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MIVA ANNOUNCES SECOND QUARTER 2005 RESULTS
FORT MYERS, Fla. - August 15, 2005 - MIVA, Inc. (NASDAQ: MIVA), the leading independent Performance Marketing Network in the world, today reported financial results for the three and six months ended June 30, 2005. Financial highlights include:
- Revenue of $48.8 million, up 76% compared to the same period in 2004;
- GAAP net loss of $4.08 per diluted share, including an estimated $119 million non-cash impairment charge as well as a tax-adjusted patent litigation settlement charge;
- Net loss of $0.05 per diluted share, excluding the estimated impairment charge and the tax-adjusted litigation settlement charge;
- EBITDA, excluding the estimated non-cash impairment charge and the litigation settlement charge, of $1.9 million;
- Adjusted net loss of $0.01 per diluted share, excluding the estimated non-cash impairment charge and the tax-adjusted litigation settlement charge; and
- Cash, cash equivalents and short-term investments at June 30 of approximately $50 million.
"We are energized by the team's successful execution on a number of planned initiatives during the second quarter, especially our global re-branding to MIVA," said Craig Pisaris-Henderson, chairman and chief executive officer of MIVA. "Our operating expenses were impacted by increased investment in these initiatives, the payment of additional fees to the Company's former public accounting firm and costs associated with our patent case. However, going forward we are confident that our global brand momentum, customized solutions and dedication to traffic quality will allow us to leverage our unique position as the industry's leading independent player.
"As we look ahead, we plan to continue to invest for the future. We are focused on expanding our publisher product offering, developing infrastructure to support innovative performance search formats and broadening our distribution segmentation to help our partners better monetize their traffic and retain their end users," added Mr. Pisaris-Henderson.
Business Highlights
- Unified FindWhat.com, Espotting, Miva Corporation and Comet Systems under one brand and launched six new market-specific websites for each of the major territories where the Company currently offers its services including the U.S., U.K., Germany, France, Spain and Italy;
- Introduced two fully redesigned applications, Account Setup and Ad Center, for its U.S. advertisers;
- Introduced an innovative custom toolbar solution and a new expandable banner product for its publishers;
- Introduced configurable algorithmic web search to its distribution partners in Germany and France, leveraging its licensing agreement with Fast Search & Transfer™ (FAST™) and broadening the total suite of monetization and user retention products available to its partners;
- Won high-profile deals in Europe, recently announcing the signing of the following agreements: Grupo ZETA, 20 Minutos, allesklar, meinestadt, Quality Channel and Express Newspapers; and
- Signed Eniro as its first private label partner in Europe on July 1, 2005.
Second Quarter Results
The Company recorded an estimated non-cash impairment charge related to goodwill and other intangible assets in the amount of $119 million, or $3.87 per diluted share. The final measurement of the impairment has yet to be finalized; therefore, as permitted by SFAS 142, the estimated impairment charge represents management's current best estimate as to the actual charge, which may be higher or lower than the estimated charge. Upon finalization of the actual impairment charge in the third quarter of 2005, the Company will record any resulting increase or decrease to the estimated charge. After recording the estimated impairment, the Company's intangible assets decreased, with the balance of goodwill being approximately $76 million.
Revenue was $48.8 million in Q2 2005, an increase of 76% over Q2 2004 revenue of $27.8 million. GAAP net loss was $125.2 million or $4.08 per diluted share in Q2 2005, which includes the estimated $119 million impairment charge and the tax-adjusted litigation settlement charge. GAAP net loss, excluding the estimated impairment charge and the tax-adjusted litigation settlement charge, was $1.5 million or $0.05 per diluted share, compared to GAAP net income of $3.6 million or $0.15 per diluted share for the same period in 2004. EBITDA, excluding the estimated impairment charge and the tax-adjusted litigation settlement charge, was $1.9 million in Q2 2005, compared to EBITDA of $7.6 million for the same period in 2004. Adjusted net loss, excluding the estimated impairment charge and the tax-adjusted litigation settlement charge, was $0.01 per diluted share in Q2 2005, compared to adjusted net income of $0.17 per diluted share for the same period in 2004.
Operating expenses, excluding the estimated impairment charge and the litigation settlement charge, were $24.4 million in Q2 2005, compared to $9.4 million for the same period in 2004.
The Company's Q2 2005 revenue and ongoing operating expenses increased substantially versus the same period in 2004, primarily due to the inclusion of operating results from the merger with MIVA Media Europe, completed on July 1, 2004.
Amortization expense in Q2 2005 was $1.9 million, compared to $1.1 million for the same period in 2004. The increase in non-cash amortization expense from Q2 2004 to Q2 2005 reflects amortization of intangible assets resulting primarily from the merger with MIVA Media Europe on July 1, 2004.
The Company's cash, cash equivalents and short-term investments at June 30, 2005 totaled approximately $50 million, which does not reflect amounts due under the litigation settlement. The Company generated $4.9 million in cash flow from operations in Q2 2005, compared to $3.8 million for the same period in 2004 and $3.2 million in Q1 2005.
MIVA believes that "EBITDA" and "Adjusted EPS" can provide meaningful comparisons of the Company's current and projected operating performance with its historical results due to the significant increase in non-cash amortization that began in 2004 primarily due to certain intangible assets resulting from mergers and acquisitions. MIVA defines EBITDA as net income before interest, income taxes, depreciation, and amortization and defines Adjusted EPS as EPS before tax-adjusted amortization expense. MIVA uses EBITDA and Adjusted EPS as internal barometers of its business. The Company sets goals and awards bonuses in part based on performance relative to these measurements, but believes their use does not lessen the importance of GAAP measures.
2005 Guidance
As previously reported, in the first half of 2005, the Company's operating expenses were impacted by several factors including new or expanded investments associated with its global re-branding and algorithmic search technology initiatives (FAST™) and significantly higher accounting fees associated with its audit, financial reviews and Sarbanes-Oxley Act compliance. With the exception of algorithmic search-related initiatives, the Company expects the impact from these factors to decline in the second half of the year.
Over the second half of the year, the Company anticipates increasing investments into algorithmic search technology initiatives, expanding its publisher product suite, developing infrastructure to support innovative performance search formats and adding additional team members with specialized technical and management skills necessary to execute the Company's strategy.
MIVA anticipates full year 2005 revenue to be between $185 and $200 million, compared to previous guidance issued on May 5, 2005, for full year 2005 revenue of $175 to $200 million.
Operating Metrics
Beginning with Q2 2004, MIVA reported two new operating metrics to provide better insight into the progress of its business: Paid Click-throughs and Active Relationships.
Quarter |
Paid Click-throughs (in millions) |
Active Relationships + |
Q2 2004 |
219 |
63,000 |
Q3 2004 |
224 |
70,000 |
Q4 2004 |
251 |
75,000 |
Q1 2005 |
259 |
85,000 |
Q2 2005 |
217 |
87,000 |
Note: The amounts above for Q2 2004 are presented on a pro forma basis to include metrics from MIVA Small Business, MIVA Direct, B&B and MIVA Media Europe as if all companies were wholly-owned on April 1, 2004. The metrics for these acquired/merged companies for the pre-closing periods are based on information obtained from their records during those periods.
+ MIVA defines active relationships for a fiscal quarter to be those that have had a paying transaction with the Company during the quarter. MIVA has relationships with over 100,000 online businesses, including businesses that are using its MIVA Merchant storefront software, or that have made deposits in their MIVA Media accounts to fund future transactions, but some have not purchased any products or services from the Company during the quarter and hence are not included in the active relationships metric.
Management Conference Call
Chairman and Chief Executive Officer Craig Pisaris-Henderson, President and Chief Operating Officer Phillip Thune and Chief Financial Officer William Seippel will participate in a conference call to discuss the full results and outlook for the Company on August 15, 2005, at approximately 4:45 p.m. ET. The conference call will be simulcast on the Internet at www.vcall.com/CEPage.asp?ID=92889.
A replay of the conference call will be available on the investor relations area of MIVA's website at ir.miva.com/medialist.cfm. Interested parties may email questions in advance to Peter Weinberg of MIVA, Inc. at peter.weinberg@miva.com.
About MIVA®, Inc.
MIVA is the leading independent Performance Marketing Network, dedicated exclusively to helping businesses grow. MIVA connects millions of buyers with sellers at exactly the right place and time. MIVA delivers qualified leads to advertisers, helps maximize revenue for publisher partners, facilitates commerce for online merchants and provides relevant information to customers. The Company has relationships with more than 100,000 customers, spanning North America, Europe and Asia.
Forward-looking Statements
This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "plan," "intend," "believe" or "expect'" or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation, the potential that the information and estimates used to predict anticipated revenues and expenses were not accurate; the risks associated with the fact that we have material weaknesses in our internal control over financial reporting that may prevent us from being able to accurately report our financial results or prevent fraud; the risk that we have in the past and may in the future incur goodwill impairment charges that materially adversely affect our earnings and our operating results; the potential that demand for our services will decrease; the risk that we will not be able to continue to enter into new online marketing relationships to drive qualified traffic to our advertisers; the risk that our distribution partners will use unacceptable means to obtain users; risks associated with our ability to compete with competitors and increased competition for distribution partners; political and global economic risks attendant to our business; risks associated with legal and cultural pressures on certain of our advertiser's service and/or product offerings; other economic, business and competitive factors generally affecting our business; the risk that operation of our business model infringes upon intellectual property rights held by others; our reliance on distribution partners for revenue generating traffic; risks associated with our expanding international presence; difficulties executing integration strategies or achieving planned synergies with acquired businesses and private label initiatives; the risk that we will not be able to effectively manage our growth; the risk that new technologies could emerge which could limit the effectiveness of our products and services; risks associated with the operation of our technical systems, including system interruptions, security breaches and damage; risks associated with Internet security, including security breaches which, if they were to occur, could damage our reputation and expose us to loss or litigation; risks relating to regulatory and legal uncertainties, both domestically and internationally. Additional key risks are described in MIVA's reports filed with the U.S. Securities and Exchange Commission, including the Form 10-K/A for fiscal 2004, and the most recently filed quarterly report on Form 10-Q. MIVA undertakes no obligation to update the information contained herein.
Non-GAAP Financial Measures
This press release includes discussion of additional financial measures "EBITDA" and "Adjusted EPS." These measures are defined as non-GAAP financial measures by the Securities and Exchange Commission and may differ from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. generally accepted accounting principles. MIVA provides reconciliations of these two financial measures to net income and net income per share in its press releases regarding actual financial results. A reconciliation of these two financial measures to net income and net income per share for the three and six months ended June 30, 2005 included in this press release is set forth below.
®Registered trademark of MIVA, Inc.
All other marks properties of their respective companies.
MIVA, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended June 30, six Months Ended June 30,
2005 2004 2005 2004
-------------- -------------- -------------- --------------
Revenues $ 48,790 $ 27,765 $ 106,978 $ 52,451
Cost of service 25,861 12,461 57,102 24,627
-------------- -------------- -------------- --------------
Gross profit 22,929 15,304 49,876 27,824
Operating expenses
Marketing, sales and service 9,157 2,863 17,049 5,081
General and administrative 10,961 4,194 20,864 7,653
Product development 2,304 1,296 4,297 1,896
Impairment loss on goodwill and
other intangible assets 118,895 - 118,895 -
Amortization 1,942 1,085 3,917 1,274
Patent litigation settlement 8,000 - 8,000 -
-------------- -------------- -------------- --------------
Total operating expenses 151,259 9,438 173,022 15,904
-------------- -------------- -------------- --------------
Income (loss)from operations (128,330) 5,866 (123,146) 11,920
Interest income, net 178 94 279 274
Exchange rate loss (73) - (135) -
-------------- -------------- -------------- --------------
Income (loss) before provision for
income taxes (128,225) 5,960 (123,002) 12,194
Income tax expense (benefit) (2,991) 2,323 (969) 4,755
-------------- -------------- -------------- --------------
Net income (loss) $ (125,234) $ 3,637 $ (122,033) $ 7,439
============== ============== ============== ==============
Net income (loss) per share
Basic $ (4.08) $ 0.16 $ (3.98) $ 0.33
============== ============== ============== ==============
Diluted $ (4.08) $ 0.15 $ (3.98) $ 0.30
============== ============== ============== ==============
Weighted-average number of common
shares outstanding
Basic 30,702 22,943 30,658 22,423
============== ============== ============== ==============
Diluted 30,702 25,022 30,658 24,532
============== ============== ============== ==============
MIVA, Inc.
Reconciliations to Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Additional information: Three Months Ended June 30, six Months Ended June 30,
2005 2004 2005 2004
-------------- -------------- -------------- --------------
EBITDA, exduding non-cash
impairment charge $ 1,859 $ 7,636 $ 10,250 $ 14,470
============== ============== ============== ==============
Adjusted net income (loss),
excluding non-cash impairment charge
and patent litigation settlement charge $ (274) $ 4,310 $ 4,131 $ 8,229
============== ============== ============== ==============
Adjusted net income (loss),
excluding non-cash impairment charge
and patent litigation settlement charge
per diluted share $ (0.01) $ 0.17 $ 0.13 $ 0.33
============== ============== ============== ==============
Reconciliation of EBITDA,
Excluding Non-cash Impairment Charge
and patent Litigation Settlement
Charge to Net Income (Loss) Three Months Ended June 30, six Months Ended June 30,
2005 2004 2005 2004
-------------- -------------- -------------- --------------
EBITDA, exduding non-cash
impairment charge and patent
litigation settlement charge $ 1,859 $ 7,636 $ 10,250 $ 14,470
Interest income, net and exchange rate
loss 105 94 144 274
taxes 2,991 (2,323) 969 (4,755)
Depreciation (1,352) (685) (2,584) (1,279)
Non-cash impairment charge (118,895) - (118,895) -
Patent litigation settlement charge (8,000) - (8,000) -
Amortization (1,942) (1,085) (3,917) (1,274)
-------------- -------------- -------------- --------------
Net income (loss) $ (125,234) $ 3,637 $ (122,033) $ 7,439
============== ============== ============== ==============
Reconciliation of Adjusted Net Income (Loss),
Excluding Non-cash Impairment Charge
and Tax-adjusted patent Litigation Settlement
Charge to Net Income (Loss) Three Months Ended June 30, six Months Ended June 30,
2005 2004 2005 2004
-------------- -------------- -------------- --------------
Adjusted Net Income (Loss), exduding non-cash
impairment charge and patent
litigation settlement charge $ (274) $ 4,310 $ 4,131 $ 8,229
Amortization (1,942) (1,085) (3,917) (1,274)
tax effect - amortization 757 412 1,528 484
Non-cash impairment charge (118,895) - (118,895) -
Patent litigation settlement charge (8,000) - (8,000) -
tax effect - Patent litigation
settlement charge 3,120 - 3,120 -
-------------- -------------- -------------- --------------
Net income (loss) $ (125,234) $ 3,637 $ (122,033) $ 7,439
============== ============== ============== ==============
Reconciliation of Adjusted Net Income (Loss) per diluted share
Excluding Non-cash Impairment Charge
and Tax-adjusted patent Litigation Settlement
Charge per diluted share
to Net Income (Loss) per share
- diluted Three Months Ended June 30, six Months Ended June 30,
2005 2004 2005 2004
-------------- -------------- -------------- --------------
Adjusted EPS $ (0.01) $ 0.17 $ 0.13 $ 0.33
Amortization per diluted share (0.06) (0.04) (0.13) (0.05)
tax effect - amortization
per diluted share 0.02 0.02 0.05 0.02
Non-cash impairment charge
per diluted share (3.87) - (3.88) -
Patent litigation settlement charge
per diluted share (0.26) - (0.26) -
tax effect - Patent litigation
settlement charge per diluted share 0.10 - 0.10 -
-------------- -------------- -------------- --------------
Net income (loss) per share -diluted $ (4.08) $ 0.15 $ (3.98) $ 0.30
============== ============== ============== ==============
Reconciliation of GAAP Net Income (Loss)
Excluding Non-cash Impairment Charge
and Tax-adjusted patent Litigation Settlement
Charge to Net Income (Loss) Three Months Ended June 30, six Months Ended June 30,
2005 2004 2005 2004
-------------- -------------- -------------- --------------
GAAP net income (Loss)
excluding non-cash impairment charge
and Tax-adjusted patent litigation settlement
charge $ (1,459) $ 3,637 $ 1,742 $ 7,439
Non-cash impairment charge (118,895) - (118,895) -
Patent litigation settlement charge (8,000) - (8,000) -
tax effect - Patent litigation
settlement 3,120 - 3,120 -
-------------- -------------- -------------- --------------
Net income (loss) $ (125,234) $ 3,637 $ (122,033) $ 7,439
============== ============== ============== ==============
Reconciliation of GAAP Net Income (Loss) per diluted share
Excluding Non-cash Impairment Charge
and Tax-adjusted patent Litigation Settlement
Charge to Net Income (Loss)
per Share - Diluted Three Months Ended June 30, six Months Ended June 30,
2005 2004 2005 2004
-------------- -------------- -------------- --------------
Adjusted EPS $ (0.05) $ 0.15 $ 0.06 $ 0.30
Non-cash impairment charge
per diluted share (3.87) - (3.88) -
Patent litigation settlement charge
per diluted share (0.26) - (0.26) -
tax effect - Patent litigation
settlement charge 0.10 - 0.10 -
-------------- -------------- -------------- --------------
Net income (loss) per Share - Diluted $ (4.08) $ 0.15 $ (3.98) $ 0.30
============== ============== ============== ==============
MIVA, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value)
June 30, December 31,
ASSETS 2005 2004
-------------- --------------
(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 36,810 $ 29,220
Short-term investments 13,137 25,004
Accounts receivable,
less allowance for doubtful accounts
of $2,050 and $3,095 at June 30, 2005 and
December 31, 2004, respectively 22,508 26,117
Deferred tax assets 2,200 2,510
Income tax receivable 5,855 1,626
Prepaid expenses and other current assets 2,096 1,555
-------------- --------------
Total current assets 82,606 86,032
PROPERTY AND EQUIPMENT - NET 18,217 16,755
INTANGIBLE ASSETS
Goodwill 76,327 201,183
Other intangible assets, net 13,126 15,567
Vendor agreements, net 16,141 18,736
DEFERRED TAX ASSETS 84 1,964
OTHER ASSETS 1,432 967
-------------- --------------
Total assets $ 207,933 $ 341,204
============== ==============
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 39,118 $ 33,421
Deferred revenue 4,010 5,798
Current portion of long-term debt 341 3,941
Other current liabilities 810 760
-------------- --------------
Total current liabilities 44,279 43,920
DEFERRED TAX LIABILITIES 3,926 5,855
LONG-TERM DEBT AND OTHER LONG-TERM LIABILITIES 3,148 3,750
-------------- --------------
Total liabilities 51,353 53,525
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, $.001 par value; authorized,
500 shares; none issued and outstanding - -
Common stock, $.001 par value;
authorized, 200,000 shares;
issued 30,716 and 30,502, respectively;
outstanding
30,673 and 30,459, respectively 31 31
Additional paid-in capital 248,296 247,132
Treasury stock; 43 shares at cost (804) (804)
Accumulated other comprehensive income 2,578 12,808
Retained earnings (93,521) 28,512
-------------- --------------
Total stockholders’ equity 156,580 287,679
-------------- --------------
Total liabilities and stockholders’ equity $ 207,933 $ 341,204
============== ==============
U.S. MIVA Investor Relations Contact: |
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