Internet Brands, Inc. (NASDAQ: INET) today reported financial results
for the fourth quarter and full year ended December 31, 2008.
Fourth Quarter Operating Results
Total revenues for the fourth quarter of 2008 were $27.0 million, an 8%
increase from $24.9 million in the prior year period.
Consumer Internet revenues were $18.8 million in the fourth quarter of
2008, a 10% increase from $17.1 million in the prior year period. The
organic advertising revenue growth from the Company’s non-automotive
e-commerce websites increased 13% in the fourth quarter of 2008 compared
to the prior year period. The increase in advertising revenues was
partially offset by a reduction in spending from automotive dealers.
Licensing revenues were $8.2 million in the fourth quarter of 2008, a 4%
increase from $7.8 million in the prior year period.
Net income for the fourth quarter of 2008 was $3.1 million, or $0.07 per
diluted common share compared to net income of $2.8 million, or $0.06
per diluted common share in the prior year period.
For the fourth quarter of 2008, Adjusted EBITDA increased 29% to $9.8
million from $7.6 million in the same period last year. The Company
defines Adjusted EBITDA as earnings before investment and other income,
income taxes, depreciation and amortization and stock-based compensation.
Adjusted EBITDA margins in the quarter increased to 36.3%, an expansion
from 30.6% in the fourth quarter of 2007. The Company’s EBITDA margins
have increased sequentially throughout the year as a result of a shift
of the Company’s business revenues from lower margin e-commerce revenues
to higher margin advertising revenues.
Total monthly unique visitors to the Company’s network of owned websites
grew to 43.2 million in December 2008, a 61% increase from 26.9 million
in December 2007.
Full Year Ended December 31, 2008 Operating Results
Total revenues for the year ended 2008 were $104.0 million, a 16%
increase from $89.9 million in the prior year.
Consumer Internet revenues were $71.6 million for the year ended 2008, a
12% increase from $63.7 million in the prior year. As with the fourth
quarter operating results, the increase in advertising revenues was
partially offset by a reduction in advertising spend from automotive
dealers. Licensing revenues were $32.5 million for the year ended 2008,
a 24% increase from $26.2 million in the prior year. The increase was
due to continued performance from the Company’s Autodata division, and
organic growth from vBulletin, which the Company acquired in June 2007.
Net income for the year ended 2008 was $11.6 million, or $0.26 per
diluted common share. By comparison, net income in the prior year was
$311,000, or $0.01 per diluted common share.
For the year ended 2008, Adjusted EBITDA grew by 26% to $35.3 million
from $28.1 million in 2007.
Full Year 2009 Guidance
For 2009, Internet Brands expects full year adjusted EBITDA will grow by
approximately 10% to 15% versus 2008. The Company expects a continued
shift toward higher margin advertising revenues, which should result in
expanding EBITDA margins on a year-over-year basis.
“Our business has continued to perform strongly in the fourth quarter
and full year despite the currently challenged automotive sector,” said
Bob Brisco, CEO. “On a full-year basis, we are cautiously optimistic
about 2009 and our ability to overwhelm economic headwinds with our
growth strategies. Regarding acquisitions, the Company expects to
continue to be active, but anticipates lower investment levels than
2008. The lower investment rate is primarily the result of significantly
lower target acquisition valuation multiples.”
Balance Sheet and Liquidity
As of December 31, 2008, the Company had $57.4 million of cash and
investments, and no outstanding debt under its $35 million revolving
line of credit.
Net cash provided by operating activities in 2008 were $34.3 million
compared to $36.0 million in the prior year.
During the fourth quarter of 2008, the Company acquired 4 websites for
an aggregate purchase price of approximately $2.8 million. The 4
acquisitions include two websites in the Careers vertical, one website
in the Shopping vertical and one website in the Automotive vertical. The
2 websites in Careers are CVTips.com and GrooveJob.com, which the
Company announced in last quarter’s earnings release. The website in
Shopping is Steves-Digicams.com, and the website in Automotive is
CVTips.com is an online job search information center. The site
specializes in providing users with information and tips on writing CVs,
resumes and cover letters, and also features articles about job
searching, interviewing and general career management topics.
GrooveJob.com is one of the largest job listings websites dedicated
exclusively to part-time, seasonal, and hourly jobs. The site includes
sections for teen jobs, student jobs, summer jobs, and internships for
students in addition to an online job resource center that provides
advice for job seekers.
Steves-digicams.com is a website focused on the high-value category of
digital cameras. The site features news and reviews of digital cameras
ranging from entry-level to professional-grade equipment. The site also
features an active discussion forum in which users can exchange
information about digital cameras and other photography equipment.
SellMyCar.com is a new and used vehicle listing site that connects car
shoppers with both private sellers and dealers. The site features more
than 200,000 used car listings, and allows private sellers to list their
used vehicles on the site free of charge. The site also features a
directory of auto dealers, as well as new car pricing and auto loan
For the year ended 2008, the Company completed 29 website-related
acquisitions for an aggregate purchase price of approximately $62.6
From January 1 through February 24, 2009, the Company completed two
small acquisitions and anticipates announcing a new vertical by the end
of the first quarter of 2009.
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; (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.
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 assist in comparisons of
the Company's operating performance on a consistent basis by removing
the impact of items not directly resulting from core operations.
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 our 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
The table below reconciles net income and Adjusted EBITDA for the
periods presented (in thousands):
Conference Call and Webcast
The Company will host a conference call to discuss its fourth quarter
and full year 2008 financial results beginning at 4:30 pm ET (1:30 pm
PT), today, February 24, 2009. Participants may access the call by
dialing 800-762-8779 (domestic) or 480-248-5081 (international). In
addition, the call will be broadcast live over the Internet hosted at
the Investor Relations section of the Company’s website at www.internetbrands.com
and will be archived online within one hour of the completion of the
conference call. A telephone replay will be available through March 10,
2009. To access the replay, please dial 800-406-7325 (domestic) or
303-590-3030 (international), passcode 3970888.
About Internet Brands, Inc.
Los Angeles-based Internet Brands, Inc. (NASDAQ:INET) is a leading
Internet media company that owns, operates and grows community and
e-commerce websites in automotive, careers, home, shopping and travel
and leisure categories. With a flexible and scalable platform, Internet
Brands operates a rapidly growing network of more than 200 websites, of
which more than 80 each receive more than 100,000 monthly unique
Safe Harbor Statement
This press release includes forward-looking information and
statements, including but not limited to its 2009 business outlook,
management comments and guidance, that are subject to risks and
uncertainties that could cause actual results to differ materially. Forward-looking
statements include information concerning our possible or assumed future
results of operations, business strategies, competitive position,
industry environment, potential growth opportunities and the effects of
regulation. 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, and our reliance on the public to
continue to contribute content without compensation to our websites that
depend on such content. These and other risks are described more
fully in our Annual Report on Form 10-K for the annual period ended
December 31, 2007, filed with the U.S. Securities and Exchange
Commission (SEC) on March 12, 2008, our Quarterly Report on Form 10-Q
for the period ended March 31, 2008 filed with the SEC on May 8, 2008,
our Quarterly Report on Form 10-Q for the period ended June 30, 2008
filed with the SEC on August 7, 2008 and our Quarterly Report on Form
10-Q for the period ended September 30, 2008 filed with the SEC on
November 5, 2008. 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 February 24, 2009
and should not be unduly relied upon because we undertake no duty to
update this information.
and 3,025,000 shares issued and outstanding at December 31, 2008
and 2007, respectively
Sales and marketing
General and administrative
Stock-based compensation expense by function