Intersearch Grp. (AMEX:IGO)
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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 third quarter ended September 30, 2006.
Third Quarter 2006 Consolidated Financial Results:
Third quarter revenue was $4.8 million, a 2% increase relative to the
$4.7 million reported in the third quarter of 2005;
Gross margins were 48%, in line with the third quarter a year ago;
Operating income was $0.4 million as compared to $0.7 million for the
same quarter of fiscal 2005;
GAAP(1) earnings available to common stockholders were $0.1 million or
$.00 per diluted share as compared to net earnings of $0.4 million or
$.01 per diluted share in the third quarter of 2005;
Cash flows from operations were $0.8 million for the three months
ended September 30, 2006;
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $0.7 million.(2)
(1) Generally accepted accounting principles in the United States of
America.
(2) 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.
“As we anticipated, the third quarter results
as compared to our second quarter results were negatively impacted by
seasonal trends inherent in our business. Recent acquisitions, including
travel-related domains, will start impacting our revenues in 2007 and
are expected to gradually alleviate the pronounced seasonality that we
saw this quarter,” said InterSearch CFO, Gary
Bogatay.
“We believe our performance in the fourth
quarter of 2006 will reflect seasonally stronger online traffic and
better traffic conversion rates, which are typical for the holiday
season,” continued Gary Bogatay.
Gross margins declined sequentially from 63% in the second quarter of
2006. The decline in gross margins during the third quarter was
primarily attributable to lower revenue contribution from www.irs.com,
and higher contribution from the domain parking business, Parking Dots.
During the quarter the Company saw an increase in sales, general and
administrative expense of approximately $434,000. This was driven by
costs associated with the process of listing the Company’s
common stock on the American Stock Exchange, higher amortization expense
due to recent acquisitions, and necessary investments in infrastructure
to accommodate the anticipated revenue growth.
Third Quarter Business Highlights
Commenced trading on the American Stock Exchange under the ticker
symbol IGO.
Completed the acquisition of a premium finance-related domain, www.banks.com.
Closed a $7 million non-convertible debt financing.
Generated approximately 21 million paid clicks as compared to 18
million in the third quarter of 2005.
”This quarter we achieved significant
progress in streamlining our balance sheet and capital structure, and
providing enhanced liquidity to our shareholders,”
said InterSearch Chairman and CEO, Dan O’Donnell.
“In July, InterSearch completed a $7 million
non-convertible debt financing and used part of the proceeds to buy back
common stock which was subject to mandatory redemption by August 12,
2006. In October, our common stock was approved for listing and began
trading on the American Stock Exchange.”
Added Dan O’Donnell, “We
continued expanding our portfolio of category-level domains by acquiring www.banks.com.
This property is a great fit for our initiatives in the finance vertical
and is already generating interest from advertisers and our network
partners.”
Business Outlook
InterSearch is currently observing a quiet period. During the quiet
period, InterSearch representatives will not provide further comment on
InterSearch’s business outlook or financial
expectations in InterSearch’s earnings
releases nor will InterSearch hold conference calls to discuss its
quarterly results.
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, and can be
reached via telephone at 415-962-9700. More information about
InterSearch Group, Inc. can be found at: www.InterSearch.com.
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 “Business
Outlook.” The potential risks and
uncertainties that could cause actual results to differ materially from
those expressed or implied herein include, among others, the Company’s
relationships with its current and future advertising and distribution
network partners, the Company’s ability to
achieve anticipated results from acquisitions, and market development of
Internet advertising and paid search services. Further
information on the factors that could affect the Company’s
financial results is included in the Company’s
SEC filings, including the most recent registration statement filed with
the SEC under the heading “Risk Factors.”
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 (earnings before interest, tax, depreciation and amortization.
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 generally accepted accounting
principles. 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 earnings before
interest, income taxes, depreciation and amortization (“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.
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
September 30,
2006
2005
Revenues:
Internet search services
$4,231
3,922
Corporate services
585
778
Total revenues
4,816
4,700
Cost of revenues:
Traffic acquisition cost
2,096
1,836
Cost of consulting services
397
599
Total cost of revenues
2,493
2,435
Gross profit
2,323
2,265
Operating expenses:
Sales and marketing expense
188
330
General and administrative expense
1,766
1,190
Total operating expenses
1,954
1,520
Earnings from operations
369
745
Interest expense
210
44
Earnings before income taxes
159
701
Income taxes
79
173
Net earnings
80
528
Preferred stock dividends
-
168
Net earnings available to
common stockholders
80
360
Basic earnings per share
-
0.02
Diluted earnings per share
-
0.01
Unaudited proforma tax and loss available to common stockholders and
per share information for S Corporation periods
Net earnings available to common stockholders
360
Proforma income tax expense adjustment
32
Proforma net earnings
328
Proforma basic earnings per share
0.02
Proforma diluted earnings per share
0.01
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except share and per share data)
(Unaudited)
Nine Months Ended
September 30,
2006
2005
Revenues:
Internet search services
$17,221
10,413
Corporate services
2,051
2,168
Total revenues
19,272
12,581
Cost of revenues:
Traffic acquisition cost
5,913
5,053
Cost of consulting services
1,464
1,648
Total cost of revenues
7,377
6,701
Gross profit
11,895
5,880
Operating expenses:
Sales and marketing expense
689
666
General and administrative expense
5,624
3,554
Total operating expenses
6,313
4,220
Earnings from operations
5,582
1,660
Interest expense
246
110
Loss on derivative instrument
19
-
Earnings before income taxes
5,317
1,550
Income taxes
2,176
608
Net earnings
3,141
942
Preferred stock dividends
-
496
Net earnings available to
common stockholders
3,141
446
Basic earnings per share
0.12
0.03
Diluted earnings per share
$ 0.11
0.02
Unaudited proforma tax and earnings available to common stockholders
and per share information for S Corporation period
Net earnings available to common stockholders
$ 446
Proforma income tax expense adjustment
32
Proforma net earnings
414
Proforma basic earnings per share
0.02
Proforma diluted earnings per share
$ 0.02
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
September 30,
December 31,
2006
2005
(Unaudited)
Assets
Current assets:
Cash
$645
576
Accounts receivable
3,369
3,206
Prepaid expenses and other
518
227
Deferred income taxes
22
-
Total current assets
4,554
4,009
Office equipment, net
1,131
257
Debt issuance costs, net
664
-
Patents and trademarks, net
85
71
Domains, net
13,651
12,694
Goodwill
573
573
Deferred income taxes
505
554
Total Assets
$21,163
18,158
Liabilities and Stockholders' Equity
Current liabilities:
Revolving line of credit
629
726
Accrued liabilities
1,540
1,831
Accounts payable
1,638
1,226
Deferred revenue
-
300
Deferred income taxes
-
89
Note payable
-
1,540
Common stock subject to mandatory redemption
-
6,150
Common stock warrants
-
3,264
Total current liabilities
3,807
15,126
Notes payable, net of discount
6,537
-
Total Liabilities
10,344
15,126
Stockholders' equity:
Preferred Stock
-
-
Common Stock
25
25
Additional paid-in capital
8,635
4,054
Retained earnings (accumulated deficit)
2,159
(982)
Notes receivable for common stock issued
-
(65)
Total stockholders' equity
10,819
3,032
Total liabilities and stockholders' equity
$21,163
18,158
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Earnings to Earnings Before
Interest, Taxes, Depreciation, and Amortization (EBITDA)
(In thousands)
(Unaudited)
Three Months Ended
September 30,
2006
2005
Net earnings available to common
stockholders
$ 80
360
Preferred Stock Dividends
-
168
Net earnings
80
528
Income taxes
79
173
Earnings before income taxes
159
701
Interest expense
210
44
Earnings from operations
369
745
Depreciation
55
29
Amortization
236
-
Earnings before interest, taxes, depreciation,
amortization (EBITDA)
$ 660
$ 774
Nine Months Ended
September 30,
2006
2005
Net earnings available to common
stockholders
$ 3,141
446
Preferred Stock Dividends
-
496
Net earnings
3,141
942
Income taxes
2,176
608
Earnings before income taxes
5,317
1,550
Interest expense
246
110
Earnings from operations
5,563
1,660
Depreciation
129
83
Amortization
722
-
Earnings before interest, taxes, depreciation,
amortization (EBITDA)
$ 6,414
$ 1,743
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 third quarter ended September 30, 2006.
Third Quarter 2006 Consolidated Financial Results:
-- Third quarter revenue was $4.8 million, a 2% increase relative
to the $4.7 million reported in the third quarter of 2005;
-- Gross margins were 48%, in line with the third quarter a year
ago;
-- Operating income was $0.4 million as compared to $0.7 million
for the same quarter of fiscal 2005;
-- GAAP(1) earnings available to common stockholders were $0.1
million or $.00 per diluted share as compared to net earnings
of $0.4 million or $.01 per diluted share in the third quarter
of 2005;
-- Cash flows from operations were $0.8 million for the three
months ended September 30, 2006;
-- Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $0.7 million.(2)
(1) Generally accepted accounting principles in the United States
of America.
(2) 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.
"As we anticipated, the third quarter results as compared to our
second quarter results were negatively impacted by seasonal trends
inherent in our business. Recent acquisitions, including
travel-related domains, will start impacting our revenues in 2007 and
are expected to gradually alleviate the pronounced seasonality that we
saw this quarter," said InterSearch CFO, Gary Bogatay.
"We believe our performance in the fourth quarter of 2006 will
reflect seasonally stronger online traffic and better traffic
conversion rates, which are typical for the holiday season," continued
Gary Bogatay.
Gross margins declined sequentially from 63% in the second quarter
of 2006. The decline in gross margins during the third quarter was
primarily attributable to lower revenue contribution from www.irs.com,
and higher contribution from the domain parking business, Parking
Dots.
During the quarter the Company saw an increase in sales, general
and administrative expense of approximately $434,000. This was driven
by costs associated with the process of listing the Company's common
stock on the American Stock Exchange, higher amortization expense due
to recent acquisitions, and necessary investments in infrastructure to
accommodate the anticipated revenue growth.
Third Quarter Business Highlights
-- Commenced trading on the American Stock Exchange under the
ticker symbol IGO.
-- Completed the acquisition of a premium finance-related domain,
www.banks.com.
-- Closed a $7 million non-convertible debt financing.
-- Generated approximately 21 million paid clicks as compared to
18 million in the third quarter of 2005.
"This quarter we achieved significant progress in streamlining our
balance sheet and capital structure, and providing enhanced liquidity
to our shareholders," said InterSearch Chairman and CEO, Dan
O'Donnell. "In July, InterSearch completed a $7 million
non-convertible debt financing and used part of the proceeds to buy
back common stock which was subject to mandatory redemption by August
12, 2006. In October, our common stock was approved for listing and
began trading on the American Stock Exchange."
Added Dan O'Donnell, "We continued expanding our portfolio of
category-level domains by acquiring www.banks.com. This property is a
great fit for our initiatives in the finance vertical and is already
generating interest from advertisers and our network partners."
Business Outlook
InterSearch is currently observing a quiet period. During the
quiet period, InterSearch representatives will not provide further
comment on InterSearch's business outlook or financial expectations in
InterSearch's earnings releases nor will InterSearch hold conference
calls to discuss its quarterly results.
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, and can be reached via telephone at 415-962-9700. More
information about InterSearch Group, Inc. can be found at:
www.InterSearch.com.
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 "Business Outlook." The potential
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied herein include, among
others, the Company's relationships with its current and future
advertising and distribution network partners, the Company's ability
to achieve anticipated results from acquisitions, and market
development of Internet advertising and paid search services. Further
information on the factors that could affect the Company's financial
results is included in the Company's SEC filings, including the most
recent registration statement filed with the SEC under the heading
"Risk Factors." 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 (earnings before interest, tax, depreciation and
amortization. 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
generally accepted accounting principles. 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 earnings before interest, income taxes,
depreciation and amortization ("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.
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INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
September 30,
------------------
2006 2005
--------- --------
Revenues:
Internet search services $4,231 3,922
Corporate services 585 778
--------- --------
Total revenues 4,816 4,700
--------- --------
Cost of revenues:
Traffic acquisition cost 2,096 1,836
Cost of consulting services 397 599
--------- --------
Total cost of revenues 2,493 2,435
--------- --------
Gross profit 2,323 2,265
--------- --------
Operating expenses:
Sales and marketing expense 188 330
General and administrative expense 1,766 1,190
--------- --------
Total operating expenses 1,954 1,520
--------- --------
Earnings from operations 369 745
Interest expense 210 44
--------- --------
Earnings before income taxes 159 701
Income taxes 79 173
--------- --------
Net earnings 80 528
Preferred stock dividends - 168
--------- --------
Net earnings available to
common stockholders 80 360
--------- --------
Basic earnings per share - 0.02
--------- --------
Diluted earnings per share - 0.01
--------- --------
Unaudited proforma tax and loss available to common
stockholders and per share information for S
Corporation periods
Net earnings available to common stockholders 360
Proforma income tax expense adjustment 32
--------
Proforma net earnings 328
--------
Proforma basic earnings per share 0.02
--------
Proforma diluted earnings per share 0.01
--------
*T
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INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except share and per share data)
(Unaudited)
Nine Months Ended
September 30,
-----------------
2006 2005
-------- --------
Revenues:
Internet search services $17,221 10,413
Corporate services 2,051 2,168
-------- --------
Total revenues 19,272 12,581
-------- --------
Cost of revenues:
Traffic acquisition cost 5,913 5,053
Cost of consulting services 1,464 1,648
-------- --------
Total cost of revenues 7,377 6,701
-------- --------
Gross profit 11,895 5,880
-------- --------
Operating expenses:
Sales and marketing expense 689 666
General and administrative expense 5,624 3,554
-------- --------
Total operating expenses 6,313 4,220
-------- --------
Earnings from operations 5,582 1,660
Interest expense 246 110
Loss on derivative instrument 19 -
-------- --------
Earnings before income taxes 5,317 1,550
Income taxes 2,176 608
-------- --------
Net earnings 3,141 942
Preferred stock dividends - 496
-------- --------
Net earnings available to
common stockholders 3,141 446
-------- --------
Basic earnings per share 0.12 0.03
-------- --------
Diluted earnings per share $0.11 0.02
-------- --------
Unaudited proforma tax and earnings available to
common stockholders and per share information for S
Corporation period
Net earnings available to common stockholders $446
Proforma income tax expense adjustment 32
--------
Proforma net earnings 414
--------
Proforma basic earnings per share 0.02
--------
Proforma diluted earnings per share $0.02
--------
*T
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INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
September 30, December 31,
---------------------------
2006 2005
------------- ------------
(Unaudited)
Assets
Current assets:
Cash $645 576
Accounts receivable 3,369 3,206
Prepaid expenses and other 518 227
Deferred income taxes 22 -
------------- ------------
Total current assets 4,554 4,009
Office equipment, net 1,131 257
Debt issuance costs, net 664 -
Patents and trademarks, net 85 71
Domains, net 13,651 12,694
Goodwill 573 573
Deferred income taxes 505 554
------------- ------------
Total Assets $21,163 18,158
============= ============
Liabilities and Stockholders' Equity
Current liabilities:
Revolving line of credit 629 726
Accrued liabilities 1,540 1,831
Accounts payable 1,638 1,226
Deferred revenue - 300
Deferred income taxes - 89
Note payable - 1,540
Common stock subject to mandatory
redemption - 6,150
Common stock warrants - 3,264
------------- ------------
Total current liabilities 3,807 15,126
------------- ------------
Notes payable, net of discount 6,537 -
Total Liabilities 10,344 15,126
------------- ------------
Stockholders' equity:
Preferred Stock - -
Common Stock 25 25
Additional paid-in capital 8,635 4,054
Retained earnings (accumulated deficit) 2,159 (982)
Notes receivable for common stock issued - (65)
------------- ------------
Total stockholders' equity 10,819 3,032
------------- ------------
Total liabilities and stockholders' equity $21,163 18,158
============= ============
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INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Earnings to Earnings Before
Interest, Taxes, Depreciation, and Amortization (EBITDA)
(In thousands)
(Unaudited)
Three Months Ended
September 30,
2006 2005
--------- --------
Net earnings available to common
stockholders $80 360
Preferred Stock Dividends - 168
--------- --------
Net earnings 80 528
Income taxes 79 173
--------- --------
Earnings before income taxes 159 701
Interest expense 210 44
--------- --------
Earnings from operations 369 745
Depreciation 55 29
Amortization 236 -
--------- --------
Earnings before interest, taxes, depreciation,
amortization (EBITDA)
$660 $774
========= ========
Nine Months Ended
September 30,
2006 2005
--------- --------
Net earnings available to common
stockholders $3,141 446
Preferred Stock Dividends - 496
--------- --------
Net earnings 3,141 942
Income taxes 2,176 608
--------- --------
Earnings before income taxes 5,317 1,550
Interest expense 246 110
--------- --------
Earnings from operations 5,563 1,660
Depreciation 129 83
Amortization 722 -
--------- --------
Earnings before interest, taxes, depreciation,
amortization (EBITDA)
$6,414 $1,743
========= ========
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