Ask Jeeves Reports First Quarter Results Ask Jeeves posts first
quarter revenues of $94.9 million OAKLAND, Calif., April 27
/PRNewswire-FirstCall/ -- Ask Jeeves, Inc. (Nasdaq: ASKJ; the
"Company") today reported results for the first quarter 2005.
Revenues for the quarter ended March 31, 2005 were $94.9 million.
These first quarter results represent 142% growth over revenues of
$39.2 million for the comparable year-ago quarter. "Ask Jeeves
achieved another record quarter, building strong momentum for the
rest of 2005 and beyond," said Steve Berkowitz, CEO of Ask Jeeves,
Inc. "Our flagship Ask Jeeves site had more unique users than ever
before and our Fun Web Products business had its best quarter ever.
We acquired Bloglines, the market leading RSS aggregator, and
sharpened our core differentiation with advancements in our
proprietary algorithmic search technology. We believe our progress
underscores that we have strong strategic assets in place to
continue to grow market share in the fast-growing search market."
Pro forma income for the first quarter was $25.8 million, or $0.37
per share. For the comparable year-ago quarter, Ask Jeeves' pro
forma income was $13.5 million, or $0.23 per share. Pro forma
results contained in this release exclude items described below and
should be evaluated in light of the Company's financial results
prepared in accordance with GAAP. Under GAAP, Ask Jeeves' net
income for the first quarter of 2005 was $18.1 million, or $0.26
per share. This compares to net income on a GAAP basis of $13.4
million, or $0.23 per share, for the comparable year-ago quarter.
Cash, cash equivalents and marketable securities totaled $109.9
million on March 31, 2005. Ask Jeeves completed its acquisition of
Interactive Search Holdings, Inc. ("ISH") on May 6, 2004.
Accordingly, the Company's results include the financial results of
the ISH properties after the closing date. Business Outlook The
following business outlook contains forward-looking statements
describing management's current expectations for the future. The
matters discussed in these forward-looking statements are subject
to numerous assumptions, risks and uncertainties, some of which are
listed or referred to in the cautionary note below. The business
outlook is stated on a stand-alone basis, without adjustment for
the Company's pending acquisition by IAC. "We are very pleased with
our first quarter results. We had record revenues, earnings and
traffic," said Steve Sordello, CFO of Ask Jeeves, Inc. "Driven by
strong query growth, our search revenue grew 16% sequentially. This
is particularly exciting as we are just beginning to expand into
the large global search market. We are projecting continued strong
financial growth while investing more in key areas such as
marketing and the user-experience for even greater growth in 2006."
Second Quarter 2005 For the second quarter of 2005, Ask Jeeves
anticipates revenues of $94 million and pro forma income of
approximately $21.5 million, or $0.31 per share. Ask Jeeves
anticipates that GAAP net income for the second quarter will be
$0.21 per share. The anticipated difference between second quarter
GAAP basis net income and pro forma income results primarily from
non-cash amortization of intangible assets. The earnings per share
forecast assumes a share count of 69.5 million shares. 2005
Business Outlook For the full year, Ask Jeeves currently
anticipates revenues of approximately $380 to $395 million and pro
forma income of approximately $1.30 to $1.45 per share. GAAP net
income is expected to be $0.90 to $1.05 per share. The anticipated
difference between full-year 2005 GAAP basis net income and pro
forma income results primarily from non-cash amortization of
intangible assets. The earnings per share forecast assumes a share
count of 70.0 million shares. Pro Forma Results Ask Jeeves' pro
forma results are calculated by adjusting GAAP net income to
exclude the effects of items that management believes are not
directly related to the underlying performance of Ask Jeeves' core
business operations. A table reconciling the Company's pro forma
income to GAAP net income is included with the condensed
consolidated financial statements attached to this release. The
principal differences between the Company's pro forma and GAAP
results are the exclusion of amortization of intangible and other
assets and stock-based compensation. Please refer to the
reconciliation table for a full list of the adjustments. Ask
Jeeves' pro forma measures may be different from pro forma measures
used or reported by other companies, and should be considered in
addition to and not as a substitute for nor superior to measures of
financial performance prepared in accordance with GAAP. Pending
Acquisition by IAC On March 21, 2005 Ask Jeeves signed an agreement
to be acquired by IAC/Interactive Corp. (Nasdaq: IACI; "IAC").
Under the agreement, which is subject to approval by Ask Jeeves'
stockholders and other customary conditions, Ask Jeeves will merge
with a newly formed subsidiary of IAC and Ask Jeeves stockholders
will receive 1.2668 shares of IAC common stock for each share they
hold of Ask Jeeves common stock at the time of the merger. Ask
Jeeves will survive the merger as a wholly-owned subsidiary of IAC.
The transaction is currently expected to close late in the second
quarter or early in the third quarter. More information about the
proposed merger will be set forth in a combined proxy
statement/prospectus that will be mailed to Ask Jeeves stockholders
prior to a special meeting of Ask Jeeves stockholders at which
stockholder approval of the merger will be sought. Conference Call
Scheduled for 5 p.m. Eastern time on April 27, 2005 Ask Jeeves will
hold a conference call to discuss its first quarter 2005 results,
and its business outlook for the second quarter and the year 2005,
at 5 p.m. Eastern time on April 27, 2005. A more-detailed outlook
will be presented on the call than is contained in this release.
Interested persons can listen to a live broadcast of the conference
call on the "Investors" section of Ask Jeeves' Web site (
http://www.irconnect.com/askjinc/index.html ). To listen to the
live call, go to the Web site at least fifteen minutes prior to the
start time to download and install the necessary audio software.
For those unable to listen to the live broadcast, a replay will be
available one hour after the conclusion of the call at the same
site, under the sub- category "Earnings Releases" for a period of
at least three months. The financial and statistical information to
be discussed during the conference call will also be posted on Ask
Jeeves' Web site at the above address. Cautionary Note Regarding
Forward-looking Statements This press release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements regarding
the future are forward-looking statements, including those
regarding the Company's expectations or potential for future
growth, the proposed merger with IAC, expectations regarding future
or anticipated events or developments, and all financial forecasts,
including those regarding revenue and productivity metrics, cash
flow, net income, pro forma income, revenue growth and pro forma
earnings per share of the Company. The forward-looking statements
in this press release are subject to numerous assumptions, risks
and other uncertainties and are based on limited information
available to Ask Jeeves at this time, which is subject to change.
Ask Jeeves' actual results in the future may differ materially from
management's current expectations. Although management's
expectations and the information known or available to management
may change after the date of this release, Ask Jeeves undertakes no
obligation to revise or update the guidance or other statements
made above. The lack of any revision or update is not meant to
imply continued affirmation of guidance or other forward-looking
statements. Factors that might cause or contribute to actual
results differing from forward-looking statements include, but are
not limited to: Ask Jeeves' dependence on a third-party paid
placement provider; the risk that the proposed IAC merger might not
close; the risk that acquisitions (including the IAC merger) might
not be integrated successfully or yield expected benefits or
synergies; the risk of further vertical consolidation in the
Internet search and keyword advertising markets; risks associated
with rapid technological change; risks that innovations by
competitors might cause Ask Jeeves' user base to migrate to other
search engines, or that Ask Jeeves search volume might otherwise
decline; risks associated with relying on third parties for search
toolbar distribution; the risk that companies' internet advertising
budgets might contract or grow at a slower pace; Ask Jeeves'
dependence on third parties for some types of content, distribution
and advertising delivery; potential lack of market acceptance of
Ask Jeeves' advertising products; introduction of new advertising
products or search technologies by competitors; declines in the
average selling price of Ask Jeeves' advertising products; and
adverse economic conditions in any of the major countries or
markets in which Ask Jeeves does business or to which its Web
content is targeted. As a relatively short announcement, this press
release cannot present a full discussion of all relevant risks.
Further information on risk factors that could affect Ask Jeeves'
financial results is included in its most recent Annual Report on
Form 10-K and subsequent filings with the Securities and Exchange
Commission. Ask Jeeves encourages investors to read all of the
disclosures in its SEC filings for a broader discussion of
important factors that may be material to investors and may affect
Ask Jeeves' business, financial condition and results of
operations. About Ask Jeeves, Inc. As the 6th largest global web
property (ComScore Media Metrix, March 2005), Ask Jeeves Inc.
delivers world-class information retrieval products through a
diverse portfolio of Web sites, portals and downloadable
applications. Ask Jeeves' search and search-based portal brands
include: Ask Jeeves (Ask.com, Ask.co.uk and es.Ask.com), the Ask
Jeeves Japan joint venture (Ask.jp), Ask Jeeves for Kids
(AJKids.com), Bloglines (bloglines.com), Excite (excite.com), iWon
(iwon.com), My Way (myway.com) and Fun Web Products
(funwebproducts.com). Additionally, Ask Jeeves owns the
differentiated search technology Teoma, as well as natural language
processing, portal and ad- serving technologies. Ask Jeeves
generates revenue from advertisers seeking to reach the company's
broad-based online audience. Founded in 1996, Ask Jeeves has been a
publicly traded company on the Nasdaq National Market since July
1999. Its headquarters are located in Oakland, California, with
offices throughout the United States, as well as in Europe and
Asia. For more information, visit http://www.ask.com/ . Where to
Find Additional Information IAC has filed a registration statement
with the SEC that includes a combined proxy statement/prospectus of
Ask Jeeves and IAC and other relevant documents relating to the
proposed merger, including the merger agreement. Ask Jeeves
stockholders should read the proxy statement/prospectus and other
relevant materials as they become available, because they contain
important information about Ask Jeeves, IAC and the proposed
merger. In addition to the merger filings described above, Ask
Jeeves and IAC file annual, quarterly and current reports, proxy
statements and other information with the SEC. The proxy
statement/prospectus and other relevant materials, and any other
documents filed with the SEC by Ask Jeeves or IAC are available
without charge at the SEC's Website at http://www.sec.gov/ , or
from the companies' Websites, at http://www.ask.com/ and
http://www.iac.com/ , respectively. Ask Jeeves, IAC and their
respective officers and directors may be deemed to be participants
in the solicitation of proxies from Ask Jeeves stockholders in
connection with the proposed merger. Certain interests of the
directors and executive officers of Ask Jeeves and the directors
and executive officers of IAC are described in the combined proxy
statement/prospectus described above. NOTE: Ask Jeeves,
AJinteractive, Ask.com, Teoma, Fun Web Products, My Way, My Search,
My Web Search, iWon, Excite and Bloglines are trademarks or
registered trademarks of Ask Jeeves, Inc. ASK JEEVES, INC. PRO
FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except share and per share data) Three Months Ended
(unaudited) March 31, 2005 March 31, 2004 Revenues $94,861 100.0%
$39,229 100.0% Cost of revenues 25,887 27.3% 5,795 14.8% Gross
profit 68,974 72.7% 33,434 85.2% Operating expenses: Product
development 8,573 9.0% 4,753 12.1% Sales and marketing 26,106 27.5%
9,164 23.4% General and administrative 8,273 8.7% 5,337 13.6% Total
pro forma operating expenses 42,952 45.2% 19,254 49.1% Pro forma
operating income 26,022 27.5% 14,180 36.1% Interest and other
income, net 349 0.4% 439 1.1% Pro forma income before income tax
provision 26,371 27.9% 14,619 37.2% Income tax provision 529 0.6%
1,100 2.8% Pro forma income $25,842 27.3% $13,519 34.4% Basic pro
forma income per share $0.44 $0.29 Weighted average shares
outstanding used in computing basic pro forma income per share
58,784,772 46,885,863 Diluted pro forma income per share $0.37
$0.23 Weighted average shares outstanding used in computing diluted
pro forma income per share 69,119,378 59,370,727 Revenues from
related parties $-- $1,131 RECONCILIATION OF PRO FORMA INCOME TO
GAAP INCOME Pro forma income $25,842 $13,519 Cost of revenues (1)
(88) -- Amortization of intangible assets (2) (3,734) (275) (3,822)
(275) Product development (1) (52) -- Sales and marketing (1) (150)
-- General and administrative (1) (41) -- Amortization of
intangible assets (2) -- (7) Transaction costs (3) (654) -- (695)
(7) Amortization of intangible assets (2) (3,329) -- Interest and
other income, net (4) 347 142 Net income $18,141 $13,379 Notes:
(1). Adjustments relate to amortization of stock based
compensation. (2). Amortization of intangible assets consists of
the pro-rata expensing of intangible assets from acquisitions and
trademarks. (3). Transaction costs relate to certain merger and
acquisition activities that did not or have not come to fruition.
(4). The adjustments to interest and other income, net consist of
realized gains and losses on investments, gains and losses on
disposals of assets and foreign exchange gains and losses. ASK
JEEVES, INC. PRO FORMA INCOME TO PRO FORMA EBITDA AND GAAP INCOME
(In thousands, except share and per share data) Three Months Ended
(unaudited) March 31, 2005 March 31, 2004 Per Per Amount Share
Amount Share Pro forma income $25,842 $0.37 $13,519 $0.23
Depreciation 3,210 0.05 1,731 0.03 Interest and other income, net
(349) (0.01) (439) (0.01) Income tax provision 529 0.01 1,100 0.02
Pro forma EBITDA 29,232 0.42 15,911 0.27 Adjustments: Depreciation
(3,210) (0.05) (1,731) (0.03) Interest and other income, net 349
0.01 439 0.01 Income tax provision (529) (0.01) (1,100) (0.02) Cost
of revenues (1) (88) -- -- -- Amortization of intangible assets (2)
(3,734) (0.05) (275) -- (3,822) (0.05) (275) -- Product development
(1) (52) -- -- -- Sales and marketing (1) (150) -- -- -- General
and administrative (1) (41) -- -- -- Amortization of intangible
assets (2) -- -- (7) -- Transaction costs (3) (654) (0.01) -- --
(695) (0.01) (7) -- Amortization of intangible assets (2) (3,329)
(0.05) -- -- Interest and other income, net (4) 347 -- 142 -- Net
income $18,141 $13,379 Weighted average shares outstanding used in
computing diluted income per share 69,119,378 $0.26 59,370,727
$0.23 Note: Pro forma EBITDA is defined as pro forma income
excluding depreciation, interest and other income and income tax
provision. Footnotes appear on the Pro Forma Condensed Consolidated
Statements of Operations. ASK JEEVES, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (In thousands, except share and per share
data) Three Months Ended March 31, (unaudited) 2005 2004 Revenues
$94,861 $39,229 Cost of revenues 29,709 6,070 Gross profit 65,152
33,159 Operating expenses: Product development 8,625 4,753 Sales
and marketing 26,256 9,164 General and administrative 8,968 5,344
Amortization of intangible assets 3,329 -- Total operating expenses
47,178 19,261 Operating income 17,974 13,898 Interest income, net
347 442 Interest expense (47) (3) Other income, net 396 142 Income
before income tax provision 18,670 14,479 Income tax provision 529
1,100 Net income $18,141 $13,379 Earnings per Share- Basic: Net
income per share $0.31 $0.29 Weighted average shares outstanding
used in computing basic net income per share 58,784,772 46,885,863
Earnings per Share- Diluted: Net income per share $0.26 $0.23
Weighted average shares outstanding used in computing diluted net
income per share 69,119,378 59,370,727 Revenues from related
parties $-- $1,131 ASK JEEVES, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands) March 31, December 31, 2005 2004 (unaudited)
ASSETS Current assets: Cash and cash equivalents $64,777 $80,452
Marketable securities 45,102 29,250 Total cash, cash equivalents
and marketable securities 109,879 109,702 Accounts receivable, net
54,444 44,911 Prepaid expenses and other current assets 12,088
8,535 Total current assets 176,411 163,148 Property and equipment,
net 33,751 22,761 Goodwill 264,898 264,898 Intangible assets, net
90,824 87,887 Deferred tax asset, net 295 295 Other long-term
assets, net 5,309 5,420 Total assets $571,488 $544,409 LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and
other accrued liabilities $47,729 $38,566 Accrued compensation and
related expenses 7,173 8,245 Accrued restructuring costs 195 383
Deferred revenue 1,782 2,583 Current portion of capital lease
obligation 661 710 Total current liabilities 57,540 50,487
Convertible subordinated notes 115,000 115,000 Capital lease
obligations, less current portion 326 460 Other liabilities 326 326
Total liabilities 173,192 166,273 Commitments and contingencies
Stockholders' equity 398,296 378,136 Total liabilities and
stockholders' equity $571,488 $544,409 DATASOURCE: Ask Jeeves, Inc.
CONTACT: Heather Staples, Corporate Communications,
+1-510-985-7610, or , or Derrick Nueman, Investor Relations,
+1-510-985-7485, or , both of Ask Jeeves, Inc. Web site:
http://www.ask.com/
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