Intersearch Grp. (AMEX:IGO)
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InterSearch Group, Inc. (AMEX:IGO), a leading operator of industry
specific destination portals such as www.Banks.com,
www.IRS.com
and www.Look.com
today reported financial results for the second quarter ended
June 30, 2007.
Second Quarter 2007 Financial Highlights
Second quarter revenue was $7.2 million, up 11% from the second
quarter a year ago.
Second quarter EBITDA1 was $1.2 million,
compared to $1.9 million in the second quarter of 2006.
Cash flow from operations totaled $3.3 million, an increase of 24%
from the same period last year.
GAAP2 net earnings were $0.3 million, or
$0.01 per fully diluted share.
Gross margins were 55%, down from 63% in the year-ago period.
As previously announced, InterSearch Group incurred a revenue credit
paid to its advertising partners during the second quarter which
adversely affected its financial performance. This chargeback was
related to a new traffic source which ultimately fell short of
InterSearch’s quality standards. The Company
has an ongoing initiative to identify and eradicate questionable sources
of traffic and it will continue to aggressively monitor traffic quality
on its network.
“Although second quarter revenue and EBITDA
came in below our initial guidance, we are pleased with the overall
progress we made in the development of our business over the first half
of 2007, especially in the financial services vertical. We are focused
on continuing to expand our presence in the financial services area
through a combination of organic growth and select acquisitions. Our
marquee property, Banks.com, is at the center of that strategy,”
said Dan O’Donnell, Chairman and Chief
Executive Officer of InterSearch Group.
Second Quarter 2007 Business Highlights
Generated over 27.9 million paid clicks, an increase of 5% over the
second quarter of 2006.
Enhanced the top-rate financial portal Banks.com with the addition of
financial calculators, credit card comparison tools, and a library of
relevant articles and blogs.
Completed acquisition of MyBanks.com, providing a platform for
personalized user pages on Banks.com.
Achieved a consistent top-five ranking with Banks.com on the major
search engines for a growing number of relevant and valuable keywords.
Increased traffic to sites in our financial services vertical and
enhanced margins of our SEM campaigns.
Third Quarter 2007 Business Outlook
InterSearch Group provided the following guidance for the third quarter
of 2007, ending September 30:
Q3 2007 Revenue Range $4.9 - $5.2 Million
Q3 2007 EBITDA Range ($0.1) - $0.1 Million
This guidance represents 2% - 8% revenue growth when compared to the
same period last year.
Gary Bogatay, Chief Financial Officer of InterSearch Group remarked, “In
the first half of 2007 we delivered 25% revenue growth and 10% EBITDA
growth over the same period last year.
The third quarter is traditionally the industry’s
slowest. Our revenue guidance also reflects the seasonality inherent
with our tax-related businesses. The forecasted decline in EBITDA is
driven by recent investments in infrastructure to support the company’s
growth and, specifically, the development of our marquee properties in
the financial services sector.
Our cost structure is also impacted by the introduction of more
stringent criteria for traffic quality including the recent roll-out of
our proprietary Data Warehouse, a sophisticated tool for analyzing our
traffic. We believe that we have the infrastructure and commitment
necessary to support solid growth on an ongoing basis, and maximize
shareholder value.”
Conference Call
Chairman and Chief Executive Officer, Dan O’Donnell,
and Chief Financial Officer, Gary Bogatay, will discuss the second
quarter performance along with the outlook for the third quarter, during
a conference call today at 2:00 p.m. PST (5:00 pm EST).
To listen to the call and have the opportunity to ask questions, please
dial 888-286-8010 (domestic) or 617-801-6888 (International) five to ten
minutes before the call and reference the passcode 49925656. 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 third 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 “Third
Quarter 2007 Business Outlook,” including
statements regarding: our efforts to aggressively monitor traffic
quality; our intent to expand our presence in the Financial Services
vertical; guidance for third quarter 2007 with respect to revenue and
EBITDA; expectations regarding revenue growth rate for the third quarter
2007; expectations that third quarter 2007 performance will be impacted
by seasonality; and our belief that we have the infrastructure and
commitment necessary to support solid growth and maximize shareholder
value. The potential risks and uncertainties that could cause actual
results to differ materially from those expressed or implied herein
include, among others, our ability to detect and terminate traffic
sources which fall short of our quality standards; our ability to
successfully integrate newly acquired domain properties in our
development cycle; market acceptance of the enhanced versions of our
newly acquired domain properties; introduction of additional competitors
in the Internet search services space; 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; market development
of Internet advertising and paid search services; and the stability of
our infrastructure. 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, our quarterly reports on Form 10-QSB and our Current
Reports on Form 8-K. Except as required by law, we assume no
responsibility 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 Group’s management evaluates
and monitors performance for InterSearch Group 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 Group’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.Look.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 to
the Financial Services industry. InterSearch Group is headquartered in
San Francisco, California at 222 Kearny Street, Suite 550 and can be
reached 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 Earnings
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
June 30,
2007
2006
Revenues
$
7,164
6,432
Cost of revenues
3,241
2,365
Gross profit
3,923
4,067
Operating expenses:
Sales and marketing expense
254
227
General and administrative expense
2,790
2,153
Total operating expenses
3,044
2,380
Earnings from operations
879
1,687
Interest expense
288
8
Earnings before income taxes
591
1,679
Income taxes
259
696
Net earnings
$
332
983
Basic earnings per share
$
0.01
0.04
Diluted earnings per share
$
0.01
0.04
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except share and per share data)
(Unaudited)
Six Months Ended
June 30,
2007
2006
Revenues
$
18,008
14,456
Cost of revenues
6,612
4,884
Gross profit
11,396
9,572
Operating expenses:
Sales and marketing expense
492
501
General and administrative expense
5,327
3,858
Total operating expenses
5,819
4,359
Earnings from operations
5,577
5,213
Interest expense
594
36
Loss on derivative instrument
-
19
Earnings before income taxes
4,983
5,158
Income taxes
2,012
2,097
Net earnings
$
2,971
3,061
Basic earnings per share
$
0.12
0.12
Diluted earnings per share
$
0.10
0.11
INTERSEARCH GROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
June 30,
December 31,
2007
2006
Assets
Current assets:
Cash
$
1,582
$
347
Accounts receivable
4,004
4,060
Prepaid expenses and other
300
196
Deferred income taxes
23
38
Total current assets
5,909
4,641
Office equipment and leasehold improvements, net
1,400
1,416
Debt issuance costs, net
661
743
Patents and trademarks, net
78
83
Domains, net
13,717
13,398
Goodwill
573
573
Other Assets
125
-
Deferred income taxes
335
253
Total Assets
$
22,798
$
21,107
Liabilities and Stockholders' Equity
Current liabilities:
Revolving line of credit
-
518
Accrued liabilities
1,286
1,002
Accounts payable
871
1,793
Deferred revenue
3
60
Total current liabilities
2,160
3,373
Notes payable, net of discount
6,609
6,561
Total Liabilities
8,769
9,934
Stockholders' equity:
Preferred Stock
-
-
Common Stock
25
25
Additional paid-in capital
8,598
8,713
Retained earnings
5,406
2,435
Total stockholders' equity
14,029
11,173
Total liabilities and stockholders' equity
$
22,798
$
21,107
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
June 30,
2007
2006
Net earnings
$
332
$
983
Income taxes
259
696
Earnings before income taxes
591
1,679
Interest expense
288
8
Earnings from operations
879
1,687
Depreciation
105
38
Amortization
255
221
Earnings before interest, taxes, depreciation,
amortization (EBITDA)
$
1,239
$
1,946
Six Months Ended
June 30,
2007
2006
Net earnings
$
2,971
$
3,061
Income taxes
2,012
2,097
Earnings before income taxes
4,983
5,158
Interest expense
594
36
Earnings from operations
5,577
5,194
Depreciation
210
74
Amortization
510
438
Earnings before interest, taxes, depreciation,
amortization (EBITDA)
$
6,297
$
5,706