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IIG EPS $0.90, Non-GAAP $0.42, Estimates $0.23. GOOD!!! Boosts forecast.

iMergent Announces Second Quarter Fiscal 2007 Financial Results
Tuesday February 6, 4:01 pm ET
- Reports Total Revenue of $35.7 Million -
- Delivers Record $37.6 Million in Net Dollar Volume of Contracts Written -
- Delivers $5.1 Million of Net Cash Provided by Operating Activities Increasing Cash and Cash Equivalents to $37.1 Million -
- Increases Trade Receivables, Net of Allowance for Doubtful Accounts, by $4.3 Million to $29.5 Million -
- Posts GAAP Net Income of $11.7 Million, Inclusive of $5.2 Million Income Tax Benefit -
- Posts GAAP Diluted EPS of $0.90 -
- Posts Record Non-GAAP Diluted EPS of $0.42 -
- Increases Guidance for Fiscal 2007 Net Dollar Volume of Contracts Written to Grow Approximately 40% over Fiscal 2006 -

OREM, Utah--(BUSINESS WIRE)--iMergent, Inc. (AMEX:IIG - News), a leading provider of eCommerce and software for small businesses and entrepreneurs, today announced its financial results for the three and six months ended December 31, 2006.

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Don Danks, chairman and chief executive officer, stated, "We have executed on our plan and delivered another quarter of tremendous growth. The first half of the fiscal year has exceeded our expectations on all fronts. For our second fiscal quarter, revenue reached $35.7 million with strong domestic sales and a reinvigorated international program. During the three months ended December 31, 2006, we held 297 workshops, including 82 internationally, compared to 200 workshops, including 65 internationally, during the comparable period last year."

Danks added, "Response to our marketing campaigns has been strong, and our sales teams are gaining traction. In January 2007, we announced AVAIL, a new telephone/voicemail/email/fax product that complements iMergent's web site development software. This demonstrates iMergent's ongoing commitment to providing our customers with the highest level of products and services. In addition, AVAIL is expected to drive recurring revenue."

"This quarter we posted another record for Net Dollar Volume of Contracts Written, which reached $37.6 million, representing a 50 percent increase over the comparable quarter last year," stated Robert Lewis, chief financial officer. "Also during the quarter, we generated $5.1 million in net cash from operating activities."

As of December 31, 2006, cash and cash equivalents were $37.1 million; net trade receivables were $29.5 million; working capital was $28.9 million; and working capital excluding deferred revenue was $52.4 million.

Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics

In December 2005, the company changed its business model to: (1) limit certain "free" services to a period of one year for all customers who purchased the StoresOnline software prior to December 20, 2005, and (2) begin charging customers for those services as part of customer support. This change in business model resulted in the recognition of previously deferred product and other revenue of $108.0 million in December 2005, which would have been recognized in future periods had the change in business model not occurred.

Because of the change in business model described above, the company believes the Net Dollar Volume of Contracts Written during each period is a consistent and relevant measure to understand the operations of the company. Net Dollar Volume of Contracts Written represents the gross dollar amount of contracts executed during the period less estimates for bad debts, discounts incurred on sales of trade receivables, and estimates for customer returns. The company also believes non-GAAP net income and non-GAAP net income per diluted common share are useful measures. The non-GAAP measures, including non-GAAP net income and non-GAAP net income per diluted common share, assume 1) the Net Dollar Volume of Contracts Written is recognized as revenue at the time of sale; 2) certain corresponding cost of product and other revenue and selling and marketing expenses are also recognized at the time of sale; and 3) the income tax provision is based upon an estimated federal, state, and foreign statutory blended rate of 40 percent. Non-GAAP net income per diluted common share is defined as non-GAAP net income divided by the weighted average of diluted common shares outstanding. Tables reconciling GAAP and non-GAAP measures follow in this press release.

Fiscal Second Quarter 2007 Compared to 2006

* Revenues for the second quarter of fiscal 2007 were $35.7 million. This compares to $120.5 million for the second quarter of fiscal 2006, which included the recognition of previously deferred product and other revenue of $108.0 million due to the change in our business model in December 2005.
* Net Dollar Volume of Contracts Written was $37.6 million for the current quarter compared to $25.1 million for the comparable period last year.
* Total operating expenses were $30.8 million for the current quarter, compared to $21.6 million for the comparable quarter last year. The increase in cost of product and other revenues and selling and marketing expenses was primarily attributable to the increase in Net Dollar Volume of Contracts Written.
* Net cash provided by operating activities for the current quarter was $5.1 million.
* For the three months ended December 31, 2006, net income was $11.7 million, or $0.90 per diluted common share, which included the impact of a $5.2 million income tax benefit resulting primarily from the reversal of a valuation allowance against the company's deferred income tax assets. This compares to net income of $111.2 million, or $8.92 per diluted common share in the comparable quarter last year, which included the aforementioned recognition of product and other revenues of $108.0 million and an income tax benefit of $11.7 million.
* Non-GAAP net income was $5.5 million, or $0.42 per diluted common share, for the three months ended December 31, 2006, compared to non-GAAP net income of $2.5 million, or $0.20 per diluted common share, for the comparable quarter last year.

Six Months Ended December 31, 2006 Compared to 2005

* Revenues for the six months ended December 31, 2006 were $64.7 million compared to $131.9 million for the comparable period last year, which included the aforementioned recognition of previously deferred product and other revenues of $108.0 million.
* Net Dollar Volume of Contracts Written was $70.1 million for the current period, compared to $42.1 million for the same period last year.
* Total operating expenses were $57.3 million, compared to $38.8 million for the comparable period last year.
* Net cash provided by operating activities for the current period was $8.1 million.
* For the six months ended December 31, 2006, net income was $14.0 million, or $1.07 per diluted common share, which includes a $3.6 million income tax benefit resulting from the reversal of a valuation allowance against the company's deferred income tax assets. This compares to net income of $105.7 million, or $8.46 per diluted common share, in the comparable period last year, which included the aforementioned recognition of previously deferred product and other revenues of $108.0 million and an income tax benefit of $11.5 million.
* Non-GAAP net income was $9.5 million, or $0.72 per diluted common share, for the six months ended December 31, 2006, compared to non-GAAP net income of $2.6 million, or $0.21 per diluted common share, for the comparable period last year.

Outlook

Danks concluded, "We closed a very strong quarter and are quite positive about 2007. Therefore, we increased our expectations for fiscal 2007 annual growth of Net Dollar Volume of Contracts Written to approximately 40 percent over fiscal 2006. Additionally, we continue to anticipate non-GAAP net income, which assumes Net Dollar Volume of Contracts Written is recognized as revenue and related expenses are recognized at the time of sale, including income taxes at a blended rate of 40 percent, will grow at a faster percentage rate than Net Dollar Volume of Contracts Written."