News Room
Press Release
InterSearch Announces Second Quarter 2006 Results
Thursday August 3, 2006 4:02 pm ET
InterSearch Group, Inc. (OTC:IGPN - News), a leading provider of Internet search services and operator of industry specific destination portals, today reported financial results for the second quarter ended June 30, 2006.
Second Quarter 2006 Consolidated Financial Results:
-- Second quarter revenue was $6.4 million, a 68% increase relative to the $3.8 million reported in the second quarter of 2005;
-- Gross margins were 63% as compared to 43% in the second quarter a year ago;
-- Operating income was $1.7 million, up almost 700% from $0.2 million for the same quarter of fiscal 2005;
-- GAAP(1) earnings available to common stockholders were $1.0 million or $0.04 per diluted share as compared to net loss of $(0.1) million or $(0.02) per diluted share in the second quarter of 2005;
-- Cash flows from operations were $0.9 million for the three months ended June 30, 2006;
-- Earnings before interest, taxes, depreciation and amortization (EBITDA) was $1.9 million, representing an increase of over 700% as compared to EBITDA of $0.2 million for the same quarter of fiscal 2005(2);
-- Operating income before amortization (OIBA) increased to $1.9 million, from $0.2 million in the second quarter of 2005(2).
(1) Generally accepted accounting principles in the United States of America.
(2) EBITDA and OIBA are non-GAAP financial measures. These measures may be different from non-GAAP financial measures used by other companies. We encourage investors to review the section below entitled "Non-GAAP Financial Measures" and to review the reconciling adjustments between the GAAP and non-GAAP measures attached to this press release.
Second Quarter Business Highlights
-- Generated approximately 27 million paid clicks as compared to 14 million in the second quarter of 2005 and 25 million in the first quarter of 2006.
-- Completed an acquisition of travel-related domains, including www.camps.com and www.summercamp.com.
-- Increased revenue contribution from our proprietary traffic to 68%, up from 41% in the second quarter of 2005.
In commenting on the results, InterSearch Chairman and CEO, Dan O’Donnell, said, "We exceeded our second quarter guidance due to continued strength in Internet search services, especially in the proprietary traffic segment of our business. We anticipated a bigger drop-off in revenues generated by our tax domains, following the April 15th tax filing deadline. Instead, traffic and revenue remained strong throughout April and gradually tapered off in May and early June. Our search engine marketing efforts also performed better than expected due to strong traffic flow and improved traffic monetization."
Business Outlook and Financial Guidance
Said InterSearch CFO, Gary Bogatay, "As we’ve previously discussed, our revenue is expected to be highly seasonal and that seasonality will be most pronounced in the third quarter."
Continued Gary Bogatay, "The third quarter revenues from our tax-related properties will be minimal by comparison to the first and second quarters of this year, which were beneficially impacted by the US tax season. Also, the summer is seasonally the slowest period for Internet activity across most online properties, including ours. Our guidance reflects these considerations."
InterSearch provides the following guidance for the third quarter of 2006, ending September 30:
Q3 2006 Revenue Range $4.0 - $4.2 Million
Q3 2006 EBITDA Range $0.4 - $0.6 Million
The company expects to be profitable and generate positive cash flow from operations in the third quarter of 2006 and for the remainder of fiscal year 2006.
Conference Call
InterSearch Group will host a conference call today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), during which Dan O’Donnell, Chairman and Chief Executive Officer, and Gary Bogatay, Chief Financial Officer, will further discuss financial results, execution milestones and the company’s strategy.
To listen to the call and have the opportunity to ask questions, please dial 866.203.3436 (domestic) or 617.213.8849 (International) five to ten minutes before the call and reference the passcode (74097531). A simultaneous live Webcast of the call will be available at the Investor Relations section of the InterSearch website at http://www.intersearch.com. An online playback of the Webcast will be available on the company’s website for at least 90 days following the call. This press release will also be available on the InterSearch website.
Questions for the conference call will also be taken via email at stockwatch@intersearch.com and can be sent anytime prior to the conference call’s starting time.
About InterSearch Group, Inc.
InterSearch is a leading provider of Internet search services through a combination of traffic aggregation and proprietary websites, such as www.irs.com. The company operates in the fastest growing segments of Internet commerce including paid search, direct navigation and online marketing driving high quality traffic to advertisers and providing users with quick access to pertinent products and services. Through its InterSearch Corporate Services division, the company also provides IT and Internet strategy consulting to large corporations, predominantly in the financial services market. InterSearch is headquartered in San Francisco, California at 222 Kearny Street, Suite 550, and can be reached via telephone at 415-962-9700. More information about InterSearch Group, Inc. can be found at http://www.intersearch.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. Forward-looking statements, which are based on management’s current expectations, are generally identifiable by the use of terms, such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "possible," "potential," "predicts," "projects," "should," "would" and similar expressions. The forward-looking statements in this press release are contained principally in the section entitled "Business Outlook and Financial Guidance." The potential risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein include, among others, the Company’s relationships with its current and future advertising and distribution network partners, the Company’s ability to achieve anticipated results from acquisitions, and market development of Internet advertising and paid search services. Further information on the factors that could affect the Company’s financial results is included in the Company’s SEC filings, including the most recent registration statement filed with the SEC under the heading "Risk Factors." Except as required by law, InterSearch Group assumes no obligation to update these forward-looking statements publicly, even if new information becomes available in the future.
Non-GAAP Financial Measures
This press release includes the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission: EBITDA (earnings before interest, tax, depreciation and amortization) and OIBA (operating income before amortization). The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles. See "Reconciliation of GAAP Net Earnings to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)" and "Reconciliation of GAAP Net Earnings to Operating Income Before Amortization (OIBA)" tables included in this press release for further information regarding these non-GAAP financial measures.
InterSearch"s management evaluates and monitors performance for InterSearch primarily through earnings before interest, income taxes, depreciation and amortization ("EBITDA") and operating income before amortization ("OIBA"). In addition, EBITDA is presented because management believes it is frequently used by securities analysts, investors and others in the evaluation of companies. EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization. OIBA is calculated by adding income taxes, interest expense, amortization and loss on derivative to net earnings. EBITDA and OIBA are not defined under GAAP and should not be considered in isolation or as a substitute for net earnings and other consolidated earnings data prepared in accordance with GAAP or as a measure of InterSearch's profitability. A reconciliation of EBITDA and OIBA is provided in the tables below.
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended June 30,
---------------------------
2006 2005
------------- -------------
Revenues:
Internet search services $5,790 3,058
Corporate services 642 781
------------- -------------
Total revenues 6,432 3,839
------------- -------------
Cost of revenues:
Traffic acquisition cost 1,877 1,589
Cost of consulting services 488 581
------------- -------------
Total cost of revenues 2,365 2,170
------------- -------------
Gross profit 4,067 1,669
------------- -------------
Operating expenses:
Sales and marketing expense 227 203
General and administrative
expense 2,153 1,254
------------- -------------
Total operating expenses 2,380 1,457
------------- -------------
Earnings from operations 1,687 212
Interest expense 8 29
------------- -------------
Earnings before income taxes 1,679 183
Income taxes 696 75
------------- -------------
Net earnings 983 108
Preferred stock dividends - 171
------------- -------------
Net earnings (loss) available to
common stockholders 983 (63)
------------- -------------
Basic earnings (loss) per share 0.04 (0.02)
------------- -------------
Diluted earnings (loss) per share 0.04 (0.02)
------------- -------------
Unaudited proforma tax and loss available
to common stockholders and per
share information for S
Corporation periods
Net loss available to common stockholders (63)
Proforma income tax expense adjustment 32
-------------
Proforma net loss (95)
-------------
Proforma basic loss per share (0.03)
-------------
Proforma diluted loss per share (0.03)
-------------
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Six Months Ended June 30,
---------------------------
2006 2005
------------- -------------
Revenues:
Internet search services $12,990 6,492
Corporate services 1,466 1,390
------------- -------------
Total revenues 14,456 7,882
------------- -------------
Cost of revenues:
Traffic acquisition cost 3,817 3,217
Cost of consulting services 1,067 1,049
------------- -------------
Total cost of revenues 4,884 4,266
------------- -------------
Gross profit 9,572 3,616
------------- -------------
Operating expenses:
Sales and marketing expense 501 336
General and administrative
expense 3,858 2,364
------------- -------------
Total operating expenses 4,359 2,700
------------- -------------
Earnings from operations 5,213 916
Interest expense 36 66
Loss on derivative instrument 19 -
------------- -------------
Earnings before income taxes 5,158 850
Income taxes 2,097 435
------------- -------------
Net earnings 3,061 415
Preferred stock dividends - 328
------------- -------------
Net earnings available to
common stockholders 3,061 87
------------- -------------
Basic earnings per share 0.12 0.03
------------- -------------
Diluted earnings per share 0.11 0.02
------------- -------------
Unaudited proforma tax and earnings
available to common stockholders
and per share information for S
Corporation periods
Net earnings available to common
stockholders 87
Proforma income tax expense adjustment 32
-------------
Proforma net earnings 55
-------------
Proforma basic earnings per share 0.02
-------------
Proforma diluted earnings per share 0.02
-------------
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
June 30, December 31,
---------------------------
2006 2005
------------- -------------
(Unaudited)
Assets
Current assets:
Cash $875 576
Accounts receivable 3,618 3,206
Prepaid expenses and other 452 227
Deferred income taxes 18 -
------------- -------------
Total current assets 4,963 4,009
Office equipment, net 645 257
Patents and trademarks, net 67 71
Domains, net 12,544 12,694
Goodwill 573 573
Deferred income taxes 522 554
------------- -------------
Total Assets $19,314 18,158
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Revolving line of credit - 726
Accrued liabilities 1,775 1,831
Accounts payable 1,261 1,226
Deferred revenue - 300
Deferred income taxes - 89
Note payable 847 1,540
Common stock subject to mandatory
redemption 6,150 6,150
Common stock warrants - 3,264
------------- -------------
Total current liabilities 10,033 15,126
------------- -------------
Stockholders' equity:
Preferred Stock - -
Common Stock 25 25
Additional paid-in capital 7,177 4,054
Retained earnings (accumulated deficit) 2,079 (982)
Notes receivable for common stock issued - (65)
------------- -------------
Total stockholders' equity 9,281 3,032
------------- -------------
Total liabilities and stockholders' equity $19,314 18,158
============= =============
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Earnings (Loss) to Earnings Before
Interest, Taxes, Depreciation, and Amortization (EBITDA)
(In thousands)
(Unaudited)
Three Months Ended
June 30,
2006 2005
---------------------------
Net earnings (loss) available to common
stockholders $983 (63)
Preferred Stock Dividends - 171
---------------------------
Net earnings 983 108
Income taxes 696 75
---------------------------
Earnings before income taxes 1,679 183
Interest expense 8 29
---------------------------
Earnings from operations 1,687 212
Depreciation 38 28
Amortization 221 -
---------------------------
Earnings before interest, taxes, depreciation,
amortization (EBITDA)
$1,946 $240
===========================
Six Months Ended
June 30,
2006 2005
---------------------------
Net earnings available to common
stockholders $3,061 87
Preferred Stock Dividends - 328
---------------------------
Net earnings 3,061 415
Income taxes 2,097 435
---------------------------
Earnings before income taxes 5,158 850
Interest expense 36 66
---------------------------
Earnings from operations 5,194 916
Depreciation 74 54
Amortization 438 -
---------------------------
Earnings before interest, taxes,
depreciation, amortization (EBITDA) $5,706 $970
===========================
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Earnings (Loss) to Operating
Income Before Amortization (OIBA)
(In thousands)
(Unaudited)
Three Months Ended
June 30,
2006 2005
---------------------------
Net earnings (loss) available to common
stockholders $983 (63)
Preferred Stock Dividends - 171
---------------------------
Net earnings 983 108
Income taxes 696 75
---------------------------
Earnings before income taxes 1,679 183
Interest expense 8 29
---------------------------
Earnings from operations 1,687 212
Amortization 221 -
---------------------------
Operating income before amortization (OIBA) $1,908 $212
===========================
Six Months Ended
June 30,
2006 2005
---------------------------
Net earnings available to common
stockholders $3,061 87
Preferred Stock Dividends - 328
---------------------------
Net earnings 3,061 415
Income taxes 2,097 435
---------------------------
Earnings before income taxes 5,158 850
Loss on derivative instrument 19 -
Interest expense 36 66
---------------------------
Earnings from operations 5,213 916
Amortization 438 -
---------------------------
Operating income before amortization (OIBA) $5,651 $916
===========================
Investor Contact:
BPC Financial Marketing,
John Baldissera,
800-368-1217.