Inphonic (NASDAQ:INPC)
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InPhonic Announces Record First Quarter 2005 Financial Results
and Raises Guidance
- Reports Revenue of $76.6 million for Q1 2005, up 91% year over year -
WASHINGTON, April 27 /PRNewswire-FirstCall/ -- InPhonic, Inc. (NASDAQ:INPC), a
leading online seller of wireless services, today reported financial results
for its first quarter ended March 31, 2005.
"This was a very strong quarter for InPhonic. We started 2005 by delivering
record revenue, exceeding our guidance in all areas including revenues,
Adjusted EBITDA and Adjusted EBT per share, and continuing to take advantage of
the Internet as the fastest growing means for consumers to purchase products
and services," said David A. Steinberg, chairman and chief executive officer of
InPhonic. "Through the investments we have made this quarter, InPhonic is in
an excellent position to deliver both on a top line and the profit goals we've
set out for 2005."
Consolidated Financial Results
GAAP Results
* Revenues were $76.6 million for the first quarter 2005, compared to
$40.1 million for the first quarter of 2004, an increase of 91% year
over year.
* Net loss was $(7.0) million or $(0.21) per basic and diluted share for
the quarter, and included stock-based compensation of $(7.0) million or
$(0.21) per basic and diluted share and depreciation and amortization
of $(1.8) million or $(0.05) per basic and diluted share. This
compares to a net loss of $(4.8) million, or $(0.60) per basic and
diluted share, for the first quarter of 2004, which included stock-
based compensation of $(0.2) million or $(0.02) per basic and diluted
share and depreciation and amortization of $(1.6) million or $(0.14)
per basic and diluted share.
* General and administrative costs for the quarter were $18.0 million,
including stock-based compensation of $6.4 million.
* Sales and marketing costs for the quarter were $18.4 million, including
stock-based compensation of $0.6 million.
* Cash and marketable securities were $89.7 million at March 31, 2005,
compared to $101.0 million at December 31, 2004.
* Capital expenditures for the quarter totaled $2.1 million, compared to
$1.4 million for the first quarter of 2004.
Non-GAAP Results
* Revenues were $76.6 million for the first quarter of 2005, compared to
revenues of $38.0 million, excluding the effects of the one-time
recognition of $2.1 million in revenues for the first quarter of 2004
that were previously deferred in accordance with Staff Accounting
Bulletin No. 104, Revenue Recognition in Financial Statements, an
increase of 102% year over year.
* Adjusted EBITDA for the quarter was $1.8 million, compared to $(5.0)
million for the first quarter 2004, an improvement of $6.8 million year
over year.
* Adjusted Earnings before Taxes ("Adjusted EBT") of $0.2 million for the
quarter, or $0.01 per pro forma diluted share, reflected an improvement
of $6.4 million compared with adjusted EBT of $(6.2) million, or
$(0.21) per pro forma diluted share for the first quarter 2004.
* General and administrative costs for the quarter were $11.6 million,
excluding stock-based compensation of $6.4 million and was 15% of
revenue for the quarter, compared to 25% for the first quarter of 2004.
* Sales and marketing costs for the quarter were $17.8 million, excluding
stock-based compensation of $0.6 million and was 23% of revenue for the
quarter, compared to 25% for the first quarter 2004.
The components of Adjusted EBITDA and Adjusted EBT are discussed below under
"Non-GAAP Financial Measures."
Operating Highlights
* Completed acquisition of certain assets of A1 Wireless USA, Inc, one of
the largest activators of wireless devices over the Internet;
* Acquired substantially all of the assets of VMC Satellite in April
2005, a leading online marketer of digital broadcast satellite
services;
* Entered wireless peripherals market with the launch of wireless
accessories product category;
* Launched Spanish-language MVNO, Viva Liberty(SM), as an extension of
its successful wholly owned subsidiary MVNO, Liberty Wireless;
* Awarded Wireless Week magazine's 2005 Retail Strategies Excellence
Award; and,
* Received T-Mobile Internet Partner of the Year and Sprint Newcomer of
the Year awards.
Business Outlook
The following business outlook is based on current information and expectations
as of April 27, 2005. InPhonic's business outlook as of today will be available
on the Company's Investor Relations Web site throughout the current quarter. It
is currently expected the outlook will not be updated until the release of
InPhonic's next quarterly earnings announcement, notwithstanding subsequent
developments; however, InPhonic may update the outlook or any portion thereof
at any time.
InPhonic is providing guidance for the second quarter 2005 and increasing
guidance for the full year 2005.
Second Quarter 2005 Outlook
* Revenues are expected to be between $80 million and $82 million. This
compares to non-GAAP Revenues of $49.1 million achieved for Q2 2004,
excluding the effects of the one-time recognition of $1.0 million in
revenues for the second quarter 2004 that were previously deferred in
accordance with Staff Accounting Bulletin No. 104, Revenue Recognition
in Financial Statements.
* Adjusted EBITDA is expected to be between $6.0 million and $6.5
million. This compares to Adjusted EBITDA of $0.5 million achieved for
Q2 2004, excluding the effects of the one-time recognition of $1.0
million in revenues for the second quarter 2004 that were previously
deferred in accordance with Staff Accounting Bulletin No. 104, Revenue
Recognition in Financial Statements.
* Adjusted Earnings before Taxes ("Adjusted EBT") is expected to be
between $0.10 and $0.12 per share. This compares to Adjusted EBT per
share of $(0.03) achieved for Q2 2004, excluding the effects of the
one-time recognition of $1.0 million in revenues for the second quarter
of 2004, that were previously deferred in accordance with Staff
Accounting Bulletin No. 104, Revenue Recognition in Financial
Statements.
Full Year 2005 Outlook
* Revenues are expected to be between $345 million and $355 million. This
compares with our previous guidance for 2005 revenues of between $315
million and $325 million, and compares to non-GAAP Revenues of $204
million achieved for 2004, excluding the effects of the one-time
recognition of revenues that were previously deferred in accordance
with Staff Accounting Bulletin No. 104, Revenue Recognition in
Financial Statements.
* Adjusted EBITDA is expected to be between $36 million and $37 million.
This compares with our previous guidance for Adjusted EBITDA of between
$35 million and $36 million and compares to Adjusted EBITDA of $4.4
million achieved for 2004.
* Adjusted Earnings before Taxes is expected to be between $0.75 and
$0.78 per share. This compares to our previous guidance for Adjusted
EBT of between $0.74 and $0.76 per share and compares to Adjusted EBT
per share of $(0.04) achieved for 2004.
Forward-Looking Statements
This press release contains forward-looking statements, including, without
limitation, all statements related to future financial performance, plans to
grow our business and build our brand. Words such as "expect," "anticipate" and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements are based upon our current expectations.
Forward-looking statements involve risks and uncertainties. Our actual results
and the timing of events could differ materially from those anticipated in such
forward-looking statements as a result of these risks and uncertainties, which
include, without limitation, risks related to our fluctuating operating
results, seasonality in our business, our ability to acquire products on
reasonable terms, our online business model, demand for our products, the
strength of our brand, competition, our ability to fulfill orders and other
risks detailed in our filings with the Securities and Exchange Commission,
including our Annual Report on Form 10-K as of and for the Year ended December
31, 2004. You are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date of this press release. All
forward-looking statements are qualified in their entirety by this cautionary
statement, and InPhonic undertakes no obligation to revise or update any
forward-looking statements to reflect events or circumstances after the date
hereof.
Conference Call
Company management will be holding a conference call to discuss its first
quarter 2005 financial results Today, Wednesday, April 27, 2005 after the close
of the day's trading on the NASDAQ Stock Market. InPhonic will host a
conference call, open to the general public, at 5:00 PM Eastern Time to discuss
financial results and provide a Company update.
The conference call can be accessed by the following:
* 800-819-9193 (Domestic) or 913-981-4911 (International); passcode
5041038.
* The replay will be available through May 6, 2005 by dialing 888-203-
1112 (Domestic) or 719-457-0820 (International); passcode 5041038.
* The Company will also audio web cast the call.
* A link to the audio web cast will be available on the Company's website
at http://www.inphonic.com/ in the Investor Relations section.
* More call information and an audio archive following the call will be
available on the Company's website at http://www.inphonic.com/ in the
Investor
Relations section.
* Individual investors can listen to the call at http://www.earnings.com/,
Thomson/CCBN's individual investor portal.
* Institutional investors can access the call via the password-protected
event management site, http://www.streetevents.com/.
Non-GAAP Financial Measures
To supplement the Company's unaudited consolidated financial statements, which
are presented in accordance with GAAP, InPhonic uses Non-GAAP measures of
certain components of financial performance, including Non-GAAP earnings before
interest, taxes, depreciation and amortization, stock-based compensation, and
non-recurring restructuring costs ("Adjusted EBITDA") and Non-GAAP net income
per diluted share excluding stock-based compensation, depreciation and
amortization related to acquisitions and non-recurring restructuring costs.
Adjusted EBITDA - Earnings before interest, taxes, depreciation and
amortization adjusted for stock-based compensation and non-recurring
restructuring costs.
Adjusted EBT - Net Income (loss) excluding stock-based compensation, interest
and depreciation and amortization related to acquisitions and non- recurring
restructuring costs.
Adjusted EBT per pro forma diluted share - per share value of Adjusted EBT on
fully-diluted basis.
The Company believes that the presentation of Adjusted EBITDA, Adjusted EBT and
Adjusted EBT per pro forma diluted share provides useful information to
management and investors regarding certain additional financial and business
trends relating to its financial condition and results of operations. The
Company believes when GAAP net income and GAAP net income per share are viewed
in conjunction with these Non-GAAP measures, investors are provided with a more
meaningful understanding of the Company's ongoing operating performance. In
addition, the Company's management uses these measures for reviewing our
financial results.
These measures should be considered in addition to results prepared in
accordance with U.S. generally accepted accounting principles, but should not
be considered a substitute for, or superior to, GAAP results. The Company has
reconciled Non-GAAP financial measures included in this press release to the
nearest GAAP measure. Investors are encouraged to review the related GAAP
financial measures and the reconciliation of these Non-GAAP financial measures
to their most directly comparable GAAP financial measure.
About InPhonic
Headquartered in Washington, D.C., InPhonic, Inc. (NASDAQ:INPC) is a leading
online seller of wireless services and products. InPhonic sells these services
and devices, and provides world-class customer service through websites that it
creates and manages for online businesses, national retailers, member-based
organizations and associations under their own brands. InPhonic also
operatesWirefly, a leading mobile phones and wireless plans comparison site
that was awarded "Best of the Web" by Forbes magazine in 2004. Today, InPhonic
owns and operates Liberty Wireless, a leading MVNO and can deliver a full range
of mobility solutions to enterprise clients through its Mobile Virtual Network
Enablement (MVNE) platform. In 2004, InPhonic was selected #1 company of the
year on the Inc. 500 - Inc. Magazine's list of the fastest-growing privately
held companies in the United States. More recently, InPhonic was named
T-Mobile's Internet Partner of the Year for 2004. For more information on the
company, its products and services, visit the InPhonic Corporate website at
http://www.inphonic.com/.
INPHONIC, INC. & SUBSIDIARIES
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per share and share amounts)
Three Months Ended
March 31,
2004 2005
Revenues:
Activations and services $33,422 $57,242
Equipment 6,654 19,365
Total revenues 40,076 76,607
Cost of revenues, excluding
depreciation and amortization
Activation and services 6,029 5,337
Equipment 16,947 40,097
Total cost of revenues 22,976 45,434
Operating expenses:
General and administrative
expenses, excluding
depreciation and amortization 10,143 17,994
Sales and marketing expenses,
excluding depreciation and
amortization 10,020 18,406
Depreciation and amortization 1,609 1,777
Restructuring and severance
costs - 264
Total operating expenses 21,772 38,441
Loss from operations (4,672) (7,268)
Other income (expense):
Interest income 65 482
Interest expense (177) (208)
Total other expense (112) 274
Net loss (4,784) (6,994)
Preferred stock dividends and
accretion to preferred redemption
value (2,115) -
Net loss attributable to
common stockholders $(6,899) $(6,994)
Basic and diluted net loss per
share $(0.60) $(0.21)
Basic and diluted weighted
average shares outstanding 11,547,514 32,901,398
Three-Months Ended March 31,
2004 2005
Stock-based compensation is
allocated as follows:
General and Administrative $206 $6,361
Sales and Marketing 18 643
Total stock-based compensation $224 $7,004
SEGMENT REVENUES
Three Months Ended
March 31,
2004 2005
Revenue:
Wireless activation and
services $25,573 $65,531
MVNO services 12,520 9,646
Data services 1,983 1,430
Total revenues $40,076 $76,607
Cost of revenues,
excluding depreciation
and amortization:
Wireless activation and
services $14,612 $38,950
MVNO services 7,692 6,227
Data services 672 257
Total cost of revenues $22,976 $45,434
INPHONIC, INC & SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
December 31, March 31,
2004 2005
Assets (unaudited)
Current assets:
Cash and cash equivalents 100,986 84,776
Short-term Investments - 4,967
Accounts receivable, net 19,039 29,014
Inventory, net 10,860 15,989
Prepaid expenses 11,434 2,050
Deferred costs and other current
assets 2,391 2,588
Total current assets 144,710 139,384
Restricted cash and cash equivalent 500 500
Property and equipment, net 5,975 6,790
Goodwill 9,479 19,740
Intangible assets, net 1,490 5,745
Deposits and other assets 1,635 1,784
Total assets 163,789 173,943
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 16,922 20,309
Accrued expenses and other
liabilities 23,502 22,376
Short term capital lease 279 238
Deferred revenue 10,723 14,426
Total current liabilities 51,426 57,349
Long term capital lease 261 222
Total liabilities 51,687 57,571
Stockholders' equity:
Common stock, $0.01 par value
Authorized 200,000,000 shares
at December 31, 2004 and
March 31, 2005; issued and
outstanding 32,252,573 and
33,017,626 shares at
December 31, 2004 and March
31, 2005, respectively; 324 332
Additional paid-in capital 238,241 249,497
Accumulated deficit (126,463) (133,457)
Total stockholders' equity 112,102 116,372
Total liabilities and
stockholders' equity 163,789 173,943
INPHONIC, INC & SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
Three Months
Ended March 31,
2005
(unaudited)
Cash flows from operating activities:
Net loss (6,994)
Adjustments to reconcile net
loss to net cash used in
operating activities
Depreciation and amortization 1,777
Non-cash interest expense,
net 162
Stock-based compensation 7,004
Changes in operating assets
and liabilities, net of
assets and liabilities
received from business
acquisition:
Accounts receivable (9,975)
Inventory (2,304)
Prepaid expenses (1,316)
Deferred costs & other assets (508)
Accounts payable 3,387
Accrued expenses (4,112)
Deferred revenue 3,703
Net cash used in operating activities (9,176)
Cash flows from investing
activities:
Net cash paid for acquisitions (354)
Note receivable from stockholder -
Net purchase of short-term
investments (4,967)
Capitalized expenditures (2,078)
Net cash used in investing activities (7,399)
Cash flows from financing
activities:
Principal repayments on debt (80)
Proceeds from exercise of
warrants and options 647
Capitalized costs of initial
public offering (202)
Net cash (used in)
provided by
financing
activities 365
Net decrease in cash and cash equivalents (16,210)
Cash and cash equivalents at December 31, 2004 100,986
Cash and cash equivalents at March 31, 2005 84,776
Reconciliation of non-GAAP measures to the nearest comparable GAAP
measures
(Unaudited, in millions)
Non-GAAP revenues:
Three months ended March 31, Three months ended March 31,
2004 2005
Non-
Non-GAAP GAAP
Actual Adjustments Results Actual Adjustments Results
Revenues $40.1 $(2.1) (a) $38.0 $76.6 $ - $76.6
The following table reconciles non-GAAP Q2 2004 measures, which are used only
for comparative purposes against Q2 2005 Guidance:
Three months ended June 30, 2004
Non-GAAP
Actual Adjustments Results
Revenues $50.1 $(1.0) (b) $49.1
(a) One-time recognition of $2.1 million in revenues that were deferred
prior to Q1 2004 in accordance with Staff Accounting Bulletin No.
104, Revenue Recognition in Financial Statements.
(b) One-time recognition of $1.0 million in revenues that were deferred
prior to Q2 2004 in accordance with Staff Accounting Bulletin No.
104, Revenue Recognition in Financial Statements.
Reconciliation of non-GAAP measures to the nearest comparable GAAP
measures
(Unaudited in millions)
Adjusted EBITDA:
Three-Months Ended
March 31,
March 31, 2004 2005
Net income (loss) $(4.8) $(7.0)
Non-recurring revenue adjustment (2.1) (b) -
Add Back:
Net interest and other expense
(income) 0.1 (0.3)
Taxes - -
Stock-based compensation 0.2 7.0
Restructuring and severance costs - 0.3 (a)
Depreciation and amortization 1.6 1.8
Adjusted EBITDA: $(5.0) $1.8
The following table reconciles non-
GAAP Q2 2004 measures, which are
used only for comparative purposes
against Q2 2005 Guidance:
Three-Months Ended
June 30, 2004
Net income (loss) $(2.9)
Non-recurring revenue adjustment $(1.0) (c)
Add Back:
Net interest and other expense
(income) 0.1
Taxes -
Stock-based compensation 2.7
Loss on investment 0.2
Depreciation and amortization 1.4
Non-GAAP EBITDA $0.5
(a) Restructuring costs related to the integration of A-1 Wireless USA,
Inc and the related restructuring of the Company's workforce of $0.15
million and severance costs of $0.11 million
(b) One-time recognition of $2.1 million in revenues that were
previously deferred in accordance with Staff Accounting Bulletin No.
104, Revenue Recognition in Financial Statements.
(c) One-time recognition of $1.0 million in revenues that were previously
deferred in accordance with Staff Accounting Bulletin No. 104, Revenue
Recognition in Financial Statements.
Reconciliation of non-GAAP measures to the nearest comparable GAAP measures
(Unaudited, in millions except share and per share amounts)
March 31, 2004 March 31, 2005
Net income (loss) $(4.8) $(7.0)
Non-recurring revenue adjustment (2.1)(b) -
Add Back:
Net interest and other expense
(income) 0.1 (0.3)
Taxes - -
Stock-based compensation 0.2 7.0
Restructuring costs - 0.3 (a)
Depreciation and amortization of
acquisitions 0.4 0.2
Non-GAAP EBT $(6.2) $0.2
EBT per share $(0.21) $0.01
Basic Weighted Average Shares 11,547,514 32,901,398
Add: Diluted shares 18,289,896 8,130,260
Weighted Average Diluted Shares 29,837,410 41,031,658
Diluted shares used in per share
calculation 29,837,410 41,031,658
The following table reconciles non-GAAP Q2 2004 measures, which are used
only for comparative purposes against Q2 2005 Guidance:
Three-Months Ended
June 30, 2004
Net income (loss) $(2.9)
Non-recurring revenue adjustment $(1.0)(c)
Add Back:
Net interest and other expense
(income) 0.1
Taxes -
Stock-based compensation 2.7
Depreciation and amortization of
acquisitions 0.3
Non-GAAP EBT $(0.8)
EBT per share $(0.03)
Basic Weighted Average Shares 11,576,364
Add: Diluted shares 20,187,038
Weighted Average Diluted Shares 31,763,402
Diluted shares used in per share calculation 31,763,402
(a) Restructuring costs related to the integration of A-1 Wireless USA,
Inc and the related restructuring of the Company's workforce of $0.15
million and severance costs of $0.11 million
(b) One-time recognition of $2.1 million in revenues that were
previously deferred in accordance with Staff Accounting Bulletin No.
104, Revenue Recognition in Financial Statements.
(c) One-time recognition of $1.0 million in revenues that were previously
deferred in accordance with Staff Accounting Bulletin No. 104, Revenue
Recognition in Financial Statements.
DATASOURCE: InPhonic, Inc.
CONTACT: Tripp Donnelly VP, Corporate Communications of InPhonic, Inc.,
+1-202-333-0001,
Web site: http://www.inphonic.com/