SOURCE: Aptimus, Inc.

July 28, 2005 16:30 ET

Aptimus Announces Second Quarter 2005 Financial Results

SAN FRANCISCO, CA -- (MARKET WIRE) -- July 28, 2005 -- Aptimus, Inc. (NASDAQ: APTM) today reported its results for the second quarter of 2005, including:

--  Reports Q2 2005 Revenues of $4.5 Million
--  Reports Q2 2005 GAAP Profit of $949,000
--  Achieves Q2 2005 GAAP fully diluted EPS of $0.12, pre-tax
    
Aptimus, Inc., the online lead generation network, today announced Q2 2005 revenues of $4.5 million, a 51% increase over $3.0 million of revenues in Q2 2004.

The company also reported a GAAP profit of $949,000 for the quarter, or $0.12 earnings per share, pre-tax, calculated on a fully diluted weighted average of 7.7 million shares. This represents more than triple the $300,000 profit the company had in the second quarter of 2004. The reported profit and per share amounts are determined without consideration of income tax expense. The tax benefit of the company's Net Operating Loss Carry Forward has been fully reserved.

Cost of revenue, or fees earned by the company's network publishers, during the quarter were $2.0 million, or 45% of revenues. For the comparable quarter of 2004, fees to publishers were $1.3 million, or 44% of revenues.

Aptimus ended the quarter with $9.6 million in cash, an increase of $200,000 over the previous quarter.

Key financial metrics during the quarter were as follows:

Key Financial Business Metrics
------------------------------
                                              Three months ending
                                              -------------------
(Revenue & Pg. impressions
 in thousands)                        6/30/2005    3/31/2005    6/30/2004
--------------------------            ---------    ---------    ---------
Core placement RPM                    $  263.58    $  251.72    $  351.68
Core placement page impressions          12,066       10,835        4,737
                                      ---------    ---------    ---------
   Revenue from Core placements       $   3,180    $   2,727    $   1,666
% of revenue from core placements          70.9%        70.8%        56.0%
Other placement RPM                   $   18.79    $   18.93    $   16.77
Other placement page impressions         39,472       37,541       36,590
                                      ---------    ---------    ---------
   Revenue from Other placements      $     742    $     712    $     614
% of revenue from other placements         16.6%        18.5%        20.6%
   Revenue from Email & Other         $     561    $     413    $     696
% of revenue from email and other
 programs                                  12.5%        10.7%        23.4%
                                      ---------    ---------    ---------
The company continued to expand its publisher base during the quarter, growing its core placement impressions by 11% over the previous quarter to 12.1 million impressions. The average revenues per thousand core impressions (RPM) increased to $264. While the average RPM grew sequentially, it remains below the levels seen last year due largely to an increasing emphasis on adding new branded publishers that prefer less intrusive, lower response placement designs. Other impressions grew 5% over the previous quarter, with average revenue per thousand impressions remaining at a level of $19.

Personnel

A major emphasis for the quarter was to expand the company's Board of Directors and deepen staffing at all levels of Sales and Business Development in order to prepare for its next phase of significant growth. During the quarter, the company added multiple new stellar employees.

New additions to the company include:

--  Rob Wrubel, as Executive Vice President, overseeing the sales and
    business development teams.  Rob has over 20 years of executive management
    experience including leadership roles at AskJeeves, Knowledge Adventure,
    and WholeBody.  Rob's extraordinary background in internet and growth
    companies, as well as significant industry contracts will help attract
    large publishers and grow the company in general.
--  Brad Benz, as Senior Vice President, Strategic Business Development -
    West Coast focusing on large publisher relationships.  Brad has an
    extensive industry background in venture capital and entrepreneurial
    activities, including founding ZuluSports, which was a leading venture-
    backed Internet publisher in the sports category.
--  Mike Mayor, as Senior Vice President, Strategic Business Development -
    East Coast based in New York.  Mike also has an extensive industry
    background including most recently as President and COO of Net Creations, a
    leader in permission based email marketing. He recently coordinated the
    successful sale of Net Creations to Return Path.
--  Bob Bejan, CEO of Optimobius, as Board Member. Prior to his Optimobius
    role, Bob spent 6 1/2 years at Microsoft, beginning his career there as the
    Executive Producer for the Microsoft Network. Bob's career at Microsoft
    included roles as General Manager, MSN Business Development and
    Programming, Director of Worldwide Sales, Operations & Programming and
    finally as head of MSN's worldwide strategic alliance group, developing
    deeply integrated relationships.
    
Business Outlook

"This was a successful quarter for Aptimus as we sequentially grew our top and bottom line results, expanded our publisher relationships, and most importantly significantly expanded our team, solidifying our foundation for growth," said Tim Choate, President & CEO of Aptimus, Inc. "At the same time that we have made significant progress, looking at results half way through the 2005 year, we are behind our original November 2004 financial outlook forecast. The revenue shortfall is due to both seasonality in the education category during Q1, and our shift in focus toward higher quality branded sites that tend to have lower RPMs due to their desire for softer user experiences. We feel that an increasing focus on these highest quality sites is the best strategy for long term growth of the company," added Choate.

"Our momentum is increasing and we feel that we will have a strong finish to 2005, but the key metrics required to achieve our original guidance would not be consistent with our strategy to build our growth on a solid, high quality foundation," said John Wade, CFO of Aptimus, Inc.

Based on the factors mentioned above, Aptimus has elected to adjust its guidance to $20MM in revenues for the year and $3.9MM in earnings, or $0.50 EPS Pre-Tax, based on 7.8 million fully diluted shares outstanding for the year. On an annual basis, that continues to represent a solid 43% growth rate in revenues and a very strong 83% growth rate in earnings over 2004.

Category                        11/2004 Guidance          7/2005 Guidance
--------                        ----------------          ---------------

Revenue                          $  26,500,000             $  20,000,000
GAAP Income                      $   6,000,000             $   3,900,000
Fully Diluted Shares for Yr.         7,500,000                 7,800,000
EPS, pre-tax                     $        0.80             $        0.50
The projected 2005 profit and per share amounts are determined without consideration of income tax expense. The tax benefit of the company's Net Operating Loss Carry Forward has been fully reserved. The company is also not including the possible effect of expensing stock options in its 2005 projections as it is using the current stock option expensing rules in its forecast.

It's important to note that Aptimus' model is very scalable and the addition of certain large publishers to its network could materially change its results. The company is actively talking to multiple large publishers now, and has tests live or nearing with publishers in the top 100 web sites, but is unable to predict if or when those publishers will be fully live or how quickly they will scale up their participation in the Aptimus Network. If one or more large publishers quickly scaled programs with Aptimus, it would have a material impact on its revenues.

Product Enhancements

Aptimus introduced a new and proprietary feedback loop program this quarter that enables advertisers to provide post-lead conversion bonuses and other source level performance data, leading their offers to automatically be presented more often in locations where they generate the best back end results. This capability enables advertisers to progressively grow their leads generated while also simultaneously increasing their back end conversion results, and helps position Aptimus as a leading and ongoing online source for their marketing programs. This new capability has proven successful already at driving high quantities of quality leads in a first test program for one of the largest for-profit education providers. The company is steadily expanding that relationship and methodically rolling these capabilities out to other advertisers as well.

Conference Call

Tim Choate will host a conference call today to review the company's second quarter 2005 results beginning at 5:00 p.m. Eastern Time. The conference call in number is (866) 851-7100 and the participant code is # 762812. In addition to the call, a webcast will be available live on the Internet, and a replay will also be accessible from the Investor section of the company's website at www.aptimus.com until August 31, 2005.

About Aptimus, Inc.

Aptimus (www.aptimus.com) is the online lead generation network. The Aptimus Network generates new revenues for Web site publishers while generating sales leads for advertiser clients. For advertisers, the Aptimus Network offers a platform to present their offers across an audience of Web site and email distribution channels. Marketers pay only for the results they achieve on a cost-per-click, cost-per-lead, cost-per-acquisition, or cost-per-impression basis, as well as combinations of those models. As a result, marketers can refine their offers and payment models to achieve their objectives. For Web site publishers, the Aptimus Network generates new revenues while promoting offers from known brands in graphical formats that complement the publishers' sites and adds value for their customers. At the core of the Aptimus Network platform is the company's proprietary technology, Dynamic Revenue Optimization™, which automatically determines on a real-time basis specific advertiser offers for promotion on each publisher's Web site and in each email sent. The company's primary offer presentation formats include cross-marketing promotions at the point of registration or other transactional activity on Web sites, online advertising programs, and email marketing campaigns. Aptimus' current clients include many of the top 500 direct marketers. Aptimus Web site publishers include a diverse cross-section of the Internet. Aptimus has offices in San Francisco and Seattle, and is publicly traded on the NASDAQ NM under the symbol APTM. More information on Aptimus is available at the company's Web site at http://www.aptimus.com.

This press release contains statements that may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, comments regarding the company's future success, the continuing nature of the company's revenue growth, the company's revenue and profit forecasts, the sufficiency of the company's capital base, the ability of the company to keep its current clients and distribution publishers and add new ones, the ability of the company to maintain profitability, the viability of its network approach to direct marketing, the market acceptance of the company's products and services, the company's future capital strategy, the company's net income and earnings per share for 2005, and the company's improving prospects, in general. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include, without limitation, fluctuation of the company's operating results, the ability to compete successfully, the ability of the company to maintain current client and distribution publisher relationships and attract new ones, market acceptance of the company's co-registration advertising solution, the sufficiency of the company's capital base to fund operations, and the sufficiency of the company's computer hardware and human resource infrastructure to support expanding operations. For additional factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, please see the "Risk Factors" described in the company's Annual Report on Form 10-K, dated March 30, 2005, and in other reports and periodic filings on file with the SEC, all of which Risk Factors are incorporated herein as though fully set forth. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

                           APTIMUS, INC.
                           Balance Sheet
                          (in thousands)
                            (unaudited)
                                        June 30,   December 31,
                                          2005        2004
                                        --------    --------
ASSETS
Cash and cash equivalents               $  9,640    $  3,610
Accounts receivable, net                   3,315       2,857
Prepaid expenses and other assets            158         130
                                        --------    --------
  Total current assets                    13,113       6,597
Fixed assets, net of accumulated
 depreciation                                719         549
Intangible assets, net                       149          15
Deposits                                      37          45
                                        --------    --------
                                        $ 14,018    $  7,206
                                        ========    ========


LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable                        $    846    $  1,375
Accrued and other liabilities                568         631
                                        --------    --------
  Total current liabilities                1,414       2,006
Shareholders' equity
Common stock, no par value                69,066      63,495
Additional paid-in capital                 2,847       2,644
Accumulated deficit                      (59,309)    (60,939)
                                        --------    --------
Total shareholders' equity                12,604       5,200
                                        --------    --------
                                        $ 14,018    $  7,206
                                        ========    ========


                           APTIMUS, INC.
                        Statement of Income
               (in thousands, except per share data)
                            (unaudited)
                               Three months ended     Six months ended
                                    June 30               June 30
                                2005       2004       2005       2004
                               -------    -------    -------    -------

Net Revenues                   $ 4,483    $ 2,976    $ 8,335    $ 4,782
Operating expenses
  Cost of revenues               2,036      1,313      3,502      1,992
  Sales and marketing              735        522      1,460        959
  Connectivity and network
   costs                           209        213        420        389
  Research and development         158        151        325        303
  General and administrative       458        390      1,016        729
  Depreciation and
   amortization                     85         83        150        149
  Loss on disposal of
   long-term assets                  -          1          -          1
                               -------    -------    -------    -------
Total operating expenses         3,681      2,673      6,873      4,522
                               -------    -------    -------    -------
Operating income                   802        303      1,462        260
Interest expense                     -          7          -         34
Interest income                     58          4         79          9
Gain on warrant liability           89          -         89          -
                               -------    -------    -------    -------
Net income                     $   949    $   300    $ 1,630    $   235
                               =======    =======    =======    =======

Basic net income per share     $  0.15    $  0.05    $  0.26    $  0.04
                               =======    =======    =======    =======
Weighted average shares used
 in computing basic net
 income per share                6,420      5,654      6,213      5,446
                               =======    =======    =======    =======
Diluted net income per share   $  0.12    $  0.05    $  0.22    $  0.04
                               =======    =======    =======    =======
Weighted average shares used
 in computing diluted net
 income per share                7,704      7,083      7,538      7,029
                               =======    =======    =======    =======

Contact Information

  • Investor Relations:

    Genesis Select
    Budd Zuckerman
    303-415-0200

    Or

    John Wade
    Chief Financial Officer of Aptimus, Inc.
    415-896-2123, ext. 245
    Email Contact

    Press Inquiries:

    Holly Nuss
    Public Relations
    Aptimus, Inc.
    415-845-1095
    Email Contact