EX-99.1 3 f91640exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
News Release
Tuesday, July 22, 2003

 

 

     
Investors:   Corporate Communications:
Derrick Nueman   Alexa Rudin
Ask Jeeves, Inc.   Ask Jeeves, Inc.
Ph: (510) 985-7485   Ph: (212) 807-9741 x129
dnueman@askjeeves.com   alexa@askjeeves.com

Ask Jeeves Reports Second Quarter 2003 Results

-Ask Jeeves Posts Second Quarter Revenues of $25.6 million, a 66% Year-Over-Year Increase-

-Second Quarter Pro Forma Income of $0.10 per share-

-Second Quarter GAAP Income from Continuing Operations of $0.09 per share-

-Raises 2003 Pro Forma Guidance from $0.26 to $0.33 per share-

Emeryville, Calif. – July 22, 2003 – Ask Jeeves, Inc. (“the Company”) (Nasdaq: ASKJ) today reported results for the second quarter ended June 30, 2003. Revenues and other metrics in this release are based on Ask Jeeves’ continuing operations. Ask Jeeves announced the sale of its Jeeves Solutions division during Q2 and completed the sale on July 1, 2003.

Revenues for the second quarter ended June 30, 2003 were $25.6 million. The second quarter results represent 66 percent growth over revenues of $15.4 million for the comparable year-ago quarter.

Pro forma net income from continuing operations for the quarter was $5.2 million, or $0.10 per share, exceeding the Company’s second quarter guidance for a pro forma net income of $3.5 million, or $0.07 per share. For the comparable year-ago quarter, the pro forma net loss was $3.4 million, or $0.08 per share. The Company’s pro forma results for the quarter exclude amortization of other assets and certain other items detailed on the attached table. These pro forma results should be evaluated in light of the Company’s financial results prepared in accordance with generally accepted accounting principles (“GAAP”). Under GAAP, the income from continuing operations for the second quarter of 2003 was $4.9 million, or $0.09 per share. A table reconciling the pro forma net income (loss) to GAAP income (loss) from continuing operations is included in the condensed consolidated financial statements in this release. This compares to a loss from continuing operations on a GAAP basis of $4.9 million, or $0.12 per share, for the comparable year-ago quarter. Unrestricted cash, cash equivalents and marketable securities totaled $160.5 million on June 30, 2003.

“We executed very well this quarter – exceeding both top and bottom line expectations. Our performance was driven by growth in users and frequency of visits and by monetizing a

 

 

higher percentage of our traffic,” said Skip Battle, CEO of Ask Jeeves, Inc. “While industry analysts estimated about a 10% year over year growth in queries for the search industry in Q2, our queries on Ask.com grew 37%. We believe this indicates a growing market share and validates the need for our differentiated approach to search.”

“We believe we’re still in the very early days of a multi-year secular shift in advertising to Internet search. We expect continued growth in advertisers entering this space, growth in the number of search queries that will be advertised against, and growth in unit pricing as well. As we continue to enhance the unique search experience we provide to our users and increase the effectiveness of our sites for advertisers, we are well positioned to reap the benefits of this shift,” continued Battle.

Business Outlook

The following business outlook contains forward-looking statements describing management’s current expectations for the future. These forward-looking statements are subject to numerous assumptions, risks and uncertainties, some of which are listed in the cautionary note below. As a result of these uncertainties, the Company’s actual results in the future may differ materially from management’s expectations. The guidance provided in this press release is based on limited information available to the Company at this time, which is subject to change. In addition, the guidance provided on a pro forma basis is consistent with the pro forma results included in this release. Although management’s expectations may change after July 22, 2003, the Company undertakes no obligation to revise or update these statements.

Commenting on the Company’s business outlook, CFO Steve Sordello said, “Our key volume, pricing and productivity metrics have been strong. We’re generating cash and, with the financing completed this quarter, we’ve strengthened our balance sheet. These positive results will enable us to increase our investment in R&D and marketing while raising our earnings outlook for the year.”

Third Quarter Business Outlook

The Company expects third quarter 2003 revenue to be approximately $25.2 million. The Company expects to report pro forma net income for the third quarter of 2003 of approximately $3.5 million, or approximately $0.06 per share. The Company expects GAAP income from continuing operations in the third quarter of approximately $0.05 per share. The Company expects the approximately $0.01 per share difference between GAAP and pro forma net income to result from approximately $500,000 of amortization of other assets. The Company expects diluted weighted average shares outstanding for the third quarter to be approximately 58 million shares.

2003 Business Outlook

Ask Jeeves is raising its earnings guidance for 2003. The Company now anticipates pro forma net income of approximately $0.33 per share and GAAP income from continuing operations of approximately $0.40 per share and revenues of approximately $102 million for 2003. The Company expects the approximately $0.07 per share difference between GAAP and pro forma net income to result primarily from the one-time gain of $6.1 million from the acquisition of Ask Jeeves UK recognized in Q1. Ask Jeeves had previously expected pro forma net income of $0.26 per share and revenues of $94 million.

 

 

Conference Call Scheduled for July 22

Ask Jeeves will hold a conference call to discuss its second quarter results and its business outlook for the third quarter and 2003 at 6:00 p.m. EDT on July 22, 2003. Investors can listen to the conference call on the Internet at www.ask.com/investor. To listen to the live call, go to the Web site at least fifteen minutes prior to the start time to download and install the necessary audio software. For those unable to listen to the live broadcast, a replay will be available one hour after the conclusion of the call at www.ask.com/investor for a period of one year. The financial and statistical information that will be discussed during the conference call will be posted on our Web site at www.ask.com/investor and under the tab “Earnings” on that site.

Cautionary Note Regarding Forward-looking Statements

This press release contains forward-looking statements. All statements regarding the future are forward-looking statements, including those statements regarding continued growth of the search market, the Company’s potential for sustainable and profitable growth, expectations regarding increased traffic, unit pricing and monetization, and all expectations regarding profits, cash flow, pro forma net profits, revenue growth and pro forma earnings per share in the third quarter 2003 and/or for the year 2003. The matters discussed in those statements are subject to risks and uncertainties that could cause actual results to differ materially from the results expressed or implied by the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to: dependence on the Internet; dependence on a single third-party paid placement provider; risk associated with rapid technological change; slower spending environment for advertising sales; dependence on third parties for content, distribution or advertising delivery; lack of market acceptance of products; introduction of new products by competitors; declines in the average selling price of the Company’s products; and adverse economic conditions in any of the major countries or markets in which the Company does business. As a relatively short announcement, this press release cannot present a full discussion of such risks. Further information on risk factors that could affect the Company’s financial results is included in its most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission. The Company encourages investors to read all of the disclosure in its SEC filings for a broader discussion of important factors that may be material to investors and may affect the Company’s business, financial condition and results of operations.

About Ask Jeeves, Inc.

Ask Jeeves, Inc. is a provider of Web-wide search technologies, providing consumers with authoritative and fast ways to find relevant information to their everyday searches. Ask Jeeves deploys its search technologies on Ask Jeeves (Ask.com and Ask.co.uk), Teoma.com, and Ask Jeeves for Kids (AJKids.com). In addition to its Web sites, Ask Jeeves syndicates its monetized search technology and advertising units to a network of affiliate partners. Ask Jeeves is based in Emeryville, California, with offices in New York, Boston, New Jersey, Los Angeles and London.

 

 

For more information, visit http://www.Ask.com or call +1-510-985-7400.

NOTE: Ask Jeeves, Ask.com and Teoma are registered trademarks and Ask Jeeves for Kids is a trademark of Ask Jeeves, Inc.

###

 

 

ASK JEEVES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

                                                                         
            Three Months Ended   Six Months Ended
            (unaudited)   (unaudited)
           
 
            June 30, 2003   June 30, 2002   June 30, 2003   June 30, 2002
           
 
 
 
Revenues:
                                                                
       
Web Properties
   $ 25,568       100.0 %   $ 15,381       100.0 %   $ 48,282       100.0 %   $ 28,993       100.0 %
Cost of revenues:
                                                                
       
Web Properties
     4,964       19.4 %     4,166       27.1 %     9,958       20.6 %     8,013       27.6 %
       
 
    
     
     
     
     
     
     
     
 
 
Gross profit
     20,604       80.6 %     11,215       72.9 %     38,324       79.4 %     20,980       72.4 %
Operating expenses:
                                                                
       
Product development
     3,253       12.7 %     3,184       20.7 %     6,797       14.1 %     7,203       24.9 %
       
Sales and marketing
     7,137       27.9 %     7,404       48.1 %     14,027       29.1 %     14,274       49.2 %
       
General and administrative
     4,922       19.3 %     4,310       28.0 %     8,549       17.7 %     8,304       28.7 %
       
 
    
     
     
     
     
     
     
     
 
 
Total pro forma operating expenses
     15,312       59.9 %     14,898       96.8 %     29,373       60.9 %     29,781       102.8 %
       
 
    
     
     
     
     
     
     
     
 
 
Pro forma operating income (loss)
     5,292       20.7 %     (3,683 )     -23.9 %     8,951       18.5 %     (8,801 )     -30.4 %
 
Interest and other income, net
     193       0.8 %     267       1.7 %     381       0.8 %     580       2.0 %
       
 
    
     
     
     
     
     
     
     
 
 
Pro forma income (loss) before income tax provision
     5,485       21.5 %     (3,416 )     -22.2 %     9,332       19.3 %     (8,221 )     -28.4 %
 
Income tax provision
     335       1.3 %     —       0.0 %     670       1.4 %     —       0.0 %
       
 
    
     
     
     
     
     
     
     
 
 
Pro forma net income (loss)
   $ 5,150       20.2 %   $ (3,416 )     -22.2 %   $ 8,662       17.9 %   $ (8,221 )     -28.4 %
       
 
    
     
     
     
     
     
     
     
 
Basic diluted pro forma net income (loss) per share
   $ 0.12       n.m.     $ (0.08 )     n.m.     $ 0.20       n.m.     $ (0.20 )     n.m.  
       
 
    
             
             
             
         
Weighted average shares outstanding used in computing basic pro forma net income (loss) per share
     43,260,912       n.m.       40,943,979       n.m.       42,648,742       n.m.       40,234,643       n.m.  
       
 
    
             
             
             
         
Diluted pro forma net income (loss) per share
   $ 0.10       n.m.     $ (0.08 )     n.m.     $ 0.17       n.m.     $ (0.20 )     n.m.  
       
 
    
             
             
             
         
Weighted average shares outstanding used in computing diluted pro forma net income (loss) per share
     53,541,479       n.m.       40,943,979       n.m.       51,004,790       n.m.       40,234,643       n.m.  
       
 
    
             
             
             
         
Revenues from related parties
   $ 1,131             $ 1,131             $ 2,262             $ 3,904          
       
 
    
             
             
             
         
RECONCILIATION OF PRO FORMA NET INCOME (LOSS) TO GAAP INCOME (LOSS) FROM CONTINUING OPERATIONS
 
Pro forma net income (loss)
   $ 5,150             $ (3,416 )           $ 8,662             $ (8,221 )        
 
Cost of revenues
Amortization of other assets
     (522 )             (555 )             (1,044 )             (1,111 )        
 
Product development
     —               —               —               —          
 
Sales and marketing
     —               —               —               —          
 
General and administrative
Amortization of other assets
     (7 )             (8 )             (14 )             (14 )        
   
Transaction costs
     21               —               (625 )             —          
       
 
    
             
             
             
         
 
     14               (8 )             (639 )             (14 )        
 
Stock-based compensation
     (4 )             (23 )             (5 )             (59 )        
 
Impairment of long-lived assets
     —               (362 )             —               (2,592 )        
 
Restructuring costs
     —               (440 )             —               (440 )        
 
Gain on acquisition of joint venture
     —               —               6,123               974          
 
Gain on dissolution of joint venture
     232               —               232               —          
 
Interest and other income, net
     (13 )             (145 )             (21 )             (19 )        
       
 
    
             
             
             
         
Income (loss) from continuing operations
   $ 4,857             $ (4,949 )           $ 13,308             $ (11,482 )        
       
 
    
             
             
             
         

 

 

ASK JEEVES, INC.
PRO FORMA NET INCOME (LOSS) TO PRO FORMA EBITDA AND GAAP INCOME (LOSS) FROM CONTINUING OPERATIONS

                                                                       
          Three Months Ended   Six Months Ended
          (unaudited)   (unaudited)
         
 
          June 30, 2003   June 30, 2002   June 30, 2003   June 30, 2002
         
 
 
 
          Amount   Per Share   Amount   Per Share   Amount   Per Share   Amount   Per Share
         
 
 
 
 
 
 
 
Pro forma net income (loss)
   $ 5,150     $ 0.10     $ (3,416 )   $ (0.08 )   $ 8,662     $ 0.17     $ (8,221 )   $ (0.20 )
Depreciation
     1,780       0.03       1,916       0.05       3,703       0.07       4,216       0.10  
Interest and other income, net
     (193 )     —       (267 )     (0.01 )     (381 )     (0.01 )     (580 )     (0.01 )
Income tax provision
     335       0.01       —       —       670       0.01       —       —  
 
    
   
   
   
Pro forma EBITDA
     7,072       0.14       (1,767 )     (0.04 )     12,654       0.24       (4,585 )     (0.11 )
Adjustments:
                                                                
   
Depreciation
     (1,780 )     (0.03 )     (1,916 )     (0.05 )     (3,703 )     (0.07 )     (4,216 )     (0.10 )
   
Interest and other income, net
     193       —       267       0.01       381       0.01       580       0.01  
   
Income tax provision
     (335 )     (0.01 )     —       —       (670 )     (0.01 )     —       —  
   
Cost of revenues
Amortization of other assets
     (522 )     (0.01 )     (555 )     (0.01 )     (1,044 )     (0.02 )     (1,111 )     (0.03 )
   
Product development
     —       —       —       —       —       —       —       —  
   
Sales and marketing
     —       —       —       —       —       —       —       —  
   
General and administrative Amortization of other assets
     (7 )     —       (8 )     —       (14 )     —       (14 )     —  
     
Transaction costs
     21       —       —       —       (625 )     (0.01 )     —       —  
 
    
   
   
   
 
     14       —       (8 )     —       (639 )     (0.01 )     (14 )     —  
   
Stock-based compensation
     (4 )     —       (23 )     —       (5 )     —       (59 )     —  
   
Impairment of long-lived assets
     —       —       (362 )     (0.01 )     —       —       (2,592 )     (0.07 )
   
Restructuring costs
     —       —       (440 )     (0.01 )     —       —       (440 )     (0.01 )
   
Gain on acquisition of joint venture
     —       —       —       —       6,123       0.12       974       0.02  
   
Gain on dissolution of joint venture
     232       —       —       —       232       —                  
   
Interest and other income, net
     (13 )     —       (145 )     (0.01 )     (21 )     —       (19 )     —  
 
    
             
             
             
         
 
Income (loss) from continuing operations
   $ 4,857             $ (4,949 )           $ 13,308             $ (11,482 )        
 
    
             
             
             
         
Weighted average shares outstanding used in computing diluted income (loss) per share
     53,541,479     $ 0.09       40,943,979     $ (0.12 )     51,004,790     $ 0.26       40,234,643     $ (0.29 )
 
    
   
   
   

Note: Pro forma EBITDA is defined as pro forma net income (loss) excluding depreciation, interest and other income, and income tax provision.

 

 

ASK JEEVES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

                                     
        Three Months Ended   Six Months Ended
        June 30,   June 30,
        (unaudited)   (unaudited)
       
 
        2003   2002   2003   2002
       
 
 
 
Revenues:
                                
   
Web Properties
   $ 25,568     $ 15,381     $ 48,282     $ 28,993  
Cost of revenues:
                                
   
Web Properties
     5,486       4,721       11,002       9,124  
     
 
   
 
 
Gross profit
     20,082       10,660       37,280       19,869  
Operating expenses:
                                
   
Product development
     3,253       3,184       6,797       7,203  
   
Sales and marketing
     7,137       7,404       14,027       14,274  
   
General and administrative
     4,908       4,318       9,188       8,318  
   
Stock-based compensation
     4       23       5       59  
   
Impairment of long-lived assets
     —       362       —       2,592  
   
Restructuring costs
     —       440       —       440  
     
 
   
 
 
Total operating expenses
     15,302       15,731       30,017       32,886  
     
 
   
 
 
Operating income (loss)
     4,780       (5,071 )     7,263       (13,017 )
 
Gain on acquisition of joint venture
     —       —       6,123       974  
 
Gain on dissolution of joint venture
     232       —       232       —  
 
Interest and other income/expense, net
     180       122       360       561  
     
 
   
 
 
Income (loss) before income tax provision
     5,192       (4,949 )     13,978       (11,482 )
 
Income tax provision
     335       —       670       —  
     
 
   
 
 
Income (loss) from continuing operations
     4,857       (4,949 )     13,308       (11,482 )
 
Loss from discontinued operations
     (458 )     (3,550 )     (1,218 )     (7,455 )
     
 
   
 
 
Net income (loss)
   $ 4,399     $ (8,499 )   $ 12,090     $ (18,937 )
     
 
   
 
Earnings per Share- Basic
                                
Income (loss) from continuing operations
   $ 0.11     $ (0.12 )   $ 0.31     $ (0.29 )
Loss from discontinued operations
   $ (0.01 )   $ (0.09 )   $ (0.03 )   $ (0.18 )
     
 
   
 
Net income (loss) per share
   $ 0.10     $ (0.21 )   $ 0.28     $ (0.47 )
     
 
   
 
Weighted average shares outstanding used in computing basic net income (loss) per share
     43,260,912       40,943,979       42,648,742       40,234,643  
     
 
   
 
Earnings per Share- Diluted
                                
Income (loss) from continuing operations
   $ 0.09     $ (0.12 )   $ 0.26     $ (0.29 )
Loss from discontinued operations
   $ (0.01 )   $ (0.09 )   $ (0.02 )   $ (0.18 )
     
 
   
 
Net income (loss) per share
   $ 0.08     $ (0.21 )   $ 0.24     $ (0.47 )
     
 
   
 
Weighted average shares outstanding used in computing diluted net income (loss) per share
     53,541,479       40,943,979       51,004,790       40,234,643  
     
 
   
 
Revenues from related parties
   $ 1,131     $ 1,131     $ 2,262     $ 3,904  
     
 
   
 

 

 

ASK JEEVES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

                       
          June 30,   December 31,
          2003   2002
         
 
          (unaudited)        
ASSETS
                
Current assets:
                
 
Cash and cash equivalents
   $ 143,018     $ 27,613  
 
Marketable securities
     17,499       5,762  
 
Restricted cash and marketable securities
     65       11,065  
 
 
    
     
 
   
Total cash, cash equivalents and marketable securities
     160,582       44,440  
 
Accounts receivable, net
     8,437       7,600  
 
Prepaid expenses and other current assets
     2,091       2,272  
 
Current assets from discontinued operations
     1,724       2,699  
 
 
    
     
 
     
Total current assets
     172,834       57,011  
Property and equipment, net
     10,785       10,922  
Intangible assets, net
     1,890       2,948  
Other long-term assets
     4,503       1,295  
 
 
    
     
 
     
Total assets
   $ 190,012     $ 72,176  
 
 
    
     
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
 
Accounts payable and other accrued liabilities
   $ 11,574     $ 8,209  
 
Accrued compensation and related expenses
     5,110       3,598  
 
Accrued restructuring costs
     1,508       1,892  
 
Deferred revenue
     8,412       8,633  
 
Deferred gain on joint venture
     —       6,226  
 
Borrowings under line of credit
     —       11,000  
 
Current liabilities from discontinued operations
     1,959       3,015  
 
 
    
     
 
     
Total current liabilities
     28,563       42,573  
Other liabilities
     326       326  
Convertible subordinated notes
     115,000       —  
 
 
    
     
 
     
Total liabilities
     143,889       42,899  
Commitments and contingencies
            
Stockholders’ equity
     46,123       29,277  
 
 
    
     
 
     
Total liabilities and stockholders’ equity
   $ 190,012     $ 72,176