Ask Jeeves Reports Fourth Quarter and Full-Year 2004 Results Ask
Jeeves posts fourth quarter revenues of $86.1 million OAKLAND,
Calif., Feb. 3 /PRNewswire-FirstCall/ -- Ask Jeeves, Inc. (Nasdaq:
ASKJ; "the Company") today reported results for the fourth quarter
and full year ended December 31, 2004. Revenues for the quarter
ended December 31, 2004 were $86.1 million. These fourth quarter
results represent 170% growth over revenues of $31.8 million for
the comparable year-ago quarter. "In the fourth quarter Ask Jeeves
once again showed strong growth -- financially, from a traffic
standpoint, and in terms of our products," said Steve Berkowitz,
Ask Jeeves' CEO. "This quarter was the culmination of a great year
for the Company. We launched many innovative features and products
to make searching easier and more useful. Users responded
positively, leading to gains in both reach and frequency. In 2005,
we plan to continue to outgrow the search market as a whole as we
roll out new products, build on the differentiation of our core
technologies, and expand globally." Pro forma income from
continuing operations for the fourth quarter was $24.2 million, or
$0.35 per share. For the comparable year-ago quarter, Ask Jeeves'
pro forma income from continuing operations was $8.2 million, or
$0.14 per share. Pro forma results contained in this release
exclude items described below and should be evaluated in light of
the Company's financial results prepared in accordance with GAAP.
Under GAAP, Ask Jeeves' income from continuing operations for the
fourth quarter of 2004 was $17.1 million, or $0.25 per share. This
compares to income from continuing operations on a GAAP basis of
$7.6 million, or $0.13 per share, for the comparable year-ago
quarter. Cash, cash equivalents and marketable securities totaled
$109.7 million on December 31, 2004. Revenues for the year ended
December 31, 2004 were $261.3 million. These 2004 revenues
represent 144% growth over revenues of $107.3 million for 2003. Pro
forma income from continuing operations for 2004 was $71.1 million,
or $1.08 per share, compared to pro forma income from continuing
operations of $22.0 million, or $0.40 per share, for 2003. Under
GAAP, Ask Jeeves' income from continuing operations for 2004 was
$52.4 million, or $0.80 per share. This compares to income from
continuing operations on a GAAP basis of $24.8 million, or $0.45
per share, for 2003. Ask Jeeves completed its acquisition of
Interactive Search Holdings, Inc. (ISH) on May 6, 2004.
Accordingly, the Company's 2004 results include the financial
results of the ISH properties after the closing date. Unless
otherwise indicated, all financial, pro forma and other metrics in
this release are based on Ask Jeeves' continuing operations.
Continuing operations exclude results from the Jeeves' Solutions
division which was sold on July 1, 2003. Business Outlook The
following business outlook contains forward-looking statements
describing management's current expectations for the future. The
matters discussed in these forward-looking statements are subject
to numerous assumptions, risks and uncertainties, some of which are
listed or referred to in the cautionary note below. "We are very
pleased as we enter 2005," said Steve Sordello, Ask Jeeves' CFO.
"Our key volume, pricing and productivity metrics are positive.
We're generating cash and strengthening our balance sheet while
investing in our brands, technologies and infrastructure. Looking
ahead, we continue to be excited about our opportunity to
capitalize on the growing search market." First Quarter 2005 For
the first quarter of 2005, Ask Jeeves anticipates revenues of $94
million and pro forma income of approximately $23.8 million, or
$0.34 per share. Ask Jeeves anticipates that GAAP net income for
the first quarter will be $0.24 per share. The anticipated
difference between first quarter GAAP basis net income and pro
forma income results primarily from non-cash amortization of
intangible assets. The earnings per share forecast assumes a share
count of 70 million shares. 2005 Business Outlook For the full year
ahead, Ask Jeeves currently anticipates revenues of approximately
$380 to $395 million and pro forma income of approximately $1.30 to
$1.45 per share. GAAP net income is expected to be $0.90 to $1.05
per share. The guidance excludes the effects of the change in
accounting for stock-based compensation, which comes into effect
later this year. Guidance should be considered in light of the
risks referred to in the cautionary note below. Pro Forma Results
Ask Jeeves' pro forma results are calculated by adjusting GAAP
income from continuing operations to exclude the effects of items
that management believes are not directly related to the underlying
performance of Ask Jeeves' core business operations. A table
reconciling the Company's pro forma income from continuing
operations to GAAP income from continuing operations is included
with the condensed consolidated financial statements attached to
this release. The principal differences between the Company's pro
forma and GAAP results are exclusion of amortization of goodwill
and other assets, stock-based compensation, impairment of
long-lived assets, restructuring costs, gain on acquisition of its
UK joint venture and the gain on dissolution of another joint
venture. Please refer to the reconciliation table for a full list
of the adjustments. The anticipated difference between GAAP-basis
net income and pro forma income for 2005 results primarily from
non-cash amortization of intangible assets. Ask Jeeves' pro forma
measures should be considered in addition to and not as a
substitute for, nor superior to measures of financial performance
prepared in accordance with GAAP. Conference Call Scheduled for 5
p.m. Eastern time on February 3, 2005 Ask Jeeves will hold a
conference call to discuss its fourth quarter and full year 2004
results, and its business outlook for the first quarter and the
year 2005 at 5 p.m. Eastern time on February 3, 2005. A
more-detailed outlook will be presented on the call than is
contained in this release. Interested persons can listen to a live
broadcast of the conference call on the Internet at
http://www.irconnect.com/askjinc/index.html. To listen to the live
call, go to the web site at least fifteen minutes prior to the
start time to download and install the necessary audio software.
For those unable to listen to the live broadcast, a replay will be
available one hour after the conclusion of the call at the same
site, under the category "earnings releases" for a period of three
months. The financial and statistical information to be discussed
during the conference call will be posted on Ask Jeeves Web site at
the above address. Cautionary Note Regarding Forward-looking
Statements This press release contains forward-looking statements.
All statements regarding the future are forward-looking statements,
including those statements regarding the Company's potential for
future growth, the Company's anticipated increase in investment in
its business, the Company's plans to continue to innovate and
improve and all expectations regarding financial forecasts
including revenue and productivity metrics, cash flow, net income,
pro forma income, revenue growth and pro forma earnings per share
of the Company in the future. The forward-looking guidance provided
in this press release is subject to numerous assumptions, risks and
other uncertainties and is based on limited information available
to Ask Jeeves at this time, which is subject to change. Ask Jeeves'
actual results in the future may differ materially from
management's current expectations. Although management's
expectations may change after the date of this release, Ask Jeeves
undertakes no obligation to revise or update the guidance above.
The lack of any revision or update is not meant to imply continued
affirmation of the guidance. Factors that might cause or contribute
to such differences include, but are not limited to: Ask Jeeves'
dependence on a third-party paid placement provider; the risk that
acquisitions might not be integrated successfully; the risk of
further vertical consolidation in the Internet search and keyword
advertising markets; risks associated with rapid technological
change; risks that innovations by competitors might cause Ask
Jeeves' user base to migrate to other search engines, or that Ask
Jeeves search volume might otherwise decline; risks associated with
relying on third parties for search toolbar distribution; the risk
that companies' internet advertising budgets might contract or grow
at a slower pace; Ask Jeeves' dependence on third parties for some
types of content, distribution and advertising delivery; potential
lack of market acceptance of Ask Jeeves' advertising products;
introduction of new advertising products or search technologies by
competitors; declines in the average selling price of Ask Jeeves'
advertising products; and adverse economic conditions in any of the
major countries or markets in which Ask Jeeves does business or to
which its web content is targeted. As a relatively short
announcement, this press release cannot present a full discussion
of such risks. Further information on risk factors that could
affect Ask Jeeves' financial results is included in its most recent
Annual Report on Form 10-K and subsequent quarterly reports on Form
10-Q filed with the Securities and Exchange Commission. Ask Jeeves
encourages investors to read all of the disclosures in its SEC
filings for a broader discussion of important factors that may be
material to investors and may affect Ask Jeeves' business,
financial condition and results of operations. About Ask Jeeves,
Inc. Ask Jeeves, Inc. provides consumers and advertisers with
information retrieval products across a diverse portfolio of Web
sites, portals and desktop search applications. Ask Jeeves' search
and search-based portal brands include: Ask Jeeves (Ask.com and
Ask.co.uk); Ask Jeeves Japan (Ask.jp, a joint venture); Ask Jeeves
for Kids (AJKids.com); Excite (excite.com); iWon (iwon.com); My
Search (mysearch.com); My Way (myway.com); My Web Search
(mywebsearch.com) and Teoma (teoma.com). Ask Jeeves also owns the
search technology Teoma, proprietary natural language processing
technology, as well as portal and ad serving technologies. In
addition to powering several of the Ask Jeeves brands, the Company
syndicates its technologies to help companies increase revenue
through powerful search. Ask Jeeves' advertising division,
AJinteractive, provides advertisers with targeted tools to reach a
broad base of valuable customers. Ask Jeeves, Inc. is headquartered
in Oakland, California, with offices throughout the United States,
as well as in London, England and Dublin, Ireland. For more
information, visit http://www.ask.com/ or call 510-985-7400. NOTE:
Ask Jeeves, AJinteractive, Ask.com, Teoma, My Way, My Search, My
Web Search, iWon and Excite are trademarks or registered trademarks
of Ask Jeeves, Inc ASK JEEVES, INC. PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share
and per share data) Three Months Ended (unaudited) December 31,
2004 December 31, 2003 Revenues $86,103 100.0% $31,834 100.0% Cost
of revenues 23,660 27.5% 5,136 16.1% Gross profit 62,443 72.5%
26,698 83.9% Operating expenses: Product development 7,224 8.4%
3,762 11.8% Sales and marketing 22,690 26.4% 9,639 30.3% General
and administrative 7,354 8.5% 4,982 15.6% Total pro forma operating
expenses 37,268 43.3% 18,383 57.7% Pro forma operating income
25,175 29.2% 8,315 26.2% Interest and other income, net 160 0.2%
411 1.3% Pro forma income before income tax provision 25,335 29.4%
8,726 27.5% Income tax provision 1,108 1.3% 483 1.5% Pro forma
income from continuing operations $24,227 28.1% $8,243 26.0% Basic
pro forma income from continuing operations per share $0.42 $0.18
Weighted average shares outstanding used in computing basic pro
forma income from continuing operations per share 58,240,478
46,375,914 Diluted pro forma income from continuing operations per
share $0.35 $0.14 Weighted average shares outstanding used in
computing diluted pro forma income from continuing operations per
share 69,186,012 58,496,224 Revenues from related parties $--
$1,131 RECONCILIATION OF PRO FORMA INCOME FROM CONTINUING
OPERATIONS TO GAAP INCOME FROM CONTINUING OPERATIONS Pro forma
income from continuing operations $24,227 $8,243 Cost of revenues
(1) (119) -- Amortization of intangible assets (2) (3,214) (522)
(3,333) (522) Product Development (1) (113) -- Sales and marketing
(1) (217) -- General and administrative (1) (70) -- Amortization of
intangible assets (2) (2) (7) Transaction costs (3) -- -- (72) (7)
Impairment and write off of long-lived assets (4) -- --
Amortization of intangible assets (5) (3,329) -- Gain on
acquisition and dissolution of joint ventures (6) -- -- Interest
and other income, net (7) (15) (76) Income from continuing
operations $17,148 $7,638 Year Ended (unaudited) December 31, 2004
December 31, 2003 Revenues $261,327 100.0% $107,292 100.0% Cost of
revenues 66,885 25.6% 19,828 18.5% Gross profit 194,442 74.4%
87,464 81.5% Operating expenses: Product development 23,848 9.1%
14,766 13.8% Sales and marketing 68,550 26.2% 31,901 29.7% General
and administrative 27,225 10.4% 18,369 17.1% Total pro forma
operating expenses 119,623 45.7% 65,036 60.6% Pro forma operating
income 74,819 28.7% 22,428 20.9% Interest and other income, net 967
0.4% 1,446 1.3% Pro forma income before income tax provision 75,786
29.1% 23,874 22.2% Income tax provision 4,694 1.8% 1,891 1.8% Pro
forma income from continuing operations $71,092 27.3% $21,983 20.4%
Basic pro forma income from continuing operations per share $1.32
$0.50 Weighted average shares outstanding used in computing basic
pro forma income from continuing operations per share 54,050,461
44,233,461 Diluted pro forma income from continuing operations per
share $1.08 $0.40 Weighted average shares outstanding used in
computing diluted pro forma income from continuing operations per
share 65,811,066 54,773,229 Revenues from related parties $2,740
$4,525 RECONCILIATION OF PRO FORMA INCOME FROM CONTINUING
OPERATIONS TO GAAP INCOME FROM CONTINUING OPERATIONS Pro forma
income from continuing operations $71,092 $21,983 Cost of revenues
(1) (284) (1) Amortization of intangible assets (2) (8,984) (2,088)
(9,268) (2,089) Product Development (1) (212) (2) Sales and
marketing (1) (497) (1) General and administrative (1) (147) (2)
Amortization of intangible assets (2) (24) (29) Transaction costs
(3) - (625) (171) (656) Impairment and write off of long-lived
assets (4) - (702) Amortization of intangible assets (5) (8,663) --
Gain on acquisition and dissolution of joint ventures (6) -- 6,356
Interest and other income, net (7) 149 (104) Income from continuing
operations $52,430 $24,785 Notes: (1). Adjustments to cost of
revenues, product development, sales and marketing, and general and
administrative costs relate to amortization of stock based
compensation and the write-off of certain office leases. (2).
Amortization of intangible assets in cost of revenues and general
and administrative costs consists of the pro-rata expensing of
intangible assets from acquisitions, certain licensing fees, and
trademarks. (3). Transaction costs in 2003 related to certain
merger and acquisition activities that did not come to fruition.
(4). Impairment and write off of long-lived assets consists
primarily of the write-off of obsolete equipment. (5). Amortization
of intangible assets consists of the amortization of intangible
assets from the acquisition of ISH in 2004. (6). Gain on
acquisition and dissolution of joint ventures in 2003 consists of a
gain from the acquisition of our UK joint venture and a gain from
the dissolution of our Ask Jeeves en Espanol joint venture. (7).
The adjustments to interest and other income, net consist of
realized gains and losses on investments, losses on disposals of
assets, foreign exchange gains and losses, and miscellaneous
income. ASK JEEVES, INC. PRO FORMA INCOME FROM CONTINUING
OPERATIONS TO PRO FORMA EBITDA FROM CONTINUING OPERATIONS AND GAAP
INCOME FROM CONTINUING OPERATIONS (In thousands, except share and
per share data) Three Months Ended (unaudited) December 31, 2004
December 31, 2003 Per Per Amount Share Amount Share Pro forma
income from continuing operations $24,227 $0.35 $8,243 $0.14
Depreciation 3,082 0.04 1,586 0.03 Interest and other income, net
(160) -- (411) (0.01) Income tax provision 1,108 0.02 483 0.01 Pro
forma EBITDA from continuing operations 28,257 0.41 9,901 0.17
Adjustments: Depreciation (3,082) (0.04) (1,586) (0.03) Interest
and other income, net 160 -- 411 0.01 Income tax provision (1,108)
(0.02) (483) (0.01) Cost of revenues (1) (119) -- -- --
Amortization of intangible assets (2) (3,214) (0.05) (522) (0.01)
(3,333) (0.05) (522) (0.01) Product development (1) (113) -- -- --
Sales and marketing (1) (217) -- -- -- General and administrative
(1) (70) -- -- -- Amortization of intangible assets (2) (2) -- (7)
-- Transaction costs (3) -- -- -- -- (72) -- (7) -- Impairment and
write off of long- lived assets (4) -- -- -- -- Amortization of
intangible assets (5) (3,329) (0.05) -- -- Gain on acquisition and
dissolution of joint ventures (6) -- -- -- -- Interest and other
income, net (7) (15) -- (76) -- Income from continuing operations
$17,148 $7,638 Weighted average shares outstanding used in
computing diluted income from continuing operations per share
69,186,012 $0.25 58,496,224 $0.13 Year Ended (unaudited) December
31, 2004 December 31, 2003 Per Per Amount Share Amount Share Pro
forma income from continuing operations $71,092 $1.08 $21,983 $0.40
Depreciation 9,788 0.15 6,922 0.13 Interest and other income, net
(967) (0.01) (1,446) (0.03) Income tax provision 4,694 0.07 1,891
0.03 Pro forma EBITDA from continuing operations 84,607 1.29 29,350
0.53 Adjustments: Depreciation (9,788) (0.15) (6,922) (0.13)
Interest and other income, net 967 0.01 1,446 0.03 Income tax
provision (4,694) (0.07) (1,891) (0.03) Cost of revenues (1) (284)
-- (1) -- Amortization of intangible assets (2) (8,984) (0.14)
(2,088) (0.04) (9,268) (0.14) (2,089) (0.04) Product development
(1) (212) -- (2) -- Sales and marketing (1) (497) (0.01) (1) --
General and administrative (1) (147) -- (2) -- Amortization of
intangible assets (2) (24) -- (29) -- Transaction costs (3) -- --
(625) (0.01) (171) -- (656) (0.01) Impairment and write off of
long- lived assets (4) -- -- (702) (0.01) Amortization of
intangible assets (5) (8,663) (0.13) -- -- Gain on acquisition and
dissolution of joint ventures (6) -- -- 6,356 0.11 Interest and
other income, net (7) 149 -- (104) -- Income from continuing
operations $52,430 $24,785 Weighted average shares outstanding used
in computing diluted income from continuing operations per share
65,811,066 $0.80 54,773,229 $0.45 Note: Pro forma EBITDA from
continuing operations is defined as pro forma income from
continuing operations excluding depreciation, interest and other
income, and income tax provision. Footnotes appear on the Pro Forma
Condensed Consolidated Statements of Operations. ASK JEEVES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except share and per share data) Three Months Ended Year Ended
December 31, December 31, (unaudited) (unaudited) 2004 2003 2004
2003 Revenues $86,103 $31,834 $261,327 $107,292 Cost of revenues
26,993 5,658 76,153 21,917 Gross profit 59,110 26,176 185,174
85,375 Operating expenses: Product development 7,337 3,762 24,060
14,768 Sales and marketing 22,907 9,639 69,047 31,902 General and
administrative 7,426 4,989 27,396 19,025 Amortization of intangible
assets 3,329 -- 8,663 -- Impairment and write-off of long-lived
assets -- -- -- 702 Total operating expenses 40,999 18,390 129,166
66,397 Operating income 18,111 7,786 56,008 18,978 Gain on
acquisition and dissolution of joint ventures -- -- -- 6,356
Interest income, net 247 411 1,098 1,311 Interest expense (31) --
(173) (165) Other income, net (71) (76) 191 196 Income before
income tax provision 18,256 8,121 57,124 26,676 Income tax
provision 1,108 483 4,694 1,891 Income from continuing operations
17,148 7,638 52,430 24,785 Discontinued operations: Loss from
discontinued operations -- -- -- (1,218) Gain on sale of
discontinued operations 351 -- 731 2,482 Income from discontinued
operations 351 -- 731 1,264 Net income $17,499 $7,638 $53,161
$26,049 Earnings per Share- Basic: Income from continuing
operations $0.29 $0.16 $0.97 $0.56 Income from discontinued
operations $0.01 $-- $0.01 $0.03 Net income per share $0.30 $0.16
$0.98 $0.59 Weighted average shares outstanding used in computing
basic net income per share 58,240,478 46,375,914 54,050,461
44,233,461 Earnings per Share - Diluted: Income from continuing
operations $0.25 $0.13 $0.80 $0.45 Income from discontinued
operations $-- $-- $0.01 $0.03 Net income per share $0.25 $0.13
$0.81 $0.48 Weighted average shares outstanding used in computing
diluted net income per share 69,186,012 58,496,224 65,811,066
54,773,229 Revenues from related parties $-- $1,131 $2,740 $4,525
ASK JEEVES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands) December 31, December 31, 2004 2003 (unaudited) ASSETS
Current assets: Cash and cash equivalents $80,452 $36,673
Marketable securities 29,250 143,975 Total cash, cash equivalents
and marketable securities 109,702 180,648 Accounts receivable, net
44,911 12,062 Prepaid expenses and other current assets 5,827 3,299
Total current assets 160,440 196,009 Property and equipment, net
22,339 10,933 Goodwill 264,898 -- Intangible assets, net 87,887 831
Deferred tax asset, net 295 -- Other long-term assets, net 5,420
4,482 Total assets $541,279 $212,255 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable and other accrued
liabilities $35,436 $12,050 Accrued compensation and related
expenses 8,245 5,137 Accrued restructuring costs 383 1,167 Deferred
revenue 2,583 5,367 Current portion of capital lease obligation 710
-- Total current liabilities 47,357 23,721 Convertible subordinated
notes 115,000 115,000 Capital lease obligations, less current
portion 460 -- Other liabilities 326 326 Total liabilities 163,143
139,047 Commitments and contingencies Stockholders' equity 378,136
73,208 Total liabilities and stockholders' equity $541,279 $212,255
DATASOURCE: Ask Jeeves, Inc. CONTACT: Heather Staples, Corporate
Communications, +1-510-985-7610, or , or Derrick Nueman, Investor
Relations, +1-510-985-7485, or , both of Ask Jeeves Web site:
http://www.ask.com/
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