LOS ANGELES, CA--(Marketwire - February 18, 2010) - Internet Brands, Inc. (
NASDAQ:
INET)
-- Record Revenues: $27.7 million in fourth quarter
-- Record Adjusted EBITDA: $11.8 million in fourth quarter, year-over-year
growth of 21%
-- Net Income: $4.3 million in fourth quarter, $0.09 per diluted common
share, year-over-year growth of 40%
Internet Brands, Inc. (
NASDAQ:
INET) today reported financial results for
the fourth quarter and full year ended December 31, 2009.
"We are very pleased with our financial results and the on-going success of
our business model," said Bob Brisco, CEO of Internet Brands. "Our
performance during this past year once again validated the hallmarks of our
business: our ability to organically attract large audiences of high value
consumers and our unique operating platform that monetizes these audiences
extremely well."
Fourth Quarter Operating Results
Total revenues for the fourth quarter of 2009 were $27.7 million compared
to $27.0 million in the prior year period.
Consumer Internet advertising revenues increased by $2.0 million in the
fourth quarter of 2009 as compared to the prior year period, driven
primarily by growth from websites in the Company's Home, Auto Enthusiast,
and Careers verticals. The increase in advertising revenues was offset by
a $3.3 million year-over-year decrease in automotive e-commerce revenues
due to continued weakness in consumer demand for automobiles. Excluding
automotive e-commerce, revenues from websites owned more than a year
organically grew by approximately 13% as compared to the prior year period.
Overall, Consumer Internet revenues were $17.5 million in the fourth
quarter of 2009 compared to $18.8 million in the prior year period.
Licensing revenues were $10.1 million in the fourth quarter of 2009
compared to $8.2 million in the prior year period. The increase in
licensing revenues was primarily the result of the successful fourth
quarter launch of the Company's vBulletin 4.0 publishing suite.
Net income for the fourth quarter of 2009 was $4.3 million, or $0.09 per
diluted common share, compared to net income of $3.1 million, or $0.07 per
diluted common share, in the prior year period.
For the fourth quarter of 2009, Adjusted EBITDA grew 21% to $11.8 million
from $9.8 million in the prior year period. Adjusted EBITDA margins in the
fourth quarter of 2009 expanded 640 basis points year-over-year to 42.7%.
The Company's EBITDA margins have continued to expand as a result of the
shift from lower margin automotive e-commerce revenues to higher margin
advertising revenues and from the continued leverage derived from the
Company's common operating platform.
Total monthly unique visitors to the Company's network of websites grew to
a monthly average of 50 million in the fourth quarter of 2009, a 22%
increase from 41 million in the fourth quarter of 2008. In January, unique
visitors increased to 56.5 million. In each period, more than 97% of the
traffic to the Company's websites was derived from non-paid sources.
Management Comments
"Since our IPO two years ago, spanning a very difficult period for
advertising and auto markets, we have grown our full year 2009 EBITDA by
43% from 2007," said Bob Brisco, CEO of Internet Brands. "We believe our
advertising revenues will continue to outperform the industry in 2010 due
to the strong results we generate for our more than 40,000 vertical market
advertisers."
Brisco added, "We also expect to continue to expand our audience reach
through a combination of highly accretive acquisitions and through organic
growth initiatives that are building our content, growing our communities,
and strengthening our brands."
Full Year Ended 2009 Operating Results
Total revenues for the year ended December 31, 2009 were $99.8 million
compared to $104.0 million in the prior year.
Consumer Internet advertising revenues increased by $7.9 million for the
year ended December 31, 2009 as compared to the prior year, which was a
result of both organic and acquired website growth. The increase in
advertising revenues for the year ended 2009 was offset by a $13.3 million
year-over-year decrease in automotive e-commerce revenues due to continued
weakness in consumer demand for automobiles resulting from the adverse
economic and credit climate in 2009. As a result, overall Consumer Internet
revenues were $66.2 million for the year ended December 31, 2009 compared
to $71.6 million in the prior year.
Licensing revenues were $33.6 million for the year ended December 31, 2009
compared to $32.5 million in the prior year. If the Company used a fixed
year-over-year exchange rate, licensing revenues for the year ended
December 31, 2009 would have been approximately $0.8 million higher than
reported.
Net income for the year ended December 31, 2009 was $12.4 million, or $0.27
per diluted common share, compared to net income of $11.6 million, or $0.26
per diluted common share, in the prior year.
The Company's effective tax rate for the year ended December 31, 2009 was
37.8% as compared to 41.4% in the prior year. The reduction in the
effective tax rate in 2009 was primarily the result of one-time research
and development credits that were recognized during the fourth quarter of
2009.
For the year ended December 31, 2009, Adjusted EBITDA grew 14% to $40.1
million from $35.3 million in the prior year. Adjusted EBITDA margins for
the year ended December 31, 2009 expanded 630 basis points year-over-year
to 40.2%.
First Quarter and Full Year 2010 Guidance
The Company expects first quarter 2010 revenues to be approximately $26.0
to $26.6 million and Adjusted EBITDA to be approximately $10.0 to $10.5
million.
For the full year of 2010, the Company expects revenues to be approximately
$112.0 to $118.0 million, representing year-over-year revenue growth of 12-
18%. Adjusted EBITDA in 2010 is expected to be approximately $46.0 to
$48.0 million, representing year-over-year EBITDA growth of 15-20%.
Balance Sheet and Liquidity
As of December 31, 2009, the Company had $60.1 million of cash and
investments, and no outstanding debt under its $35 million revolving line
of credit.
Net cash provided by operating activities for the year ended December 31,
2009 was $36.3 million compared to $33.8 million in the prior year period.
Acquisitions
In a separate press release today, the Company announced that in the fourth
quarter of 2009 it expanded its Health and Home verticals with the
acquisition of seven websites. The aggregate purchase price for the
websites was approximately $8.1 million. The seven acquisitions include
three websites in the Health vertical: DentalFind.com,
InfertilitySpecialist.com and SkinCareGuide.com; and four websites in the
Home vertical: DavesGarden.com, Gardens.com, Craftster.org and
SplitCoastStampers.com.
"We have now completed more than 100 acquisitions and will integrate these
latest sites onto our industry-leading media platform," Brisco added.
For the year ended December 31, 2009, the Company completed 18
website-related acquisitions for an aggregate purchase price of
approximately $19.9 million. Total spend related to acquisition purchases,
earnouts and holdbacks totaled $24.2 million during the year ended December
31, 2009. The financial impact of these acquisitions is included in the
Company's 2010 business outlook.
Non-GAAP Financial Measures
This press release includes a discussion of "Adjusted EBITDA," which is a
non-GAAP financial measure. The Company defines EBITDA as net income
before (a) investment and other income (expense); (b) income tax provision
(benefit); and (c) depreciation and amortization. The Company defines
Adjusted EBITDA as a further adjustment of EBITDA to exclude share-based
compensation expense related to the Company's grant of stock options and
other equity instruments.
The Company believes these non-GAAP financial measures provide important
supplemental information to management and investors. These non-GAAP
financial measures reflect an additional way of viewing aspects of the
Company's operations that, when viewed with the GAAP results and the
accompanying reconciliations to corresponding GAAP financial measures,
provide a more complete understanding of factors and trends affecting the
Company's business and results of operations.
Management uses EBITDA and Adjusted EBITDA as measurements of the Company's
operating performance because they provide information related to the
Company's ability to provide cash flows for acquisitions, capital
expenditures and working capital requirements. Internally, these non-GAAP
measures are also used by management for planning purposes, including the
preparation of internal budgets; to allocate resources to enhance financial
performance; to evaluate the effectiveness of operational strategies; and
to evaluate the Company's capacity to fund capital expenditures and to
expand its business. The Company also believes that analysts and investors
use EBITDA and Adjusted EBITDA as supplemental measures to evaluate the
overall operating performance of companies in its industry.
These non-GAAP financial measures are 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 and Adjusted EBITDA for the periods
presented (in thousands):
Three months ended Year ended
December 31, December 31,
----------------------- -----------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
(unaudited)
Net income $ 4,285 $ 3,054 $ 12,388 $ 11,559
Provision for income taxes 1,865 2,851 7,534 8,158
Depreciation and
amortization 4,570 3,762 16,590 13,554
Stock-based compensation 859 619 3,277 2,491
Investment and other
(income) expense 227 (494) 312 (497)
----------- ----------- ----------- -----------
Adjusted EBITDA $ 11,806 $ 9,792 $ 40,101 $ 35,265
=========== ========== =========== ==========
Conference Call and Webcast
The Company will host a conference call to discuss its fourth quarter 2009
financial results beginning at 4:30 pm ET (1:30 pm PT), today, February 18,
2010. Participants may access the call by dialing 877-941-8416 (domestic)
or 480-629-9808 (international). In addition, the call will be broadcast
live over the Internet, hosted at the Investor Relations section of the
Company's website at
www.internetbrands.com and will be archived online
within approximately one hour of the completion of the conference call. A
telephone replay will be available through March 4, 2010. To access the
replay, please dial 800-406-7325 (domestic) or 303-590-3030
(international), passcode 4206148.
About Internet Brands, Inc.
Los Angeles-based Internet Brands, Inc. (
NASDAQ:
INET) is a leading
Internet media company that owns, operates and grows community and
e-commerce websites in the automotive, careers, health, home, money and
business, shopping, and travel and leisure categories. With a flexible and
scalable platform, Internet Brands operates a rapidly growing network of
more than 200 websites, of which more than 90 each receive greater than
100,000 monthly unique visitors. In the fourth quarter of 2009, the
company's websites averaged 50 million monthly unique visitors. More than
97% of the traffic to the company's websites is from non-paid sources.
Safe Harbor Statement
This press release includes forward-looking information and statements,
including but not limited to its 2010 business outlook, management comments
and guidance that are subject to risks and uncertainties that could cause
actual results to differ materially. Forward-looking statements include
information concerning our possible or assumed future results of
operations, business strategies, competitive position, industry
environment, potential growth opportunities and the effects of regulation.
These statements are based on our management's current expectations and
beliefs, as well as a number of assumptions concerning future events. Such
forward-looking statements are subject to known and unknown risks,
uncertainties, assumptions and other important factors, many of which are
outside our management's control that could cause actual results to differ
materially from the results discussed in the forward-looking statements.
These risks, uncertainties, assumptions and other important factors
include, but are not limited to, our pursuit of an acquisition-based growth
strategy entailing significant execution, integration and operational
risks, the impact of the recent downturn in the economy and the automotive
industry in particular on our revenues from automotive dealers and
manufacturers, our ability to compete effectively against a variety of
Internet and traditional offline competitors, and our reliance on the
public to continue to contribute content without compensation to our
websites that depend on such content. These and other risks are described
more fully in our Annual Report on Form 10-K for the annual period ended
December 31, 2008, filed with the U.S. Securities and Exchange Commission
(SEC) on March 6, 2009. You should consider these factors in evaluating
forward-looking statements. For additional information regarding the risks
related to our business, see our prospectus in the Registration Statement,
and other related documents, that we have filed with the SEC. You may get
these documents for free by visiting EDGAR on the SEC website at
http://www.sec.gov. All information provided in this release is as of
February 18, 2010 and should not be unduly relied upon because we undertake
no duty to update this information.
INTERNET BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share amounts)
December 31,
--------------------
2009 2008
--------- ---------
ASSETS
Current assets
Cash and cash equivalents $ 38,408 $ 43,648
Investments, available for sale 21,736 13,723
Accounts receivable, less allowances for doubtful
accounts of $618 and $1,513 at December 31, 2009
and 2008, respectively 15,416 16,353
Deferred income taxes 16,184 9,832
Prepaid expenses and other current assets 1,212 1,299
--------- ---------
Total current assets 92,956 84,855
Property and equipment, net 15,125 11,460
Goodwill 223,925 203,806
Intangible assets, net 20,080 24,556
Deferred income taxes 39,255 52,245
Other assets 602 767
--------- ---------
Total assets $ 391,943 $ 377,689
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 13,957 $ 17,043
Deferred revenue 6,414 7,325
Other liabilities 258 -
--------- ---------
Total current liabilities 20,629 24,368
Commitments and Contingencies - -
Stockholders' equity
Common stock, Class A, $.001 par value;
125,000,000 shares authorized and 42,142,080
and 40,946,826 issued and outstanding
at December 31, 2009 and 2008, respectively 42 41
Common stock, Class B, $.001 par value; 6,050,000
authorized and 3,025,000 shares issued and
outstanding at December 31, 2009 and 2008,
respectively 3 3
Additional paid-in capital 612,528 607,434
Accumulated deficit (241,806) (254,194)
Accumulated other comprehensive income 547 37
--------- ---------
Total stockholders' equity 371,314 353,321
--------- ---------
Total liabilities and stockholders' equity $ 391,943 $ 377,689
========= =========
INTERNET BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues
Consumer Internet $ 17,530 $ 18,821 $ 66,154 $ 71,564
Licensing 10,148 8,157 33,602 32,472
---------- ---------- ---------- ----------
Total revenues 27,678 26,978 99,756 104,036
Costs and operating
expenses
Cost of revenues
(exclusive of
depreciation and
amortization) 5,122 6,349 18,781 23,952
Sales and marketing (1) 5,097 4,971 19,109 21,473
Technology (1) 2,565 2,320 9,631 8,683
General and
administrative (1) 3,947 4,165 15,411 17,154
Depreciation and
amortization of
intangibles 4,570 3,762 16,590 13,554
---------- ---------- ---------- ----------
Total costs and operating
expenses 21,301 21,567 79,522 84,816
---------- ---------- ---------- ----------
Income from operations $ 6,377 $ 5,411 $ 20,234 $ 19,220
Investment and other
income (expense) (227) 494 (312) 497
---------- ---------- ---------- ----------
Income before income taxes 6,150 5,905 19,922 19,717
Provision for income taxes (1,865) (2,851) (7,534) (8,158)
---------- ---------- ---------- ----------
Net income $ 4,285 $ 3,054 $ 12,388 $ 11,559
========== ========== ========== ==========
Basic net income per share
- Class A and B $ 0.10 $ 0.07 $ 0.28 $ 0.27
Diluted net income per
share - Class A and B $ 0.09 $ 0.07 $ 0.27 $ 0.26
Class A and B weighted
average number of shares
- Basic 43,817,979 43,274,157 43,513,476 43,028,230
Class A and B weighted
average number of shares
- Diluted 46,753,817 45,062,774 46,069,649 45,011,503
(1) Stock-based
compensation expense by
function
Sales and marketing $ 109 $ 79 $ 410 $ 292
Technology 63 38 207 130
General and
administrative 687 502 2,660 2,069