| [May 10, 2007] |
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Think Partnership First Quarter 2007 Financial Results
CLEARWATER, Fla. --(Business Wire)-- Think Partnership Inc. (AMEX:THK), an international leader in interactive performance-based marketing and related Internet technologies, reported financial results for the first quarter ended March 31, 2007.
Q1 2007 Financial Results
As compared to the same period a year ago and the previous quarter:
-- Revenues totaled $17.7 million, up 47% from $12.1 million a year ago and a decrease of 7% from $19.0 million in the previous quarter.
-- Net loss from operations was $0.7 million, an improvement from a loss of $0.9 million a year ago and compared to a gain of $0.6 million in the previous quarter.
-- Basic and fully diluted earnings per common share totaled a loss of ($0.01), an improvement from a loss of ($0.02) per share a year ago and improvement from loss of ($0.14) in the previous quarter.
-- Earnings before interest, taxes, depreciation and amortization expenses ("EBITDA") was $1.7 million, an increase of 437% from $0.3 million reported a year ago and a decrease of 37% from $2.7 million reported in the previous quarter. A reconciliation of EBITDA to income from operations is included at the end of this release.
Q1 2007 Event Highlights
-- Think Partnership completed conversion of all outstanding preferred stock to common. The conversion eliminated $19.1 million of preferred stock from the balance sheet, as well as eliminated an estimated $5.9 million in annual preferred dividend payments and accretion in 2007. The company expects the conversion to increase net income applicable to common share holders by approximately $0.11 per share.
-- adMarketplace, a popular CPC network which was once exclusive to eBay, chose Think Partnership's ValidClick(TM) technology to perform real time third-party click fraud validation on clicks generated through adMarketplace's syndication network.
-- Also for ValidClick, the company negotiated significantly more favorable terms and a contract extension through 2009 with its Tier 1 upstream feed provider.
-- MarketSmart Advertising, a unit of Think Partnership's Advertising division, expanded its relationship with one of its premier clients, Bayliner Boats. As the result of a recent successful interactive marketing and Internet advertising campaign lead by MarketSmart, this leading international boat manufacturer tripled its interactive advertising budget. This followed the win of two new clients, Alternate Access and UNC Health Care, and the appointment of Lewis Finch as the new president of the Think Advertising division.
-- MarketSmart Advertising received the coveted Addy Award for a 60-second television commercial for Subway(R) Restaurants entitled "Road Trip" created by its production house, Bright Idea Studios.
-- The client base of Second Bite(TM) was dramatically expanded when it was added as a standard feature to KowaBunga! and PrimaryAds. As a "super affiliate," Second Bite helps merchants recover potentially sales lost due to Internet shopping cart abandonment.
"Our year-over-year growth was substantial, showing strong organic growth in our Network and especially our direct-to-consumer segments," said Think Partnership's president and CEO, Scott P. Mitchell. "This was achieved despite, as we stated previously, the quarter's performance being affected by certain operating challenges that spilled over from the previous quarter. We believe these issues are nonrecurring and are resolved. We anticipate a stronger second quarter to re-establish our growth trajectory."
Continued Mitchell, "We also see new synergies emerging with the recent combination of our Consumer and Direct Divisions, as new management will be better able to leverage the potential of our consumer-focused properties with the tremendous marketing success of our Direct Division. Given this strategic operational reorganization, more favorable pricing agreements with our partners, favorable industry trends, and our expanding marquee customer base, we are excited about our growth opportunities for the remainder of 2007."
Financial Details
During the first quarter the Company operated in four segments, Think Network, Think Direct, Think Advertising and Think Consumer Services. To provide transparency into the performance of these four divisions which address different market segments, the company reports its financial results accordingly:
Net Revenue by Industry Segment
--------------------------------------------------------------
--------
Three Months Ended March 31,
2007 2006
---------------------------------------------------
Year-
to-
% of % of Year %
Revenue by Segment Amount Revenue Amount Revenue Change
---------------------------------------------------------------
-------
Network $3,574,126 20% $1,762,926 15% 103%
Direct 7,103,473 40% 1,339,689 11% 430%
Advertising 4,655,886 26% 5,318,811 44% -12%
Consumer 2,421,431 14% 3,793,214 31% -36%
Elimination (93,632) -1% (164,246) -1% -43%
-----------------------------------------------------------------
-----
Total Revenue $17,661,284 100% $12,050,394 100% 47%
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----
Think Network
This segment is comprised of the company's Search Network, Affiliate Network and Software solutions and Web Hosting. Network revenues for the quarter totaled $3.6 million, down 8% from $3.9 million in the previous quarter and up 103% from $1.8 million a year ago. This contributed 20% of total revenues, down from 21% in the previous quarter, and up from 15% in the same quarter a year ago. Network EBITDA was $1.1 million, a decrease of 27% from $1.5 million in the previous quarter and up 213% from $0.3 million reported a year ago. The acquisitions of the company's search network contributed approximately $1.3 million in revenue during the current year. The remaining growth was due to increased revenue derived from the company's affiliate networks and software.
Think Direct
This segment is primarily engaged in interactive direct marketing of internally generated and third party offers, and generates revenue mainly from online memberships, lead sales and list management services. Revenue from this segment totaled $7.1 million in the first quarter, up 17% from $6.1 million in the previous quarter, and up 430% from $1.3 million reported a year ago. This contributed 40% of total revenues, which was up from 32% in the previous quarter and up from 11% a year ago. Direct EBITDA was $1.6 million, down 14% from $1.8 million reported in the previous quarter, and up 84% from $0.8 million a year ago. The company completed an acquisition in May of 2006 which further expanded its revenue base to include online memberships. Revenue from online memberships contributed approximately $5.3 million during the first quarter 2007.
Think Advertising
This segment is primarily engaged in traditional offline and online advertising agency services. Advertising revenues for the quarter totaled $4.7 million, down 26% from $6.3 million in the previous quarter and down 12% from $5.3 million a year ago. This contributed 26% of total revenues, a decrease from both 33% in the previous quarter and 44% in the same quarter a year ago. Advertising EBITDA was a loss of $0.1 million, an improvement from a loss of $0.2 million in the previous quarter and compares to positive EBITDA of $0.2 million reported a year ago. Revenue from this Advertising segment decreased by approximately $0.7 million in the first quarter as compared to the same period last year. Search engine enhancement revenue decreased by approximately $2.4 million during first quarter as compared to last year. This was offset by increased paid search revenue of approximately $2.1 million derived from foreign operations.
Think Consumer Services
This segment provides various online destinations directly accessed by consumers. Consumer services revenues for the quarter totaled $2.4 million, down 13% from $2.8 million in the previous quarter and down 36% from $3.8 million a year ago. It contributed EBITDA of $0.4 million, down 32% from the $0.6 million reported in the previous quarter and up 79% from $0.2 million reported a year ago. Revenue from our dating properties has declined by approximately $1.2 million during the quarter as compared to the prior year first quarter.
EBITDA, other
There were certain costs that occurred on the corporate level that were factored into the company's total EBITDA. These costs amounted to $1.3 million for the first quarter, up 31% from $1.0 million in the previous quarter and virtually unchanged from the same year-ago quarter.
Conference Call
The company will hold a conference call later today to discuss its first quarter financial results. Think Partnership CEO Scott Mitchell and CFO Jody Brown will host the presentation, which will be followed by a question and answer period.
Date: Thursday, May 10, 2007
Time: 4:30 pm Eastern (1:30 pm Pacific)
Dial-In Number: 800-922-9655
International: 973-935-2407
Conference ID#: 8701478
Internet Simulcast: http://viavid.net/dce.aspx?sid=00003DFD
(Windows Media Player needed for simulcast)
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization and ask you to wait until the call begins. If you have any difficulty connecting with the conference call, please contact the Liolios Group at (949) 574-3860.
A replay of the conference call will be available starting May 10 at 7:30 PM Eastern and until May 24, 2007:
Toll-free replay number: 877-519-4471
International replay number: 973-341-3080
Replay Pin#: 8701478
Webcast Replay: http://viavid.net/dce.aspx?sid=00003DFD
About Think Partnership
Think Partnership Inc. is an international leader in interactive performance-based marketing and related Internet technologies. Think provides a comprehensive and integrated set of scalable and cost-effective marketing solutions for both advertisers and publishers. These solutions increase customer retention and revenues through a diverse set of related marketing channels, including affiliate marketing, click-fraud-protected pay-per-click advertising, lead generation, interactive direct marketing, integrated offline advertising, campaign management, public relations, and branding. Think also operates several direct-to-consumer services including online dating, online education, and home business opportunities. High-profile brands include ValidClick(TM), PrimaryAds(TM), iLead Media, KowaBunga!(R), BabyToBee, Second Bite(TM) and MarketSmart. For more information, visit www.thinkpartnership.com.
Regarding Forward-Looking Statements
Statements made in this press release that express the company's or management's intentions, plans, beliefs, expectations or predictions of future events, are forward-looking statements. Those statements are based on many assumptions and are subject to many known and unknown risks, uncertainties and other factors that could cause the company's actual activities, results or performance to differ materially from those anticipated or projected in such forward-looking statements. For a discussion of these risks, see the company's report, as filed with the Securities and Exchange Commission on Form 10-K, filed March 29, 2007, under the section headed "Risk Factors." The company cannot guarantee future financial results, levels of activity, performance or achievements, and investors should not place undue reliance on the company's forward-looking statements.
Financial Tables
THINK PARTNERSHIP INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 2007 and 2006
2007 2006
------------ ------------
Net Revenue $17,661,284 $12,050,393
Cost of Revenue 8,335,314 3,353,880
------------ ------------
Gross Profit 9,325,970 8,696,513
Operating Expenses
Selling, General and Administrative 8,962,062 9,056,568
Amortization of Purchased Intangibles 1,028,315 555,499
------------ ------------
Loss from Operations (664,407) (915,554)
Other Income(Expenses)
Interest Income 21,148 860
Interest Expense (225,469) (242,381)
Other Income, Net 54,086 1,942
------------ ------------
Loss before Income Tax Expense (814,642) (1,155,133)
Income Tax Benefit (287,401) (446,493)
------------ ------------
Net Loss (527,241) (708,640)
Other Comprehensive Income
Unrealized Gain on Securities 0 44,590
Reclassification Adjustment 2,577 0
Foreign Currency Adjustment 104,589 (49,570)
------------ ------------
Comprehensive Loss ($420,075) ($713,620)
------------ ------------
Net Loss Per Share
Basic ($0.01) ($0.02)
------------ ------------
Fully Diluted ($0.01) ($0.02)
------------ ------------
Weighted Average Shares(Basic) 65,646,865 40,033,321
------------ ------------
Weighted Average Shares(Fully Diluted) 65,646,865 40,033,321
------------ ------------
The accompanying notes to the condensed consolidated financial statements available in the company quarterly statement for the period ended March 31, 2007, as filed with the Securities and Exchange Commission, are an integral part of these statements.
THINK PARTNERSHIP INC.
CONSOLIDATED BALANCE SHEET
March 31, 2007 and December 31, 2006
March 31, December 31,
2007 2006
------------- -------------
Assets
Current Assets
Cash and Cash Equivalents $3,468,202 $3,031,488
Restricted Cash 1,366,999 1,164,216
Accounts Receivable Net of Allowance for
Doubtful Accounts of $79,162 and
$68,920 9,817,842 11,397,761
Refundable Corporate Income Taxes 504,186 715,814
Prepaid Expenses and Other Current
Assets 1,226,863 856,726
------------- -------------
Total Current Assets 16,384,092 17,166,005
------------- -------------
Equipment and Software, net 3,983,323 4,010,647
------------- -------------
Other Assets
Goodwill 79,288,550 79,140,787
Intangible Assets 18,976,162 19,819,652
Other Assets 172,697 260,048
------------- -------------
Total Other Assets 98,437,409 99,220,487
------------- -------------
Total Assets $118,804,824 $120,397,139
------------- -------------
Liabilities and Shareholders' Equity
Current Liabilities
Notes Payable - Current Portion $0 $208,333
Note Payable - Related Party 38,767 37,326
Accounts Payable 5,475,869 6,335,623
Deferred Revenue 1,882,748 2,076,537
Client Prepaid Media Buys 146,334 168,002
Deferred Tax Liability 610,838 613,965
Accrued Payroll 614,819 354,073
Accrued Expenses 957,342 852,703
Other Current Liabilities 7,089 496,731
------------- -------------
Total Current Liabilities 9,733,806 11,143,293
------------- -------------
Long-Term Liabilities 15,515,505 15,930,020
------------- -------------
Series A Redeemable Preferred - 26,500
shares authorized, 25,000 issued and
outstanding 0 3,859,785
------------- -------------
Shareholders' Equity
Preferred Stock, $.001 par value:
Authorized Shares -- 5,000,000 -- none
issued or outstanding 0 0
Common Stock, $.001 par value:
Authorized Shares -- 200,000,000
Issued Shares -- 70,065,024 as of
March 31 and 66,876,794 as of
December 31 70,065 66,877
Outstanding Shares -- 67,416,350 as of
March 31 and 64,228,120 as of
December 31
Additional Paid in Capital 107,698,976 103,055,090
Accumulated Deficit (13,649,491) (12,986,723)
Accumulated Other Comprehensive Income 279,844 172,678
Treasury Stock (843,881) (843,881)
------------- -------------
Total Shareholders' Equity 93,555,513 89,464,041
------------- -------------
Total Liabilities and Shareholders' Equity $118,804,824 $120,397,139
------------- -------------
The accompanying notes to the condensed consolidated financial statements available in the company quarterly statement for the period ended March 31, 2007, as filed with the Securities and Exchange Commission, are an integral part of these statements.
Revenue and Reconciliation of Pre-Tax Income to Adjusted EBITDA by Segment
In addition to other measures, management evaluates the operating results of each of its segments based upon revenue and "EBITDA," which is defined as net income before depreciation and amortization, interest expense and income taxes, each of which is presented on the company's Consolidated Statements of Operations. The company's presentation of EBITDA may not be comparable to similarly-titled measures used by other companies. Any of these items could be significant to the company's financial results. The following table summarizes revenues and EBITDA, as well as reconciles EBITDA to pre-tax income for the first quarter of 2007, as compared to the same year-ago quarter:
Three Months Ended March 31,
2007 2006
--------------- ------------
Revenue by Segment
Network $3,574,126 $1,762,926
Direct 7,103,473 1,339,689
Advertising 4,655,886 5,318,811
Consumer 2,421,431 3,793,214
Elimination (93,632) (164,246)
--------------- ------------
Total Revenue $17,661,284 $12,050,394
--------------- ------------
EBITDA Reconciliation
Pre-Tax ($814,642) ($1,155,133)
Amortization 1,640,407 781,634
Amortization of Stock Options 280,320 162,534
Depreciation 378,657 278,007
Net Interest Expense 204,321 241,521
Derivative Adjustment (30,718) 0
--------------- ------------
TOTAL EBITDA $1,658,345 $308,563
--------------- ------------
EBITDA by Segment
Network $1,068,790 $341,063
Direct 1,552,930 844,443
Advertising (67,825) 181,315
Consumer 408,622 227,840
Corporate (1,304,172) (1,286,098)
--------------- ------------
Total EBITDA $1,658,345 $308,563
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