Press Release
InterSearch Reports Record First Quarter 2007 Financial Results.
San Francisco, CA — Monday May 14, 2007 4:02 pm ET
InterSearch Group, Inc. (AMEX: IGO - News), a leading operator of industry specific destination portals such as www.irs.com, www.banks.com and www.camps.com, and provider of Internet search services today reported financial results for the first quarter ended March 31, 2007.
First Quarter 2007 Financial Highlights
- First quarter revenue was $10.8 million, up 35% from the first quarter a year ago;
- First quarter EBITDA¹ was $5.1 million, a 34% increase from $3.8 million in the first quarter of 2006;
- First quarter GAAP² net earnings rose to $2.6 million, or $0.09 per fully diluted share.
Gross margins increased sequentially to 69% from 53% in the fourth quarter of 2006 and were consistent with our gross margins from the first quarter of 2006.
Sales, general and administrative expense increased by $0.8 million year over year, attributable mainly to new software development hires and the expensing of certain data warehouse related salaries and expenses which had been capitalized in 2006, reflecting the launch of the Data Warehouse into production.
"We′re very pleased with our record-setting first quarter, which features the highest revenues and EBITDA in our Company′s history and is indicative of our continuing growth," said Dan O′Donnell, Chairman and Chief Executive Officer of InterSearch Group. "Growth was driven by a combination of seasonally strong performance of our tax-related domains and the continued improvement and refinement of our aggressive internet and search engine marketing efforts which generated significant traffic to InterSearch′s proprietary websites."
Second Quarter 2007 Business Outlook
InterSearch Group provided the following guidance for the second quarter of 2007, ending June 30:
- Q2 2007 Revenue Range $8.0 - $8.4 Million.
- Q2 2007 EBITDA Range $2.2 - $2.4 Million
InterSearch Group expects to be profitable on a GAAP basis and generate positive cash flow from operations for the entire FY2007 period. Said Gary Bogatay, Chief Financial Officer of InterSearch Group, "With a strong finish to the extended 2007 tax filing season, combined with continued growth of other destination sites in our domain portfolio, we expect to achieve a 25% to 31% year-over-year growth rate for the second quarter of 2007. "
Conference Call
Chairman and Chief Executive Officer, Dan O’Donnell, and Chief Financial Officer, Gary Bogatay, will discuss the first quarter performance along with the outlook for the second quarter, during a conference call today at 2:00 p.m. PDT (5:00 p.m. EDT).
To listen to the call and have the opportunity to ask questions, please dial 800.591.6942 (domestic) or 617.614.4909 (International) five to ten minutes before the call and reference the passcode 81375000. A simultaneous live Webcast of the call will be available at the Investor Relations section of the InterSearch Group website at: 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.
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 second quarter of 2007. 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 "Second 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 second quarter 2007. The potential risks and uncertainties 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; uncertainties related to the acceptance by customers of our enhanced versions of www.Banks.com and www.Camps.com; 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 our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006 and our Current Reports on Form 8-K. Except as required by law, we assume 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 Group is a leading operator of industry specific destination portals and provider of Internet search services through a combination of traffic aggregation and proprietary websites, such as www.Banks.com, www.IRS.com and www.Camps.com. InterSearch Group 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 corporate services division, InterSearch Group also provides Internet technology related professional services to large corporations, predominantly in the Financial Services industry. InterSearch Group 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 can be found at: www.InterSearch.com.
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.
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
March 31,
---------------------
2007 2006
---------- ----------
Revenues $10,844 8,024
Cost of revenues 3,371 2,250
Gross profit 7,473 5,504
Operating expenses:
Sales and marketing expense 238 274
General and administrative expense 2,537 1,706
Total operating expenses 2,775 1,980
Earnings from operations 4,698 3,524
Interest expense 306 27
Loss on derivative instrument - 19
Earnings before income taxes 4,392 3,478
Income taxes 1,753 1,401
Net earnings $2,639 2,077
Basic earnings per share $ 0.10 0.08
Diluted earnings per share $ 0.09 0.08
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
March December
31, 31,
---------------------
2007 2006
---------- ----------
Assets
Current assets:
Cash $1,315 $347
Accounts receivable 7,247 4,060
Prepaid expenses and other 268 196
Deferred income taxes 16 38
---------- ----------
Total current assets 8,846 4,641
---------- ----------
Office equipment, net 1,404 1,416
Debt issuance costs, net 702 743
Patents and trademarks, net 80 83
Domains, net 13,146 13,398
Goodwill 573 573
Deferred income taxes 261 253
---------- ----------
Total Assets $25,012 $21,107
---------- ----------
Liabilities and Stockholders' Equity
Current liabilities:
Revolving line of credit - 518
Accrued liabilities 2,203 1,002
Accounts payable 1,787 1,793
Deferred revenue 238 60
---------- ----------
Total current liabilities 4,228 3,373
Notes payable, net of discount 6,585 6,561
---------- ----------
Total Liabilities 10,813 9,934
---------- ----------
Stockholders' equity:
Preferred Stock - -
Common Stock 25 25
Additional paid-in capital 9,100 8,713
Retained earnings (accumulated deficit) 5,074 2,435
---------- ----------
Total stockholders' equity 14,199 11,173
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Tot. liabilities & stockholders' equity $25,012 $21,107
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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,
---------------------
2007 2006
---------- ----------
Net earnings (loss) $ 2,639 $ 2,077
Income taxes 1,753 1,401
---------- ----------
Earnings before income taxes 4,392 3,478
Interest expense 306 27
---------- ----------
Earnings from operations 4,698 3,505
Depreciation 105 36
Amortization 255 217
---------- ----------
Earnings (loss) before interest, taxes, $ 5,058 $ 3,758
depreciation, amortization (EBITDA)
---------- ----------
Investor Contact:
BPC Financial Marketing,
John Baldissera
800-368-1217