Ask Jeeves (NASDAQ:ASKJ)
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Ask Jeeves Reports Fourth Quarter and Full-Year 2004 Results
Ask Jeeves posts fourth quarter revenues of $86.1 million
OAKLAND, Calif., Feb. 3 /PRNewswire-FirstCall/ -- Ask Jeeves, Inc. (Nasdaq:
ASKJ; "the Company") today reported results for the fourth quarter and full
year ended December 31, 2004.
Revenues for the quarter ended December 31, 2004 were $86.1 million. These
fourth quarter results represent 170% growth over revenues of $31.8 million for
the comparable year-ago quarter.
"In the fourth quarter Ask Jeeves once again showed strong growth --
financially, from a traffic standpoint, and in terms of our products," said
Steve Berkowitz, Ask Jeeves' CEO. "This quarter was the culmination of a great
year for the Company. We launched many innovative features and products to make
searching easier and more useful. Users responded positively, leading to gains
in both reach and frequency. In 2005, we plan to continue to outgrow the search
market as a whole as we roll out new products, build on the differentiation of
our core technologies, and expand globally."
Pro forma income from continuing operations for the fourth quarter was $24.2
million, or $0.35 per share. For the comparable year-ago quarter, Ask Jeeves'
pro forma income from continuing operations was $8.2 million, or $0.14 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' income from
continuing operations for the fourth quarter of 2004 was $17.1 million, or
$0.25 per share. This compares to income from continuing operations on a GAAP
basis of $7.6 million, or $0.13 per share, for the comparable year-ago quarter.
Cash, cash equivalents and marketable securities totaled $109.7 million on
December 31, 2004.
Revenues for the year ended December 31, 2004 were $261.3 million. These 2004
revenues represent 144% growth over revenues of $107.3 million for 2003. Pro
forma income from continuing operations for 2004 was $71.1 million, or $1.08
per share, compared to pro forma income from continuing operations of $22.0
million, or $0.40 per share, for 2003. Under GAAP, Ask Jeeves' income from
continuing operations for 2004 was $52.4 million, or $0.80 per share. This
compares to income from continuing operations on a GAAP basis of $24.8 million,
or $0.45 per share, for 2003.
Ask Jeeves completed its acquisition of Interactive Search Holdings, Inc. (ISH)
on May 6, 2004. Accordingly, the Company's 2004 results include the financial
results of the ISH properties after the closing date. Unless otherwise
indicated, all financial, pro forma and other metrics in this release are based
on Ask Jeeves' continuing operations. Continuing operations exclude results
from the Jeeves' Solutions division which was sold on July 1, 2003.
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.
"We are very pleased as we enter 2005," said Steve Sordello, Ask Jeeves' CFO.
"Our key volume, pricing and productivity metrics are positive. We're
generating cash and strengthening our balance sheet while investing in our
brands, technologies and infrastructure. Looking ahead, we continue to be
excited about our opportunity to capitalize on the growing search market."
First Quarter 2005
For the first quarter of 2005, Ask Jeeves anticipates revenues of $94 million
and pro forma income of approximately $23.8 million, or $0.34 per share. Ask
Jeeves anticipates that GAAP net income for the first quarter will be $0.24 per
share. The anticipated difference between first 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 70 million
shares.
2005 Business Outlook
For the full year ahead, 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 guidance excludes the effects of the change in accounting for
stock-based compensation, which comes into effect later this year. Guidance
should be considered in light of the risks referred to in the cautionary note
below.
Pro Forma Results
Ask Jeeves' pro forma results are calculated by adjusting GAAP income from
continuing operations 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 from
continuing operations to GAAP income from continuing operations 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
exclusion of amortization of goodwill and other assets, stock-based
compensation, impairment of long-lived assets, restructuring costs, gain on
acquisition of its UK joint venture and the gain on dissolution of another
joint venture. Please refer to the reconciliation table for a full list of the
adjustments. The anticipated difference between GAAP-basis net income and pro
forma income for 2005 results primarily from non-cash amortization of
intangible assets. Ask Jeeves' pro forma measures should be considered in
addition to and not as a substitute for, nor superior to measures of financial
performance prepared in accordance with GAAP.
Conference Call Scheduled for 5 p.m. Eastern time on February 3, 2005
Ask Jeeves will hold a conference call to discuss its fourth quarter and full
year 2004 results, and its business outlook for the first quarter and the year
2005 at 5 p.m. Eastern time on February 3, 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 Internet at
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 category "earnings releases" for a period of three
months. The financial and statistical information to be discussed during the
conference call will be posted on Ask Jeeves Web site at the above address.
Cautionary Note Regarding Forward-looking Statements
This press release contains forward-looking statements. All statements
regarding the future are forward-looking statements, including those statements
regarding the Company's potential for future growth, the Company's anticipated
increase in investment in its business, the Company's plans to continue to
innovate and improve and all expectations regarding financial forecasts
including revenue and productivity metrics, cash flow, net income, pro forma
income, revenue growth and pro forma earnings per share of the Company in the
future. The forward-looking guidance provided in this press release is subject
to numerous assumptions, risks and other uncertainties and is 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 may
change after the date of this release, Ask Jeeves undertakes no obligation to
revise or update the guidance above. The lack of any revision or update is not
meant to imply continued affirmation of the guidance.
Factors that might cause or contribute to such differences include, but are not
limited to: Ask Jeeves' dependence on a third-party paid placement provider;
the risk that acquisitions might not be integrated successfully; 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 such
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 quarterly reports on Form 10-Q filed 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.
Ask Jeeves, Inc. provides consumers and advertisers with information retrieval
products across a diverse portfolio of Web sites, portals and desktop search
applications. Ask Jeeves' search and search-based portal brands include: Ask
Jeeves (Ask.com and Ask.co.uk); Ask Jeeves Japan (Ask.jp, a joint venture); Ask
Jeeves for Kids (AJKids.com); Excite (excite.com); iWon (iwon.com); My Search
(mysearch.com); My Way (myway.com); My Web Search (mywebsearch.com) and Teoma
(teoma.com). Ask Jeeves also owns the search technology Teoma, proprietary
natural language processing technology, as well as portal and ad serving
technologies. In addition to powering several of the Ask Jeeves brands, the
Company syndicates its technologies to help companies increase revenue through
powerful search. Ask Jeeves' advertising division, AJinteractive, provides
advertisers with targeted tools to reach a broad base of valuable customers.
Ask Jeeves, Inc. is headquartered in Oakland, California, with offices
throughout the United States, as well as in London, England and Dublin,
Ireland. For more information, visit http://www.ask.com/ or call 510-985-7400.
NOTE: Ask Jeeves, AJinteractive, Ask.com, Teoma, My Way, My Search, My Web
Search, iWon and Excite 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)
December 31, 2004 December 31, 2003
Revenues $86,103 100.0% $31,834 100.0%
Cost of revenues 23,660 27.5% 5,136 16.1%
Gross profit 62,443 72.5% 26,698 83.9%
Operating expenses:
Product development 7,224 8.4% 3,762 11.8%
Sales and marketing 22,690 26.4% 9,639 30.3%
General and administrative 7,354 8.5% 4,982 15.6%
Total pro forma operating expenses 37,268 43.3% 18,383 57.7%
Pro forma operating income 25,175 29.2% 8,315 26.2%
Interest and other income, net 160 0.2% 411 1.3%
Pro forma income before income
tax provision 25,335 29.4% 8,726 27.5%
Income tax provision 1,108 1.3% 483 1.5%
Pro forma income from continuing
operations $24,227 28.1% $8,243 26.0%
Basic pro forma income from
continuing operations per share $0.42 $0.18
Weighted average shares outstanding
used in computing basic pro forma
income from continuing operations
per share 58,240,478 46,375,914
Diluted pro forma income from
continuing operations per share $0.35 $0.14
Weighted average shares outstanding
used in computing diluted pro forma
income from continuing operations
per share 69,186,012 58,496,224
Revenues from related parties $-- $1,131
RECONCILIATION OF PRO FORMA INCOME FROM CONTINUING OPERATIONS TO GAAP
INCOME FROM CONTINUING OPERATIONS
Pro forma income from continuing
operations $24,227 $8,243
Cost of revenues (1) (119) --
Amortization of intangible
assets (2) (3,214) (522)
(3,333) (522)
Product Development (1) (113) --
Sales and marketing (1) (217) --
General and administrative (1) (70) --
Amortization of intangible
assets (2) (2) (7)
Transaction costs (3) -- --
(72) (7)
Impairment and write off of
long-lived assets (4) -- --
Amortization of intangible
assets (5) (3,329) --
Gain on acquisition and dissolution
of joint ventures (6) -- --
Interest and other income, net (7) (15) (76)
Income from continuing operations $17,148 $7,638
Year Ended
(unaudited)
December 31, 2004 December 31, 2003
Revenues $261,327 100.0% $107,292 100.0%
Cost of revenues 66,885 25.6% 19,828 18.5%
Gross profit 194,442 74.4% 87,464 81.5%
Operating expenses:
Product development 23,848 9.1% 14,766 13.8%
Sales and marketing 68,550 26.2% 31,901 29.7%
General and administrative 27,225 10.4% 18,369 17.1%
Total pro forma operating expenses 119,623 45.7% 65,036 60.6%
Pro forma operating income 74,819 28.7% 22,428 20.9%
Interest and other income, net 967 0.4% 1,446 1.3%
Pro forma income before income
tax provision 75,786 29.1% 23,874 22.2%
Income tax provision 4,694 1.8% 1,891 1.8%
Pro forma income from continuing
operations $71,092 27.3% $21,983 20.4%
Basic pro forma income from continuing
operations per share $1.32 $0.50
Weighted average shares outstanding
used in computing basic pro forma
income from continuing operations
per share 54,050,461 44,233,461
Diluted pro forma income from
continuing operations per share $1.08 $0.40
Weighted average shares outstanding
used in computing diluted pro forma
income from continuing operations
per share 65,811,066 54,773,229
Revenues from related parties $2,740 $4,525
RECONCILIATION OF PRO FORMA INCOME FROM CONTINUING OPERATIONS TO GAAP
INCOME FROM CONTINUING OPERATIONS
Pro forma income from continuing
operations $71,092 $21,983
Cost of revenues (1) (284) (1)
Amortization of intangible
assets (2) (8,984) (2,088)
(9,268) (2,089)
Product Development (1) (212) (2)
Sales and marketing (1) (497) (1)
General and administrative (1) (147) (2)
Amortization of intangible
assets (2) (24) (29)
Transaction costs (3) - (625)
(171) (656)
Impairment and write off of
long-lived assets (4) - (702)
Amortization of intangible
assets (5) (8,663) --
Gain on acquisition and
dissolution of joint ventures (6) -- 6,356
Interest and other income, net (7) 149 (104)
Income from continuing operations $52,430 $24,785
Notes:
(1). Adjustments to cost of revenues, product development, sales and
marketing, and general and administrative costs relate to
amortization of stock based compensation and the write-off of
certain office leases.
(2). Amortization of intangible assets in cost of revenues and general
and administrative costs consists of the pro-rata expensing of
intangible assets from acquisitions, certain licensing fees, and
trademarks.
(3). Transaction costs in 2003 related to certain merger and acquisition
activities that did not come to fruition.
(4). Impairment and write off of long-lived assets consists primarily of
the write-off of obsolete equipment.
(5). Amortization of intangible assets consists of the amortization of
intangible assets from the acquisition of ISH in 2004.
(6). Gain on acquisition and dissolution of joint ventures in 2003
consists of a gain from the acquisition of our UK joint venture and
a gain from the dissolution of our Ask Jeeves en Espanol joint
venture.
(7). The adjustments to interest and other income, net consist of
realized gains and losses on investments, losses on disposals of
assets, foreign exchange gains and losses, and miscellaneous income.
ASK JEEVES, INC.
PRO FORMA INCOME FROM CONTINUING OPERATIONS TO PRO FORMA EBITDA FROM
CONTINUING OPERATIONS AND GAAP INCOME FROM CONTINUING OPERATIONS
(In thousands, except share and per share data)
Three Months Ended
(unaudited)
December 31, 2004 December 31, 2003
Per Per
Amount Share Amount Share
Pro forma income from continuing
operations $24,227 $0.35 $8,243 $0.14
Depreciation 3,082 0.04 1,586 0.03
Interest and other income, net (160) -- (411) (0.01)
Income tax provision 1,108 0.02 483 0.01
Pro forma EBITDA from continuing
operations 28,257 0.41 9,901 0.17
Adjustments:
Depreciation (3,082) (0.04) (1,586) (0.03)
Interest and other income, net 160 -- 411 0.01
Income tax provision (1,108) (0.02) (483) (0.01)
Cost of revenues (1) (119) -- -- --
Amortization of intangible
assets (2) (3,214) (0.05) (522) (0.01)
(3,333) (0.05) (522) (0.01)
Product development (1) (113) -- -- --
Sales and marketing (1) (217) -- -- --
General and administrative (1) (70) -- -- --
Amortization of intangible
assets (2) (2) -- (7) --
Transaction costs (3) -- -- -- --
(72) -- (7) --
Impairment and write off of long-
lived assets (4) -- -- -- --
Amortization of intangible assets (5) (3,329) (0.05) -- --
Gain on acquisition and dissolution
of joint ventures (6) -- -- -- --
Interest and other income, net (7) (15) -- (76) --
Income from continuing operations $17,148 $7,638
Weighted average shares outstanding
used in computing diluted income
from continuing operations
per share 69,186,012 $0.25 58,496,224 $0.13
Year Ended
(unaudited)
December 31, 2004 December 31, 2003
Per Per
Amount Share Amount Share
Pro forma income from continuing
operations $71,092 $1.08 $21,983 $0.40
Depreciation 9,788 0.15 6,922 0.13
Interest and other income, net (967) (0.01) (1,446) (0.03)
Income tax provision 4,694 0.07 1,891 0.03
Pro forma EBITDA from continuing
operations 84,607 1.29 29,350 0.53
Adjustments:
Depreciation (9,788) (0.15) (6,922) (0.13)
Interest and other income, net 967 0.01 1,446 0.03
Income tax provision (4,694) (0.07) (1,891) (0.03)
Cost of revenues (1) (284) -- (1) --
Amortization of intangible
assets (2) (8,984) (0.14) (2,088) (0.04)
(9,268) (0.14) (2,089) (0.04)
Product development (1) (212) -- (2) --
Sales and marketing (1) (497) (0.01) (1) --
General and administrative (1) (147) -- (2) --
Amortization of intangible
assets (2) (24) -- (29) --
Transaction costs (3) -- -- (625) (0.01)
(171) -- (656) (0.01)
Impairment and write off of long-
lived assets (4) -- -- (702) (0.01)
Amortization of intangible assets (5) (8,663) (0.13) -- --
Gain on acquisition and dissolution
of joint ventures (6) -- -- 6,356 0.11
Interest and other income, net (7) 149 -- (104) --
Income from continuing operations $52,430 $24,785
Weighted average shares outstanding
used in computing diluted income
from continuing operations
per share 65,811,066 $0.80 54,773,229 $0.45
Note: Pro forma EBITDA from continuing operations is defined as pro forma
income from continuing operations 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 Year Ended
December 31, December 31,
(unaudited) (unaudited)
2004 2003 2004 2003
Revenues $86,103 $31,834 $261,327 $107,292
Cost of revenues 26,993 5,658 76,153 21,917
Gross profit 59,110 26,176 185,174 85,375
Operating expenses:
Product development 7,337 3,762 24,060 14,768
Sales and marketing 22,907 9,639 69,047 31,902
General and administrative 7,426 4,989 27,396 19,025
Amortization of
intangible assets 3,329 -- 8,663 --
Impairment and write-off
of long-lived assets -- -- -- 702
Total operating expenses 40,999 18,390 129,166 66,397
Operating income 18,111 7,786 56,008 18,978
Gain on acquisition and
dissolution of joint ventures -- -- -- 6,356
Interest income, net 247 411 1,098 1,311
Interest expense (31) -- (173) (165)
Other income, net (71) (76) 191 196
Income before income tax
provision 18,256 8,121 57,124 26,676
Income tax provision 1,108 483 4,694 1,891
Income from continuing
operations 17,148 7,638 52,430 24,785
Discontinued operations:
Loss from discontinued
operations -- -- -- (1,218)
Gain on sale of
discontinued operations 351 -- 731 2,482
Income from discontinued
operations 351 -- 731 1,264
Net income $17,499 $7,638 $53,161 $26,049
Earnings per Share- Basic:
Income from continuing
operations $0.29 $0.16 $0.97 $0.56
Income from discontinued
operations $0.01 $-- $0.01 $0.03
Net income per share $0.30 $0.16 $0.98 $0.59
Weighted average shares
outstanding used in
computing basic net
income per share 58,240,478 46,375,914 54,050,461 44,233,461
Earnings per Share - Diluted:
Income from continuing
operations $0.25 $0.13 $0.80 $0.45
Income from discontinued
operations $-- $-- $0.01 $0.03
Net income per share $0.25 $0.13 $0.81 $0.48
Weighted average shares
outstanding used in
computing diluted net
income per share 69,186,012 58,496,224 65,811,066 54,773,229
Revenues from related
parties $-- $1,131 $2,740 $4,525
ASK JEEVES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2004 2003
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $80,452 $36,673
Marketable securities 29,250 143,975
Total cash, cash equivalents and
marketable securities 109,702 180,648
Accounts receivable, net 44,911 12,062
Prepaid expenses and other current assets 5,827 3,299
Total current assets 160,440 196,009
Property and equipment, net 22,339 10,933
Goodwill 264,898 --
Intangible assets, net 87,887 831
Deferred tax asset, net 295 --
Other long-term assets, net 5,420 4,482
Total assets $541,279 $212,255
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued
liabilities $35,436 $12,050
Accrued compensation and related
expenses 8,245 5,137
Accrued restructuring costs 383 1,167
Deferred revenue 2,583 5,367
Current portion of capital lease
obligation 710 --
Total current liabilities 47,357 23,721
Convertible subordinated notes 115,000 115,000
Capital lease obligations, less
current portion 460 --
Other liabilities 326 326
Total liabilities 163,143 139,047
Commitments and contingencies
Stockholders' equity 378,136 73,208
Total liabilities and
stockholders' equity $541,279 $212,255
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
Web site: http://www.ask.com/