Revenues for the second quarter of 2011 were $54.3 million, compared to revenues of $52.4 million for the second quarter of 2010.

Income from continuing operations for the second quarter was $4.4 million, or $0.12 per diluted share.

Net loss for the second quarter of 2011 was $3.9 million, or $0.10 per diluted share, which includes a charge of $7.7 million, or $0.20 per diluted share, due to the loss on the sale of the e-commerce business; compared to net income of $0.7 million, or $0.02 per diluted share, for the second quarter of 2010.

Adjusted EBITDA, as defined below, was $9.0 million for the second quarter of 2011, compared to $11.3 million for the second quarter of 2010.

Non-GAAP net income, as defined below, which excludes non-cash income taxes, was $6.2 million, or $0.16 per diluted share for the second quarter of 2011, compared to $2.2 million, or $0.06 per diluted share, for the second quarter of 2010.

Cash, cash equivalents, and marketable securities as of June 30, 2011 totaled $263.4 million. At the end of the quarter, the Company had no debt obligations.

Revenues:

Cost of sales:

Gross profit

Expenses and other income:

Engineering and technology ⁽²⁾

Sales and marketing ⁽²⁾

General and administrative ⁽²⁾

Depreciation

Other loss (income), net ⁽³⁾

Total expenses and other loss

Income from continuing operations before income taxes

Income tax expense

Income from continuing operations

Discontinued operations:⁽¹⁾

Loss from discontinued operations, net of taxes ⁽²⁾

Loss on sale of discontinued operations, net of taxes

Net income (loss)

Earnings per share - Basic

Income from continuing operations

Loss from discontinued operations

Loss on sale of discontinued operations, net of taxes

Net income (loss) per share - Basic

Earnings per share - Diluted

Income from continuing operations

Loss from discontinued operations

Loss on sale of discontinued operations

Net income (loss) per share - Diluted

Weighted average shares outstanding used in computing basic income per share

Weighted average shares outstanding used in computing diluted income per share

In the three and six months ended June 30, 2011, the Company completed the sale of its Mercantila e-commerce business. The operating results of that business have been presented as discontinued operations for all periods presented. Income taxes related to discontinued operations were a benefit of $0.6 million and a benefit of $1.3 million for the three and six months ended June 30, 2011, respectively. Income taxes related to discontinued operations were $0.2 million for the three and six months ended June 30, 2010. A loss, net of an income tax benefit of $5.1 million, on the sale of the Mercantila business was recorded for the three and six months ended June 30, 2011, respectively. Revenue, operating expenses and income taxes, loss from discontinued operations and the loss on sale of these discontinued operations are presented below (in thousands):

Revenue

Operating expenses and income taxes

Loss from discontinued operations, net of taxes

Loss on sale of discontinued operations, net of taxes

Stock-based compensation expense for the three and six months ended June 30, 2011 and 2010 is allocated among the following captions (in thousands):

Cost of sales - services

Engineering and technology

Sales and marketing

General and administrative

Discontinued operations

Total stock-based compensation expense

In the six months ended June 30, 2011, the Company recorded a $1.5 million charge as a result of the increase in the estimated fair value of a contingent liability related to operation of the assets acquired on April 1, 2010 from Make The Web Better, and recorded a $1.5 million gain on the resolution of a contingency.

ASSETS

Current assets:

Cash and cash equivalents

Short-term investments, available-for-sale

Accounts receivable, net

Other receivables

Prepaid expenses and other current assets

Assets of discontinued operations

Total current assets

Property and equipment, net

Goodwill

Other intangible assets, net

Other long-term assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses and other current liabilities

Liabilities from discontinued operations

Total current liabilities

Other long-term liabilities

Total liabilities

Stockholders’ equity:

Common stock

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income (loss)

Total stockholders’ equity

Total liabilities and stockholders’ equity

Summary of cash, cash equivalents, and short-term investments:

Cash and cash equivalents

Short-term investments, available-for-sale

Cash, cash equivalents, and short-term investments

Operating activities:

Net income (loss)

Adjustments to reconcile net income to net cash provided by operating activities of continuing operations:

Loss on sale of discontinued operations

Loss from discontinued operations

Stock-based compensation

Depreciation and amortization of intangible assets

Earn-out contingent liability adjustments

Gain on resolution of contingent liability

Deferred income taxes

Excess tax benefits from stock-based award activity

Amortization of premium on investments, net

Loss on disposal of assets

Other

Cash provided (used) by changes in operating assets and liabilities:

Accounts receivable

Other receivables

Prepaid expenses and other current assets

Other long-term assets

Accounts payable

Accrued expenses and other current and long-term liabilities

Net cash provided by operating activities of continuing operations

Investing activities:

Business acquisitions, net of cash acquired

Purchases of property and equipment

Other long-term assets

Proceeds from the sale of assets

Proceeds from maturities of investments

Purchases of investments

Net cash used by investing activities of continuing operations

Financing activities:

Proceeds from stock option exercises and issuance of stock through employee stock purchase plan

Tax payments from shares withheld upon vesting of restricted stock units

Earn-out payments for business acquisitions

Repayment of capital lease obligations

Excess tax benefits from stock-based award activity

Net cash provided by financing activities of continuing operations

Discontinued operations:

Net cash povided used by operating activities attributable to discontinued operations

Net cash used by investing activities attributable to discontinued operations

Net cash provided used by discontinued operations

Net decrease in cash and cash equivalents

Cash and cash equivalents:

Beginning of period

End of period

Net income (loss) ⁽²⁾

Discontinued operations

Depreciation and amortization of intangible assets

Stock-based compensation

Other loss (income), net ⁽³⁾

Income tax expense

Adjusted EBITDA ⁽⁴⁾

Net income (loss) ⁽²⁾

Discontinued operations

Income from continuing operations ⁽²⁾

Non-cash income tax expense from continuing operations⁽¹⁾

Non-GAAP net income ⁽⁴⁾

Income from continuing operations - diluted

Non-cash income taxes per share - diluted ⁽⁴⁾

Non-GAAP net income per share - diluted ⁽⁴⁾

Net income

Depreciation

Stock-based compensation

Other income, net ⁽³⁾

Income tax expense

Adjusted EBITDA

InfoSpace’s Adjusted EBITDA is calculated by adjusting net income determined in accordance with generally accepted accounting principles (“GAAP”) to exclude the effects of discontinued operations (including loss from discontinued operations, net of taxes, and loss on sale of discontinued operations, net of taxes), income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, and other (income) loss, net (which includes such items as adjustments to the fair values of contingent liabilities related to business combinations, gains on resolutions of contingencies, interest income, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed above. InfoSpace’s management believes that Adjusted EBITDA provides meaningful supplemental information regarding the Company’s performance by excluding certain expenses and gains that management believes are not indicative of its core business operating results. InfoSpace uses this non-GAAP financial measure for internal management purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. InfoSpace believes that Adjusted EBITDA is a common measure used by investors and analysts to evaluate its performance, that it provides a more complete understanding of the results of operations and trends affecting the Company’s business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure.

As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).

Other income, net, primarily consists of adjustments to the fair values of contingent liabilities related to business combinations, gains on resolutions of contingencies, interest income, foreign currency gains or losses, and gains or losses from the disposal of assets.

Amounts previously disclosed have been revised to reflect the effect of classifying the Company’s Mercantila e-commerce business as discontinued operations.

Net income ⁽²⁾

Discontinued operations

Depreciation and amortization of intangible assets

Stock-based compensation

Other loss (income), net ⁽³⁾

Income tax expense

Adjusted EBITDA ⁽⁴⁾

Net income ⁽²⁾

Discontinued operations

Income from continuing operations ⁽²⁾

Non-cash income tax expense from continuing operations⁽¹⁾

Non-GAAP net income ⁽⁴⁾

Income from continuing operations per share - diluted

Non-cash income taxes per share - diluted ⁽⁴⁾

Non-GAAP net income per share - diluted ⁽⁴⁾

InfoSpace’s Adjusted EBITDA is calculated by adjusting net income determined in accordance with generally accepted accounting principles (“GAAP”) to exclude the effects of discontinued operations (including loss from discontinued operations, net of taxes, and loss on sale of discontinued operations, net of taxes), income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, and other (income) loss, net (which includes such items as adjustments to the fair values of contingent liabilities related to business combinations, gains on resolutions of contingencies, interest income, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed above. InfoSpace’s management believes that Adjusted EBITDA provides meaningful supplemental information regarding the Company’s performance by excluding certain expenses and gains that management believes are not indicative of its core business operating results. InfoSpace uses this non-GAAP financial measure for internal management purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. InfoSpace believes that Adjusted EBITDA is a common measure used by investors and analysts to evaluate its performance, that it provides a more complete understanding of the results of operations and trends affecting the Company’s business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure.

As presented in the Preliminary Condensed Consolidated Statements of Operations (unaudited).

Other income, net, primarily consists of adjustments to the fair values of contingent liabilities related to business combinations, gains on resolutions of contingencies, interest income, foreign currency gains or losses, and gains or losses from the disposal of assets.

Amounts previously disclosed have been revised to reflect the effect of classifying the Company’s Mercantila e-commerce business as discontinued operations.