LookSmart Reports Fourth Quarter and Full Year 2000 Results.Business Editors and High Tech Writers SAN FRANCISCO--(BUSINESS WIRE)--Jan. 25, 2001 LookSmart (Nasdaq: LOOK, ASX ASX See: Australian Stock Exchange : LOK), the global leader in Web directories, today announced financial results for the fourth quarter and full year ending December December: see month. 31, 2000. Summary Highlights: -- Revenue: LookSmart reported fourth quarter 2000 revenue of $30.5 million and full year 2000 revenue of $112.6 million. -- Listings Growth: Listings revenues of $4.7 million grew 44 percent from the third quarter of 2000. The number of Express Submit listings grew to 30,000 and Subsite Listings grew to 30,000. -- Cash Operating Losses: Cash operating losses for the fourth quarter of 2000 were $12.9 million and $37.5 million for the full year 2000 (excluding the effects of non-cash compensation and intangible amortization charges). -- Cash Operating EPS: Cash operating EPS for the fourth quarter 2000 was ($0.14) (excluding the effects of non-cash compensation and intangible amortization charges). -- Cash: Cash used was $14.0 million. LookSmart had a balance of $98.9 million in cash and short-term investments at the end of the fourth quarter of 2000. -- International Deals: LookSmart was named the Web search and directory provider for AOL Australia. LookSmart also launched Express Submit and Subsite Listings in Australia. LookSmart's joint venture with BT, BTLookSmart, launched Express Submit and Subsite Listings in the United Kingdom. -- Wireless Deals: Through a distribution deal with Genie, Europe's leading wireless carrier, BTLookSmart will offer 22 wireless directories for 19 countries to more than 35 million wireless subscribers of BT and its partner companies in countries throughout Europe and Asia. Financial Details: -- Revenues of $30.5 million for the fourth quarter 2000 grew 65 percent from the fourth quarter 1999, and full year 2000 revenues of $112.6 million grew 130 percent from the full year 1999 revenues of $48.9 million. -- Cash operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. (excluding the effects of non-cash compensation and intangible amortization charges) of $12.9 million for the fourth quarter 2000 narrowed 33 percent from the fourth quarter of 1999 loss of $19.3 million. Full year 2000 cash operating losses of $37.5 million narrowed 28 percent from the full year 1999 loss of $51.8 million. -- LookSmart had a balance of $98.9 million in cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments at the end of the fourth quarter of 2000. Cash used in the fourth quarter of 2000 was $14.0 million. LookSmart Strategy Focuses on Targeted Online Marketing Products: Listings, Targeted Advertising, and CPC (1) (Central Processing Complex) An IBM mainframe that has two or more central processors (CPs) that share memory. It is the collection of processors, memory and I/O subsystems manufactured with a single serial number, typically all contained in one cabinet. The trend in online advertising spending continues to move from untargeted to targeted advertising, and from CPM (1) (Critical Path Method) A project management planning and control technique implemented on computers. The critical path is the series of activities and tasks in the project that have no built-in slack time. (cost per thousand) to CPC (cost per click). LookSmart's business has trended away from traditional CPM priced banner products, towards targeting advertising and listings CPC products. "Our results continue to validate To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data the evolution of LookSmart's business model towards the directory listings opportunity that delivers superior value to our customers," said Evan Thornley Evan Thornley (born 1965), Australian businessman and politician, was elected to the Victorian Legislative Council for the Australian Labor Party at the 2006 Victorian state election. , chairman and chief executive officer of LookSmart. "The continued growth in the listings products enable LookSmart to establish a stronger position during the current industry downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. and to look to profitably expand the business in the second half of 2001 with new distribution deals. Our recent restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). to more clearly focus on the listings opportunity is bearing fruit with recent major customer additions, including, The Gap, Amazon.com (Amazon.com, Seattle, WA, www.amazon.com) The largest online shopping site and one of the most widely known e-commerce sites on the Web. Founded by Jeff Bezos in 1995, it had 11 employees by year's end. Within four years, it had more than 1,600 employees and four million customers. , and eBay (eBay, Inc., San Jose, CA, www.ebay.com) The major auction service on the Web. eBay popularized the concept of buying and selling online, and both individuals and commercial enterprises list items for sale. ." Listings Listings revenues, including Express Submit and Subsite Listings, grew 44 percent in the fourth quarter 2000 despite a challenging market environment. Listings' growth is due to the effectiveness of these marketing products, and, as a result, the lower cost per customer acquired for LookSmart's clients. LookSmart's listings products appeal to online and offline marketers, both big and small. Express Submit targets small to medium sized businesses, which are mainly offline. Subsite Listings' customers, who include The Gap, Amazon.com, Ebay and VerticalNet (Verticalnet Inc., Malvern, PA, www.verticalnet.com) A company that was an early pioneer in the development and operation of business-to-business Web portals for scientific, industrial and manufacturing industries. , appeal to larger marketers. Targeted advertising LookSmart's revenue from listings and targeted advertising grew from $6.5 million in the first quarter of 2000 to $13.3 million in the fourth quarter of 2000, a 27 percent compound quarterly growth rate. Untargeted product revenues, by comparison, grew from $6.0 million to $6.1 million over the same period, a one percent compound quarterly growth rate. These results demonstrate the speed of the transition to targeted products. Cost-per-click CPC revenues grew from $2.4 million in the first quarter of 2000 to $10.9 million in the fourth quarter of 2000, a 67 percent compound quarterly growth rate. Over the same period, CPM revenues declined from $9.7 million to $6.1 million, a negative 14 percent compound quarterly growth rate. This demonstrates LookSmart's continuing transition toward a direct marketing oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. approach. Results by Business Segment Listings Products: -- Listings revenue of $4.7 million grew 44 percent in the fourth quarter of 2000, representing 16 percent of total revenue. Listings revenues were $0.6 million in the first quarter of 2000, $1.6 million in the second quarter of 2000, and $3.3 million in the third quarter of 2000. Full year 2000 listings revenues topped $10 million. -- The number of Express Submit listings grew to 30,000 and Subsite Listings grew to 30,000. -- The percentage of LookSmart directory listings that generate revenue grew from 0.2 percent in the first quarter of 2000, to 0.4 percent in the second quarter of 2000, to 1.0 percent in the third quarter of 2000, and to 1.7 percent in the fourth quarter of 2000. -- Subsite customer highlights include the Gap, Amazon.com, eBay and VerticalNet -- Express Listings' products are sold through LookSmart, Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. , AltaVista (AltaVista Company, Palo Alto, CA, www.altavista.com) The first search engine to index every word on a page and provide a retrieval system to extract relevant information. Developed by Digital's Research Labs in Palo Alto in 1995, the AltaVista search engine is available in more than 25 , Excite, iWon Iwon may refer to:
IWon. , and through resellers, including SmartAge and Traffick.com. Advertising/Syndication -- Advertising/Syndication revenue was $15.8 million in the fourth quarter of 2000, up 55 percent from $10.2 million in the fourth quarter of 1999. For the full year 2000, advertising/syndication revenue was $64.7 million, up 193 percent from $22.1 during 1999. -- Revenue per 1,000 pages ("yield") was $17.20, compared to $15.91 in the fourth quarter of 1999 and $23.36 in the third quarter of 2000. -- Customers: Total customers were 344 at the end of fourth quarter 2000 compared to 347 at the end of the third quarter 2000. -- Advertising/Syndication revenue as a percentage of total revenue continues to decrease from 63 percent in the second quarter of 2000, to 57 percent in the third quarter of 2000, and to 52 percent in the fourth quarter of 2000. Licensing -- Licensing revenues were $3.5 million in the fourth quarter of 2000 compared with $5.0 million in the fourth quarter 1999. This represents 11 percent of total revenues, compared to 27 percent of total revenues in the fourth quarter of 1999. Full year 2000 licensing revenues were $19.6 million compared to $19.3 million for the full year 1999. -- As expected, licensing revenues were cyclically lower in the fourth quarter of 2000 due to the accounting treatment of fixed licensing payments from Microsoft resulting from LookSmart's continual over-delivery against contractual requirements (for the seventh consecutive quarter). For further information, see LookSmart's Annual Report or Form 10-K filed with the SEC on March 30, 2000. ECommerce -- ECommerce revenues of $6.5 million in the fourth quarter of 2000 grew 96 percent from $3.3 million in the fourth quarter of 1999. Full year 2000 eCommerce revenues of $18.1 million grew 140 percent compared to $7.5 million for the full year 1999. International and Wireless: -- Genie: LookSmart's joint venture with BT, BTLookSmart, signed an exclusive distribution agreement with Genie, Europe's leading wireless carrier. The distribution deal enables BTLookSmart to begin offering 22 wireless directories for 19 countries to more than 35 million wireless subscribers of BT and its partner companies in countries throughout Europe and Asia. -- 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. Australia: LookSmart signed a distribution agreement naming LookSmart as the Web search and directory provider for AOL Australia, the joint venture between America Online See AOL. , Inc., the world's leading interactive services company, and AAPT AAPT American Association of Physics Teachers AAPT Association of Asphalt Paving Technologists AAPT American Association of Philosophy Teachers AAPT American Association of Pharmacy Technicians AAPT Australian Association for Psychological Type Ltd., Australia's third largest telecommunications company See telecom company. . -- Express Submit and Subsite Listings in Australia and the U.K.: LookSmart launched Express Submit and Subsite Listings in Australia. LookSmart's joint venture with BT, BTLookSmart, launched Express Submit and Subsite Listings in the U.K. Product -- Directories - US and Global: LookSmart continues to develop the highest quality directories on the Web. LookSmart currently has 32 Internet directories See Web white pages and Web yellow pages. in 27 countries and 13 languages, as well as 24 WAP (1) (Wireless Access Point) See access point. (2) (Wireless Application Protocol) A standard for providing cellular phones, pagers and other handheld devices with secure access to e-mail and text-based Web pages. directories in 19 countries and 11 languages. LookSmart directories now have 2.7 million URLs organized into 250,000 categories. -- Zeal Zeal Bows, Mr. crippled fiddler with intense feelings. [Br. Lit.: Pendennis] Cedric of Rotherwood zealous about restoring Saxon independence. [Br. : LookSmart finalized See finalization. the acquisition of Zeal Media and has imported a significant number of the Zeal sites into the LookSmart directory. The integration of community technology into LookSmart is planned for April 2001. Earnings Conference Call LookSmart will be holding a conference call to discuss its fourth quarter results at 2:00 p.m. PST PST Paroxysmal supraventricular tachycardia, see there and 5:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on January 25, 2001, and 9:00 a.m. Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. Eastern Daylight Time on January 26, 2001. Investors can listen to the conference call over the 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 at http://aboutus.looksmart.com. To listen to the live call, go to the Web site at least fifteen minutes prior to the start time to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install the necessary audio software. For those unable to listen to the live broadcast, a replay of the call will be available one hour after the conclusion of the call at http://aboutus.looksmart.com. About LookSmart LookSmart (Nasdaq: LOOK, ASX: LOK) is the global leader in Web directories. With 32 directories spanning 27 countries, and 13 languages, LookSmart is committed to organizing the Web. LookSmart distributes its databases to a vast network that currently reaches more than 64 million US Internet users Internet user n → internauta m/f Internet user Internet n → internaute m/f through over 400 partnerships including Microsoft's MSN (1) (MicroSoft Network) A family of Internet-based services from Microsoft, which includes a search engine, e-mail (Hotmail), instant messaging (Windows Live Messaging) and a general-purpose portal with news, information and shopping (MSN Directory). , Netscape Netcenter, AltaVista, Excite, iWon, Time Warner, Sony, Prodigy An online information service that provides access to the Internet, e-mail and a variety of databases. Launched in 1988, Prodigy was the first consumer-oriented online service in the U.S. , Macromedia, Road Runner road runner: see cuckoo. Road Runner thrives on outwitting Wile E. Coyote. [Comics: “Beep Beep the Road Runner” in Horn, 105] See : Cunning Road Runner , Cox Interactive Media and Qwest. BTLookSmart, LookSmart's joint venture with British Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , deploys LookSmart's wireless and Web directory solutions for ISPs, portals and mobile Internet Refers to gaining access to the Internet using a lightweight, handheld device. See Mobile IP, PDA, smartphone and mobile TV. businesses in countries across Europe and Asia-Pacific. 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. Except for the historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties. Words such as "will," "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," and variations of these words or similar expressions are intended to identify forward-looking statements. Also, any statements that refer to expected revenues from existing and new products, time lines for roll-out of new products, changes in advertising yields, future expectations, industry projections or other characterizations of future events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , including assumptions underlying these projections, are forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties. Our future results may differ from the results discussed or forecasted due to various factors, such as the potential failure of businesses, Web sites and Internet users to use our targeted advertising and listings products at projected rates; the potential inability to integrate community technology into the LookSmart directory on the proposed timelines This article or section contains self-references. For other uses of "Timeline", see Timeline (disambiguation). The following is an index of timelines found on Wikipedia. due to technical, product or other issues; the possibility that listings revenues will not continue to grow as they have in recent quarters; the potential failure to expand successfully in international and wireless markets; the possibility that BT customers will not choose to use wireless internet services or the LookSmart directory at rates sufficient to recoup recoup To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss. our costs; the possible failure to continue to expand the LookSmart network and our traffic base at projected rates; the possibility of an unexpected increase in costs, expenses or other factors contributing to our burn rate; and the possibility that we may not reach operating profitability as early as projected, if at all. In addition you should read the risk factors detailed in our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. and Current Reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed with the Securities and Exchange Commission. Please note that we undertake no obligation to revise or update publicly any forward-looking statements for any reason. "LookSmart" is a trademark of LookSmart, Ltd., and/or its subsidiaries in the U.S. and other countries. All other trademarks mentioned are the property of their respective owners.
LOOKSMART, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 2000 1999 2000
(unaudited) (unaudited) (unaudited)
Revenues:
Listings -- $ 4,731 -- $ 10,261
Advertising
and syndication $ 10,194 15,775 $ 22,076 64,680
Licensing 5,028 3,484 19,255 19,618
Ecommerce 3,292 6,467 7,534 18,063
--------- --------- --------- ---------
Total revenues 18,514 30,457 48,865 112,622
Cost of revenues:
Listings -- 781 -- 1,268
Advertising
and syndication 1,113 2,027 2,870 5,548
Ecommerce 1,579 3,826 4,048 10,842
--------- --------- --------- ---------
Total cost of revenues 2,692 6,634 6,918 17,658
--------- --------- --------- ---------
Gross profit 15,822 23,823 41,947 94,964
--------- --------- --------- ---------
Operating expenses:
Sales and marketing 24,435 24,701 59,082 84,347
Product development 8,371 8,723 26,593 35,699
General and
administrative 2,318 3,305 8,082 12,448
Amortization of
goodwill and
intangibles 1,718 2,101 5,442 7,489
Amortization of
unearned compensation 1,242 915 9,866 3,218
--------- --------- --------- ---------
Total operating
expenses 38,084 39,745 109,065 143,201
--------- --------- --------- ---------
Loss from operations (22,262) (15,922) (67,118) (48,237)
Non-operating income
(expenses) 1,400 (7,074) 2,925 (14,190)
--------- --------- --------- ---------
Loss before
income taxes (20,862) (22,996) (64,193) (62,427)
Income taxes 418 28 470 163
--------- --------- --------- ---------
Net loss $ (21,280) $ (23,024) $ (64,663) $ (62,590)
========= ========= ========= =========
Historical net loss
per common share:
Basic and diluted net
loss per share $ (0.25) $ (0.25) $ (1.42) $ (0.70)
========= ========= ========= =========
Weighted average shares
outstanding 85,555 90,589 45,518 89,111
========= ========= ========= =========
Pro forma net loss
excluding non cash
compensation and
amortization of
goodwill $ (18,320) $ (20,008) $ (49,355) $ (51,883)
========= ========= ========= =========
Pro forma net loss
excluding non cash
compensation and
amortization of
goodwill per
share $ (0.21) $ (0.22) $ (1.08) $ (0.58)
========= ========= ========= =========
Pro forma operating
loss excluding
non-cash compensation
and amortization of
goodwill $ (19,302) $ (12,906) $ (51,810) $ (37,530)
========= ========= ========= =========
Pro forma operating
loss excluding
non-cash compensation
and amortization of
goodwill per
share $ (0.23) $ (0.14) $ (1.14) $ (0.42)
========= ========= ========= =========
LOOKSMART, LTD
Consolidated Condensed Balance Sheets
(in thousands)
December 31, 1999 December 31, 2000
--------------------------------------------
(unaudited)
ASSETS
Cash $ 75,971 $ 71,628
Short Term Investments 28,038 27,265
Accounts Receivable, net 8,039 18,307
Other Current Assets 5,655 13,266
-------- --------
Total Current Assets 117,703 130,466
Property, Plant
and Equipment, net 11,595 13,259
Goodwill and Intangibles,
net 29,301 31,895
Other Assets 2,920 6,776
-------- --------
Total Assets $161,519 $182,396
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and
Accrued Liabilities $ 18,310 $ 29,212
Deferred Revenue -
current portion 16,705 13,622
--------- --------
Total Current Liabilities 35,015 42,834
Long Term Liabilities 6,952 60,338
--------- --------
Total Liabilities 41,967 103,172
Total Equity 119,552 79,224
--------- --------
Total Liabilities and
Stockholders' Equity $161,519 $182,396
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