Be Free's Second Quarter Revenue Increases More Than 400 Percent Year Over Year.-Signs Motorola, Time, Inc, DaimlerChrysler's Giggo.com and other leading brick-to-click customers - Launches new personalization Custom tailoring information to the individual. On the Web, personalization means returning a page that has been customized for the user, taking into consideration that person's habits and preferences. product, BSELECT -Begins major European expansion MARLBOROUGH, Mass.--(BUSINESS WIRE)--July 26, 2000 Be Free, Inc. (Nasdaq:BFRE BFRE Besoin en Fonds de Roulement d'Exploitation (French: Working Capital Requirement for Exploitation) ), a leader in performance marketing on the Internet, today reported its financial results for the second quarter ended June 30, 2000. Revenue for the second quarter of 2000 increased 401 percent to a record $4.3 million, compared with $863,000 for the second quarter of 1999, and compared with $3.6 million in the first quarter of 2000. Net loss, excluding non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for equity-related compensation and merger-related items, was $5.0 million, or $0.08 per share, for the second quarter of 2000, compared with a loss of $3.4 million, or $0.27 per share, for the same period in 1999 and a loss of $3.7 million, or $0.07 per share, for the first quarter of 2000. Be Free's net loss, including the non-cash charges, was $19.1 million, or $0.31 per share, for the second quarter of 2000, compared with a net loss of $4.5 million, or $0.36 per share, for the same period in 1999 and a net loss of $9.3 million, or $0.17 per share, for the first quarter of 2000. Revenue for the first six months of 2000 increased 469 percent to a record $7.9 million, compared with $1.4 million for the first half of 1999. Net loss, excluding non-cash charges for equity-related compensation and merger-related items, was $8.7 million, or $0.15 per share, for the first six months of 2000, compared with a loss of $5.8 million, or $0.46 per share, for the same period in 1999. Be Free's net loss, including the non-cash charges, was $28.5 million, or $0.49 per share, for the first half of 2000, compared with a net loss of $7.5 million, or $0.59 per share, for the same period in 1999. "We reached historic highs in each of our key business metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. during the quarter, signed major brick-and-click customers and launched our first personalization service, BSELECT(SM)," said Gordon Hoffstein, the company's chairman and chief executive officer. "Our relationships with new customers such as Motorola, Time, Inc., and DaimlerChrysler's Giggo.com provide powerful evidence that traditional blue-chip businesses understand - and want to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. - the reach, measurability and results of performance marketing." Dynamic Growth in Key Metrics Be Free achieved record levels in each of its business metrics: --The company's total customer base increased to 420, an increase of 285 percent from 109 in the second quarter of 1999, and an increase of 17 percent from 358 last quarter. --The number of revenue-generating customers - those with live performance marketing channels - increased to 311, up 607 percent from 44 in the same period a year earlier, and 30 percent from 240 in the first quarter of 2000. --The number of impressions, or times that the promotions of Be Free's customers were viewed on affiliate sites, rose 434 percent to 4.4 billion from 824 million for the same period a year ago and 2.9 billion in the first quarter of 2000. --The number of affiliate relationships that Be Free enables for its customers increased 292 percent to 4.2 million from 1.1 million in the second quarter of 1999 and 3.4 million in the first quarter of 2000. Customer Wins and Partnerships Be Free's customer roster increased to 420 with the addition of companies from a broad spectrum of industries, including BMG BMG Bundesministerium für Gesundheit (Germand: Federal Ministry for Health) BMG Be My Girl BMG Blue Man Group BMG Bertelsmann Music Group BMG Be My Guest BMG Browning Machine Gun BMG Bulk Metallic Glass Music Service, DaimlerChrysler's Giggo.com, Doubleday's Booksonline.com, Expedia.com, Motorola, Sprint, TigerDirect, and Time, Inc. In recent weeks, Be Free has also expanded its e-commerce infrastructure by delivering its performance marketing technology through channel partners such as Escalate es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. , Pandesic and Pulsity. Launching New Products A major initiative in the second quarter was Be Free's launch of BSELECT Onsite (SM), the first service based on the company's proprietary personalization technology. By tracking Internet browsing and purchasing preferences while ensuring the consumer's privacy and anonymity, BSELECT gives merchants the insight to deliver - in real time - the online content, products and services their customers are most likely to want when they visit the merchant's site. "The addition of BSELECT is an important element in our strategy to provide e-businesses with a unified marketing A unified market is the economic term for a single market where goods, services, capital and people can move freely without regard to national boundaries. These "four freedoms" are implemented by, among other things, removal of tariffs on the transfer of goods and services among infrastructure that will enable them to find new customers through multiple channels, sell more to their customers and track and manage the performance of these channels," said Hoffstein. Expanding in Europe Fueled by strong demand for its performance marketing services in Europe, Be Free has initiated a major expansion in that market. The company already has completed the first step in this expansion with the opening of a European headquarters in London to support key customers such as Bertelsmann, QXL QXL Quixell (European online auction website) QXL Quark Express Element Library and Gateway Europe. "We believe that Europe represents a dynamic and strategic market for Be Free," Hoffstein said. "As a result of the significant demand we have witnessed for our services, we intend to move aggressively to expand our European operations, both through infrastructure build-out and the opening of sales and support offices in Paris and Munich." Discussion of Strategy and Business Model Commenting on Be Free's near-term strategy, Hoffstein said, "Our superb financial results demonstrate that our strategy of partnering with the industry leaders - both pure online companies and traditional brick-and-click businesses - is paying off. We intend to continue growing our business by aligning with the winners in e-commerce, both in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and abroad. Looking forward, we see increased demand for our performance marketing services, and we have the financial resources and business model to accommodate that demand." "The growth we are seeing is a direct result of the pay-for-performance nature of our business," Hoffstein said. "Because e-businesses pay only for the purchases and leads generated from performance marketing programs, our customers tell us that we provide a level of cost-effectiveness and accountability absent in other online marketing services. We will continue capitalizing on that strength as we build our customer base, expand our services and extend our geographic reach." About Be Free Be Free, Inc. (NASDAQ:BFRE) is a leader in online performance and personalization marketing - the most effective combination to drive Web site traffic, reach the best customers and sell goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. in context on the Internet. By providing its performance marketing and personalization tools as hosted services, Be Free helps its customers build and manage performance-based online sales channels, and then convert prospects to buyers by offering personalized per·son·al·ize tr.v. per·son·al·ized, per·son·al·iz·ing, per·son·al·iz·es 1. To take (a general remark or characterization) in a personal manner. 2. To attribute human or personal qualities to; personify. product and content recommendations - in real time. Be Free's customers include some of the Internet's leading merchants, online services and portals such as Motorola (NYSE NYSE See: New York Stock Exchange :MOT (OpenView Managed Object Toolkit) An OpenView toolkit from HP for developing network management applications based on CMIS. The toolkit contains library routines that handle the transmission and receipt of CMIS requests and responses. ), Sprint (NYSE:PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. ), IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) (NYSE:IBM), America Online See AOL. , Inc. (NYSE:AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. ), barnesandnoble.com (Nasdaq:BNBN), GoTo.com (Nasdaq:GOTO), Mercata, C|Net (Nasdaq:CNET (body) CNET - Centre national d'Etudes des Telecommunications. The French national telecommunications research centre at Lannion. ), Garden.com (Nasdaq:GDEN), PC Connection (Nasdaq:PCCC PCCC Passaic County Community College (Paterson, NJ) PCCC Platform Communication on Climate Change (The Netherlands) PCCC Porsche Ceramic Composite Clutch ), Lycos (Nasdaq:LCOS (Liquid Crystal on Silicon) A technology used to make microdisplays for rear-projection TVs and head-mounted displays (HMDs). Each LCoS chip hosts a grayscale LCD shutter sandwiched between a cover glass and a mirror. ), About.com (Nasdaq:BOUT) and Yahoo!(R)GeoCities (Nasdaq:YHOO YHOO Yahoo! Inc. (NASDAQ symbol) ). Founded in 1996, Be Free has offices in Marlborough, MA, Pittsburgh, PA, Atlanta, GA, Chicago, IL, Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , CA, Campbell, CA, Silver Spring, MD, Seattle, WA, Austin, TX, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY and London, England. For more information, visit http://www.befree.com. Statements in this news release, including but not limited to those relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the growth of the company's sales force, demand for the company's products, the ability of the company to meet demand, the growth of the company's customer base domestically and internationally, and the expansion of the company's services, may be considered forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on Be Free's current expectations, hopes, beliefs and estimates, and involve risks and uncertainties that could cause actual results to differ materially from those anticipated or projected. Risk factors include but are not limited to intense market competition, the inability to develop new and enhanced services Enhanced service is service offered over commercial carrier transmission facilities used in interstate communications, that employs computer processing applications that act on the format, content, code, protocol, or similar aspects of the subscriber's transmitted information; , the adequate protection of intellectual property rights, the continued viability of the Internet infrastructure, and the ability to attract and retain key personnel. Further information about risk factors that could affect the Company's performance are contained in the Company's filings with the Securities and Exchange Commission, including but not limited to its quarterly report on form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2000. The Consolidated Statements of Operations and Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. follow:
BE FREE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per share amounts)
Unaudited
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
Revenue:
Performance marketing
services $4,320 $863 $7,949 $1,396
Total revenue 4,320 863 7,949 1,396
Operating expenses:
Cost of revenue 852 137 1,455 238
Sales and marketing 4,746 2,085 8,305 3,350
Client Services 1,798 677 3,325 1,146
Development and engineering 2,729 920 4,297 1,482
General and administrative 1,755 503 2,931 854
Equity related compensation 388 503 660 953
Merger related expenses 13,754 -- 19,103 --
Total operating expenses 26,022 4,825 40,076 8,023
Operating loss (21,702) (3,962) (32,127) (6,627)
Interest income
(expense), net 2,584 48 3,665 (168)
Net loss (19,118) (3,914) (28,462) (6,795)
Accretion of
preferred stock to
redemption value -- (604) -- (701)
Net loss attributable
to common
stockholders $(19,118) $(4,518) $(28,462) $(7,496)
Basic and diluted net
loss per share $(0.31) $(0.36) $(0.49) $(0.59)
Shares used in
computing basic and
diluted net loss per share 61,963 12,670 58,243 12,644
Supplemental Data:
Net loss attributable
to common
stockholders $(19,118) $(4,518) $(28,462) $(7,496)
Equity related compensation 388 503 660 953
Merger related charges 13,754 -- 19,103 --
Accretion of preferred
stock to
redemption value -- 604 -- 701
Adjusted net loss $(4,976) $(3,411) $(8,699) $(5,842)
Supplemental net loss
per share $(0.08) $(0.27) $(0.15) $(0.46)
Shares used in computing
supplemental
net loss per share 61,963 12,670 58,243 12,644
BE FREE, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
Unaudited
June 30, December 31,
2000 1999
ASSETS
Current assets:
Cash, cash equivalents and
marketable securities $120,958 $ 71,738
Accounts receivable, net of
allowance for doubtful accounts 3,251 1,328
Prepaid expenses and other current assets 3,405 1,282
Total current assets 127,614 74,348
Marketable securities 47,561 7,954
Property and equipment, net 15,655 7,967
Intangible assets, net 146,699 --
Other assets 1,817 568
Total assets $339,346 $ 90,837
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses 9,645 3,883
Deferred revenue 1,951 943
Current portion of long term debt 2,390 943
Total current liabilities 13,986 5,769
Long-term debt, net of current portion 3,694 2,507
Total liabilities 17,680 8,276
Stockholders' equity 321,666 82,561
Total liabilities and
stockholders' equity $339,346 $ 90,837
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