Stockgroup Information Systems Inc.
OTC Bulletin Board : SWEB

Stockgroup Information Systems Inc.

August 15, 2007 09:02 ET

Stockgroup Reports 108% Revenue Increase

Achieves its 18th Consecutive Quarter of Revenue Growth

NEW YORK, NEW YORK--(Marketwire - Aug. 15, 2007) - Stockgroup Information Systems Inc. (OTCBB:SWEB)(TSX VENTURE:SWB) today announced financial results for the second quarter ended June 30, 2007. A conference call and webcast will be held today at 4:05 PM EDT to discuss the results. All results are reported in US Dollars under accounting principles generally accepted in the United States of America (US GAAP).

Stockgroup™ revenues for the second quarter of 2007 were $3.7 million, an increase of 108 percent year-over-year. This is the Company's 18th consecutive quarter of revenue growth. The Company posted a loss of $1.2 million, primarily due to costs associated with previously announced investments in product development for the next generation StockHouse, expected to launch late in the third quarter of 2007, and two quarters of amortization and related costs from the acquisition announced in January 2007.

Q2'07 Financial Highlights Compared to Q2'06

- Increased revenues by 108% to $3.7 million

- Licensing and subscription revenues increased 184% to $2.6 million

- Advertising revenue increased 27% to $1 million

- Raised net $4.1 million with institutions in a restricted private placement

3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
(in thousands) 2007 2006 2007 2006
Revenues $ 3,705 $ 1,781 $ 6,805 $ 3,585
Loss Before Interest,
Taxes, Depreciation
and Amortization
(EBITDA)(1) $ (851) $ (481) $ (1,313) $ (431)
Net Loss $ (1,211) $ (519) $ (1,768) $ (634)
Cash and cash
equivalents $ 5,453 $ 2,164 $ 5,453 $ 2,164

1. Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization
is a non-GAAP measure that does not have a standardized meaning and may
not be comparable to similar measures disclosed by other issuers. This
measure does not have a comparable US GAAP measure. EBITDA is
calculated as Income (Loss) from operations less depreciation,
amortization, interest income and tax provision.

"In Q2 we made significant progress by achieving record revenues and a number of key milestones," stated Marcus New, President and CEO of Stockgroup. "We are pleased to report a record 108% year over year increase in total second quarter revenues and a 184% year over year increase in our licensing and subscription revenues. During the quarter, we announced agreements with two major media companies (Yahoo and Reuters), made an acquisition of strategic wireless technology, installed initial first-time deployments of our Stockstream Platinum enterprise product and completed a net $4.1 million equity financing with institutions."

"Web 2.0/Collabortive technologies continue to change the production and consumption of financial media by actively engaging users and bringing more information to the marketplace," continued Mr. New. "The multi-generational re-launch of our website (StockHouse) will provide investors for the first time with innovation which we believe will solve the core problem with user generated content, the low value content or noise factor."

Our progress towards our 2007 stated objectives:

1. Continue to invest in product development and launch the next generation of StockHouse, to transform it into the leading Web 2.0 financial portal in North America.

The major redesign of StockHouse is nearing completion and expected to launch late in the third quarter. The state-of-the-art collaborative features, along with the capability to rank, sort and filter user generated content will create an engaging forum for where users will be able to search "the wisdom of the crowd", as well as solve the core challenge with user generated, quality content.

2. Increase revenue by more than 100 percent over 2006 results.

Second quarter revenues for Stockgroup were up 108% on a year-over year basis and the company is on track to achieve its FY2007 revenue goal.

3. Extend Stockgroup's existing backend infrastructure to create a more scalable and secure platform. This will enable the company to gain a greater market share among intermediaries and individual investors.

In Q2 we continued to make substantial progress in changing our back-end architecture to a .net platform. Stockgroup is achieving benefits in terms of stability and efficiency of our product development team from these efforts. We are on track for year-end completion of this objective.

4. Continue to evaluate strategic acquisitions.

Midway through Q2, Stockgroup acquired the financial wireless assets of Semotus Solutions, Inc. ("Semotus"). The Semotus asset acquisition gives Stockgroup a proven and flexible polling wireless technology. The Semotus technology does not require an open bandwidth connection and will enable Stockgroup to distribute financial information through wireless product offerings with price points suited to retail investors.

Stockgroup continues to evaluate the financial media landscape for companies with content, technology or traffic which would extend and accelerate our strategy.

Other Highlights in Q2

- New product installations of StockStream™ Platinum in Q2 include: National Bank of Canada, Desjardin and Laurentian Bank

- Completed net $4.1 million dollars institutional restricted private placement priced at $1.36 / share.

- Announced agreement to provide Yahoo! Canada with a selection of editorial and user generated content from Stockgroup's StockHouse website

- Announced agreement with Reuters to license Stockgroup's wireless technology and offer a private labeled version of Reuters Connect for wireless to the Blackberry™ smartphone.

- Hired Joe McWilliams as new VP Monetization/Advertising. Mr. McWilliams was formerly VP of Advertising Sales for HighBeam Research and Director of Global Advertising Sales for Hoovers. Mr. McWilliams will focus on increasing advertising revenue and overall monetization of StockHouse, including revenue per page and revenue per user.

Conference Call and Web cast

To participate in the conference call, please call 1-866-400-3310 five to ten minutes prior to the start time. To listen to the live web cast, please go to

The earnings call will be recorded and accessible on our website for a period of one month. Participants intending to access the web cast should have Windows Media Player installed prior to connecting to the call.

About Stockgroup Information Systems Inc.

Stockgroup™ is a leading financial media company focused on user-generated content and collaborative technologies. The Stockgroup platform for web-based portfolio management and financial content is licensed to top North American brokerage firms and media companies. This platform is also extended through, a leading online financial portal owned and operated by Stockgroup. StockHouse is home to BullBoards™ message board - Canada's largest community of active investors. Recognized for its engaged audience, provides a sought-after demographic for advertisers.

To find out more about Stockgroup (OTCBB: SWEB, TSX-V: SWB), visit our website at

Legal notice regarding Forward Looking Statements

This release contains "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this document include that Stockhouse will become the leading Web 2.0 financial portal in North America; that we expect to launch our new portal late in the third quarter; that it will create an engaging forum for where users will be able to search "the wisdom of the crowd", as well as solve the core challenge with user generated, quality content; that we will Increase revenue by more than 100 percent over 2006 results; that we will extend Stockgroup's existing backend infrastructure to create a more scalable and secure platform; and that this will enable the company to gain a greater market share among intermediaries and individual investors. Factors which could delay or prevent these forward looking statements from being achieved include that our product offerings may present greater technical challenges than anticipated, causing delays or preventing features we intend to offer; that competitors may offer better or cheaper alternatives to our products;we may lose key employees; we may not have sufficient capital to fund our plans; and that the market for our products may not grow. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this press release. In addition, this release should be read in conjunction with the Company's current periodic reports which are on file with the SEC and available at the SEC website at Stockgroup undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. All forward looking statements are qualified in their entirety by this cautionary statement.

Stockgroup Information Systems Inc.
(Expressed in Thousands of U.S. Dollars, except number of common shares in

June 30, December 31,
2007 2006(1)
Current Assets:
Cash and cash equivalents $ 5,453 $ 2,013
Accounts receivable (net of allowances
for doubtful accounts of $337;
December 31, 2006 - $98) 1,959 814
Prepaid and other current assets 581 186

Prepaid and other long-term assets 107 -
Property and equipment, net 672 447
Goodwill (note 3) 284 -
Intangible assets, net 1,724 -
TOTAL ASSETS $ 10,780 $ 3,460

Current Liabilities:
Accounts payable $ 1,778 $ 426
Accrued liabilities 2,023 473
Accrued compensation 321 176
Deferred revenues 1,585 810
Capital lease obligations 193 130

Long-term payable 81 -
Long-term capital lease obligations 57 97
Long-term deferred revenues 42 65

Shareholders' Equity:
Common stock, no par value; authorized 75,000;
issued and outstanding of 40,715 at
June 30, 2007 and 35,350 at December 31, 2006 18,811 13,793
Additional paid-in capital 3,561 3,394
Accumulated deficit (17,672) (15,904)

(1) The balance sheet at December 31, 2006 has been derived from the
audited consolidated financial statements at that date.

Stockgroup Information Systems Inc.
(Expressed in Thousands of U.S. Dollars, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Licensing and Subscriptions $ 2,614 $ 921 $ 4,789 $ 1,842
Advertising 1,091 860 2,016 1,743
$ 3,705 $ 1,781 $ 6,805 $ 3,585

Cost of revenues (exclusive
of amortization) 1,590 595 2,860 1,115
Sales and marketing 1,260 892 2,353 1,668
Research and development 386 150 671 279
General and administrative 1,435 673 2,450 1,177
Amortization of intangible
assets 271 - 271 -
EXPENSES 4,942 2,310 8,605 4,239

Loss from operations (1,237) (529) (1,800) (654)

Interest income, net 26 10 33 20

Net loss before income taxes (1,211) (519) (1,767) (634)
Provision for income taxes - - 1 -

Net loss and comprehensive
loss $ (1,211) $ (519) $ (1,768) $ (634)

Net loss per common share:
Basic and diluted $ (0.03) $ (0.01) $ (0.05) $ (0.02)

Common shares used in
computing basic and diluted
net loss per share (in
thousands) 38,835 33,488 37,676 33,456

Stockgroup Information Systems Inc.
(Expressed in Thousands of U.S. Dollars)
Six Months Ended
June 30,
2007 2006
Operating activities:
Net loss $ (1,768) $ (634)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization of property and equipment 216 98
Amortization of intangible assets 271 -
Stock-based compensation 80 61
Changes in operating assets and liabilities:
Accounts receivable, net 174 87
Prepaid and other assets (182) 21
Accounts payable 560 235
Accrued liabilities (5) -
Accrued compensation 123 57
Deferred revenues 237 296

Investing activities:
Purchases of property and equipment (70) (81)
Acquisition of Mobile Finance Division (224) -
Acquisition of Semotus assets (181) -

Financing activities:
Proceeds on exercise of stock options 119 38
Repurchase of common stock - (27)
Proceeds on private placement, net of costs 4,146 -
Net change in capital lease obligations (56) (44)

Net increase in cash and cash equivalents 3,440 107
Cash and cash equivalents, beginning of period 2,013 2,057
Cash and cash equivalents, end of period $ 5,453 $ 2,164

The TSX Venture Exchange and the OTCBB have not reviewed and does not accept responsibility for the adequacy or accuracy of this press release.

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