MessageMedia Announces Second Quarter Financial Results

Kurt Peters

LOUISVILLE, COLO. - (August 16, 2001) - MessageMedia, Inc. (Nasdaq: MESG), a leader in permission-based, e-mail marketing and messaging solutions, today announced financial results for its second quarter ended June 30, 2001. In the 2001 second quarter, MessageMedia reported revenues of $7.6 million, compared to $8.4 million reported in the 2000 second quarter and $8.7 million in the 2001 first quarter.

Cost reduction initiatives that began in December 2000 and continued into the first six months of 2001 have been successful. The Company improved its operating margins and, for the first time, its U.S. operations registered positive EBITDA in the just-completed quarter. (EBITDA is defined as earnings before interest, taxes, depreciation, amortization, severance, restructuring, and net of other income and expense, minority interest, and extraordinary item.)

The Company posted a net loss of $13.5 million in the second quarter of 2001, or a loss per share of $0.20, compared to a net loss of $19.7 million or a loss per share of $0.35 for the second quarter of 2000, and a net loss of $13.5 million or a loss per share of $0.22 in the 2001 first quarter. These figures include a 2001 second quarter reduction-in-force expense of $0.6 million, a restructuring charge of $6.4 million, and an extraordinary gain of $5.2 million.

For the six months ended June 30, 2001, MessageMedia reported revenues of $16.2 million, compared to $15.4 million reported in the same period in 2000. Net loss for the first half of 2001 was $27.0 million or $0.41 per share, compared to a net loss of $38.6 million or $0.69 per share in the same period in 2000.

2001 Second Quarter Restructuring Charge

In the 2001 second quarter, MessageMedia and its joint venture partner, @viso Limited, agreed to liquidate MessageMedia Europe and terminate all related agreements undertaken at the formation of the joint venture. Per the agreement, @viso loaned MessageMedia $2.0 million, which was contributed to its European subsidiary. Also provided in the agreement was the release of MessageMedia`s obligations to @viso for the joint venture. In consideration, MessageMedia issued @viso a promissory note of $2.5 million. Both notes are due December 31, 2003. As a result of these decisions, a restructuring charge of $4.6 million was recorded in the 2001 second quarter and a gain on the exchange of debt of $5.2 million was realized.

Also during the just-completed quarter, the December 2000 restructuring charge was increased by $1.8 million to $8.8 million, primarily to provide for the write down of furniture and additional facilities cost as the Company continues to seek opportunities to sublet excess facilities.

Releases UnityMail 5.0, Its Newest Enterprise Software Solution Recently, MessageMedia released UnityMail 5.0, the newest version of its UnityMail enterprise software solution. This database-enabled software offers extensive, high-performance capabilities with powerful reporting and expanded international language messaging capabilities. This powerful e-mail software helps marketers deliver large-scale, targeted, permission-based campaigns.

For more information on UnityMail 5.0 and other MessageMedia products and services, please see our web site at http://www.messagemedia.com/solutions/unitymail/index.shtml

About MessageMedia, Inc.

MessageMedia, Inc. (Nasdaq:MESG), a leader in permission-based e-mail marketing and messaging solutions, offers M3Platform, a powerful, e-messaging platform, and UnityMail, an award-winning licensed software. MessageMedia provides specialized solutions for the publishing, ISP/portal, retail/e-tail, financial services, high-tech, and travel and entertainment industries.

Safe Harbor Statement Under the Private Securities Litigation Reform Act

With the exception of the historical information contained in this release, the matters described herein contain forward-looking statements that involve risk and uncertainties. MessageMedia`s ability to meet any or all projections is inherently speculative, uncertain, and subject to a high degree of risk. Specific risks include, but are not limited to: MessageMedia`s limited operating history, the anticipated fluctuations in operating results, demand for the Company`s products and services, price competition, disruptions in MessageMedia`s business as a result of its recent reduction in the number of employees, inaccuracy of certain of the assumptions used to make these forecasts, uncertain acceptance of new services being offered, undeveloped and rapidly changing market conditions, and other factors detailed in MessageMedia`s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2000 and its most recent Quarterly Report on Form 10-Q. The occurrence of one or more of the risks referenced above may materially affect the Company`s financial performance, which in turn, may cause the value of its common stock to fall. All companies and product names are trademarks of their respective owners. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. MessageMedia undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Contact Information:
William E. Buchholz
Senior Vice President, Chief Financial Officer
MessageMedia, Inc.
Tel: (303) 381-7500

MessageMedia, Inc.
1100 McCaslin Boulevard, Suite 100, Superior, CO. 80027
Telephone: (303) 440-7550
Fax: (303) 381-3934




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