PlanetOut Reports Fourth-Quarter and Full-Year 2007 Results

SAN FRANCISCO, Feb. 29  /PRNewswire-FirstCall/ -- PlanetOut Inc. (NASDAQ:LGBT), the leading media and entertainment company exclusively focused on the gay and lesbian market, today reported its financial results for the fourth quarter and full year ended December 31, 2007.

Total revenue for the full year ended December 31, 2007 was $70.0 million, before adjusting for discontinued operations, and was within the range of $69.0 to $72.0 million provided during PlanetOut's third quarter 2007 earnings call on November 1, 2007.  GAAP net loss for the full year ended December 31, 2007 was $51.2 million.  Adjusted EBITDA for the full year ended December 31, 2007 was $(9.7) million, and was also within the range of $(9.0) million to $(11.0) million provided on the earnings call noted above.

Use of Non-GAAP Financial Measures

This press release includes the non-GAAP financial measures of Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted earnings per share ("Adjusted EPS") -- Basic and Diluted, which are reconciled to net income (loss), net income (loss), and net income (loss) per share -- basic and diluted, respectively, which the company believes are the most comparable GAAP measures. The company uses these non-GAAP financial measures for internal managerial purposes, when providing its business outlook, and as a means to evaluate period-to-period comparisons. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of the company's operations that, when viewed with its GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the company's business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, income (loss) from operations, cash flow from operating activities and net income (loss) and net income (loss) per share calculated in accordance with generally accepted accounting principles.

Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and other income (expense), net, less Adjusted EBITDA from Discontinued Operations. Adjusted EBITDA from Discontinued Operations is defined as net income (loss) from discontinued operations before interest, taxes, depreciation and amortization, stock-based compensation, restructuring and non-cash impairment charges. The company considers Adjusted EBITDA to be an important indicator of its operational strength. The company deducts other income (expense), net, consisting primarily of interest income (expense), and Adjusted EBITDA from Discontinued Operations from net income (loss) in calculating Adjusted EBITDA because it regards interest income (expense) and Adjusted EBITDA from Discontinued Operations to be non-operating items. This measure also eliminates the effects of depreciation and amortization, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and stock-based compensation expense from period to period, which the company believes is useful to management and investors in evaluating its operating performance, as depreciation and amortization, restructuring, non- cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and stock-based compensation costs are not directly attributable to the underlying performance of the company's business operations. A limitation associated with this measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the company's businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. A further limitation associated with this measure is that it does not include stock-based compensation expenses related to the company's workforce. Management compensates for this limitation by providing supplemental information about stock-based compensation expense on the face of the consolidated statements of operations.

Adjusted Net Income (Loss) is defined as net income (loss) excluding stock-based compensation expense, restructuring, non-cash impairment charges, executive transition, financial advisory fees and income (loss) from discontinued operations. The company considers Adjusted Net Income (Loss) to be a profitability measure which facilitates the forecasting of its operating results for future periods and allows for the comparison of its results to historical periods and to other companies in its industry. A limitation of Adjusted Net Income (Loss) is that it does not include all items that impact the company's net income (loss) and net income (loss) per share for the period. Adjusted EPS -- Basic and Diluted are defined as Adjusted Net Income (Loss) calculated on a basic and diluted per share basis, respectively.

PlanetOut's management believes the non-GAAP information is useful because it can enhance the understanding of the company's ongoing economic performance and PlanetOut therefore uses non-GAAP information internally to evaluate and manage the company's operations. PlanetOut has chosen to provide this information to investors to enable them to perform comparisons of operating results in a manner similar to how the company analyzes its operating results.

About PlanetOut Inc.

PlanetOut Inc. is the leading global media and entertainment company exclusively serving the lesbian, gay, bisexual and transgender (LGBT) community.

PlanetOut's digital media brands include Gay.com, PlanetOut.com, Advocate.com, Out.com, OutTraveler.com and HIVPlusMag.com. PlanetOut print media brands include The Advocate, Out, The Out Traveler and HIVPlus, as well as SpecPub, Inc. titles. Transaction services brands include e-commerce Web sites Kleptomaniac.com and BuyGay.com, and book publisher Alyson Publications.

PlanetOut, based in San Francisco with additional offices in New York and Los Angeles, offers Global 1000 and local advertisers access to what it believes to be the most extensive multi-channel, multi-platform network of gay and lesbian people in the world. For more information, please visit http://www.planetoutinc.com/.

                              PlanetOut Inc.
        Unaudited Condensed Consolidated Statements of Operations
                 (In thousands, except per share amounts)

                                    Three months ended   Twelve months ended
                                       December 31,          December 31,
                                      2006      2007       2006       2007
  Revenue:
    Advertising services             $7,428    $6,194    $26,479    $25,555
    Subscription services             6,025     5,167     24,447     21,901
    Transaction services              2,167     1,826      7,830      5,557
      Total revenue                  15,620    13,187     58,756     53,013
  Operating costs and expenses:(*)
    Cost of revenue                   7,339     7,937     26,744     29,886
    Sales and marketing               4,160     3,969     15,592     16,266
    General and administrative        3,073     3,163     11,690     15,122
    Restructuring                      (101)       49        791        630
    Depreciation and amortization     1,638     1,646      5,187      6,723
    Impairment of goodwill and
     intangible assets                  -       4,814        -       25,914
      Total operating costs and
       expenses                      16,109    21,578     60,004     94,541
  Loss from operations                 (489)   (8,391)    (1,248)   (41,528)
  Other income (expense), net          (374)       53       (616)    (1,441)
  Loss from continuing operations
   before income taxes                 (863)   (8,338)    (1,864)   (42,969)
  Provision (benefit) for income taxes    7       -           45         (6)
  Loss from continuing operations      (870)   (8,338)    (1,909)   (42,963)
  Income (loss) from discontinued
   operations, net of taxes            (860)      298     (1,801)    (8,207)

  Net loss                          $(1,730)  $(8,040)   $(3,710)  $(51,170)

  Loss per share from continuing
   operations - basic and diluted    $(0.50)   $(2.06)    $(1.10)   $(14.94)
  Income (loss) per share from
   discontinued operations -
   basic and diluted                 $(0.49)    $0.07     $(1.04)    $(2.85)
  Net loss per share -
   basic and diluted                 $(0.99)   $(1.99)    $(2.14)   $(17.79)
  Weighted-average shares used to
   compute net loss per share -
   basic and diluted                  1,739     4,048      1,733      2,876

  (*)Includes stock-based
   compensation expense as follows:
       Cost of revenue                  $50       $34        $67       $198
       Sales and marketing               22         3         40         40
       General and administrative       168        89        180        506
         Total stock-based
          compensation expense         $240      $126       $287       $744

  Supplemental Financial Data
  Adjusted EBITDA                      $690   $(1,512)    $4,152    $(9,671)
  Adjusted Net Loss                   $(591)  $(3,101)     $(356)  $(14,328)
  Adjusted EPS:
    Basic                            $(0.34)   $(0.77)    $(0.21)    $(4.98)
    Diluted                          $(0.34)   $(0.77)    $(0.21)    $(4.98)



                              PlanetOut Inc.
    Note to Unaudited Condensed Consolidated Statements of Operations



This press release includes the non-GAAP financial measures of Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted earnings per share ("Adjusted EPS") -- Basic and Diluted, which are reconciled to net income (loss), net income (loss) and net income (loss) per share -- basic and diluted, respectively, which the Company believes are the most comparable GAAP measures. The Company uses these non-GAAP financial measures for internal managerial purposes, when providing its business outlook, and as a means to evaluate period-to-period comparisons. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with its GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company's business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, income (loss) from operations, cash flow from operating activities and net income (loss) and net income (loss) per share calculated in accordance with generally accepted accounting principles.

Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation, restructuring, non- cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations and other income (expense), net, less Adjusted EBITDA from Discontinued Operations.  Adjusted EBITDA from Discontinued Operations is defined as net income (loss) from discontinued operations before interest, taxes, depreciation and amortization, stock-based compensation, restructuring and non-cash impairment charges. The Company considers Adjusted EBITDA to be an important indicator of its operational strength. The Company deducts other income (expense), net, consisting primarily of interest income (expense), and Adjusted EBITDA of Discontinued Operations from net income (loss) in calculating Adjusted EBITDA because it regards interest income (expense) and Adjusted EBITDA from Discontinued Operations to be non-operating items.  This measure also eliminates the effects of depreciation and amortization, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations less Adjusted EBITDA from discontinued operations and stock-based compensation expense from period to period, which the Company believes is useful to management and investors in evaluating its operating performance, as depreciation and amortization, restructuring, non-cash impairment charges, executive transition, financial advisory fees, income (loss) from discontinued operations less Adjusted EBITDA from Discontinued Operations and stock-based compensation costs are not directly attributable to the underlying performance of the Company's business operations. A limitation associated with this measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company's businesses. Management evaluates the costs of such tangible and intangible assets through other financial measures such as capital expenditures. A further limitation associated with this measure is that it does not include stock-based compensation expenses related to the Company's workforce. Management compensates for this limitation by providing supplemental information about stock-based compensation expense on the face of the consolidated statements of operations.

Adjusted Net Income (Loss) is defined as net income (loss) excluding stock-based compensation expense, restructuring, non-cash impairment charges, executive transition, financial advisory fees and income (loss) from discontinued operations. The Company considers Adjusted Net Income (Loss) to be a profitability measure which facilitates the forecasting of its operating results for future periods and allows for the comparison of its results to historical periods and to other companies in its industry. A limitation of Adjusted Net Income (Loss) is that it does not include all items that impact the Company's net income (loss) and net income (loss) per share for the period.  Adjusted EPS - Basic and Diluted are defined as Adjusted Net Income (Loss) calculated on a basic and diluted per share basis, respectively.

The Company undertakes no obligation to provide or update any such estimates or supplemental information in the future.

                              PlanetOut Inc.
             Unaudited Condensed Consolidated Balance Sheets
                              (In thousands)

                                                          December 31,
                                                    2006              2007
  Assets
  Current assets:
    Cash and cash equivalents                      $9,674            $8,534
    Short-term investments                          2,050               -
    Restricted cash                                 2,854               167
    Accounts receivable, net                        8,963             6,868
    Inventory                                       1,690             1,113
    Prepaid expenses and other current assets       4,137             2,188
    Current assets of discontinued operations       7,573               -
    Current assets held for sale                      -               1,795
      Total current assets                         36,941            20,665
  Property and equipment, net                      10,737             8,441
  Goodwill                                         28,590             7,123
  Intangible assets, net                            9,763             1,870
  Other assets                                      1,021               580
  Long-term assets of discontinued
   operations                                       6,537               -
  Long-term assets held for sale                      -               2,673
      Total assets                                $93,589           $41,352

  Liabilities and stockholders' equity
  Current liabilities:
    Accounts payable                               $1,691            $1,338
    Accrued expenses and other liabilities          3,310             2,491
    Deferred revenue, current portion               8,989             5,760
    Capital lease obligations, current portion        694               838
    Notes payable, current portion net
     of discount                                    8,817               -
    Deferred rent, current portion                    228               264
    Current liabilities of discontinued
     operations                                     6,068               -
    Current liabilities related to
     assets held for sale                             -               1,676
      Total current liabilities                    29,797            12,367
  Deferred revenue, less current
   portion                                          1,474             1,089
  Capital lease obligations, less
   current portion                                  1,504               984
  Notes payable, less current portion
   and discount                                     8,100               -
  Deferred rent, less current portion               1,569             1,401
  Long-term liabilities related to
   assets held for sale                               -                 602
      Total liabilities                            42,444            16,443
  Stockholders' equity:
    Common stock                                       17                40
    Additional paid-in capital                     89,532           114,406
    Accumulated other comprehensive loss             (122)              (85)
    Accumulated deficit                           (38,282)          (89,452)
      Total stockholders' equity                   51,145            24,909
      Total liabilities and stockholders' equity  $93,589           $41,352



                              PlanetOut Inc.
        Unaudited Condensed Consolidated Statements of Cash Flows
                              (In thousands)

                                                      Twelve months ended
                                                          December 31,
                                                   2006                2007
  Cash flows from operating activities:
    Net loss                                    $(3,710)           $(51,170)
      Net loss from discontinued operations,
       net of tax                                 1,801               8,207
    Adjustments to reconcile net loss
     to net cash used in operating activities:
      Depreciation and amortization               5,186               6,723
      Impairment of goodwill and
       intangible assets                            -                25,914
      Non-cash services expense                     -                   185
      Provision for doubtful accounts               219                 211
      Restructuring                                  19                 203
      Stock-based compensation                      293                 744
      Amortization of debt discount                  55                 392
      Amortization of deferred rent                 (43)               (132)
      Loss on disposal or write-off of
       property and equipment                        46                 940
      Changes in operating assets and
       liabilities, net of acquisition effects
       and classification of assets and
       liabilities related to assets
       held for sale:
        Accounts receivable                      (3,152)              1,987
        Inventory                                  (341)                263
        Prepaid expenses and other
         assets                                  (1,628)              1,489
        Accounts payable                            357                (281)
        Accrued expenses and other
         liabilities                                560                (858)
        Deferred revenue                            (24)             (1,602)
          Net cash used in continuing
           operating activities                    (362)             (6,785)
          Net cash used in discontinued
           operations                            (4,364)             (1,131)
          Net cash used in operations            (4,726)             (7,916)

  Cash flows from investing
   activities:
    Purchases of property and equipment          (4,454)             (3,844)
    Changes in short-term investments            (2,050)              2,050
    Changes in restricted cash                   (2,854)              2,687
    Acquisitions, net of cash acquired               76                 -
    Acquisition of discontinued
     operations, net of cash                     (5,479)                -
          Net cash provided by (used in)
           investing activities                 (14,761)                893

  Cash flows from financing
   activities:
    Proceeds from exercise of common
     stock options and warrants                     461                  71
    Proceeds from equity financing,
     net of transaction costs                       -                24,017
    Proceeds from issuance of notes payable      10,500                 -
    Proceeds from repayment of note
     receivable from stockholder                    843                 -
    Principal payments under capital
     lease obligations and notes
     payable                                     (1,105)            (18,097)
    Tax withholding payments
     reimbursed by restricted stock                 -                  (137)
          Net cash provided by financing
           activities                            10,699               5,854

  Effect of exchange rate on cash and
   cash equivalents                                   1                  29

  Net decrease in cash and cash equivalents      (8,787)             (1,140)
  Cash and cash equivalents, beginning
   of period                                     18,461               9,674

  Cash and cash equivalents, end of period       $9,674              $8,534

  Supplemental disclosure of noncash
   investing and financing activities:
    Property and equipment and related
     maintenance acquired under capital leases   $2,525                $461
    Issuance of common stock warrants
     in connection with debt issuance
     and financial advisory fees                   $445                $-



                              PlanetOut Inc.
    Reconciliations to Condensed Consolidated Statements of Operations
           (Unaudited, in thousands, except per share amounts)

                                    Three months ended   Twelve months ended
                                        December 31,         December 31,
                                      2006       2007      2006       2007

  Adjusted EBITDA:
    Net loss                        $(1,730)   $(8,040)  $(3,710)  $(51,170)
    (Income) loss from
     discontinued operations            860       (298)    1,801      8,207
    Provision (benefit) for income
     taxes                                7        -          45         (6)
    Other (income) expense, net         374        (53)      616      1,441
    Loss from operations               (489)    (8,391)   (1,248)   (41,528)
    Stock-based compensation expense    240        126       287        744
    Restructuring                      (101)        49       791        630
    Non-cash impairment charges *       -        5,012       -       26,579
    Executive transition                140        -         475        497
    Financial advisory fees             -           50       -          185
    Depreciation and amortization     1,638      1,646     5,187      6,723
    Adjusted EBITDA from continuing
     operations                       1,428     (1,508)    5,492     (6,170)
    Adjusted EBITDA from discontinued
     operations                        (738)        (4)   (1,340)    (3,501)
                                       $690    $(1,512)   $4,152    $(9,671)

  Adjusted Net Loss:
    Net loss                        $(1,730)   $(8,040)  $(3,710)  $(51,170)
    (Income) loss from
     discontinued operations            860       (298)    1,801      8,207
    Stock-based compensation expense    240        126       287        744
    Restructuring                      (101)        49       791        630
    Non-cash impairment charges *       -        5,012       -       26,579
    Executive transition                140        -         475        497
    Financial advisory fees             -           50       -          185
                                      $(591)   $(3,101)    $(356)  $(14,328)

  Adjusted EPS:
      Basic                          $(0.34)    $(0.77)   $(0.21)    $(4.98)
      Diluted                        $(0.34)    $(0.77)   $(0.21)    $(4.98)

    Weighted-average shares used to
     compute Adjusted EPS:
      Basic                           1,739      4,048     1,733      2,876
      Diluted                         1,739      4,048     1,733      2,876

  *   Non-cash impairment charges for the twelve months ended December 31,
      2007 include $93,000 of charges for the three months ended March 31,
      2007 not previously defined as a reconciling item in our calculation
      of Adjusted EBITDA or Adjusted Net Income (Loss).



                              PlanetOut Inc.
          Unaudited Summary of Consolidated Segment Information
                              (In thousands)

                             Three months ended       Three months ended
                              December 31, 2006        December 31, 2007

                         Online Publishing Total  Online Publishing Total
  Revenue:
    Advertising
     services             $3,874  $3,554   $7,428  $2,474  $3,720   $6,194
    Subscription
     services              4,393   1,632    6,025   3,957   1,210    5,167
    Transaction services     512   1,655    2,167     232   1,594    1,826
      Total revenue        8,779   6,841   15,620   6,663   6,524   13,187
  Direct operating costs
   and expenses:
    Cost of revenue        2,846   4,493    7,339   2,907   5,030    7,937
    Sales and marketing    2,462   1,698    4,160   2,277   1,692    3,969
      Total direct
       operating costs
       and expenses        5,308   6,191   11,499   5,184   6,722   11,906

  Contribution margin
   (loss)                 $3,471    $650    4,121  $1,479   $(198)   1,281
  Other operating costs
   and expenses:
    General and
     administrative                         3,073                    3,163
    Restructuring                            (101)                      49
    Depreciation and
     amortization                           1,638                    1,646
    Impairment of goodwill
     and intangible assets                    -                      4,814
      Total other operating
       costs and expenses                   4,610                    9,672
  Loss from operations                       (489)                  (8,391)
  Other income (expense),
   net                                       (374)                      53
  Provision (benefit) for
   income taxes                                 7                      -
  Income (loss) from
   discontinued operations                   (860)                     298
  Net loss                                $(1,730)                 $(8,040)



                          Twelve months ended        Twelve months ended
                           December 31, 2006          December 31, 2007

                        Online Publishing Total   Online Publishing Total
  Revenue:
    Advertising
     services           $11,116 $15,363  $26,479  $9,365 $16,190  $25,555
    Subscription
     services            18,378   6,069   24,447  16,476   5,425   21,901
    Transaction
     services             2,129   5,701    7,830   1,191   4,366    5,557
      Total revenue      31,623  27,133   58,756  27,032  25,981   53,013
  Direct operating
   costs and expenses:
    Cost of revenue      10,240  16,504   26,744  12,673  17,213   29,886
    Sales and marketing  10,236   5,356   15,592   9,296   6,970   16,266
      Total direct
       operating costs
       and expenses      20,476  21,860   42,336  21,969  24,183   46,152
  Contribution margin   $11,147  $5,273   16,420  $5,063  $1,798    6,861
  Other operating
   costs and expenses:
    General and
     administrative                       11,690                   15,122
    Restructuring                            791                      630
    Depreciation and
     amortization                          5,187                    6,723
    Impairment of
     goodwill and
     intangible assets                       -                     25,914
      Total other
       operating costs
       and expenses                       17,668                   48,389
  Loss from operations                    (1,248)                 (41,528)
  Other expense, net                        (616)                  (1,441)
  Provision (benefit)
   for income taxes                           45                       (6)
  Loss from
   discontinued
   operations                             (1,801)                  (8,207)
  Net loss                               $(3,710)                $(51,170)


DATASOURCE: PlanetOut Inc.



CONTACT:  Dan Steimle of PlanetOut Inc., [phone]



Web site:  http://www.planetoutinc.com/

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