Harris Interactive Reports Fiscal 2000 Q3 Financial Results; Overall Revenue For First Three Quarters Soars 118%; Internet Revenues Rise 813% Over Same Period Last Year.Business Editors ROCHESTER Rochester (rŏch`ĕstər, –ĭstər). 1 City (1990 pop. 70,745), seat of Olmsted co., SE Minn.; inc. 1858. , N.Y.--(BUSINESS WIRE)--April 25, 2000 Harris Interactive Harris Interactive (NASDAQ: HPOL) is an American market research company that specializes in public opinion research using both telephone and surveys on online panels. The company is the product of a 1996 merger between the Gordon S. Black Company and Louis Harris & Associates. (Nasdaq: HPOL), a leading Internet-based market research firm, today announced revenues of $14.2 million for its fiscal third quarter ended March 31, 2000. This represents an increase of 118% compared with $6.5 million reported for the third quarter of fiscal 1999. For the nine-month period ended March 31, 2000, Harris Interactive reported revenues of $36.0 million, an increase of 81% compared with $19.9 million reported in the same period in fiscal 1999. Quarterly Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the Revenue Surges 778% Internet revenues, the key driver of the company's growth, expanded in the third quarter to $6.5 million. This is an increase of 778% compared with the third quarter of fiscal 1999 and 44% compared with the $4.5 million recorded in the last quarter. Since June June: see month. 30, 1999, Internet revenues have totaled $13.7 million, an increase of 813% compared with $1.5 million reported for the same nine-month period in FY 1999. Gross Margin Continues to Increase -From 34% in Fiscal 1999 to 47% in Fiscal 2000 Gross margin for the third quarter was $6.7 million, which represents 47% of revenues, compared with $2.2 million or 34% in the third quarter of fiscal 1999. Gross margin for the nine months ended March 31, 2000 was $15.2 million or 42% of revenues compared with $6.9 million or 35% of revenues for the same period in fiscal 1999. The continuing increase in gross margin resulted primarily from the significant growth of Internet revenues relative to overall revenue growth. Net loss for the three-months ended March 31, 2000 was $5.5 million ($0.17 per share), compared with $2.8 million ($0.29 per share) in the third quarter of fiscal 1999. Harris Interactive to Become Predominately an Internet Research This article is about using the Internet for research; for the field of research about the Internet, see Internet studies. Internet research is the practice of using the Internet, especially the World Wide Web, for research. Firm During Next Quarter Dr. Gordon S Gordon, river in W Tasmania, Australia, 125 mi (200 km) long. Flowing from mountains to the W coast, its main tributaries are the Franklin and Denison from the N, and Serpentine and Olga to the S. . Black, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. : stated, "The continued rapid expansion of Internet revenues combined with increasing margins confirms the soundness of our business model. We anticipate that our Internet-based research revenue will surpass traditional revenue by the end of the June 2000 quarter, and we are already collecting more than half of our questionnaires using the Internet. In fact, we will have converted the majority of our research activities to the Internet in just one year, an extraordinary achievement given our 40-year presence on the traditional side of the business." Dr. Black continued, "The greater than anticipated loss is a result of revenue that fell slightly short of plan, and increased spending for new product and panel development. We will continue these expenditures at a similar level for our fourth quarter, as we strengthen our strategic position and build upon our first-mover advantage First-mover advantage is the advantage gained by the initial occupant of a market segment. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match. . This will result in an estimated loss for the quarter of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.19 to $0.22 per share. These investments are tied to new revenue streams, which we expect to bring on line in the near future, and the expansion of our business into multi-national research." Internet Business Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. Grows 62% from Previous Quarter Business backlog for the Internet, a key indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of going forward revenues, increased on a quarter-to-quarter basis from $4.2 million at the end of December December: see month. to $6.8 million at the end of March, an increase of 62%. The overall business backlog during the same period went from $15.0 million at the end of the last quarter to $17.3 million at the end of March, an increase of 15%. The continued increase in Internet backlog supports the company's Internet transition strategy. Dramatic Global Panel Expansion Efforts Underway Harris Interactive spent approximately $1.6 million during the quarter to expand its online panel, and the company expects to grow its Internet panel to 10 million cooperative cooperative Organization owned by and operated for the benefit of those using its services. Cooperatives have been successful in such fields as the processing and marketing of farm products and the purchasing of other kinds of equipment and raw materials, and in the respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. by the end of the calendar year. The firm is currently building similar panels in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Japan and now has approximately 400,000 members outside the US. The
company currently is engaged in a number of global initiatives that will
add dramatically to the non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. respondent In Equity practice, the party who answers a bill or other proceeding in equity. The party against whom an appeal or motion, an application for a court order, is instituted and who is required to answer in order to protect his or her interests. database in FY 2001. Harris Harris, Scotland: see Lewis and Harris. Interactive's use of the panelists expanded significantly during the third quarter. During the three months ending March 31, 2000, completed interviews grew to 1.3 million, up 30% from the 1.0 million completed during the second quarter. The net number of active panelists stood at over 6.2 million, up from 5.4 million at December 31, 1999. Revenue Growth in Internet Research is Strong in All Business Segments -- MTV - to capture opinions of 13-24 year olds -- Nickelodeon - to capture opinions of 8-12 year olds -- Talk City - for joint development of interactive voter polling for Iowa debates -- Medici Group - a joint venture to recruit and retain participants for clinical drug trials -- DoughNet - an alliance to develop an Internet based youth loyalty/reward program -- Excite Canada - a long-term alliance for Internet research and polling -- Taylor Nelson Sofres --a long-term alliance to jointly develop databases and syndicated research services in Europe and the United States. Harris Interactive Service Bureau (HISB) Detail HISB currently has two long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. data collection contracts - out of a predicted five. However, the number of other market research firms using HISB for data collection at full rate is much larger than originally anticipated, and these revenues are producing a partial offset. Today, 29 market research firms use the HISB for data collection, up from 19 firms at the end of the previous quarter. New Alliances and Joint Ventures Formed During the last quarter additional relationships were forged forge 1 n. 1. A furnace or hearth where metals are heated or wrought; a smithy. 2. A workshop where pig iron is transformed into wrought iron. v. to significantly increase our panel membership and revenue: -- MTV - to capture opinions of 13-24 year olds -- Nickelodeon - to capture opinions of 8-12 year olds -- Talk City - for joint development of interactive voter polling for Iowa debates -- Medici Group - a joint venture to recruit and retain participants for clinical drug trials -- DoughNet - an alliance to develop an Internet based youth loyalty/reward program -- Excite Canada - a long-term alliance for Internet research and polling -- Taylor Nelson Sofres --a long-term alliance to jointly develop databases and syndicated research services in Europe and the United States. The company is currently in negotiations with dozens of additional organizations to form strategic alliances designed for continued panel growth, international expansion and revenue increases. Please See Attached Schedules for More Financial Detail About Harris Interactive Harris Interactive (Nasdaq: HPOL), a leading global market research firm, uses Internet-based and traditional methodologies to provide its clients with information about the views, experiences, behaviors and attitudes of people worldwide. Known for its Harris Poll, Harris Interactive has over 40 years experience in providing its clients with market research and polling services including custom, multi-client and service bureau research, as well as customer relationship management services. Through its US and Global Network offices, Harris Interactive conducts research in over 85 different countries in more than 30 different languages. Harris Interactive uses its proprietary technology to survey its database of more than 6.2 million online panelists. For more information about Harris Interactive, please visit our Web site at http://www.harrisinteractive.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This media release includes statements that may constitute forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information. We caution you that these 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. are subject to risks and uncertainties that could cause actual results to differ materially from those discussed. Additional detailed information concerning a number of factors that could cause actual results to differ is readily available in the "Risk Factors" section of our Prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. , dated December 6, 1999 and filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933.
Harris Interactive
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
March 31, June 30,
2000 1999
Assets
Current assets:
Cash and cash equivalents $ 27,192 $ 108
Marketable securities 54,018
Accounts receivable 8,779 5,989
Costs and estimated earnings in excess
of billings on uncompleted contracts 4,612 1,706
Prepaid expenses 748 83
Other current assets 1,150 71
------------ --------
Total current assets 96,499 7,957
Property, plant and equipment, net 11,254 5,029
Goodwill 1,119 1,197
Other assets 915 602
--------- --------
$ 109,787 $14,785
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,043 $ 1,843
Accrued expenses 3,343 1,800
Short-term borrowings 1,050 291
Billings in excess of
costs and estimated
earnings on uncompleted
contracts 2,198 3,470
Total current liabilities 9,634 7,404
Mandatory redeemable preferred stock 15,876
Total stockholders' equity
(deficit) 100,153 (8,495)
------------- --------
$ 109,787 $ 14,785
Harris Interactive
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
March 31, March 31,
------------------ -----------------
2000 1999 2000 1999
Revenues from services $ 14,156 $ 6,462 $ 35,993 $ 19,927
Cost of services 7,503 4,291 20,760 13,061
Gross profit 6,653 2,171 15,233 6,866
Operating expenses:
Database development
expenses 1,600 1,233 4,120 3,545
Sales and marketing 2,863 388 5,716 859
General and administrative
expenses 9,046 3,133 21,398 8,657
Operating loss (6,856) (2,583) (16,001) (6,195)
Other income 1,340 32 1,670 151
Net loss (5,516) (2,551) (14,331) (6,044)
Accrued dividends on
preferred stock - (294) (738) (882)
Net loss available to
holders of common stock $ (5,516) $ (2,845) $ (15,069) $ (6,926)
Basic and diluted net
loss per share $ (.17) $ (.29) $ (.76) $ (.71)
Weighted average shares
outstanding -basic
and diluted 32,157,898 9,680,664 19,796,104 9,753,697
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