Company Surpasses Guidance, Launches 161 Vertical Search Sites and Announces New CFO
SAN FRANCISCO, Calif., Oct 27, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- LookSmart (Nasdaq: LOOK; ASX: LOK), an online media and search technology company, today announced financial results for the third quarter ended September 30, 2005.
* Revenue of $9.2 million exceeds prior guidance of $7.0 - $8.0 million * Net loss per share of $0.04 on a pre-split basis surpasses guidance of $0.05 net loss per share * Company expects revenue growth of 5% - 6% in the fourth quarter
"LookSmart's revenues were higher and our losses lower than we had guided for the third quarter. We believe we are closing a chapter of the company's history as we anticipate a return to revenue growth in the fourth quarter, ending a period of declining revenue results," stated Chief Executive Officer David Hills. "We continue to make solid progress across our key business areas with today's launch of 161 new vertical sites, improving metrics within key verticals across our ad network and the generation of revenue from our technology licensing agreements. While we still have a lot to accomplish, we now have a stable platform for growth and are excited about our prospects going forward in a highly dynamic and growing industry."
Corporate Highlights The Company: * Today launched 161 new vertical search sites. In total, LookSmart now offers 181 sites in 13 different categories, making it the single largest provider of vertical search destinations on the web and delivering relevant search results to consumers and more qualified customers to advertisers. Category-focused, demographically defined and with a unified look, feel and functionality, these sites join the "LookSmart Education" and "LookSmart Money" clusters launched earlier this year. * Went live with two additional publishers using LookSmart Solutions for Publishers, following its first customer implementation in the second quarter. To date, LookSmart has licensed its advertiser center, search content and Furl.net products, leveraging its existing technology assets to create new revenue streams while allowing publishers the flexibility to brand these products according to their needs. * Has appointed John Simonelli as Chief Financial Officer, effective November 14th. Mr. Simonelli joins the Company from Gap Inc. Direct, the ecommerce division for Gap Inc., where he served as Chief Financial Officer. Prior to that, he held roles as Chief Operating Officer and Chief Financial Officer at Business.com, a paid search and directory company focusing on the business category. Mr. Simonelli's career also includes a variety of financial roles at The Walt Disney Company; PeopleMover, an enterprise software company; Citicorp Securities and Deloitte, Haskins & Sells. He is a Certified Public Accountant and holds a Bachelor of Business Administration in Accounting from the University of Notre Dame.
Mr. Hills continued, "We are pleased to welcome John on board. With his extensive financial background within online media companies, he is an excellent addition to the team and demonstrates our ability to attract high caliber talent to the company."
* Appointed Timothy J. Wright to the Board of Directors. Currently Chief Executive of the EMEA and Asia-Pacific operations of Geac Computer Corporation, Mr. Wright also previously spent several years at Terra Lycos and The Learning Company. * Completed a one for five reverse stock split designed to maintain the Company's listing on the Nasdaq National Market and to "right size" the number of shares outstanding. Financial Highlights
Revenue: Total revenue of $9.2 million for the third quarter of 2005 exceeded the company's previously stated guidance of $7.0 to $8.0 million, compared to total revenue of $10.2 million in the second quarter of 2005.
Key Operating Metrics: Total paid clicks were 71 million for the third quarter compared to 80 million in the preceding quarter. The expected decline reflects the company's efforts to streamline the network to focus on more productive traffic. Average revenue per click excluding the company's Run Of Site (ROS) product was $0.15, unchanged from the previous quarter.
Cost of Revenue: As expected, traffic acquisition costs increased slightly to 53% of advertising revenue in the third quarter, up from 51% in the second quarter of 2005.
Operating Expenses: Total operating expenses in the third quarter were $8.0 million, including a restructuring benefit of $0.3 million. This compares to total operating expenses of $9.5 million in the second quarter of 2005, which included a non-cash restructuring charge of $1.9 million related to increasing reserves for certain redundant lease facilities.
Loss from Continuing Operations: Loss from continuing operations for the third quarter was $4.3 million, or $0.04 per share on a pre-split basis and $0.19 per share on a post-split basis, based on 113,854,000 pre-split weighted average shares outstanding and 22,771,000 post-split weighted average shares outstanding. This compares to a loss from continuing operations in the preceding quarter of $3.5 million, or $0.03 per share on a pre-split basis and $0.16 per share on a post-split basis, net of restructuring charge of $1.9 million and based on 113,784,000 pre-split weighted average shares outstanding and 22,757,000 post-split weighted average shares outstanding.
Net Loss: Net loss for the third quarter of 2005 was $4.3 million, or $0.04 per share on a pre-split basis and $0.19 per share on a post-split basis, based on 113,854,000 pre-split weighted average shares outstanding and 22,771,000 post-split weighted average shares outstanding. This compares to net loss in the preceding quarter of $5.4 million, $0.05 per share on a pre- split basis and $0.24 per share on a post-split basis, which included a $1.9 million restructuring charge and a gain of $28,000 from discontinued operations. The pre-split weighted average share count for the second quarter 2005 was 113,784,000 and the post-split weighted average share count was 22,757,000.
Net loss for the third quarter of 2005 includes $2.0 million of depreciation and amortization, unchanged from $2.0 million reported in the second quarter of 2005.
Cash: Total cash and investments were $55.7 million at September 30, 2005, which consists of $52.0 million in cash and short-term investments and $3.7 million in longer-term securities, and compares to total cash and short-term investments of $61.1 million at June 30, 2005. Cash usage of $5.4 million included a final payment related to the acquisition of Furl.net, the company's online filing cabinet for consumers of $800,000.
For the fourth quarter ending December 31, 2005, revenues are expected to increase 5% to 6%. Traffic acquisition costs for the fourth quarter are expected to be within the range of 57% to 60%. Operating expenses are expected to be flat sequentially after excluding the restructuring benefit in the third quarter. As a result, the company anticipates the fourth quarter operating loss to be lower than the third quarter, excluding the restructuring benefit, resulting in a GAAP operating loss approximately flat with the third quarter.
LookSmart will host a conference call today at 6:00 p.m. ET (8:00 a.m. Australian ET, October 27, 2005) to discuss its financial results. To listen to the call from the U.S., dial 1-800-257-2182; from Australia, dial 1-800-730-220. The call will also be available live by webcast on LookSmart's Investor Relations Web site at http://www.shareholder.com/looksmart/ .
LookSmart is an online media and technology company that provides relevant content, advertising and technology solutions for advertisers and publishers of all sizes. LookSmart's distribution network is designed to maximize advertiser ROI via owned and operated properties, carefully chosen and monitored syndicated publishers, and search engine partners. The company's owned and operated vertical search sites and web tools offer consumers essential search results and a more personalized web experience. LookSmart is based in San Francisco, California. For more information on LookSmart, visit www.looksmart.com or call 415-348-7500.
This press release contains forward-looking statements, such as references to our fourth quarter financial and operating results and our business prospects. These statements, including their underlying assumptions, are subject to risks and uncertainties and are not guarantees of future performance. Results may differ due to various factors such as the possibility that we may be unable to achieve or maintain operating profitability, that we may fail to preserve our expertise in search product development, that potential distribution partners may opt to work with competitors because our competitors offer more favorable products or pricing terms, that we may be unable to find sources of revenue other than our listings revenues, that changes in the distribution network composition may lead to decreases in traffic volumes, that we may be unable to continue to improve our match rate, average CPC or other advertiser metrics, that our customers may decide to reduce spending or terminate their relationships with us, or that we may have unexpected increases in other costs and expenses. In addition, you should read the risk factors detailed in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other documents filed with the Securities and Exchange Commission.
The statements presented in this press release speak only as of the date of the release. Please note that we undertake no obligation to revise or update publicly any forward-looking statements for any reason.
NOTE: "LookSmart" is a trademark of LookSmart, Ltd., and/or its subsidiaries in the U.S. and other countries. All other trademarks mentioned are the property of their respective owners.
Investor Contacts: Alex Wellins or Jennifer Jarman The Blueshirt Group 415-217-7722 firstname.lastname@example.org; email@example.com LOOKSMART, LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Revenues: Listings $9,165 $17,490 $31,391 $60,283 Licensing -- -- -- 188 Total revenues 9,165 17,490 31,391 60,471 Cost of revenues 6,103 9,563 21,015 34,389 Gross profit 3,062 7,927 10,376 26,082 Operating expenses: Sales and marketing 1,831 1,495 5,180 6,044 Product development 4,791 5,033 13,888 18,315 General and administrative 1,638 1,958 5,359 7,321 Restructuring charges (254) 98 1,650 4,152 Total operating expenses 8,006 8,584 26,077 35,832 Loss from operations (4,944) (657) (15,701) (9,750) Non-operating income 666 227 1,570 374 Loss from continuing operations before income taxes (4,278) (430) (14,131) (9,376) Income taxes 9 (117) (4) (117) Loss from continuing operations (4,269) (547) (14,135) (9,493) Gain from discontinued operations -- 562 110 1,146 Net income (loss) $(4,269) $15 $(14,025) $(8,347) Net income (loss) per common share - pre-split basis: Basic net income (loss) per share Loss from continuing operations $(0.04) $(0.00) $(0.12) $(0.09) Gain from discontinued operations, net of taxes $-- $0.00 $0.00 $0.01 Net income (loss) $(0.04) $0.00 $(0.12) $(0.08) Fully diluted net income (loss) per share Loss from continuing operations $(0.04) $(0.00) $(0.12) $(0.09) Gain from discontinued operations, net of taxes $-- $0.00 $0.00 $0.01 Net income (loss) $(0.04) $0.00 $(0.12) $(0.08) Weighted average shares outstanding - basic 113,854 112,530 113,792 110,661 Weighted average shares outstanding - fully diluted 113,854 113,508 113,792 110,661 Net income (loss) per common share - post-split basis: Basic net income (loss) per share Loss from continuing operations $(0.19) $(0.02) $(0.62) $(0.43) Gain from discontinued operations, net of taxes $-- $0.02 $0.00 $0.05 Net income (loss) $(0.19) $0.00 $(0.62) $(0.38) Fully diluted net income (loss) per share Loss from continuing operations $(0.19) $(0.02) $(0.62) $(0.43) Gain from discontinued operations, net of taxes $-- $0.02 $0.00 $0.05 Net income (loss) $(0.19) $0.00 $(0.62) $(0.38) Weighted average shares outstanding - basic 22,771 22,506 22,758 22,132 Weighted average shares outstanding - fully diluted 22,771 22,702 22,758 22,132 LOOKSMART, LTD CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) September 30, December 31, 2005 2004 ASSETS Cash $39,345 $45,054 Short-term investments 12,654 7,648 Total cash and short-term investments 51,999 52,702 Accounts receivable, net 2,136 3,880 Other current assets 1,354 2,216 Total Current Assets 55,489 58,798 Property, plant and equipment, net 5,602 5,988 Goodwill and intangibles, net 20,539 21,786 Long term investments 3,725 11,198 Other assets 2,334 3,318 Total Assets $87,689 $101,088 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $1,541 $1,266 Accounts payable 1,399 360 Other current liabilities 5,006 6,766 Customer deposits 2,358 1,525 Total Current Liabilities 10,304 9,917 Long term liabilities 5,294 5,071 Total Liabilities 15,598 14,988 Total Equity 72,091 86,100 Total Liabilities and Stockholders' Equity $87,689 $101,088
SOURCE LookSmart, Ltd.
Alex Wellins, firstname.lastname@example.org, or Jennifer Jarman, email@example.com, both of The Blueshirt Group, +1-415-217-7722, for LookSmart, Ltd.
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