segment with its online ad network, comprised of the company's search network, affiliate network, software solutions and Web hosting. Network revenues for the quarter totaled $5.1 million, up 33% from $3.9 million in the previous quarter and a decrease of 2% from $5.3 million a year ago. This contributed 27% of total revenues, up from 23% in the previous quarter and up from 24% in the same quarter a year ago. Network EBITDA was $1.1 million, a decrease of 19% from $1.3 million in the previous quarter and down 50% from $2.1 million reported a year ago.

Think Direct

Think Direct is primarily engaged in the interactive direct marketing of internally generated and third party offers. The company's operations in this segment generates revenue mainly from online memberships, lead sales and list management services, as well as direct-to-consumer services including online dating, online education, and home business opportunities. Revenue from Think Direct totaled $9.2 million in the third quarter 2007, up 2% from $9.0 million in the previous quarter and down 4% from $9.6 million reported a year ago. This contributed 49% of total revenues, which was down from 53% in the previous quarter and up from 44% a year ago. Direct EBITDA was $3.1 million, up 23% from $2.5 million reported in the previous quarter and up 4% from $3.0 million a year ago.

Think Advertising

This segment comprises traditional offline and online advertising agency services. Advertising revenues for the quarter totaled $5.0 million, up 14% from $4.4 million in the previous quarter and down 29% from $7.0 million a year ago. This contributed 26% of total revenues, unchanged from 26% in the previous quarter and down from 33% in the same quarter a year ago. Advertising EBITDA was a loss of $48,000, an improvement from a loss of $0.3 million in the previous quarter and compares to positive EBITDA of $0.2 million reported a year ago.

EBITDA, other

There were certain costs that occurred on the corporate level that were factored into the company's total EBITDA. These costs amounted to $1.1 million for the third quarter, a decrease of 23% from $1.5 million in the previous quarter and down from $1.5 million in the same year-ago quarter.

Conference Call

The company will hold a conference call later today to discuss its third quarter financial results. Think Partnership CEO Scott P. Mitchell and CFO Jody Brown will host the presentation, which will be followed by a question and answer period.

Date: Thursday, November 1, 2007
Time: 4:30 pm Eastern (1:30 pm Pacific)
Dial-In Number: 1-800-922-9655
International: 1-973-935-2407
Conference ID#: 9338422

Internet Simulcast: http://viavid.net/dce.aspx?sid=00004642
(Windows Media Player needed for simulcast)

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call, please contact the Liolios Group at 949-574-3860.

A replay of the conference call will be available at 7:30 PM Eastern and until November 15, 2007:

Toll-free replay number: 1-877-519-4471
International replay number: 1-973-341-3080
Replay Pin#: 9096662
Webcast Replay: http://viavid.net/dce.aspx?sid=00004642

About Think Partnership Inc.

Think Partnership is an international leader in interactive performance-based marketing and related Internet technologies. Think provides a comprehensive and integrated set of scalable and cost-effective marketing solutions for both advertisers and publishers. These solutions increase customer retention and revenues through a diverse set of related marketing channels, including affiliate marketing, click-fraud-protected pay-per-click advertising, lead generation, interactive direct marketing, integrated offline advertising, campaign management, public relations, and branding. Think also operates several direct-to-consumer services including online dating, online education, and home business opportunities. High-profile brands include ValidClick AdExchange™, PrimaryAds™, iLead Media, KowaBunga!®, BabyToBee, Second Bite™ and MSA. For more information, visit www.thinkpartnership.com.

Regarding Forward Looking Statements

Statements made in this press release that express the company's or management's intentions, plans, beliefs, expectations or predictions of future events, are forward-looking statements. Those statements are based on many assumptions and are subject to many known and unknown risks, uncertainties and other factors that could cause the company's actual activities, results or performance to differ materially from those anticipated or projected in such forward-looking statements. For a discussion of these risks, see the company's report, as filed with the Securities and Exchange Commission on Form 10-K, filed March 29, 2007, under the section headed "Risk Factors." The company cannot guarantee future financial results, levels of activity, performance or achievements, and investors should not place undue reliance on the company's forward-looking statements.



                             THINK PARTNERSHIP INC.
                     CONSOLIDATED STATEMENT OF OPERATIONS
                Three Months Ended September 30, 2007 and 2006


The accompanying notes to the condensed consolidated financial statements
available in the company's quarterly statement for the period ended
September 30, 2007, as filed with the Securities and Exchange Commission,
are an integral part of these statements.

                        Nine Months Ended           Three Months Ended
                    --------------------------  --------------------------
                        2007          2006          2007          2006
                    ------------  ------------  ------------  ------------
Net Revenue         $ 53,460,653  $ 52,912,752  $ 18,860,976  $ 21,560,721
Cost of Revenue       25,543,893    19,020,951     9,322,745     7,659,569
                    ------------  ------------  ------------  ------------
Gross Profit          27,916,760    33,891,801     9,538,231    13,901,152
Operating Expenses
  Selling, General
   and
   Administrative     25,379,486    30,374,665     8,008,498    11,217,237
  Amortization of
   Purchased
   Intangibles         3,185,692     2,444,068     1,156,771     1,019,636
                    ------------  ------------  ------------  ------------
(Loss) Income from
 Operations             (648,418)    1,073,068       372,962     1,664,279
Other
 Income (Expenses)
  Interest Income         25,109        10,906         2,270         6,632
  Interest Expense      (649,206)     (673,300)     (216,636)     (237,349)
  Other Income, Net       60,818        42,876         6,732        50,026
                    ------------  ------------  ------------  ------------
(Loss) Income before
 Income Tax
 (Benefit) Expense    (1,211,697)      453,550       165,328     1,483,588
Income Tax
 (Benefit) Expense      (365,854)      177,097       135,248       571,396
                    ------------  ------------  ------------  ------------
Net (Loss) Income       (845,843)      276,453        30,080       912,192
Other Comprehensive
 Income
  Unrealized Gain
   on Securities           2,942        29,306            88       (34,638)
  Reclassification
   Adjustment              2,577       (90,183)            0       (90,183)
  Foreign Currency
   Adjustment          1,139,485       313,457       450,235        66,951
                    ------------  ------------  ------------  ------------
Comprehensive
 Income             $    299,161  $    529,033  $    480,403  $    854,322
                    ------------  ------------  ------------  ------------

Net (Loss) Income
 Per Common Share
  Basic             ($      0.01) ($      0.06) $       0.00  ($      0.01)
                    ------------  ------------  ------------  ------------
  Fully Diluted     ($      0.01) ($      0.06) $       0.00  ($      0.01)
                    ------------  ------------  ------------  ------------

Weighted Average
 Shares (Basic)       66,946,190    45,722,120    67,646,350    50,033,794
                    ------------  ------------  ------------  ------------
Weighted Average
 Shares (Fully
 Diluted)             66,946,190    45,722,120    68,230,627    50,033,794
                    ------------  ------------  ------------  ------------




                             THINK PARTNERSHIP INC.
                           CONSOLIDATED BALANCE SHEET

                     September 30, 2007 and December 31, 2006


                                             September 30,    December 31,
                                                  2007           2006
                                            --------------- ---------------
Assets
Current Assets
  Cash and Cash Equivalents                 $     1,945,420 $     3,031,488
  Restricted Cash                                 1,255,612       1,164,216
  Accounts Receivable net of allowance for       13,458,008      11,397,761
   doubtful accounts of $325,337 and
   $68,920
  Refundable Corporate Income Taxes                 504,255         715,814
  Prepaid Expenses and Other Current Assets       1,769,988         856,726
                                            --------------- ---------------
   Total Current Assets                          18,933,283      17,166,005
                                            --------------- ---------------
Equipment and Software, net                       4,030,290       4,010,647
                                            --------------- ---------------
Other Assets
  Goodwill                                       79,874,708      79,140,787
  Intangible Assets                              17,427,975      19,819,652
  Other Assets                                      331,551         260,048
                                            --------------- ---------------
Total Other Assets                               97,634,234      99,220,487
                                            --------------- ---------------
Total Assets                                $   120,597,807 $   120,397,139
                                            --------------- ---------------

Liabilities and Shareholders’ Equity
Current Liabilities
  Notes Payable -Current Portion            $            0  $      208,333
  Note Payable - Related Party                      40,188          37,326
  Accounts Payable                               5,055,388       6,335,623
  Deferred Revenue                               1,697,036       2,076,537
  Client Prepaid Media Buys                        109,686         168,002
  Deferred Tax Liability                           593,434         613,965
  Accrued Payroll                                  641,114         354,073
  Accrued Expenses                               1,713,193         852,703
  Other Current Liabilities                          5,589         496,731
                                            --------------  --------------
Total Current Liabilities                        9,855,628      11,143,293
                                            --------------  --------------

Long-Term Liabilities                           14,977,771      15,930,020
                                            --------------  --------------

Series A Redeemable Preferred - 26,500                  0       3,859,785
 shares authorized, 0 and 5,000 issued and
 outstanding
                                            --------------  --------------

Shareholders’ Equity
  Preferred Stock, $.001 par value:
    Authorized Shares -- 5,000,000 -- none
     issued or outstanding                               0               0
  Common Stock, $.001 par value:
    Authorized Shares -- 200,000,000                70,295          66,877
    Issued Shares -- 70,295,024 as of
     September 30 and 66,876,794 as of
     December 31
    Outstanding Shares -- 67,646,350 as of
     September 30 and 64,228,120 as of
     December 31
  Additional Paid in Capital                   106,203,866     100,206,078
  Accumulated Deficit                          (10,983,554)    (10,137,711)
  Accumulated Other Comprehensive Income         1,317,682         172,678
  Treasury Stock                                  (843,881)       (843,881)
                                            --------------  --------------
Total Shareholders’ Equity                      95,764,408      89,464,041
                                            --------------  --------------
Total Liabilities and Shareholders’ Equity  $  120,597,807  $  120,397,139
                                            --------------  --------------

Revenue and Reconciliation of Pre-Tax Income to Adjusted EBITDA by Segment

In addition to other measures, management evaluates the operating results of each of its segments based upon revenue and "EBITDA," which is defined as net income before depreciation and amortization, interest expense and income taxes, each of which is presented on the company's Consolidated Statements of Operations. The company's presentation of EBITDA may not be comparable to similarly-titled measures used by other companies. Any of these items could be significant to the company's financial results. The following table reconciles EBITDA to pre-tax income for the six and nine months ended September 30, 2007 and 2006:

                        Nine Months Ended           Three Months Ended
                          September 30,               September 30,
                    ------------  ------------  ------------  ------------
EBIDTA                  2007          2006          2007          2006
 Reconciliation     ------------  ------------  ------------  ------------
Pre tax             ($ 1,211,698) $    453,550  $    165,326  $  1,483,589

Amortization           5,229,927     3,535,569     1,914,068     1,510,157

Amortization- Stock
 Options                 934,582       493,140       319,356       192,100

Depreciation           1,168,374       901,639       378,469       326,360

Net Interest
 Expense                 624,097       662,394       214,367       230,717

Derivative
 Adjustment              (30,718)       61,596             0        36,656
                    ------------  ------------  ------------  ------------
TOTAL EBIDTA        $  6,714,565  $  6,107,888  $  2,991,587  $  3,779,579
                    ============  ============  ============  ============

EBIDTA By Segment

Network             $  3,426,820  $  4,201,278  $  1,053,527  $  2,118,252

Direct                 7,581,593     5,709,420     3,099,859     2,968,032

Advertising             (421,051)      415,449       (47,769)      207,080

Corporate             (3,872,797)   (4,218,259)   (1,114,030)   (1,513,786)
                    ------------  ------------  ------------  ------------
Total EBIDTA        $  6,714,565  $  6,107,887  $  2,991,587  $  3,779,578
                    ============  ============  ============  ============

Contact Information

  • Contacts
    Jody Brown
    CFO
    Think Partnership Inc.
    Tel 727.324.0046, ext. 7123
    Email Contact

    or

    Scott Liolios/Scott Kitcher
    The Liolios Group, Inc.
    949.574.3860
    Email Contact