Company Makes Significant Progress Towards Profitability; Sees Record Growth in New Membership; Launches Grocery-Focused Marketing Network Across Top Web Properties
CHICAGO, Oct 29, 2002 -- CoolSavings, Inc. (OTC BB:CSAV), an online direct marketing and media company that provides smarter solutions to connect marketers to their target consumers, today reported results for the third quarter and nine month period ended September 30, 2002. The Company reported net revenues in the third quarter of $7.1 million compared to $4.3 million in the same period of 2001. Gross profit in the third quarter was $6.2 million, or 88% of net revenues, compared to $3.0 million, or 69% of net revenues in the third quarter of 2001. Total operating expenses in the quarter were $10.0 million compared to $7.9 million reported in the same period of 2001, an increase of 26%. The loss applicable to common shareholders in the third quarter was $4.3 million, or $0.11 per share, compared to the loss of $8.3 million, or $0.21 per share, reported in the same period of 2001. EBITDA for the third quarter was a loss of $2.6 million compared to an EBITDA loss of $3.6 million in the third quarter of 2001.
During the third quarter, the Company determined that a significant portion of its unoccupied leased office space and the assets associated with that office space were unnecessary for its future operations. As a result, the Company recorded a $3.1 million operating expense, representing the estimated future net lease obligations and the write down of the assets associated with the unoccupied space to their estimated fair value. Excluding these charges, total operating expenses for the quarter would have been $6.9 million, EBITDA would have been $0.5 million, and the loss applicable to common shareholders would have been $1.2 million.
"We are pleased with the Company`s strong momentum in the third quarter and our continued focus on reaching EBITDA profitability," said Matthew Moog, CoolSavings president and CEO.
CoolSavings` net revenues in the nine-month period ended 2002 were $18.0 million compared to $15.9 million in the same period of 2001. Gross profit in the first nine months of 2002 was $15.2 million, or 85% of net revenues, compared to $11.1 million, or 70% of net revenues in the first nine months of 2001. Total operating expenses in the nine-month period were $22.7 million compared to $34.4 million reported in the same period of 2001, a decrease of 34%. For the nine-month period, the loss applicable to common shareholders was $8.9 million, or $0.23 per share, compared to the loss of $26.9 million, or $0.69 per share, reported in the same period of 2001. EBITDA for the nine month period was a loss of $3.9 million compared to an EBITDA loss of $19.5 million in the comparable period of 2001.
Excluding the charges for the lease exit and asset write down recorded during the third quarter of 2002, total operating expenses for the nine month period would have been $19.6 million, EBITDA would have been a loss of $0.8 million, and the loss applicable to common shareholders would have been $5.8 million.
At September 30, 2002, CoolSavings had cash and cash equivalents of $2.0 million and total assets of $11.4 million. Accounts receivable, net of allowances, at the end of the third quarter were $4.5 million. Current liabilities totaled $21.6 million and total liabilities were $22.8 million. Shareholder deficit at September 30, 2002 was $23.9 million.
EBITDA is defined as earnings before interest expense, taxes, depreciation and amortization. The Company has presented EBITDA because it is a common alternative measure of performance. The Company`s definition of EBITDA may not be consistent with that of other companies. EBITDA is not a measure of financial performance or liquidity under generally accepted accounting principles (GAAP) and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company has also provided, for the quarter and nine months ended September 30, 2002, total operating expenses, EBITDA and loss applicable to common shareholders excluding certain charges. This information is presented because the Company believes it is meaningful, as a complement to, but not as a substitute for, the operating results presented in accordance with GAAP.
Record Member Registration
In the third quarter, the Company achieved a record of 2.13 million new member registrations in a single quarter, a 7.5% improvement over the previous record of 1.98 million new registrations in the first quarter of 2002. This significant registration growth increased CoolSavings total membership to more than 21 million registered U.S. households. Compared to last year, the third quarter of 2002 yielded a 98% improvement in registrations over the third quarter of 2001. In addition, September 2002 set a record for registrations in one month with more then 740,000, beating the previous record of 717,000 new registrations set in January 2002. CoolSavings experienced 19.3 million total member visits in the third quarter, a 76% improvement over the third quarter of 2001.
Core Business Growth
CoolSavings` third quarter of 2002 was marked by continued momentum in the Company`s core business services as well as recently launched product initiatives, including Direct Mail List Rental and Cooperative Direct Mail services and Coupon Technology licensing service. The quarter also marked the launch of the CoolSavings Marketing Network, which expands the Company`s promotional and consumer reach for advertisers through partnerships with top Web properties across the Internet.
The Launch of the CoolSavings Marketing Network
In a press announcement yesterday, the Company officially launched the CoolSavings Marketing Network (CSMN), an Internet distribution network for coupons and samples from CPG manufacturers, retailers, and restaurants, which saw a soft launch in early September. Combining the Company`s Coupon Technology and partnerships with top Web properties, the network provides advertisers with the ability to deliver high-quality promotional offer content to a large and ever-growing number of consumers who are increasingly looking beyond their newspaper freestanding inserts for coupons.