Internet Brands, Inc. (NASDAQ: INET)
-- Revenues: $29.1 million in third quarter, year-over-year growth of 15%
-- Adjusted EBITDA: $12.3 million in third quarter, year-over-year growth
of 15%
-- Net Income: $3.1 million in third quarter, $0.06 per diluted common
share
-- Unique Visitor growth of 39% year-over-year
Internet Brands, Inc. (NASDAQ: INET) today reported financial
results for the three and nine months ended September 30, 2010.
Third Quarter Operating Results
Total revenues for the third quarter of 2010 were $29.1 million,
a 15% increase from $25.3 million in the prior year period.
Consumer Internet advertising revenues increased by $4.3 million
in the third quarter of 2010 as compared to the prior year period,
driven primarily by growth from websites in the Company's Shopping,
Careers, Auto Enthusiast, and Legal verticals. Excluding automotive
e-commerce, revenues from websites grew organically by 14% in the
third quarter of 2010 as compared to the prior year period, and 12%
for websites owned more than one year. Overall, Consumer Internet
revenues were $20.5 million in the third quarter of 2010, a 23%
increase from $16.6 million in the prior year period. Licensing
revenues were $8.6 million in the third quarter of 2010 as compared
to $8.7 million in the prior year period.
Net income for the third quarter of 2010 was $3.1 million, or
$0.06 per diluted common share, compared to net income of $3.3
million, or $0.07 per diluted common share, in the prior year
period. During the third quarter of 2010, the Company incurred
approximately $2.2 million of non-recurring costs associated with
the potential merger with an affiliate of Hellman & Friedman
Capital Partners VI, L.P. These costs negatively impacted net
income in the third quarter of 2010 by $0.05 per diluted common
share.
For the third quarter of 2010, Adjusted EBITDA grew 15% to $12.3
million from $10.7 million in the prior year period.
Total monthly unique visitors to the Company's network of
websites grew to a monthly average of 69 million in the third
quarter of 2010, a 39% increase from 50 million in the third
quarter of 2009. In each period, more than 98% of the traffic to
the Company's websites was derived from non-paid sources.
Nine Months Ended 2010 Operating Results
Total revenues for the nine-month period ended September 30,
2010 were $83.5 million, a 16% increase from $72.1 million in the
prior year period.
Consumer Internet advertising revenues increased by $12.0
million for the nine-month period ended September 30, 2010 as
compared to the prior year period, driven primarily by growth from
websites in the Company's Auto Enthusiast, Home, and Careers
verticals. The increase in advertising revenues was partially
offset by a $3.7 million year-over-year decrease in automotive
e-commerce revenues. Overall, Consumer Internet revenues were $56.9
million for the nine-month period ended September 30, 2010, a 17%
increase from $48.6 million in the prior year period.
Licensing revenues were $26.6 million for the nine-month period
ended September 30, 2010, a 13% increase from $23.5 million in the
prior year period. The increase was primarily the result of new
client accounts and the sale of additional services to existing
clients at the Company's Autodata division.
Net income for the nine-month period ended September 30, 2010
was $10.7 million, or $0.22 per diluted common share, compared to
net income of $8.1 million, or $0.18 per diluted common share, in
the prior year period.
For the nine-month period ended September 30, 2010, Adjusted
EBITDA grew 22% to $34.5 million from $28.3 million in the same
period last year.
Balance Sheet and Liquidity
As of September 30, 2010, the Company had $60.2 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 nine-month
period ended September 30, 2010 was $32.8 million compared to $27.1
million in the prior year period, representing an increase of
21%.
Acquisitions
During the third quarter of 2010, the Company acquired five
websites for an aggregate purchase price of approximately $7.0
million. The five acquisitions include two websites in the Auto
Enthusiast vertical, one website in the Health vertical, one
website in the Money, Legal and Business vertical, and one website
in the Travel and Leisure vertical.
For the nine-month period ended September 30, 2010, the Company
completed fourteen website-related acquisitions for an aggregate
purchase price of approximately $23.3 million. Total cash spend
related to acquisition purchases, earnouts and holdbacks totaled
$22.3 million for the nine-month period ended September 30,
2010.
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, and transaction costs related to the potential merger
with Hellman & Friedman.
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 Nine months ended
September 30, September 30,
------------------- -------------------
2010 2009 2010 2009
--------- --------- --------- ---------
(unaudited)
Net income $ 3,058 $ 3,295 $ 10,699 $ 8,103
Provision for income taxes 2,455 2,323 7,681 5,669
Depreciation and amortization 4,377 4,194 13,157 12,020
Stock-based compensation 1,494 874 4,033 2,418
Investment and other income
(expense) (1,311) 8 (3,299) 85
Transaction costs 2,207 - 2,207 -
--------- --------- --------- ---------
Adjusted EBITDA $ 12,280 $ 10,694 $ 34,478 $ 28,295
========= ========= ========= =========
About Internet Brands, Inc.
Internet Brands, Inc. (NASDAQ: INET) is a unique and leading
Internet media company. INET owns and operates more than 100
websites that are leaders in their vertical markets. These websites
include ApartmentRatings.com, CarsDirect.com, CruiseReviews.com,
DavesGarden.com, DoItYourself.com, FitDay.com, FlyerTalk.com,
HealthNews.org, Loan.com, Wikitravel.org, and many more. In total,
these sites organically attract (without paid marketing)
approximately 69 million unique visitors per month. The vast
majority of these sites have very strong community
participation.
INET is also unique in its ability to monetize Internet
audiences. The company's proprietary platform optimizes yields from
its more than 40,000 direct advertisers spanning seven vertical
categories. The platform is also core to the company's acquisitions
strategy, providing a cost-efficient and scalable approach to
expanding the company's online footprint.
Important Additional Information
In connection with the proposed merger with affiliates of
Hellman & Friedman Capital Partners VI, L.P., Internet Brands
filed a Preliminary Proxy Statement on Schedule 14A and a Schedule
13E-3 on September 30, 2010, and will file a definitive proxy
statement and other materials with the Securities and Exchange
Commission ("SEC") at a later date. WE URGE INVESTORS TO READ THE
PRELIMINARY PROXY STATEMENT, SCHEDULE 13E-3, AND THE DEFINITIVE
PROXY STATEMENT (WHEN IT BECOMES AVAILABLE), ALL RELATED
SUPPLEMENTS AND AMENDMENTS (IF ANY AND WHEN THEY BECOME AVAILABLE)
AND ALL OTHER RELATED MATERIALS CAREFULLY BECAUSE THEY CONTAIN AND
WILL CONTAIN IMPORTANT INFORMATION ABOUT INTERNET BRANDS AND THE
PROPOSED TRANSACTION. Investors may obtain free copies of the
Preliminary Proxy Statement and the Schedule 13E-3 (and the
definitive proxy statement and other related materials when they
become available) as well as other filed documents containing
information about Internet Brands at http://www.sec.gov, the SEC's
free internet site. Free copies of Internet Brands' SEC filings
including the Preliminary Proxy Statement and Schedule 13E-3 (and
the definitive proxy statement when available) are also available
on Internet Brands' internet site at http://www.internetbrands.com/
under "Investors."
Internet Brands and its executive officers and directors may be
deemed, under SEC rules, to be participants in the solicitation of
proxies from Internet Brands' stockholders with respect to the
proposed transaction. Information regarding the executive officers
and directors of Internet Brands is included in the Preliminary
Proxy Statement on Schedule 14A filed with the SEC on September 30,
2010 under "Important Information Regarding Internet Brands --
Directors and Executive Officers of Internet Brands" and "Important
Information Regarding Internet Brands -- Ownership of Common Stock
by Certain Beneficial Owners and Directors and Executive Officers."
The Preliminary Proxy Statement also contains a description of the
parties involved in the potential merger and their direct or
indirect interests in the Company under "Summary Term Sheet -- The
Parties Involved in the Merger," "The Parties to the Merger,"
"Important Information Regarding Internet Brands -- Ownership of
Common Stock by Certain Beneficial Owners and Directors and
Executive Officers," and "Important Information Regarding Parent,
Merger Sub and the H&F Filing Persons."
Safe Harbor Statement
Some of the statements in this press release may constitute
forward-looking information and statements. 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, our reliance on
the public to continue to contribute content without compensation
to our websites that depend on such content, and risks associated
with our ability to close the previously-disclosed merger with an
affiliate of Hellman & Friedman Capital Partners VI, L.P. For
more information on factors that may affect future performance,
please review the reports filed by us with the U.S. Securities and
Exchange Commission (SEC), in particular our Annual Report on Form
10-K for the annual period ended December 31, 2009, filed with the
SEC on March 3, 2010. 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 November 2, 2010 and
should not be unduly relied upon because we undertake no duty to
update this information.
INTERNET BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30, December 31,
2010 2009
------------- -------------
Unaudited
ASSETS
Current assets
Cash and cash equivalents $ 43,591 $ 38,408
Investments, available for sale 16,615 21,736
Accounts receivable, less allowances for
doubtful accounts of $514 and $618 at
September 30, 2010 and December 31, 2009,
respectively 15,511 15,416
Deferred income taxes 11,732 16,184
Prepaid expenses and other current assets 1,655 1,212
------------- -------------
Total current assets 89,104 92,956
Property and equipment, net 18,483 15,125
Goodwill 247,438 223,925
Intangible assets, net 16,069 20,080
Deferred income taxes 37,350 39,255
Other assets 594 602
------------- -------------
Total assets $ 409,038 $ 391,943
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 15,028 $ 13,957
Deferred revenue 5,295 6,414
------------- -------------
Total current liabilities 20,323 20,371
Other liabilities 144 258
Stockholders' equity
Common stock, Class A, $.001 par value;
125,000,000 shares authorized and
43,293,067 and 42,095,325 issued and
outstanding at September 30, 2010 and
December 31, 2009 43 42
Common stock, Class B, $.001 par value;
6,050,000 authorized and 3,025,000 shares
issued and outstanding at September 30, 2010
and December 31, 2009 3 3
Additional paid-in capital 620,848 612,528
Accumulated deficit (231,107) (241,806)
Accumulated other comprehensive (loss)
income (1,216) 547
------------- -------------
Total stockholders' equity 388,571 371,314
------------- -------------
Total liabilities and stockholders' equity $ 409,038 $ 391,943
============= =============
INTERNET BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Revenues
Consumer Internet $ 20,453 $ 16,648 $ 56,910 $ 48,624
Licensing 8,615 8,674 26,608 23,454
---------- ---------- ---------- ----------
Total revenues 29,068 25,322 83,518 72,078
Costs and operating
expenses
Cost of revenues 5,128 4,470 15,233 13,659
Sales and marketing 5,634 4,675 16,049 14,012
Technology 2,812 2,660 7,688 7,066
General and
administrative 4,708 3,697 14,103 11,464
Depreciation and
amortization of
intangibles 4,377 4,194 13,157 12,020
Transaction costs 2,207 - 2,207 -
---------- ---------- ---------- ----------
Total costs and operating
expenses 24,866 19,696 68,437 58,221
---------- ---------- ---------- ----------
Income from operations 4,202 5,626 15,081 13,857
Investment and other
(expense) income 1,311 (8) 3,299 (85)
---------- ---------- ---------- ----------
Income before income taxes 5,513 5,618 18,380 13,772
Provision for income taxes 2,455 2,323 7,681 5,669
---------- ---------- ---------- ----------
Net income $ 3,058 $ 3,295 $ 10,699 $ 8,103
========== ========== ========== ==========
Basic net income per share
- Class A and B $ 0.07 $ 0.08 $ 0.24 $ 0.19
Diluted net income per
share - Class A and B $ 0.06 $ 0.07 $ 0.22 $ 0.18
Class A and B weighted
average number of shares
- Basic 44,767,237 43,623,449 44,497,500 43,434,920
Class A and B weighted
average number of shares
- Diluted 48,346,678 46,498,811 47,881,373 45,846,679
Stock-based compensation
expense by function
Sales and marketing $ 210 $ 108 $ 572 $ 301
Technology 135 50 343 144
General and administrative 1,149 716 3,118 1,973
Add to Digg Bookmark with del.icio.us Add to Newsvine
Internet Brands, Inc. (MM) (NASDAQ:INET)
Historical Stock Chart
From Aug 2024 to Sep 2024
Internet Brands, Inc. (MM) (NASDAQ:INET)
Historical Stock Chart
From Sep 2023 to Sep 2024