FindWhat.com Announces Record Third Quarter Results
Revenue Increases 23% Sequentially; Net Income of $0.04 per share, Raises 2001 Guidance
NEW YORK--Oct. 22, 2001--FINDWHAT.COM
(NASDAQ:FWHT), a leading developer and marketer of performance-based
advertising services for the Internet, featuring the FindWhat.com
pay-for-performance search engine, today reported record financial
results for the three and nine months ended September 30, 2001.
Highlights include:
-- FindWhat.com generated net income of $0.04 per share for the
third quarter, up from $0.01 in Q2 2001, and $0.02 ahead of
projections.
-- Revenue for the third quarter of 2001 increased 23% versus the
second quarter of 2001.
-- FindWhat.com`s operating margins improved to 12% in Q3 2001
from 3% in Q2 2001.
-- Cash balances increased approximately $1.5 million during Q3
2001, entirely due to cash flows generated from operations.
-- The FindWhat.com search engine generated 36.0 million paid
click-throughs in Q3 2001, an increase of 8% from 33.3 million
in Q2 2001.
-- Average revenue per paid click-through on the FindWhat.com
search engine increased to $0.15 in Q3 2001, an increase of
16% from $0.13 in Q2 2001.
-- The number of active advertiser accounts on the FindWhat.com
search engine during Q3 2001 was 12,400, an increase of 22%
versus the 10,200 accounts that were active in Q2 2001.
-- Revenue and earnings per share guidance have been increased
for Q4 2001 and for the full year 2001.
FindWhat.com reported record revenue in Q3 2001 of $5,449,853, an
increase of 23% over revenue of $4,440,089 for the second quarter of
2001. In Q3 2000, FindWhat.com had revenue of $716,697. For the nine
months ended September 30, 2001, FindWhat.com had revenue of
$12,453,274, compared to revenue of $1,307,225 for the nine months
ended September 30, 2000.
FindWhat.com reported record net income in Q3 2001 of $650,623, or
$0.04 per share, an increase of 386% over net income of $133,849, or
$0.01 per share, in Q2 2001. In Q3 2000 FindWhat.com had a net loss of
$2,255,927, or $(0.16) per share. For the nine months ended September
30, 2001, FindWhat.com`s net loss was $1,947,532, or $(0.12) per
share, which included $996,382, or ($0.06) per share, related to the
one-time sale of its remaining radio advertising time under its
agreement with Beasley Broadcast Group. For the nine months ended
September 30, 2000, FindWhat.com`s net loss was $7,185,052, or $(0.52)
per share.
As of September 30, 2001, FindWhat.com had cash balances of
$3,514,444, compared to cash balances of $2,021,406 as of June 30,
2001.
Craig Pisaris-Henderson, President and CEO of FindWhat.com
commented, "We posted another outstanding quarter. Despite the typical
seasonal summer drop in Internet activity and the tragic events of
September 11th, we increased our net income almost 400% from Q2 2001.
We are demonstrating just how scalable our business model is, as we
continue to benefit from the shift by online marketers to
performance-based advertising vehicles."
Projected Results and Management Comments
FindWhat.com is raising its current projection for Q4 2001 revenue
to $6.25 million, replacing its previously stated range of $5.5 to
$6.0 million. As a result, FindWhat.com is raising its projection for
full year 2001 revenue from $18.0 million to approximately $18.75
million, which would represent an increase of 550% over 2000 revenue.
FindWhat.com`s current projection for 2002 revenue is $30.0 million,
which would represent an increase of 60% over 2001 projected revenue.
FindWhat.com is raising its current projection for Q4 2001 diluted
earnings per share, or EPS, to $0.05, up from the previously announced
projection of $0.04. As a result, FindWhat.com is raising its
projection for full year 2001 EPS to ($0.06), up from the previously
announced projection of ($0.10). FindWhat.com`s current projection for
2002 EPS is $0.23.
Phillip Thune, Chief Operating Officer and Chief Financial
Officer, said, "Our ability to drive a large proportion of incremental
revenue to our bottom line in Q3 was notable. We increased revenue
approximately $1 million from Q2 2001 to Q3 2001, and increased both
operating and net income by more than $500,000. As a result, our
operating margins improved dramatically. As our projections indicate,
we believe we have additional room for margin expansion. We have built
a marketplace for online advertisers, and while our revenue-sharing
payments to our distribution partners increase as our revenue grows,
many of the fixed costs of operating the marketplace are now covered,
with incremental advertisers, searches, and click-throughs generating
almost no incremental fixed costs. So while `dot-com` has in many ways
become synonymous with wasteful spending and huge losses, FindWhat.com
and a few others are offering a glimpse at the potential profitability
of a sound business model which takes advantage of the low costs of
conducting business and transactions online."
Pisaris-Henderson said, "Thus far in the fourth quarter, we
continue to add advertisers and we are seeing further increases in our
average revenue per click-through from the $0.15 reported for the
third quarter. We continue to feel that there are thousands of
additional advertisers who could use our service. We are also
increasing paid click-throughs by improving our position on current
partners like Excite.com and CNET`s Search.com, and, more importantly,
by adding new distribution partners. This increases the audience
exposed to our advertisers` listings, while diversifying our revenue
stream and reducing our reliance on any one distribution partner. At
the end of Q3 2001, we had over 12,400 active advertisers and over 100
distribution partners, and we are constantly finding more advertisers
looking for the highly qualified traffic our distribution network
provides, and more distribution partners seeking to increase their
revenue and improve their e-commerce oriented search results by
showing FindWhat.com`s listings."
Services / Key Metrics
The FindWhat.com search engine is a performance-based, or
"pay-per-click," advertising vehicle, because its advertisers only pay
for an Internet user who clicks through to their sites. Historically,
advertising, including most online advertising, has been
impression-based, meaning that advertisers are charged on the number
of viewers, listeners, readers, or users who are potentially exposed
to their ad, with no guarantee that the ad was seen, heard, or read.
With the "trackability" of the Internet, and the decreasing attention
paid to banner ads, online advertisers are increasingly demanding
performance-based advertising alternatives. Forrester Research
projects that by 2003, 83% of digital marketing campaigns will include
a performance-based component.
FindWhat.com`s search engine revenue can be derived by multiplying
the number of paid click-throughs by the average revenue per paid
click-through. Advertisers bid for position among FindWhat.com`s
search results for the key words that are most relevant to their Web
sites. The advertiser that bids the most for a particular key word is
listed first, with all other Web sites listed in descending order of
their bids. Advertisers only pay FindWhat.com if an Internet user
searches for one of their key words and then clicks on their listing,
producing a paid click-through. Through FindWhat.com`s Listing
Management Center, advertisers can sign-up and manage their accounts
themselves, 24 hours a day, seven days a week. They can control and
track their bids, the placement of their listings, their total
expenditures, and their cost per visitor, all in a real-time
environment. As a result, they can easily determine and work to
improve their return on their investment from FindWhat.com.
FindWhat.com`s editors review every bid to ensure that the key word is
appropriate for that advertiser`s Web site. This methodology produces
extremely relevant results for e-commerce oriented searches, and
drives highly qualified traffic to FindWhat.com`s advertisers.
FindWhat.com distributes its listings to third-party search
engines and other high-traffic Web sites, including Excite.com,
Webcrawler.com, CNET`s Search.com, InfoSpace`s MetaCrawler and
Dogpile, and many others, and FindWhat.com shares its revenue from
paid click-throughs with these sites. As a result, FindWhat.com serves
as a source of revenue and relevant search result listings for these
sites, while providing its advertisers with exposure to potential
customers across the Internet. As with the Yellow Pages in the offline
world, FindWhat.com`s advertisers get their message in front of
prospects at the exact time they are looking for the advertisers`
products and services. Unlike the Yellow Pages, advertisers only pay
for those visitors that "walk" into their virtual stores.
The key metrics for the FindWhat.com search engine are paid
click-throughs, average revenue per click-through, and active
advertiser accounts. FindWhat.com reports the number of active
advertiser accounts for a given quarter, although there are thousands
of accounts that are inactive each quarter, which, due to seasonality
or other factors, may become active again in the future. In the third
quarter of 2001, FindWhat.com had approximately 12,400 active
accounts. The following table lists key metrics for each of the seven
full quarters of operation for the FindWhat.com search engine.
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