Vertro, Inc. Announces Second Quarter 2010 Results
Revenue From Continuing Operations Up Approximately 42% Year-Over-Year; $0.2 Million in GAAP Net Income and $0.5 Million in Adjusted EBITDA From Continuing Operations
On Thursday August 5, 2010, 4:02 pm
NEW YORK, NY--(Marketwire - 08/05/10) - Vertro, Inc. (NASDAQ:VTRO - News) today reported financial results for the second quarter ended June 30, 2010.
Summary of Second Quarter 2010 Results from Continuing Operations:
-- Revenue of $8.5 million in Q2 2010, compared to revenue of $8.1 million
in Q1 2010;
-- Gross margins of 96% in Q2 2010, compared to the 94% gross margins
in Q1 2010;
-- GAAP net income from continuing operations of $0.2 million or $0.01 per
basic share in Q2 2010, compared to GAAP net income from continuing
operations of $0.5 million or $0.02 per basic share in Q1 2010. Q1 2010
GAAP net income included a non-recurring $0.3 million gain from the
sale of an Internet domain name;
-- EBITDA of $0.2 million in Q2 2010, compared to EBITDA of $0.5 million
in Q1 2010. Q2 2010 EBITDA included $0.2 million of non-cash
compensation expense. Q1 2010 EBITDA included $0.2 million of non-cash
compensation expense and a non-recurring $0.3 million gain from the
sale of an Internet domain name; and
-- Adjusted EBITDA of $0.5 million in Q2 2010, compared to Adjusted
EBITDA of $0.4 million in Q1 2010. Q2 2010 Adjusted EBITDA excluded
$0.2 million of non-cash compensation expense. Q1 2010 Adjusted EBITDA
excluded $0.2 million of non-cash compensation expense and a
non-recurring $0.3 million gain from the sale of an Internet domain
name.
"Q2 was another solid quarter. We delivered approximately 42% year-over-year revenue growth, added cash to the balance sheet, and posted our third consecutive quarter of profitability. We achieved continued growth in our user base both nationally and internationally, and we continued to expand the portfolio of apps we offer our toolbar and homepage users," commented Peter Corrao, Vertro's President and CEO.
"While we are pleased to have continued our recent trend of increasing sequential quarterly revenue, we believe our growth in the second quarter was tempered by our focus on regaining compliance with NASDAQ's shareholder equity requirement. We cautiously managed our customer acquisition program during the quarter to try and ensure that we could regain compliance with only a minimal capital raise. We are pleased to have now regained compliance with the NASDAQ shareholder equity requirement and expect to get back to more robust revenue growth for the remainder of 2010 and beyond."
Second Quarter 2010 Results from Continuing Operations
Revenue was $8.5 million in Q2 2010, compared to Q1 2010 revenue of $8.1 million.
Gross margins were 96% in Q2 2010, compared to 94% in Q1 2010. Gross margin excludes customer acquisition costs of $5.2 million in Q2 2010 and $4.9 million in Q1 2010, which is included in consolidated operating expenses within the marketing and sales category.
Operating expenses were $7.9 million in Q2 2010, compared to $7.4 million in Q1 2010. The operating expenses in both Q1 and Q2 2010 included $0.2 million of non-cash compensation expense.
GAAP net income from continuing operations was $0.2 million or $0.01 per basic share in Q2 2010, compared to $0.5 million or $0.02 per basic share in Q1 2010. Q1 2010 GAAP net income included a non-recurring $0.3 million gain from the sale of an Internet domain name.
Adjusted net income was $0.5 million or $0.02 per diluted share in Q2 2010, compared to Adjusted net income of $0.4 million or $0.01 per diluted share in Q1 2010. Q2 2010 Adjusted net income excluded $0.2 million of non-cash compensation expense. Q1 2010 Adjusted net income excluded $0.2 million of non-cash compensation expense and a non-recurring $0.3 million gain from the sale of an Internet domain name.
EBITDA was $0.2 million in Q2 2010, compared to EBITDA of $0.5 million in Q1 2010. Q2 2010 EBITDA included $0.2 million of non-cash compensation expense. Q1 2010 EBITDA included $0.2 million of non-cash compensation expense and a non-recurring $0.3 million gain from the sale of an Internet domain name.
Adjusted EBITDA was $0.5 million in Q2 2010 compared to Adjusted EBITDA of $0.4 million in Q1 2010. Q2 2010 Adjusted EBITDA excluded $0.2 million of non-cash compensation expense. Q1 2010 Adjusted EBITDA excluded $0.2 million of non-cash compensation expense and a non-recurring $0.3 million gain from the sale of an Internet domain name.
Cash and cash equivalents were $5.9 million at June 30, 2010, an increase of $0.7 million from March 31, 2010 cash of $5.2 million. The increase was primarily a result of gains from operations and the execution of a $0.25 million Stock Purchase Agreement between the Company, Red Oak Fund, LP and Pinnacle Fund, LLLP.
As of June 30, 2010, the Company had an active base of under 50 full time employees, which is compared to 42 full time employees as of March 31, 2010.
Selected metrics from continuing operations for Q2 2010 are available on Vertro's investor relations website at: http://ir.vertro.com/results.cfm
Management Conference Call
Management will participate in a conference call to discuss the full results for the Company on Thursday, August 5, 2010, at approximately 4:30 p.m. ET. Details of the call for interested parties are as follows:
Date: Thursday, August 5, 2010
Time: 4:30 p.m. ET
Dial-in number: (877) 353-0044 / (970) 315-0525 (Intl.)
Live webcast: http://ir.vertro.com/events.cfm
Conference call replay: http://ir.vertro.com/events.cfm
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 - News) is an Internet company that owns and operates the ALOT product portfolio. ALOT's products are designed to 'Make the Internet Easy' by enhancing the way consumers engage with content online. Through ALOT, Internet users can discover best-of-the-web content and display that content through customizable toolbar and homepage products. ALOT has millions of live users across its product portfolio. 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, and (4) the potential acceptance of new products in the market. Additional key risks are described in Vertro's reports filed with the U.S. Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2009 and the Form 10-Qs for Q1 and Q2 2010.
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 principle (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 net income/loss and net income/loss per share for the three months ended June 30, 2010, are included in this press release below.
Vertro, Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) For the For the For the For the Three Three Six Six Months Months Months Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, -------- -------- --------- -------- 2010 2009 2010 2009 -------- -------- --------- -------- Revenues $ 8,461 6,002 $ 16,565 $ 12,236 Cost of services 363 445 869 901 -------- -------- --------- -------- Gross profit 8,098 5,557 15,696 11,335 Operating expenses Marketing and sales 5,608 6,143 11,056 10,896 General and administrative 1,802 2,193 3,239 5,285 Product development 535 633 1,083 1,331 Restructuring - 0 (15) Amortization - 40 - 40 -------- -------- --------- -------- Total operating expenses 7,945 9,009 15,378 17,537 -------- -------- --------- -------- Income (loss) from operations 153 (3,452) 318 (6,202) Foreign exchange rate gain (loss) 50 (398) 119 (398) Gain on sale of domain name - - 285 - Other Income (expense), net 10 9 10 (72) -------- -------- --------- -------- Income (loss) before provision for income taxes 213 (3,841) 732 (6,672) Income tax expense 17 14 42 27 -------- -------- --------- -------- Income (loss) from continuing operations 196 (3,855) 690 (6,699) Income (loss) from discontinued operations, net of income taxes (51) 491 753 (4,667) Gain on sale of discontinued operations, net of income taxes - 213 0 7,139 -------- -------- --------- -------- Net income (loss) $ 145 $ (3,151) 1,443 $ (4,227) ======== ======== ========= ======== Basic earnings (loss) per share Continuing operations $ 0.01 $ (0.11) $ 0.02 $ (0.20) ======== ======== ========= ======== Discontinued operations $ - $ 0.02 $ 0.02 $ 0.07 ======== ======== ========= ======== Total earnings (loss) per share $ 0.01 $ (0.09) $ 0.04 $ (0.13) ======== ======== ========= ======== Diluted earnings (loss) per share Continuing operations $ 0.01 $ (0.11) $ 0.02 $ (0.20) ======== ======== ========= ======== Discontinued operations $ - $ 0.02 $ 0.02 $ 0.07 ======== ======== ========= ======== Total earnings (loss) per share $ 0.01 $ (0.09) $ 0.04 $ (0.13) ======== ======== ========= ======== Weighted-average number of common shares outstanding Basic 34,229 33,707 34,192 33,453 ======== ======== ========= ======== Diluted 35,379 33,707 35,341 33,453 ======== ======== ========= ======== Vertro, Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) For the Three For the Three Months Ended Months Ended June 30, March 31, ------------ ------------- 2010 2010 ------------ ------------- Revenues $ 8,461 $ 8,104 Cost of services 363 506 ------------ ------------- Gross profit 8,098 7,598 Operating expenses Marketing and sales 5,608 5,448 General and administrative 1,802 1,436 Product development 535 549 ------------ ------------- Total operating expenses 7,945 7,433 ------------ ------------- Income from operations 153 165 Foreign exchange rate gain 50 70 Gain on sale of domain name - 285 Other Income, net 10 - ------------ ------------- Income before provision for income taxes 213 520 Income tax expense 17 25 ------------ ------------- Income from continuing operations 196 495 Income (loss) from discontinued operations, net of income taxes (51) 804 ------------ ------------- Net income $ 145 $ 1,299 ============ ============= Basic earnings per share Continuing operations $ 0.01 $ 0.02 ============ ============= Discontinued operations $ - $ 0.02 ============ ============= Earnings per share $ 0.01 $ 0.04 ============ ============= Diluted earnings per share Continuing operations $ 0.01 $ 0.02 ============ ============= Discontinued operations $ - $ 0.02 ============ ============= Earnings per share $ 0.01 $ 0.04 ============ ============= Weighted-average number of common shares outstanding Basic 34,229 34,154 ============ ============= Diluted 35,379 35,276 ============ ============= Vertro, Inc. Reconciliations to Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) Three Months Three Months Six Months Six Months Additional Ended June Ended June Ended June Ended June information: 30, 2010 30, 2009 30, 2010 30, 2009 ----------- ----------- ----------- ----------- Adjusted EBITDA 503 (3,166) 891 (5,445) =========== =========== =========== =========== Adjusted net income (loss) 532 (3,593) 955 (5,992) =========== =========== =========== =========== Adjusted net income (loss) per share - basic $ 0.02 $ (0.11) $ 0.03 $ (0.18) =========== =========== =========== =========== Adjusted net income (loss) per share - diluted $ 0.02 $ (0.11) $ 0.03 $ (0.18) =========== =========== =========== =========== Additional Three Months Three Months information: Ended June Ended March 30, 2010 31, 2010 ----------- ----------- Adjusted EBITDA 503 388 =========== =========== Adjusted net income 532 424 =========== =========== Adjusted net income per share - basic $ 0.02 $ 0.01 =========== =========== Adjusted net income per share - diluted $ 0.02 $ 0.01 =========== =========== Three Months Three Months Six Months Six Months Ended June Ended June Ended June Ended June 30, 2010 30, 2009 30, 2010 30, 2009 ----------- ----------- ----------- ----------- Reconciliation of Net Income (Loss) to Adjusted EBITDA Income (Loss) from continuing operations 196 (3,855) 690 (6,699) Interest income (expense), net and exchange rate loss (60) 389 (129) 470 Income tax expense 17 14 42 27 Depreciation 14 24 23 50 Amortization - 40 - 40 ----------- ----------- ----------- ----------- EBITDA 167 (3,388) 626 (6,112) Gain on Sale of domain name - - (285) - Non-Cash Compensation 218 222 432 682 Restructuring - - - (15) Severence 118 - 118 - ----------- ----------- ----------- ----------- Adjusted EBITDA 503 (3,166) 891 (5,445) =========== =========== =========== =========== Three Months Three Months Ended June Ended March 30, 2010 31, 2010 ----------- ----------- Reconciliation of Net Income to Adjusted EBITDA Income from continuing operations 196 495 Interest income, net and exchange rate gain (60) (70) Income tax expense 17 25 Depreciation 14 9 ----------- ----------- EBITDA 167 459 Other Income - (285) Non-Cash Compensation 218 214 Severence 118 - ----------- ----------- Adjusted EBITDA 503 388 =========== =========== Three Months Three Months Six Months Six Months Ended June Ended June Ended June Ended June 30, 2010 30, 2009 30, 2010 30, 2009 ----------- ----------- ----------- ----------- Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) Income (loss) from continuing operations 196 (3,855) 690 (6,699) Gain on sale of domain name - - (285) - Non-cash compensation 218 222 432 682 Restructuring - - - (15) Severence 118 - 118 - Amortization - 40 - 40 ----------- ----------- ----------- ----------- Adjusted net income (loss) 532 (3,593) 955 (5,992) =========== =========== =========== =========== Adjusted net income (loss) per share - basic $ 0.02 $ (0.11) $ 0.03 $ (0.18) Adjusted net income (loss) per share - diluted $ 0.02 $ (0.11) $ 0.03 $ (0.18) Shares used in per share calculation - basic 34,229 33,707 34,192 33,453 Shares used in per share calculation - diluted 35,379 33,707 35,341 33,453 Three Months Three Months Ended June Ended March 30, 2010 31, 2010 ----------- ----------- Reconciliation of Net Income to Adjusted Net Income Income from continuing operations 196 495 Gain on sale of domain name - (285) Non-cash compensation 218 214 Severence 118 - ----------- ----------- Adjusted net income 532 424 =========== =========== Adjusted net Income per share - basic $ 0.02 $ 0.01 Adjusted net Income per share - diluted $ 0.02 $ 0.01 Shares used in per share calculation - basic 34,229 34,154 Shares used in per share calculation - diluted 35,379 35,276 Vertro, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par values) June 30, December 31, ASSETS 2010 2009 ----------- ----------- (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 5,879 $ 4,837 Accounts receivable, less allowances of $570 and $679 at June 30, 2010 and December 31, 2009 2,991 3,041 Income tax receivable 320 695 Prepaid expenses and other current assets 546 651 ----------- ----------- TOTAL CURRENT ASSETS 9,736 9,224 Property and equipment, net 122 71 Restricted cash 200 200 Other assets 343 517 ----------- ----------- TOTAL ASSETS $ 10,401 $ 10,012 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 3,668 $ 4,706 Accrued expenses 2,571 2,778 Income tax payable 20 299 Deferred revenue - 25 ----------- ----------- TOTAL CURRENT LIABILITIES 6,259 7,808 Long-term liabilities 1,306 1,365 ----------- ----------- TOTAL LIABILITIES 7,565 9,173 ----------- ----------- STOCKHOLDERS' EQUITY Preferred stock, $.001 par value; authorized, 500 shares; none issued and outstanding - - Common stock, $.001 par value; authorized, 200,000 shares; issued 36,191 and 35,642, respectively; outstanding 34,231 and 33,852, respectively 36 35 Additional paid-in capital 271,316 270,690 Treasury stock, 1,960 and 1,790 shares at cost, respectively (6,795) (6,722) Accumulated other comprehensive income 12,914 12,914 Accumulated deficit (274,635) (276,078) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 2,836 839 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,401 $ 10,012 =========== ===========
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