Attached files
| file | filename |
|---|---|
| 8-K - Vertro, Inc. | vtro8k5122011.htm |
| EX-99.2 - Vertro, Inc. | vrtoex9925122011.htm |
Exhibit 99.1
Vertro, Inc. Announces First Quarter 2011 Results
Company Delivers Sixth Consecutive Profitable Quarter in EBITDA
New High Quality Apps to Help Drive Expansion in Live User Distribution and Retention
NEW YORK, NY – May 12, 2011 – Vertro, Inc. (NASDAQ: VTRO), today reported financial results for the first quarter ended March 31, 2011.
Summary of first quarter 2011 results:
• | Revenue of $8.4 million in Q1 2011, compared to revenue of $9.6 million in Q4 2010; |
• | Gross margins of 94% in Q1 2011, compared to gross margins of 94% in Q4 2010; |
• | There was no Income from Continuing Operations in Q1 2011 (1), compared to Income from Continuing Operations of $0.8 million or $0.11 per diluted share in Q4 2010; |
• | EBITDA of $0.1 million in Q1 2011, compared to EBITDA of $0.6 million in Q4 2010; and |
• | Adjusted EBITDA of $0.3 million in Q1 2011, compared to Adjusted EBITDA of $0.9 million in Q4 2010. |
“Q1 was a challenging quarter, but one in which we believe the distribution issues we suffered in Q4 2010 have been put behind us,” said Peter Corrao, Vertro’s President and CEO.
“Since the beginning of the year, we have made great progress against our app strategy, with the launch of a number of new apps that we expect to help drive distribution, retention and non-search revenue as we move into Q2 and beyond. Examples of new apps released include PeopleDeals (a progressive couponing app), eMusic (with a free daily music download) and the Experian Free Credit Score Estimator.”
First quarter 2011 results
Revenue of $8.4 million in Q1 2011, compared to Q4 2010 revenue of $9.6 million.
Gross margins of 94% in Q1 2011, compared to 94% in Q4 2010. Gross margins exclude customer acquisition costs of $5.3 million in Q1 2011 and $6.2 million in Q4 2010, which are included in Operating Expenses within the Marketing and Sales expense category.
Operating expenses of $7.9 million in Q1 2011, compared to $8.5 million in Q4 2010. Operating expenses in Q1 2011 and Q4 2010 included $0.2 million and $0.3 million, respectively, of non-cash compensation expense.
There was no Income from Continuing Operations in Q1 2011 (1), compared to Income from Continuing Operations of $0.8 million or $0.11 per diluted share in Q4 2010. Q4 2010 Income from Continuing Operations included a net non-recurring income tax benefit of approximately $0.4 million.
Adjusted net income from Continuing Operations of $0.3 million or $0.04 per diluted share in Q1 2011, compared to Adjusted net income of $0.8 million or $0.11 per diluted share in Q4 2010. Q1 2011 Adjusted net income excluded $0.2 million in non cash compensation expense; Q4 2010 Adjusted net income excluded $0.3 million in non-cash compensation expense, and a gain of approximately $0.4 million from a net non-recurring income tax benefit.
EBITDA of $0.1 million in Q1 2011, compared to $0.6 million in Q4 2010. Q1 2011 and Q4 2010 EBITDA included $0.2 million and $0.3 million, respectively, of non-cash compensation expense.
Adjusted EBITDA of $0.3 million in Q1 2011, compared to $0.9 million in Q4 2010. Q1 2011 and Q4 2010 Adjusted EBITDA excluded $0.2 million and $0.3 million, respectively, in non-cash compensation expense.
Cash and cash equivalents were $5.1 million at March 31, 2011, a decrease of $1.4 million from December 31, 2010 cash of $6.5 million. The decrease was primarily due to results from operations, lower payables, and capitalized costs.
As of March 31, 2011, the Company had 46 full time employees, a decrease of 3 from the 49 full time employees as of December 31, 2010.
Non-financial Metrics for the First Quarter 2011 (in millions) (1):
Q1 2010(2) | Q4 2010 | Q1 2011 | |
Average monthly search queries (3)(4) | 234.8 | 361.5 | 331.1 |
ALOT Region One | 151.9 | 161.4 | 145.6 |
ALOT rest-of-world | 82.9 | 200.1 | 185.5 |
ALOT Toolbar live users (5) | 5.8 | 9.4 | 8.6 |
ALOT Region One | 4.1 | 4.7 | 4.4 |
ALOT rest-of-world | 1.7 | 4.6 | 4.2 |
ALOT Homepage unique users | 4.3 | 7.9 | 7.7 (6) |
(1) Certain quarterly breakdowns don't match totals due to rounding; legacy brand users and search queries were de minimis in Q4 2010 so we have ceased reporting these as part of our non-financial metrics.
(2) Q1 2010 total figures do reflect Legacy Brand users and search queries.
(3) Source: internal statistics; total quarterly search volumes across all products; includes error search
(4) Region One' refers to ALOT users in the U.S., Canada, U.K., Ireland, Australia and New Zealand.
(5) Source: Internal statistics; live users are defined as the number of unique toolbar users active on the Internet in the last 15 days of each period. This does not include legacy brand.
(6) Source: Google Analytics "Absolute Unique Visitors" report. (Due to reporting issues arising from Google’s change in pixel code, our Q1 2011 number is estimated based on prior daily unique trends as a % of Toolbar Heartbeats).
Management Conference Call
Management will participate in a conference call to discuss the full results for the Company on May 12, 2011, at approximately 5:00 p.m. ET. Details of the call for interested parties are as follows:
Date: May 12, 2011
Time: 5:00 p.m. ET
Dial-in numbers: (877) 353-0044 / (970) 315-0525 (Intl.)
Live webcast: http://ir.vertro.com/events.cfm
Conference call replay: http://ir.vertro.com/events.cfm
(1) | Income from Continuing Operations is reported as $0.0 million in Q1 2011 as a result of rounding. |
Vertro believes that “EBITDA,” “Adjusted EBITDA,” “Adjusted net income/loss” and “Adjusted net income/loss per share” provide meaningful measures for comparison of the Company’s current and projected operating performance with its historical results due to the significant changes in non-cash amortization that began in 2004 primarily due to certain intangible assets resulting from mergers and acquisitions that have since been written off. Vertro defines Adjusted EBITDA as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business. Vertro uses EBITDA and Adjusted EBITDA as internal measures of its business and believes they are utilized as important measures of performance by the investment community. Vertro sets goals and awards bonuses in part based on performance relative to Adjusted EBITDA. Vertro defines Adjusted net income/loss as net income/loss plus amortization and non-cash compensation expense, plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business, in each case including the tax effects (if any) of the adjustment. Vertro believes the use of these measures does not lessen the importance of GAAP measures.
About Vertro, Inc.
Vertro, Inc. (NASDAQ: VTRO) is an Internet company that owns and operates the ALOT product portfolio. Through ALOT, consumers can discover apps which they can display through three specific products: ALOT Appbar, ALOT Toolbar and ALOT Home. These apps are developed in-house and by third party app developers and are designed to enhance the way people interact with content online. ALOT has millions of users across its products. Together these users conduct high-volumes of type-in-search queries, which are monetized through third-party search and content agreements.
Source: VTRO-E
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 "anticipate," "plan," "will," "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 (1) our ability to successfully execute upon our corporate strategies, (2) our ability to distribute and monetize our international products at rates sufficient to meet our expectations, (3) our ability to develop and successfully market new products and services, (4) the potential acceptance of new products in the market, and (5) the impact of changes to our monetization partners implementation guidelines. Additional key risks are described in Vertro's reports filed with the U.S. Securities and Exchange Commission, including the Form 10-Q for Q1 2011.
Non-GAAP Financial Measures
This press release includes discussion of additional financial measures “EBITDA,” “Adjusted EBITDA,” “Adjusted Net Loss,” “Adjusted Net Income,” “Adjusted Net Loss Per Share” and “Adjusted Net Income Per Share,” which are not considered generally accepted accounting principles (GAAP) 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 GAAP. Vertro provides reconciliations of these two financial measures to GAAP measures in its press releases regarding actual financial results. A reconciliation of these financial measures to income/loss from continuing operations and income/loss loss from continuing operations per share for the three months ended March 31, 2011 are included in this press release.
Vertro, Inc. | |||||||
Unaudited Consolidated Statements of Operations | |||||||
(in thousands, except per share amounts) | |||||||
Three Months | Three Months | ||||||
Ended | Ended | ||||||
March 31, 2011 | March 31, 2010 | ||||||
Revenues | $ | 8,364 | $ | 8,104 | |||
Cost of services | 479 | 506 | |||||
Gross profit | $ | 7,885 | $ | 7,598 | |||
Operating expenses | |||||||
Marketing and sales | 5,700 | 5,448 | |||||
General and administrative | 1,836 | 1,436 | |||||
Product development | 356 | 549 | |||||
Total operating expenses | $ | 7,892 | $ | 7,433 | |||
Income (loss) from operations | $ | (7 | ) | $ | 165 | ||
Foreign exchange rate gain | 5 | 70 | |||||
Gain on sale of domain name | — | 285 | |||||
Income (loss) before provision for income taxes | $ | (2 | ) | $ | 520 | ||
Income tax expense | 7 | 25 | |||||
Income (loss) from continuing operations | $ | (9 | ) | $ | 495 | ||
Income (loss) from discontinued operations, net of income tax | (80 | ) | 804 | ||||
Net income (loss) | $ | (89 | ) | $ | 1,299 | ||
Basic earnings (loss) per share | |||||||
Continuing operations | $ | — | $ | 0.07 | |||
Discontinued operations | $ | (0.01 | ) | $ | 0.12 | ||
Earnings (loss) per share | $ | (0.01 | ) | $ | 0.19 | ||
Diluted earnings (loss) per share | |||||||
Continuing operations | $ | — | $ | 0.07 | |||
Discontinued operations | $ | (0.01 | ) | $ | 0.11 | ||
Earnings (loss) per share | $ | (0.01 | ) | $ | 0.18 | ||
Weighted-average number of common shares outstanding | |||||||
Basic | 7,122 | 6,831 | |||||
Diluted | 7,122 | 7,055 | |||||
* All per share amounts reported are reflective of the 1-for-5 reverse split announced on August 17, 2010 | |||||||
Vertro, Inc. | |||||||
Unaudited Condensed Consolidated Statements of Operations | |||||||
(in thousands, except per share amounts) | |||||||
Three Months | Three Months | ||||||
Ended | Ended | ||||||
March 31, 2011 | December 31, 2010 | ||||||
Revenues | $ | 8,364 | $ | 9,571 | |||
Cost of services | 479 | 534 | |||||
Gross profit | $ | 7,885 | $ | 9,037 | |||
Operating expenses | |||||||
Marketing and sales | 5,700 | 6,528 | |||||
General and administrative | 1,836 | 1,641 | |||||
Product development | 356 | 349 | |||||
Amortization | 46 | 30 | |||||
Total operating expenses | $ | 7,938 | $ | 8,548 | |||
Income (loss) from operations | $ | (7 | ) | $ | 489 | ||
Foreign exchange rate gain (loss) | 5 | (114 | ) | ||||
Other income (expense), net | — | 4 | |||||
Income before provision for income taxes | $ | (2 | ) | $ | 379 | ||
Income tax expense (benefit) | 7 | (423 | ) | ||||
Income from continuing operations | $ | (9 | ) | $ | 802 | ||
Income (loss) from discontinued operations, net of income tax | (80 | ) | 242 | ||||
Net income (loss) | $ | (89 | ) | $ | 1,044 | ||
Basic earnings (loss) per share | |||||||
Continuing operations | $ | — | $ | 0.11 | |||
Discontinued operations | $ | (0.01 | ) | $ | 0.03 | ||
Earnings (loss) per share | $ | (0.01 | ) | $ | 0.14 | ||
Diluted earnings (loss) per share | |||||||
Continuing operations | $ | — | $ | 0.11 | |||
Discontinued operations | $ | (0.01 | ) | $ | 0.03 | ||
Earnings (loss) per share | $ | (0.01 | ) | $ | 0.14 | ||
Weighted-average number of common shares outstanding | |||||||
Basic | 7,122 | 7,014 | |||||
Diluted | 7,122 | 7,334 | |||||
Vertro, Inc. | |||||||
Reconciliations to Condensed Consolidated Statements of Operations | |||||||
(in thousands, except per share data) | |||||||
(Unaudited) | |||||||
Additional information: | Three Months | Three Months | |||||
Ended | Ended | ||||||
March 31, 2011 | March 31, 2010 | ||||||
Adjusted EBITDA | $ | 268 | $ | 388 | |||
Adjusted net income (loss) | $ | 266 | $ | 433 | |||
Adjusted net income (loss) per share - basic | $ | 0.04 | $ | 0.06 | |||
Adjusted net income (loss) per share - diluted | $ | 0.04 | $ | 0.06 | |||
Additional information: | Three Months | Three Months | |||||
Ended | Ended | ||||||
March 31, 2011 | December 31, 2010 | ||||||
Adjusted EBITDA | $ | 268 | $ | 902 | |||
Adjusted net income (loss) | $ | 266 | $ | 803 | |||
Adjusted net income (loss) per share - basic | $ | 0.04 | $ | 0.11 | |||
Adjusted net income (loss) per share - diluted | $ | 0.04 | $ | 0.11 | |||
Three Months | Three Months | ||||||
Ended | Ended | ||||||
March 31, 2011 | March 31, 2010 | ||||||
Reconciliation of Net Income to Adjusted EBITDA | |||||||
Income (loss) from continuing operations | $ | (9 | ) | $ | 495 | ||
Income tax expense (benefit) | 7 | 25 | |||||
Exchange rate loss (gain) | (5 | ) | (70 | ) | |||
Depreciation | 23 | 9 | |||||
Amortization | 46 | — | |||||
EBITDA | $ | 62 | $ | 459 | |||
Non-cash compensation | $ | 167 | $ | 214 | |||
Other (income) expense | — | (285 | ) | ||||
Severance | 39 | — | |||||
Adjusted EBITDA | $ | 268 | $ | 388 | |||
Three Months | Three Months | ||||||
Ended | Ended | ||||||
March 31, 2011 | December 31, 2010 | ||||||
Reconciliation of Net Income to Adjusted EBITDA | |||||||
Income (loss) from continuing operations | $ | (9 | ) | $ | 802 | ||
Income tax expense (benefit) | 7 | (423 | ) | ||||
Exchange rate loss (gain) | (5 | ) | 114 | ||||
Depreciation | 23 | 41 | |||||
Amortization | 46 | 30 | |||||
EBITDA | $ | 62 | $ | 564 | |||
Non-cash compensation | 167 | 338 | |||||
Severance | 39 | — | |||||
Adjusted EBITDA | $ | 268 | $ | 902 | |||
Three Months | Three Months | ||||||
Ended | Ended | ||||||
March 31, 2011 | March 31, 2010 | ||||||
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) | |||||||
Income (loss) from continuing operations | $ | (9 | ) | $ | 495 | ||
Depreciation | 23 | 9 | |||||
Amortization | 46 | — | |||||
Non-cash compensation | 167 | 214 | |||||
Non-recurring other income (expense), net | — | (285 | ) | ||||
Severance | 39 | — | |||||
Adjusted net income (loss) | $ | 266 | $ | 433 | |||
Adjusted net income (loss) per share - basic | $ | 0.04 | $ | 0.06 | |||
Adjusted net income (loss) per share - diluted | $ | 0.04 | $ | 0.06 | |||
Shares used in per share calculation - basic | 7,122 | 6,831 | |||||
Shares used in per share calculation - diluted | 7,122 | 7,055 | |||||
Three Months | Three Months | ||||||
Ended | Ended | ||||||
March 31, 2011 | December 31, 2010 | ||||||
Reconciliation of Net Income to Adjusted Net Income | |||||||
Income (loss) from continuing operations | $ | (9 | ) | $ | 802 | ||
Non-recurring income tax (benefit) expense | — | (408 | ) | ||||
Depreciation | 23 | 41 | |||||
Amortization | 46 | 30 | |||||
Non-cash compensation | 167 | 338 | |||||
Severance | 39 | — | |||||
Adjusted net income | $ | 266 | $ | 803 | |||
Adjusted net Income per share - basic | $ | 0.04 | $ | 0.11 | |||
Adjusted net Income per share - diluted | $ | 0.04 | $ | 0.11 | |||
Shares used in per share calculation - basic | 7,122 | 7,014 | |||||
Shares used in per share calculation - diluted | 7,122 | 7,334 | |||||
* All per share amounts reported are reflective of the 1-for-5 reverse split announced on August 17, 2010 | |||||||
PART 1. FINANCIAL INFORMATION | |||||||
ITEM 1. Financial Statements | |||||||
Vertro, Inc. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except par values) | |||||||
March 31, | December 31, | ||||||
2011 | 2010 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
CURRENT ASSETS | |||||||
Cash and cash equivalents | $ | 5,115 | $ | 6,430 | |||
Restricted cash | 58 | 58 | |||||
Accounts receivable, less allowances of $11 and $7, respectively | 2,883 | 3,160 | |||||
Income tax receivable | 350 | 329 | |||||
Prepaid expenses and other current assets | 370 | 387 | |||||
TOTAL CURRENT ASSETS | $ | 8,776 | $ | 10,364 | |||
Property and equipment, net | 360 | 319 | |||||
Intangible assets, net | 903 | 549 | |||||
Other assets | 328 | 329 | |||||
TOTAL ASSETS | $ | 10,367 | $ | 11,561 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
CURRENT LIABILITIES | |||||||
Accounts payable | $ | 3,174 | $ | 3,663 | |||
Accrued expenses | 1,917 | 2,482 | |||||
Income tax payable | 6 | 5 | |||||
TOTAL CURRENT LIABILITIES | $ | 5,097 | $ | 6,150 | |||
Long-term liabilities | 703 | 697 | |||||
TOTAL LIABILITIES | $ | 5,800 | $ | 6,847 | |||
COMMITMENTS AND CONTINGENCIES | |||||||
STOCKHOLDERS’ EQUITY | |||||||
Preferred stock, $.005 par value; authorized, 500 shares; none issued and outstanding | — | — | |||||
Common stock, $.005 par value; authorized, 40,000 shares; issued 7,584 and 7,401, respectively; outstanding 7,125 and 6,985, respectively | $ | 37 | $ | 36 | |||
Additional paid-in capital | 272,073 | 271,908 | |||||
Treasury stock, 459 and 416 shares at cost, respectively | (7,148 | ) | (6,924 | ) | |||
Accumulated other comprehensive income | 12,914 | 12,914 | |||||
Accumulated deficit | (273,309 | ) | (273,220 | ) | |||
TOTAL STOCKHOLDERS' EQUITY | $ | 4,567 | $ | 4,714 | |||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 10,367 | $ | 11,561 | |||
Contact Information:
Michael Buchanan
Director of Investor Relations
Michael.Buchanan@Vertro.com
Tel: (212) 231-2000