Ask Jeeves (NASDAQ:ASKJ)
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Ask Jeeves Reports First Quarter Results
Ask Jeeves posts first quarter revenues of $94.9 million
OAKLAND, Calif., April 27 /PRNewswire-FirstCall/ -- Ask Jeeves, Inc. (Nasdaq:
ASKJ; the "Company") today reported results for the first quarter 2005.
Revenues for the quarter ended March 31, 2005 were $94.9 million. These first
quarter results represent 142% growth over revenues of $39.2 million for the
comparable year-ago quarter.
"Ask Jeeves achieved another record quarter, building strong momentum for the
rest of 2005 and beyond," said Steve Berkowitz, CEO of Ask Jeeves, Inc. "Our
flagship Ask Jeeves site had more unique users than ever before and our Fun Web
Products business had its best quarter ever. We acquired Bloglines, the market
leading RSS aggregator, and sharpened our core differentiation with
advancements in our proprietary algorithmic search technology. We believe our
progress underscores that we have strong strategic assets in place to continue
to grow market share in the fast-growing search market."
Pro forma income for the first quarter was $25.8 million, or $0.37 per share.
For the comparable year-ago quarter, Ask Jeeves' pro forma income was $13.5
million, or $0.23 per share. Pro forma results contained in this release
exclude items described below and should be evaluated in light of the Company's
financial results prepared in accordance with GAAP. Under GAAP, Ask Jeeves'
net income for the first quarter of 2005 was $18.1 million, or $0.26 per share.
This compares to net income on a GAAP basis of $13.4 million, or $0.23 per
share, for the comparable year-ago quarter. Cash, cash equivalents and
marketable securities totaled $109.9 million on March 31, 2005. Ask Jeeves
completed its acquisition of Interactive Search Holdings, Inc. ("ISH") on May
6, 2004. Accordingly, the Company's results include the financial results of
the ISH properties after the closing date.
Business Outlook
The following business outlook contains forward-looking statements describing
management's current expectations for the future. The matters discussed in
these forward-looking statements are subject to numerous assumptions, risks and
uncertainties, some of which are listed or referred to in the cautionary note
below. The business outlook is stated on a stand-alone basis, without
adjustment for the Company's pending acquisition by IAC.
"We are very pleased with our first quarter results. We had record revenues,
earnings and traffic," said Steve Sordello, CFO of Ask Jeeves, Inc. "Driven by
strong query growth, our search revenue grew 16% sequentially. This is
particularly exciting as we are just beginning to expand into the large global
search market. We are projecting continued strong financial growth while
investing more in key areas such as marketing and the user-experience for even
greater growth in 2006."
Second Quarter 2005
For the second quarter of 2005, Ask Jeeves anticipates revenues of $94 million
and pro forma income of approximately $21.5 million, or $0.31 per share. Ask
Jeeves anticipates that GAAP net income for the second quarter will be $0.21
per share. The anticipated difference between second quarter GAAP basis net
income and pro forma income results primarily from non-cash amortization of
intangible assets. The earnings per share forecast assumes a share count of
69.5 million shares.
2005 Business Outlook
For the full year, Ask Jeeves currently anticipates revenues of approximately
$380 to $395 million and pro forma income of approximately $1.30 to $1.45 per
share. GAAP net income is expected to be $0.90 to $1.05 per share. The
anticipated difference between full-year 2005 GAAP basis net income and pro
forma income results primarily from non-cash amortization of intangible assets.
The earnings per share forecast assumes a share count of 70.0 million shares.
Pro Forma Results
Ask Jeeves' pro forma results are calculated by adjusting GAAP net income to
exclude the effects of items that management believes are not directly related
to the underlying performance of Ask Jeeves' core business operations. A table
reconciling the Company's pro forma income to GAAP net income is included with
the condensed consolidated financial statements attached to this release. The
principal differences between the Company's pro forma and GAAP results are the
exclusion of amortization of intangible and other assets and stock-based
compensation. Please refer to the reconciliation table for a full list of the
adjustments. Ask Jeeves' pro forma measures may be different from pro forma
measures used or reported by other companies, and should be considered in
addition to and not as a substitute for nor superior to measures of financial
performance prepared in accordance with GAAP.
Pending Acquisition by IAC
On March 21, 2005 Ask Jeeves signed an agreement to be acquired by
IAC/Interactive Corp. (Nasdaq: IACI; "IAC"). Under the agreement, which is
subject to approval by Ask Jeeves' stockholders and other customary conditions,
Ask Jeeves will merge with a newly formed subsidiary of IAC and Ask Jeeves
stockholders will receive 1.2668 shares of IAC common stock for each share they
hold of Ask Jeeves common stock at the time of the merger. Ask Jeeves will
survive the merger as a wholly-owned subsidiary of IAC. The transaction is
currently expected to close late in the second quarter or early in the third
quarter.
More information about the proposed merger will be set forth in a combined
proxy statement/prospectus that will be mailed to Ask Jeeves stockholders prior
to a special meeting of Ask Jeeves stockholders at which stockholder approval
of the merger will be sought.
Conference Call Scheduled for 5 p.m. Eastern time on April 27, 2005
Ask Jeeves will hold a conference call to discuss its first quarter 2005
results, and its business outlook for the second quarter and the year 2005, at
5 p.m. Eastern time on April 27, 2005. A more-detailed outlook will be
presented on the call than is contained in this release. Interested persons can
listen to a live broadcast of the conference call on the "Investors" section of
Ask Jeeves' Web site ( http://www.irconnect.com/askjinc/index.html ). To
listen to the live call, go to the Web site at least fifteen minutes prior to
the start time to download and install the necessary audio software. For those
unable to listen to the live broadcast, a replay will be available one hour
after the conclusion of the call at the same site, under the sub- category
"Earnings Releases" for a period of at least three months. The financial and
statistical information to be discussed during the conference call will also be
posted on Ask Jeeves' Web site at the above address.
Cautionary Note Regarding Forward-looking Statements
This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. All statements regarding
the future are forward-looking statements, including those regarding the
Company's expectations or potential for future growth, the proposed merger with
IAC, expectations regarding future or anticipated events or developments, and
all financial forecasts, including those regarding revenue and productivity
metrics, cash flow, net income, pro forma income, revenue growth and pro forma
earnings per share of the Company. The forward-looking statements in this press
release are subject to numerous assumptions, risks and other uncertainties and
are based on limited information available to Ask Jeeves at this time, which is
subject to change. Ask Jeeves' actual results in the future may differ
materially from management's current expectations. Although management's
expectations and the information known or available to management may change
after the date of this release, Ask Jeeves undertakes no obligation to revise
or update the guidance or other statements made above. The lack of any revision
or update is not meant to imply continued affirmation of guidance or other
forward-looking statements.
Factors that might cause or contribute to actual results differing from
forward-looking statements include, but are not limited to: Ask Jeeves'
dependence on a third-party paid placement provider; the risk that the proposed
IAC merger might not close; the risk that acquisitions (including the IAC
merger) might not be integrated successfully or yield expected benefits or
synergies; the risk of further vertical consolidation in the Internet search
and keyword advertising markets; risks associated with rapid technological
change; risks that innovations by competitors might cause Ask Jeeves' user base
to migrate to other search engines, or that Ask Jeeves search volume might
otherwise decline; risks associated with relying on third parties for search
toolbar distribution; the risk that companies' internet advertising budgets
might contract or grow at a slower pace; Ask Jeeves' dependence on third
parties for some types of content, distribution and advertising delivery;
potential lack of market acceptance of Ask Jeeves' advertising products;
introduction of new advertising products or search technologies by competitors;
declines in the average selling price of Ask Jeeves' advertising products; and
adverse economic conditions in any of the major countries or markets in which
Ask Jeeves does business or to which its Web content is targeted. As a
relatively short announcement, this press release cannot present a full
discussion of all relevant risks. Further information on risk factors that
could affect Ask Jeeves' financial results is included in its most recent
Annual Report on Form 10-K and subsequent filings with the Securities and
Exchange Commission. Ask Jeeves encourages investors to read all of the
disclosures in its SEC filings for a broader discussion of important factors
that may be material to investors and may affect Ask Jeeves' business,
financial condition and results of operations.
About Ask Jeeves, Inc.
As the 6th largest global web property (ComScore Media Metrix, March 2005), Ask
Jeeves Inc. delivers world-class information retrieval products through a
diverse portfolio of Web sites, portals and downloadable applications. Ask
Jeeves' search and search-based portal brands include: Ask Jeeves (Ask.com,
Ask.co.uk and es.Ask.com), the Ask Jeeves Japan joint venture (Ask.jp), Ask
Jeeves for Kids (AJKids.com), Bloglines (bloglines.com), Excite (excite.com),
iWon (iwon.com), My Way (myway.com) and Fun Web Products (funwebproducts.com).
Additionally, Ask Jeeves owns the differentiated search technology Teoma, as
well as natural language processing, portal and ad- serving technologies. Ask
Jeeves generates revenue from advertisers seeking to reach the company's
broad-based online audience. Founded in 1996, Ask Jeeves has been a publicly
traded company on the Nasdaq National Market since July 1999. Its headquarters
are located in Oakland, California, with offices throughout the United States,
as well as in Europe and Asia. For more information, visit http://www.ask.com/
.
Where to Find Additional Information
IAC has filed a registration statement with the SEC that includes a combined
proxy statement/prospectus of Ask Jeeves and IAC and other relevant documents
relating to the proposed merger, including the merger agreement. Ask Jeeves
stockholders should read the proxy statement/prospectus and other
relevant materials as they become available, because they contain important
information about Ask Jeeves, IAC and the proposed merger.
In addition to the merger filings described above, Ask Jeeves and IAC file
annual, quarterly and current reports, proxy statements and other information
with the SEC. The proxy statement/prospectus and other relevant materials, and
any other documents filed with the SEC by Ask Jeeves or IAC are available
without charge at the SEC's Website at http://www.sec.gov/ , or from the
companies' Websites, at http://www.ask.com/ and http://www.iac.com/ ,
respectively.
Ask Jeeves, IAC and their respective officers and directors may be deemed to be
participants in the solicitation of proxies from Ask Jeeves stockholders in
connection with the proposed merger. Certain interests of the directors and
executive officers of Ask Jeeves and the directors and executive officers of
IAC are described in the combined proxy statement/prospectus described above.
NOTE: Ask Jeeves, AJinteractive, Ask.com, Teoma, Fun Web Products, My Way, My
Search, My Web Search, iWon, Excite and Bloglines are trademarks or registered
trademarks of Ask Jeeves, Inc.
ASK JEEVES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three Months Ended
(unaudited)
March 31, 2005 March 31, 2004
Revenues $94,861 100.0% $39,229 100.0%
Cost of revenues 25,887 27.3% 5,795 14.8%
Gross profit 68,974 72.7% 33,434 85.2%
Operating expenses:
Product development 8,573 9.0% 4,753 12.1%
Sales and marketing 26,106 27.5% 9,164 23.4%
General and administrative 8,273 8.7% 5,337 13.6%
Total pro forma operating
expenses 42,952 45.2% 19,254 49.1%
Pro forma operating income 26,022 27.5% 14,180 36.1%
Interest and other income, net 349 0.4% 439 1.1%
Pro forma income before income
tax provision 26,371 27.9% 14,619 37.2%
Income tax provision 529 0.6% 1,100 2.8%
Pro forma income $25,842 27.3% $13,519 34.4%
Basic pro forma income per share $0.44 $0.29
Weighted average shares
outstanding used in computing
basic pro forma income
per share 58,784,772 46,885,863
Diluted pro forma income per share $0.37 $0.23
Weighted average shares
outstanding used in computing
diluted pro forma income
per share 69,119,378 59,370,727
Revenues from related parties $-- $1,131
RECONCILIATION OF PRO FORMA INCOME
TO GAAP INCOME
Pro forma income $25,842 $13,519
Cost of revenues (1) (88) --
Amortization of intangible
assets (2) (3,734) (275)
(3,822) (275)
Product development (1) (52) --
Sales and marketing (1) (150) --
General and administrative (1) (41) --
Amortization of intangible
assets (2) -- (7)
Transaction costs (3) (654) --
(695) (7)
Amortization of intangible
assets (2) (3,329) --
Interest and other income,
net (4) 347 142
Net income $18,141 $13,379
Notes:
(1). Adjustments relate to amortization of stock based compensation.
(2). Amortization of intangible assets consists of the pro-rata
expensing of intangible assets from acquisitions and trademarks.
(3). Transaction costs relate to certain merger and acquisition
activities that did not or have not come to fruition.
(4). The adjustments to interest and other income, net consist of
realized gains and losses on investments, gains and losses on
disposals of assets and foreign exchange gains and losses.
ASK JEEVES, INC.
PRO FORMA INCOME TO PRO FORMA EBITDA AND GAAP INCOME
(In thousands, except share and per share data)
Three Months Ended
(unaudited)
March 31, 2005 March 31, 2004
Per Per
Amount Share Amount Share
Pro forma income $25,842 $0.37 $13,519 $0.23
Depreciation 3,210 0.05 1,731 0.03
Interest and other income, net (349) (0.01) (439) (0.01)
Income tax provision 529 0.01 1,100 0.02
Pro forma EBITDA 29,232 0.42 15,911 0.27
Adjustments:
Depreciation (3,210) (0.05) (1,731) (0.03)
Interest and other income, net 349 0.01 439 0.01
Income tax provision (529) (0.01) (1,100) (0.02)
Cost of revenues (1) (88) -- -- --
Amortization of intangible
assets (2) (3,734) (0.05) (275) --
(3,822) (0.05) (275) --
Product development (1) (52) -- -- --
Sales and marketing (1) (150) -- -- --
General and administrative (1) (41) -- -- --
Amortization of intangible
assets (2) -- -- (7) --
Transaction costs (3) (654) (0.01) -- --
(695) (0.01) (7) --
Amortization of intangible
assets (2) (3,329) (0.05) -- --
Interest and other income, net (4) 347 -- 142 --
Net income $18,141 $13,379
Weighted average shares outstanding
used in computing diluted income
per share 69,119,378 $0.26 59,370,727 $0.23
Note: Pro forma EBITDA is defined as pro forma income excluding
depreciation, interest and other income and income tax provision.
Footnotes appear on the Pro Forma Condensed Consolidated Statements
of Operations.
ASK JEEVES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three Months Ended
March 31,
(unaudited)
2005 2004
Revenues $94,861 $39,229
Cost of revenues 29,709 6,070
Gross profit 65,152 33,159
Operating expenses:
Product development 8,625 4,753
Sales and marketing 26,256 9,164
General and administrative 8,968 5,344
Amortization of intangible assets 3,329 --
Total operating expenses 47,178 19,261
Operating income 17,974 13,898
Interest income, net 347 442
Interest expense (47) (3)
Other income, net 396 142
Income before income tax provision 18,670 14,479
Income tax provision 529 1,100
Net income $18,141 $13,379
Earnings per Share- Basic:
Net income per share $0.31 $0.29
Weighted average shares outstanding
used in computing basic net income
per share 58,784,772 46,885,863
Earnings per Share- Diluted:
Net income per share $0.26 $0.23
Weighted average shares outstanding
used in computing diluted net income
per share 69,119,378 59,370,727
Revenues from related parties $-- $1,131
ASK JEEVES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2005 2004
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $64,777 $80,452
Marketable securities 45,102 29,250
Total cash, cash equivalents
and marketable securities 109,879 109,702
Accounts receivable, net 54,444 44,911
Prepaid expenses and other current
assets 12,088 8,535
Total current assets 176,411 163,148
Property and equipment, net 33,751 22,761
Goodwill 264,898 264,898
Intangible assets, net 90,824 87,887
Deferred tax asset, net 295 295
Other long-term assets, net 5,309 5,420
Total assets $571,488 $544,409
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued
liabilities $47,729 $38,566
Accrued compensation and related
expenses 7,173 8,245
Accrued restructuring costs 195 383
Deferred revenue 1,782 2,583
Current portion of capital lease
obligation 661 710
Total current liabilities 57,540 50,487
Convertible subordinated notes 115,000 115,000
Capital lease obligations, less
current portion 326 460
Other liabilities 326 326
Total liabilities 173,192 166,273
Commitments and contingencies
Stockholders' equity 398,296 378,136
Total liabilities and
stockholders' equity $571,488 $544,409
DATASOURCE: Ask Jeeves, Inc.
CONTACT: Heather Staples, Corporate Communications, +1-510-985-7610, or
, or Derrick Nueman, Investor Relations, +1-510-985-7485,
or , both of Ask Jeeves, Inc.
Web site: http://www.ask.com/