CYBERPLEX INC.
TSX : CX

CYBERPLEX INC.

November 11, 2010 16:01 ET

Cyberplex Reports Record Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 11, 2010) - Cyberplex Inc. (TSX:CX) a leader in online publishing and customer acquisition strategies today announced financial results for the third quarter ended September 30, 2010.

2010 Third Quarter Highlights

  • Quarterly revenue of $44.7 million, highest in the history of the Company

  • Revenue increased 145% quarter-over-quarter and 59% compared to the same quarter in the previous year

  • Record EBITDA of $5.3 million, on an adjusted basis, versus $0.5 million in the prior quarter and $2.9 million during same period a year ago

  • 75% of owned websites promoting cost-per-action advertisements from the performance network division, as compared to 10% from the previous quarter

  • Acquisition of Surebaby.com, a content rich website adding to our Family category of websites

Results for the Third Quarter of 2010

"During the third quarter, the Company generated its best quarterly results ever with record revenue and adjusted EBITDA" said Geoffrey Rotstein, Chief Executive Officer of Cyberplex. "Cyberplex has a unique value proposition, which is resonating strongly in our industry. With over 300 owned and operated websites and access to thousands of other web publishers, we can now connect advertisers to relevant and targeted customers more effectively than ever before."

Third quarter revenue of $44.7 million was up over 145% from the $18.2 million recorded in the second quarter of 2010 and up significantly over the $28.2 million generated during the same quarter of last year. Gross margin for the quarter was 29%, which is consistent with the 30% from last quarter, and income before amortization, interest, and income taxes and certain non-recurring restructuring costs for the quarter was $5.3 million. The net loss for the quarter of $488,000 was a direct result of additional amortization charges relating to the intangible assets acquired and to a lesser extent, additional interest expense relating to certain debt instruments. In the future, the Company expects to have significant amortization resulting from these intangible assets and as a result, the Company will use financial metrics excluding these amounts to evaluate its performance.

During the quarter, three new web properties were added to the publishing operations. The Company developed two new websites for its Health and Home verticals, and completed the acquisition of Surebaby.com, a leading web property that will add strength to its Family vertical. All of these properties further the Company's strategy of owning content-rich publishing assets in important advertising sectors that help advertisers achieve better conversions. The acquisition of Surebaby.com, although small, exemplifies one strategy the Company is taking to increase targeted organic traffic. "Strategic websites with strong organic traffic represent great acquisition opportunities for us" said Ted Hastings, President of Cyberplex. "Once added to our publishing and search marketing platform, we are able to optimize and significantly grow both organic and targeted paid search traffic to these sites and enhance their profitability."

The performance marketing network demonstrated continued progress during the quarter, with a reduced cost structure and a more diverse base of publishers capable of accelerating efforts to attract and retain more established and brand name advertisers. With a stronger foundation for cost-per-action marketing, the performance network is better positioned to build back to historical levels of profitability.

The Company is very pleased with its progress to date, and expects to meet or exceed the financial guidance provided last quarter. The financial guidance figures provided last quarter were for second half 2010 revenue to range between $75 million and $85 million and second half 2010 adjusted EBITDA to be in the $10 million to $12 million range.

Non-GAAP Financial Measures

This press release includes a discussion of "Adjusted EBITDA," which is a non-GAAP financial measure. The Company defines Adjusted EBITDA as net income before (a) interest income (expense); (b) income tax provision (recovery); (c) amortization of capital and intangible assets; (d) foreign exchange loss (gain); (e) stock-based compensation expense related to the Company's grant of stock options and (f) employee termination costs.

Management uses Adjusted EBITDA as a measurement of the Company's operating performance because it provides information related to the Company's ability to provide cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.

The non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

The table below reconciles net income (loss) and Adjusted EBITDA for the periods presented:

  Three months ended September 30,     Nine months ended September 30,
    2010     2009     2010     2009
 
Net income (loss) $ (488,180 ) $ 712,371   $ (1,306,916 ) $ 5,846,892
Add:                      
Amortization of capital and intangible assets   4,800,937     112,290     6,212,101     284,080
Interest expense (income), net   1,018,479     (4,270 )   1,302,806     51,831
Foreign exchange (gain) loss   (369,097 )   1,635,637     (716,487 )   2,448,228
Employee termination costs   159,822     -     159,822     -
Stock-based compensation   98,362     232,077     332,958     537,813
Income tax expense (recovery)   65,820     246,883     (41,046 )   384,457
Adjusted EBITDA $ 5,286,143   $ 2,934,988   $ 5,943,238   $ 9,553,301

Conference Call Details

In conjunction with the release, Cyberplex will host a conference call on Thursday November 11, 2010 at 4:30 p.m. EST to discuss the financial results and walk through an investor presentation. To access the call, please dial 1-888-892-3255. Please call five minutes prior to the call and for access to the presentation please visit the investor relations section of the Company's website at www.cyberplex.com. A replay of the conference call will be available as of 12:00 a.m. November 12, 2010. To access the replay of the conference call dial the toll free number: 1-800-937-6305, followed by the playback pass-code: 577517.

About Cyberplex

Cyberplex Inc. (www.cyberplex.com) is a North American leader in online publishing and customer acquisition strategies. The Company, through its subsidiaries, leverages over 300 proprietary web properties and its vast publisher network to efficiently connect advertisers to their most relevant online customers and prospects. By combining high quality publishing initiatives with efficient technology solutions and online marketing expertise, the Company is able to deliver the optimal targeted audience to online advertisers. Cyberplex delivers measurable results that improve advertiser ROI, monetize the value of online properties, and build targeted, loyal online audiences.

Forward-Looking Statements

This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward- looking statements. Cyberplex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

CYBERPLEX INC.
UNAUDITED INTERIM CONSOLIDATED BALANCE SHEETS
           
    as at     as at
    September 30,     December 31,
    2010     2009
           
ASSETS          
           
Current Assets:          
  Cash $ 5,271,293   $ 10,222,001
  Restricted marketable securities   4,302,613     -
  Short-term investments   3,208,784     11,540,642
  Accounts receivable, net of allowance for doubtful accounts of $2,564,758 (2009 -$2,270,977)   28,997,404     9,930,149
  Prepaid expenses and other assets   5,252,004     3,303,819
    47,032,098     34,996,611
           
Capital assets   3,588,585     1,432,309
Intangible assets   59,700,321     287,500
Goodwill   19,290,973     14,095,708
Future tax assets   1,320,266     582,740
  $ 130,932,243   $ 51,394,868
           
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Current Liabilities:          
  Accounts payable and accrued liabilities $ 17,770,652   $ 4,270,080
  Current portion of term loans   8,657,831     -
  Unearned revenue   630,798     668,255
  Income taxes payable   555,504     631,465
  Deferred lease inducements   110,420     106,618
    27,725,205     5,676,418
           
Long-term portion of term loans   26,893,630     -
Future income tax liabilities   652,287     -
Deferred lease inducements   217,336     156,119
           
Shareholders' equity   75,443,785     45,562,331
           
  $ 130,932,243   $ 51,394,868
   
   
CYBERPLEX INC.  
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF OPERATIONS  
   
  Three months ended     Nine months ended  
  September 30, 2010     September 30, 2009     September 30, 2010     September 30, 2009  
   
Revenue $ 44,719,634     $ 28,198,918     $ 75,229,598     $ 86,063,630  
Cost of revenue   31,558,261       20,337,523       53,367,633       60,557,848  
    13,161,373       7,861,395       21,861,965       25,505,782  
Expenses:                              
  Sales and marketing   3,287,660       3,083,384       7,437,273       10,593,528  
  General and administrative   4,845,754       2,075,100       8,974,235       5,896,766  
  Foreign exchange (gain) loss   (369,097 )     1,635,637       (716,488 )     2,448,228  
   
Income before the undernoted   5,397,056       1,067,274       6,166,945       6,567,260  
   
Amortization of capital assets   809,832       112,290       1,141,955       284,080  
Amortization of intangible assets   3,991,105       -       5,070,146       -  
   
Income (loss) from operations   596,119       954,984       (45,156 )     6,283,180  
   
Interest expense   (1,026,896 )     (12,761 )     (1,355,666 )     (74,518 )
Interest income   8,417       17,031       52,529       22,687  
Gain on sale of investment   -       -       331       -  
Income (loss) before income taxes   (422,360 )     959,254       (1,347,962 )     6,231,349  
   
Income tax expense (recovery)   65,820       246,883       (41,046 )     384,457  
   
Net income (loss)   (488,180 )     712,371       (1,306,916 )     5,846,892  
   
Unrealized gain (loss) on available-for-sale securities, net of tax of nil   (41,690 )     207,625       (102,936 )     308,680  
Foreign currency translation adjustment   (2,774,565 )     -       (1,597,245 )     -  
Comprehensive income (loss) $ (3,304,435 )   $ 919,996     $ (3,007,097 )   $ 6,155,572  
   
Income (loss) per share:                              
  Basic $ (0.00 )   $ 0.01     $ (0.01 )   $ 0.10  
  Diluted   (0.00 )     0.01       (0.01 )     0.09  
   
Weighted average number of common shares used in income (loss) per share:                              
  Basic   128,056,881       68,260,324       88,670,862       60,660,408  
  Diluted   128,056,881       70,626,982       88,670,862       63,072,304  
                               
                               
CYBERPLEX INC.  
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS  
   
  Three months     Nine months  
    ended September 30       ended September 30  
    2010       2009       2010       2009  
   
Cash flows from (used in) operating activities:                              
  Net income (loss) $ (488,180 )   $ 712,371     $ (1,306,916 )   $ 5,846,892  
Items not involving cash:                              
  Amortization of capital assets   809,832       112,290       1,141,955       284,080  
  Amortization of intangible assets   3,991,105       -       5,070,146       -  
  Amortization of deferred lease inducements   (29,182 )     (23,189 )     (83,428 )     (55,903 )
  Stock-based compensation   98,362       232,077       332,958       537,813  
  Unrealized foreign exchange loss (gain)   57,814       259,579       102,416       401,867  
  Future income taxes   458,179       -       255,606       -  
Change in non-cash operating assets & liabilities   569,928       (1,420,187 )     (1,021,337 )     (649,953 )
    5,467,858       (127,059 )     4,491,400       6,364,796  
   
   
Cash flows from (used in) financing activities:                              
  Decrease in bank indebtedness   -       -       -       (3,535,264 )
  Proceeds from exercise of stock options   28,600       43,666       37,000       231,932  
  Proceeds from exercise of warrants   -       106,166       -       216,667  
  Proceeds from public offering, net of issuance costs   -       (55,510 )     -       15,887,291  
  Proceeds from private placement, net of issuance costs   (26,482 )     -       30,772,593       -  
    2,118       94,322       30,809,593       12,800,626  
   
   
Cash flows from (used in) investing activities:                              
  Sale (purchase) of short-term investments   (3,043,919 )     (2,446,750 )     8,228,922       (13,867,443 )
  Sale (purchase) of restricted marketable securities   (403,040 )     -       (403,040 )     -  
  Acquisition of TSAVO, net of cash acquired   (4,524,426 )     -       (46,486,064 )     -  
  Acquisition of CXD, net of cash acquired   -       -       -       (2,400,000 )
  Acquisition of Eidenai Innovations Inc., net of cash acquired   -       -       -       (91,330 )
  Additions to intangible assets   (419,704 )     -       (520,487 )     -  
  Additions to capital assets   (607,974 )     (240,883 )     (968,616 )     (552,841 )
    (8,999,063 )     (2,687,633 )     (40,149,285 )     (16,911,614 )
   
Foreign exchange gain (loss) on cash held in foreign currency   (57,814 )     (259,579 )     (102,416 )     (401,867 )
   
Increase (decrease) in cash   (3,586,901 )     (2,979,949 )     (4,950,708 )     1,851,941  
   
Cash beginning of period   8,858,194       9,828,787       10,222,001       4,996,897  
                               
Cash end of period $ 5,271,293     $ 6,848,838     $ 5,271,293     $ 6,848,838  

Contact Information

  • Cyberplex Inc.
    David Katz
    EVP Corporate Development
    416.597.8889
    416.597.2345 (FAX)
    press@cyberplex.com