Interchange (NASDAQ:INCX)
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Interchange Corp. (Nasdaq:INCX), owner of Local.com, a
leading local search engine, today reported its financial results for
the first quarter 2006.
First Quarter Results and Highlights:
-- Revenue was $3.2 million for the first quarter of 2006 which
was at the high end of our guidance. Local search revenue was
approximately $1.2 million which was $600,000 better than the
previous quarter and $200,000 better than our guidance.
National search revenue was approximately $2.0 million.
-- Net loss was $3.8 million for the first quarter of 2006, which
was at the low end of our guidance. Basic and diluted net loss
per share was $0.41. The net loss included $915,000, or $0.10
per share, of non-cash stock-based compensation as required
with the adoption of Statement of Financial Accounting
Standards No. 123R.
-- Cash and marketable securities were $12.0 million at March 31,
2006 with no material debt. The company used $2.3 million in
cash during the quarter.
-- Released Local.com from beta.
-- Launched uk.local.com beta.
-- Traffic on Local.com grew to 8.6 million monthly unique
visitors and 42 million page views in March.
-- Hired VP Product Management Vickie Young.
-- Entered into a number of local search partnerships including
Fidelity Assets, Contractors.com, Judy's Book and Jambo.
-- Launched LocalConnect and Domain Dividends syndication
products.
-- Engaged an investment banker to explore strategic options for
national search business.
"For the second quarter in a row, local search revenues have
exceeded our expectations. We continue to build on the three value
creators in search: traffic; technology; and advertisers. Local.com
finished the quarter ranked as the 123rd busiest website and sixth
largest pure-play local search engine according to comScore. In the
second quarter we will launch high-margin ad products on Local.com as
we continue to monetize our high-quality traffic," said Heath Clarke,
Interchange CEO. "Most important of all, the recent additions of Lee
Siegfried as VP Engineering and Jennifer Black as VP Marketing, and
the promotion of Bruce Crair to President and COO, complete a
management team designed to take our company to the next level. We
look forward to continuing to deliver on our goal of making Local.com
number one in local search."
Financial Guidance
The company expects second quarter 2006 revenue to be between $3.0
million and $3.2 million. Of this revenue, local search is expected to
be approximately $1.6 million, which is an increase of approximately
40% over the first quarter 2006. The company expects net loss for the
second quarter 2006 to be between $3.6 million and $3.8 million, which
would be $0.39 to $0.41 per share. The loss per share forecast assumes
9.3 million outstanding shares.
The above guidance includes non-cash expenses of $1.2 million, or
$0.13 per share, consisting of the following:
-- Non-cash stock-based expense of approximately $675,000, or
$0.07 per share, resulting from the adoption of Statement of
Financial Accounting Standards No. 123R as required beginning
January 2006; and
-- Depreciation and amortization of $520,000, or $0.06 per share.
Based on the above guidance, the company expects to use
approximately $2.5 million in cash in Q2.
Conference Call and Webcast Information
Chairman and CEO Heath Clarke, President and COO Bruce Crair and
CFO Doug Norman will participate in a conference call to discuss the
results and outlook. The conference call will take place today, May 9,
2006 at 5 p.m. ET. Investors and analysts can participate in the call
by dialing 1-888-802-2268 or 1-913-312-1271, pass code # 5479513. To
listen to the webcast, or to view the press release, please visit the
Investor Relations section of the Interchange website at:
http://ir.interchangeusa.com. A replay of the webcast will be
available for 90 days at the company's website, starting approximately
one hour after the completion of the call.
About Interchange
Interchange Corp. (Nasdaq:INCX) owns and operates Local.com
(www.local.com), a leading local-search engine that now draws more
than 8 million visitors per month seeking information on local
businesses, products and services. Local.com is powered by the
company's proprietary Keyword DNA(TM) and local-web indexing
technologies. The company serves local and national Internet, wireless
and operator-assisted local-search markets in the United States and
Europe. Interchange generates revenue principally from paid-search
advertising. The company recently launched a domain syndication
network in the United States, launched Local.com in the United Kingdom
(uk.local.com) and plans to expand into additional markets during
2006.
The company has headquarters in Irvine with European headquarters
in Stockholm, Sweden. For more information on Interchange, please
visit: www.interchangeusa.com.
Forward-Looking Statements: All statements other than statements
of historical fact included in this document regarding our anticipated
financial position, business strategy and plans and objectives of our
management for future operations, are forward-looking statements
within the meaning of section 21E of the United States Securities and
Exchange Act of 1934, as amended. When used in this report, words such
as "anticipate," "believe," "estimate," "will," "plans," "expect,"
"intend" and similar expressions, as they relate to Interchange or our
management, identify forward-looking statements. Any forward-looking
statements reflect our current views with respect to future events and
are subject to these and other risks, uncertainties and assumptions
relating to our operations, results of operations, growth strategy and
liquidity. All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly
qualified in their entirety by this paragraph.
All statements regarding potential results and future plans and
objectives of the company, including those made regarding the
exploration of strategic options related to the company's National
Search business, and the company's assumptions regarding the value,
growth, margins and defensibility of Local.com, its traffic
acquisition strategies, subscription advertising products and planned
and future search activities, are forward-looking statements that
involve various risks and uncertainties. There can be no assurance
that such statements will prove to be accurate and actual results and
future events could differ materially from those anticipated in such
statements. Important factors that could cause actual results to
differ materially from the company's expectations include, but are not
limited to, those factors that are disclosed under the heading "Risk
Factors" and elsewhere in the company's documents filed from time to
time with the United States Securities and Exchange Commission and
other regulatory authorities.
Our Annual Report on Form 10-KSB, subsequent Quarterly Reports on
Form 10-Q, recent Current Reports on Form 8-K, and other Securities
and Exchange Commission filings discuss the foregoing risks as well as
other important risk factors that could contribute to such differences
or otherwise affect our business, results of operations and financial
condition. The forward-looking statements in this release speak only
as if the date they are made. We undertake no obligation to revise or
update publicly any forward-looking statement for any reason.
Unless otherwise stated, all site traffic and usage statistics
provided are from third-party service providers engaged by the
company.
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INTERCHANGE CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
March 31, Dec. 31,
2006 2005
----------- --------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $1,752 $1,075
Restricted cash 10 10
Marketable securities 10,270 13,244
Accounts receivable, net of allowances of $15
and $30, respectively 1,198 1,138
Prepaid expenses and other current assets 376 377
----------- --------
Total current assets 13,606 15,844
Property and equipment, net 2,497 2,772
Intangible assets, net 3,523 3,760
Goodwill 12,445 12,445
Long-term restricted cash 166 166
Deposits 47 47
----------- --------
Total assets $32,284 $35,034
=========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,552 $1,798
Accrued compensation 386 347
Deferred rent 543 575
Accrued royalties 478 496
Other accrued liabilities 776 631
Notes payable 56 84
Deferred revenue 332 295
----------- --------
Total liabilities, all current 4,123 4,226
----------- --------
Minority interest (1) (1)
----------- --------
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $0.00001 par
value; 10,000,000 shares authorized; none
issued and outstanding for all periods
presented - -
Common stock, $0.00001 par value; 30,000,000
shares authorized; 9,232,509 and 9,171,944
issued and outstanding, respectively - -
Additional paid-in capital 49,826 48,706
Accumulated comprehensive loss (135) (151)
Accumulated deficit (21,529) (17,746)
----------- --------
Stockholders' equity 28,162 30,809
----------- --------
Total liabilities and stockholders' equity $32,284 $35,034
=========== ========
INTERCHANGE CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three months ended
March 31,
---------------------
2006 2005
---------- ----------
Revenue $3,151 $5,911
---------- ----------
Operating expenses:
Search serving 1,580 3,176
Sales and marketing 2,467 1,338
General and administrative 1,804 961
Research and development 950 556
Amortization of intangibles 237 51
---------- ----------
Total operating expenses 7,038 6,082
---------- ----------
Operating loss (3,887) (171)
Interest and other income 105 314
---------- ----------
Income (loss) before income taxes (3,782) 143
Provision for income taxes 1 12
---------- ----------
Net income (loss) $(3,783) $131
========== ==========
Per share data:
Basic net income (loss) per share $(0.41) $0.02
========== ==========
Diluted net income (loss) per share $(0.41) $0.01
========== ==========
Basic weighted average shares outstanding 9,211,044 7,989,608
Diluted weighted average shares outstanding 9,211,044 9,765,291
Supplemental consolidated statements of operations information:
Three months ended
March 31,
-------------------
2006 2005
--------- ---------
Non-cash stock-based compensation expense:
Sales and marketing $172 $-
General and administrative 670 9
Research and development 73 -
-------------------
Total stock-based compensation expense $915 $9
===================
Basic and diluted net compensation expense per
share $0.10 $0.00
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