Press Release
InterSearch Announces Record Fourth Quarter and Full Year 2006 Results.
Monday March 5, 2007 11:37 am ET
San Francisco, CA Mar 5, 2007 - InterSearch Group, Inc. (AMEX:IGO), a leading provider of Internet search services and operator of industry specific destination portals such as: www.irs.com, www.banks.com and www.camps.com, today reported financial results for the fourth quarter and full year ended December 31, 2006.
Full Year and Fourth Quarter 2006 Financial Highlights
- Full year revenue was $25.6 million, a 46% increase from $17.5 million in 2005;
- Gross margins were 59% in 2006, up from 48% in 2005;
- Full year EBITDA¹ increased 598% to $7.5 million from $1.1 million in 2005;
- Full year GAAP² earnings available to stockholders were $3.4 million, or $0.12 per fully diluted share as compared to a net loss of $(1.0) million, or $(0.05) per fully diluted share, in 2005;
- Fourth quarter revenue was $6.4 million, up 28% from the fourth quarter a year ago;
- Fourth quarter EBITDA was $1.1 million as compared to a $(0.7) million loss in the fourth quarter of 2005;
- Fourth quarter GAAP earnings available to stockholders rose to $0.3 million, or $0.01 per fully diluted share.
In commenting on the results, CFO of InterSearch Group, Gary Bogatay, said, “Our top-line performance benefited from increased traffic to both our proprietary sites and to domains parked with us, and from the improved click-through rates to our search partners’ sites. Importantly, our 46% annual revenue growth was accompanied by healthy margin expansion. Our financial results in 2006 clearly illustrate the leverage embedded in our operating model.”
2006 Business Highlights
- Generated approximately 99 million paid clicks in 2006 as compared to 62 million in 2005.
- Acquired www.Banks.com - a premier category-level domain in the finance vertical.
- Acquired a collection of premium travel-related sites, including: www.Camps.com, www.SummerCamp.com and www.GreatCruises.com.
- Launched a proprietary data warehouse to implement centralized traffic monitoring and reporting capabilities.
- Began trading on the American Stock Exchange under ticker IGO.
- Became a fully reporting company under the guidelines of the SEC.
“In 2006, InterSearch Group achieved substantial progress in a number of crucial areas and laid the foundation for future growth,” said Dan O’Donnell, Chairman and Chief Executive Officer of InterSearch Group. “In the course of the year we added premier domain names to our portfolio, expanded our advertising network and further refined our revenue model. We are also very proud of our achievements in building the visibility and credibility of InterSearch Group with the investment community. In February of 2006 we became a fully reporting company under the SEC guidelines and, subsequently, moved from the Bulletin Board to begin trading on the American Stock Exchange.”
First Quarter 2007 Business Outlook
InterSearch Group provided the following guidance for the first quarter of 2007, ending March 31:
- Q1 2007 Revenue Range $10.6 - $11.0 Million
- Q1 2007 EBITDA Range $5.0 - $5.2 Million
InterSearch Group expects to be profitable on a GAAP basis and generate positive cash flow from operations for the entire FY2007 period.
Said Dan O’Donnell, “The 33% to 38% annual growth rate that we expect to achieve this quarter reflects seasonal strength as well as continued momentum in our business.”
Conference Call
Chairman and Chief Executive Officer, Dan O’Donnell, and Chief Financial Officer, Gary Bogatay, will discuss the fourth quarter and full year performance along with the outlook for InterSearch Group, during a conference call today at 2:00 p.m. PDT (5:00 pm EDT).
To listen to the call and have the opportunity to ask questions, please dial 800-706-7749 (domestic) or 617-614-3474 (International) five to ten minutes before the call and reference the passcode 50593304. A simultaneous live Webcast of the call will be available at the Investor Relations section of the InterSearch Group website at http://www.intersearch.com. An online playback of the Webcast will be available on the InterSearch Group website for at least 90 days following the call.
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.
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, including statements regarding our expected financial results for the fourth quarter of 2006. 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 “First Quarter 2007 Business Outlook, including statements regarding: guidance for 2007 with respect to revenue and EBITDA; expectations for profitability on a GAAP basis and generation of positive cash flow from operations; and expectations regarding growth rate for first quarter 2007. The potential risks and uncerta inties that could cause actual results to differ materially from those expressed or implied herein include, among others, unanticipated slowdown in the travel and financial verticals; inability to successfully develop and integrate newly acquired domains; unexpected diversion of advertising dollars away from the Internet; slower than anticipated growth rate of InterSearch Group’s advertising base; dependence on our search providers; and market development of Internet advertising and paid search services. Further information on the factors that could affect InterSearch Group’s financial results is included in the Company’s SEC filings, including the most recent registration statement filed on Form SB-2 under the heading “Risk Factors” and Current Reports on Form 8-K. 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 measure defined as non-GAAP financial measure by the Securities and Exchange Commission: EBITDA. 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 GAAP. See “Reconciliation of GAAP Net Earnings to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)” table 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 EBITDA. 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 to net earnings. EBITDA is 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.
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, www.banks.com and www.camps.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 Internet related technology Professional Services to large corporations, predominantly to the Financial Services industry. InterSearch is headquartered in San Francisco, California at 222 Kearny Street, Suite 550.
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
December 31,
---------------------
2006 2005
---------- ----------
Revenues:
Internet search services $5,915 4,089
Corporate services 447 873
---------- ----------
Total revenues 6,362 4,962
---------- ----------
Cost of revenues:
Traffic acquisition cost 2,700 1,777
Cost of consulting services 316 649
---------- ----------
Total cost of revenues 3,016 2,426
---------- ----------
Gross profit 3,346 2,536
---------- ----------
Operating expenses:
Sales and marketing expense 195 282
General and administrative expense 2,447 1,400
---------- ----------
Total operating expenses 2,642 1,682
---------- ----------
Earnings from operations 704 854
Interest expense 307 33
Loss on derivative instrument - 1,771
---------- ----------
Earnings (loss) before income taxes 397 (950)
Income taxes 121 451
---------- ----------
Net earnings (loss) $276 (1,401)
---------- ----------
Basic earnings (loss) per share $0.01 (0.06)
---------- ----------
Diluted earnings (loss) per share $0.01 (0.06)
---------- ----------
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Year Ended
December 31,
---------------------
2006 2005
---------- ----------
Revenues:
Internet search services $23,136 14,502
Corporate services 2,498 3,041
---------- ----------
Total revenues 25,634 17,543
---------- ----------
Cost of revenues:
Traffic acquisition cost 8,613 6,830
Cost of consulting services 1,780 2,297
---------- ----------
Total cost of revenues 10,393 9,127
---------- ----------
Gross profit 15,241 8,416
---------- ----------
Operating expenses:
Sales and marketing expense 884 948
General and administrative expense 8,071 4,954
---------- ----------
Total operating expenses 8,955 5,902
---------- ----------
Earnings from operations 6,286 2,514
Interest expense 553 143
Loss on derivative instrument 19 1,771
---------- ----------
Earnings before income taxes 5,714 600
Income taxes 2,297 1,059
---------- ----------
Net earnings (loss) 3,417 (459)
Preferred stock dividends - 496
---------- ----------
Net earnings (loss) available to 3,417 (955)
common stockholders
---------- ----------
Basic earnings (loss) per share $ 0.14 (0.05)
Diluted earnings (loss) per share $ 0.12 (0.05)
---------- ----------
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
December December
31, 31,
---------------------
2006 2005
---------- ----------
Assets
Current assets:
Cash $347 576
Accounts receivable 4,060 3,263
Prepaid expenses and other 196 170
Deferred income taxes 38 -
---------- ----------
Total current assets 4,641 4,009
---------- ----------
Office equipment, net 1,416 257
Debt issuance costs, net 743 -
Patents and trademarks, net 83 71
Domains, net 13,398 12,694
Goodwill 573 573
Deferred income taxes 253 554
---------- ----------
Total Assets $21,107 18,158
---------- ----------
Liabilities and Stockholders' Equity
Current liabilities:
Revolving line of credit 518 726
Accrued liabilities 1,002 1,831
Accounts payable 1,793 1,226
Deferred revenue 60 300
Deferred income taxes - 89
Note payable - 1,540
Common stock subject to - 6,150
mandatory redemption
Common stock warrants - 3,264
---------- ----------
Total current liabilities 3,373 15,126
Notes payable, net of discount 6,561 -
---------- ----------
Total Liabilities 9,934 15,126
---------- ----------
Stockholders' equity:
Preferred Stock - -
Common Stock 25 25
Additional paid-in capital 8,713 4,054
Retained earnings (accumulated deficit) 2,435 (982)
Notes receivable for common stock issued - (65)
---------- ----------
Total stockholders' equity 11,173 3,032
---------- ----------
Tot. liabilities & stockholders' equity $21,107 18,158
---------- ----------
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Earnings (Loss) to Earnings (Loss) Before
Interest, Taxes, Depreciation, and Amortization (EBITDA)
(In thousands)
(Unaudited)
Three Months Ended
December 31,
---------------------
2006 2005
---------- ----------
Net earnings (loss) $276 (1,401)
Income taxes 121 451
---------- ----------
Earnings (loss) before income taxes 397 (950)
Interest expense 307 33
---------- ----------
Earnings (loss) from operations 704 (917)
Depreciation 75 31
Amortization 315 218
---------- ----------
Earnings (loss) before interest, taxes, $1,094 $(668)
depreciation, amortization (EBITDA)
---------- ----------
Year Ended
December 31
---------------------
2006 2005
---------- ----------
Net earnings (loss) available to $3,417 (955)
common stockholders
Preferred Stock Dividends - 496
---------- ----------
Net earnings (loss) 3,417 (459)
Income taxes 2,297 1,059
---------- ----------
Earnings before income taxes 5,714 600
Interest expense 553 143
---------- ----------
Earnings from operations 6,267 743
Depreciation 204 114
Amortization 1,037 218
---------- ----------
Earnings (loss) before interest, taxes, $7,508 $1,075
depreciation, amortization (EBITDA)
---------- ----------
¹ EBITDA is a non-GAAP financial measure. This measure 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.
² Generally accepted accounting principles in the
United States of America.
Investor Contact:
BPC Financial Marketing,
John Baldissera.
800-368-1217