Be Free, Inc. Reports First-Quarter 2002 Results
Company Achieves Better-Than-Expected Bottom-Line Performance
Marlborough, MA—May 8, 2002—Be Free, Inc. (Nasdaq: BFRE), a leading provider of a marketing platform that allows businesses to attract customers and increase online sales, today reported its financial results for the first quarter ended March 31, 2002.
Revenue for the first quarter of 2002 was $5.2 million compared with $5.4 million in the first quarter of 2001, and $6.5 million in the fourth quarter of 2001. In the fourth quarter of 2001, the company recorded approximately $499,000 of additional revenue due to the implementation of a new automated billing system. Excluding this one-time event, the company would have recorded revenue of $6.0 million in that period.
The net loss for the first quarter of 2002 was $2.6 million, or $0.04 per share, compared with a net loss of $124 million, or $1.94 per share, in the first quarter of 2001 and a net loss of $3.7 million, or $0.06 per share, in the fourth quarter of 2001.
The net loss for the first quarter of 2002, excluding non-cash and non-recurring charges, was $1.6 million, or $0.02 per share, compared with a net loss of $6.6 million, or $0.10 per share, in the first quarter of 2001 and a net loss of $1.1 million, or $0.02 per share, in the fourth quarter of 2001.
"Be Free turned in a solid performance in the first quarter of 2002," said Gordon B. Hoffstein, chairman and chief executive officer. "Our revenue was in line with expectations. Additionally, as a result of the continued success of our cost-containment programs, we exceeded our bottom-line expectations of a net loss, excluding non-cash and non-recurring charges of between $0.03 and $0.04 per share. We also improved the quality of our customer base and continued a low cash burn."
Hoffstein continued, "Most significantly, Be Free took a major step to gain product diversity and achieve critical scale through our proposed merger with ValueClick, an industry leader with a solid track record of growth through acquisition."
Financial Strength
Excluding non-cash and non-recurring charges, the company reduced total quarterly expenses by $6.5 million, or 46 percent, compared with the first quarter of 2001 and by $1.0 million, or 11 percent, compared with the fourth quarter of 2001.
Be Free`s cash burn was only $2.1 million in the first quarter. This included $1.5 million from operations and $600,000 from costs associated with the company`s proposed merger with ValueClick, Inc. (Nasdaq: VCLK). At the end of the first quarter, Be Free had $131 million in cash and marketable securities.
Customer Acquisition
Be Free reported that 18 new customers implemented online marketing programs with the company in the first quarter. These companies included industry leaders such as Brookstone, Eddie Bauer, Experian Automotive, and Upromise Inc. in the U.S. In Europe, the company added Global Name Registry and Time-Life Germany, among others.
Customer losses in the first quarter of 2002 decreased to 27 compared with 72 in the first quarter of 2001 and 39 in the fourth quarter of 2001. Hoffstein commented, "This is the fourth consecutive quarter that the number of customer losses declined, and this number is significantly less than we had expected." The net customer count was 240 at the end of the first quarter of 2002 compared with 317 at the end of the first quarter of 2001 and 249 at the end of the fourth quarter of 2001."
Customer signings, an indicator of future revenue performance, remained constant with 20 signings in the first quarter of 2002 compared with 20 in the fourth quarter of 2001. This number was in line with the company`s expectations.
Proposed ValueClick Merger
"The most significant event of the quarter was the signing of a definitive merger agreement between Be Free and ValueClick, a leading global provider of digital marketing solutions for advertisers and Web publishers," said Hoffstein.
"As we have stated, Be Free`s vision is to build a marketing platform that allows companies to choose one source for a wide range of digital marketing solutions in order for them to gain high-quality customers. We believe this merger will fulfill our marketing platform vision."
In addition to Be Free`s affiliate marketing and site personalization services, the combined company will offer real-time, third-party and publisher ad serving; CPM, CPC and CPA advertising; agency management software; custom media solutions; and customer retention and customer acquisition e-mail technology and services.
Hoffstein stated, "With this merger, the combined company will gain the critical mass needed to help compete successfully in the digital marketing arena. Upon closing of the merger, we believe that we will have the financial strength of more than $270 million in cash and marketable securities and annual revenue potential of $83 million. This is in line with ValueClick`s 2002 revenue guidance of $60 million and Be Free`s 2002 revenue guidance of $23 million.
"In addition, we believe that the new company`s structure will create greater synergies and cost efficiencies needed to reach profitability and deliver increased shareholder value. We anticipate that the combined company will achieve profitability in the fourth quarter of 2002," Hoffstein said.
First-quarter Conference Call
Be Free will provide a live audio webcast of its first-quarter conference call for investors at 10:30 a.m. today. Investors who want to hear the call should log on to the investor relations section of Be Free`s web site, www.befree.com, at least 15 minutes prior to the event`s broadcast. Then, follow the instructions provided to assure that the necessary audio applications are downloaded and installed. The call will be available on the investor relations section of Be Free`s web site for one week following the filing of a transcript with the SEC under Regulation M-A.
About Be Free, Inc. (Nasdaq: BFRE)
Be Free offers a marketing platform that allows businesses to attract customers and increase online sales. With Be Free`s BFAST® affiliate marketing service, businesses build and manage a channel of online marketing partners to promote products and services across the Web. These partners are compensated based on performance, resulting in a significantly lower cost of customer acquisition compared with traditional and CPM-based advertising. With Be Free`s BSELECT Onsitesm service, retailers convert more browsers to buyers on their web site - learning from customer behavior and automatically serving real-time product recommendations. BSELECT gives a merchandiser insight into the right products to promote and where to promote them for the best results - increasing sales and revenue. For more information on Be Free`s products and services, visit www.befree.com.
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Safe Harbor Statement
This press release contains forward-looking statements including, but not limited to, statements about our proposed merger with ValueClick, Be Free`s and the combined company`s future financial performance, such as benefits and synergies expected to result from the proposed merger, revenue growth, future losses and profits, cash expenditures and cash balances, the level of customer transactions, as well as statements about the growth of performance marketing and the future market conditions for our services. These statements are based on Be Free`s current expectations, hopes, beliefs and estimates and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated or projected. The risk factors include, but are not limited to:
Continued economic slowdown could cause companies to defer or reduce expenditures on online marketing programs, which could materially and adversely affect our revenue and profitability;
If the Internet fails to grow as an advertising, marketing, and sales medium, our future revenue and business prospects would be materially and adversely affected;
System disruptions and failures may result in customers` dissatisfaction, customer loss or both, which could materially and adversely affect our reputation and business;
To be competitive we must continue to develop new and enhanced services and our failure to do so may adversely affect our prospects;
The Internet generates privacy concerns which could result in market perceptions or legislation which could harm our business, result in reduced sales of our services, or both;
If we infringe upon the intellectual property rights of others, we could be exposed to significant liability;
If we fail to manage effectively our operations, our business and prospects will be materially and adversely affected; and
If we fail to attract and retain key personnel, our business will be materially and adversely affected
Further information about risk factors that could affect Be Free`s or the combined company`s performance are contained in the Company`s filings with the Securities and Exchange Commission, including but not limited to those set forth in the section entitled "Management`s Discussion and Analysis of Financial Condition and Results of Operations -- Factors That May Affect Future Results" in its annual report on Form 10-K for the year ended December 31, 2001, and in the Risk Factors of the ValueClick/Be Free Joint Proxy Statement-Prospectus dated April 15, 2002. Be Free disclaims any obligation to update these expectations, hopes and beliefs.
The Consolidated Statements of Operations and Consolidated Balance Sheets follow:
Contact:
Stephen M. Joseph
Chief Financial Officer
Be Free, Inc.
Ph: 508.480.4017
E-mail: sjoseph@befree.com
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