LookSmart, Ltd. (Nasdaq:LOOK), an online search advertising network
solutions company, today announced financial results for the fourth
quarter and full year ended December 31, 2012.
Revenues for the fourth quarter of 2012 were $4.2 million, down
20.7% year-over-year, from revenue of $5.3 million in the fourth
quarter of 2011, and up 7.7% sequentially, from revenues of $3.9
million in the third quarter of 2012. Revenues from the Company's
Advertiser Networks for the fourth quarter of 2012 were $3.9
million, down 20.4%, year-over-year, from revenue of $4.9 million
in the fourth quarter of 2011 and up 5.4% sequentially, from
revenue of $3.7 million in the third quarter of 2012. Revenues from
the Company's Publisher Solutions were $0.3 million in the fourth
quarter of 2012, down 25% year-over-year, from revenue of $0.4
million in the fourth quarter of 2011, and up 50%, from $0.2
million in the third quarter of 2012.
Net loss for the fourth quarter of 2012 was $3.9 million, or
$0.23 per diluted share, which included a $2.3 million ($0.13 per
diluted share) expense for impairment of operating assets. This
compares to a net loss for the fourth quarter of 2011 of $1.8
million, or $0.11 per diluted share. Net loss for the third quarter
of 2012 was $2.7 million, or $0.15 per diluted share.
For the full year 2012, revenues were $15.7 million, down 43%,
from revenue of $27.6 million in 2011. Gross margin was 35% in
2012, compared to 45% in 2011. The Company's net loss in 2012 was
$11.0 million, or $0.64 per diluted share compared to net loss of
$2.5 million or $0.15 per diluted share in 2011.
"LookSmart is one of the oldest and most robust online
advertising platforms," said Michael Onghai, Chief Executive
Officer. "It is our intention to reinvigorate our team, work
closer with existing and new partners, expand our revenue mix and
position our company for profitable revenue growth in the
future. We are pleased that the Company bought back 16,784
shares of stock in the fourth quarter of 2012 at an average price
of $0.82 per share."
Gross margin decreased to 28% in the fourth quarter of 2012 from
45% in the fourth quarter of 2011, and from 35% in the third
quarter of 2012. Total operating expenses in the fourth quarter of
2012 were $5.1 million and included $2.3 million in impairment of
property and equipment and internally developed software and $0.1
million of non-cash, share-based compensation. Operating expenses
in the fourth quarter of 2011 were $4.2 million including $0.1
million of non-cash, share-based compensation charges. Operating
expenses for the third quarter of 2012 were $4.0 million and
included $0.2 million in restructuring expenses and $0.1 million of
non-cash, share-based compensation charges.
Non-GAAP net loss for the fourth quarter of 2012 was $1.5
million compared to a non-GAAP net loss of $1.7 million in the
fourth quarter of 2011. Non-GAAP net loss for the third quarter of
2012 was $2.4 million.
An explanation of LookSmart's use of non-GAAP financial
measures, including the limitations of such measures relative to
GAAP measures and reconciliation between GAAP and non-GAAP measures
where appropriate, is included later in this release.
Capital expenditures, including capitalization of internally
developed software, in the fourth quarter of 2012 were $0.2
million, compared to $0.3 million in the fourth quarter of 2011,
and $0.4 million in the third quarter of 2012. Depreciation and
amortization in the fourth quarter of 2012 was $0.4 million,
compared to $0.6 million for the fourth quarter of 2011 and $0.5
million for the third quarter of 2012.
In the fourth quarter of 2012, the Company wrote-off operating
assets in the amount of $2.3 million, most of which were related to
capitalized R&D software development initiated in 2012.
In the fourth quarter of 2012, LookSmart bought back 17,000
shares of common stock at an average price of $0.82 per share.
The Company ended the year with $15.9 million in cash, cash
equivalents, and investments, compared to $24.8 million at December
31, 2011 and $17.6 million at September 30, 2012. Net cash used in
operating activities for the three months ended December 31, 2012
was approximately $3.7 million.
About LookSmart, Ltd.
LookSmart is a pioneer in online advertising. Founded in 1997,
LookSmart has been connecting advertisers and agencies to high
quality sources of inventory for performance marketing, and helps
online publishers monetize their inventory through our award
winning Ad Center platform. Our highly scalable technology
processes billions of search queries on a daily basis, enabling
marketers to bid in real-time across search and display inventory,
and leverage intent data to get performance that meets aggressive
campaign goals. LookSmart is based in San Francisco, CA, with
offices in Los Angeles and Canada. For more information, visit
www.looksmart.com or call (415) 348-7000.
GAAP to Non-GAAP Reconciliation
We provide a reconciliation of GAAP net loss to non-GAAP net
loss below:
|
Three Months
Ended |
(000's) |
December 31, 2012
(unaudited) |
September 30, 2012
(unaudited) |
December 31, 2011
(unaudited) |
GAAP net loss |
$ (3,884) |
$ (2,654) |
$ (1,843) |
Add: Share-based compensation |
57 |
48 |
99 |
Add: Restructuring charges |
10 |
159 |
-- |
Add: Impairment charges |
2,303 |
-- |
-- |
Non-GAAP net loss |
$ (1,514) |
$ (2,447) |
$ (1,744) |
|
|
|
|
|
Year Ended December 31, |
|
(000's) |
2012 |
2011 |
|
GAAP net loss |
$ (11,047) |
$ (2,508) |
|
Add: Share-based compensation |
227 |
362 |
|
Add: Restructuring charges |
169 |
889 |
|
Add: Impairment charges |
2,303 |
-- |
|
Non-GAAP net loss |
$ (8,348) |
$ (1,257) |
|
Use of Non-GAAP Measures
Regulation G, "Conditions for Use of Non-GAAP Financial
Measures," and other provisions of the Securities Exchange Act of
1934, as amended, define and prescribe the conditions for use of
certain non-GAAP financial information. LookSmart provides
"non-GAAP net income (loss)," which is a non-GAAP financial
measure. Non-GAAP net loss consists of net loss before (a)
share-based compensation expense; (b) restructuring charges; and
(c) impairment charges.
The Company believes this non-GAAP financial measure provides
important supplemental information to management and investors.
This non-GAAP financial measure reflects an additional way of
viewing aspects of the Company's operations that the Company
believes, when viewed with the GAAP results and the accompanying
reconciliation to corresponding GAAP financial measures, provides
useful information regarding factors and trends affecting the
Company's business and results of operations.
For the non-GAAP financial measure non-GAAP net income (loss),
the adjustment provides management with information about
LookSmart's operating performance that enables comparison of its
operating financial results in different reporting periods.
Additionally, our management uses non-GAAP net income (loss) as a
supplemental measure in the evaluation of our business, and
believes that non-GAAP net income (loss) provides visibility into
our ability to meet our future capital expenditures and working
capital requirements.
This non-GAAP financial measure is used in addition to, and in
conjunction with, results presented in accordance with GAAP and
should not be relied upon to the exclusion of GAAP financial
measures. Management strongly encourages investors to review the
Company's consolidated financial statements in their entirety and
to not rely on any single financial measure. Because non-GAAP
financial measures are not standardized, it may not be possible to
compare these financial measures with other companies' non-GAAP
financial measures having the same or similar names. In addition,
the Company expects to continue to incur expenses similar to the
non-GAAP adjustments described above, in particular share-based
compensation expense, and exclusion of these items from the
Company's non-GAAP measures should not be construed as an inference
that these costs are unusual, infrequent or non-recurring.
Forward-Looking Statements
This press release contains forward-looking statements, such as
references to our business prospects. These statements, including
their underlying assumptions, are subject to risks and
uncertainties and are not guarantees of future performance. Results
may differ due to various factors such as the possibility that our
continued efforts to control expenses may not be successful, that
our efforts to increase revenue and improve gross margin may not
succeed, that we may not be able to achieve or sustain
profitability, that we may not succeed in lowering traffic
acquisition costs; that our efforts to increase traffic quality may
not be successful; that we may be unable to gain or maintain
customer acceptance of our publisher solutions or ad backfill
products, that existing and potential customers for our products
may opt to work with, or favor the products of, others due to more
favorable products or pricing terms, that we may be limited in our
ability or unable to retain and grow our ad and customer base, and
that we may be limited in our ability to, or be unable to, enhance
our products or our network of distribution partners. Additional
risks that could cause actual results to differ materially from
those projected are discussed in our Annual and Quarterly Reports
filed with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date
hereof.
The statements presented in this press release speak only as of
the date of the release. Please note that except as required by
applicable law we undertake no obligation to revise or update
publicly any forward-looking statements for any reason.
NOTE: "LookSmart" is a trademark of LookSmart, Ltd., and/or its
subsidiaries in the U.S. and other countries. All other trademarks
mentioned are the property of their respective owners.
LOOKSMART,
LTD |
CONSOLIDATED BALANCE
SHEETS |
(In thousands, except par
value) |
|
|
|
|
|
December
31, |
|
2012 |
2011 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 6,352 |
$ 17,950 |
Short-term investments |
9,506 |
6,809 |
Total cash, cash equivalents and
short-term investments |
15,858 |
24,759 |
Trade accounts receivable, net |
2,055 |
1,588 |
Prepaid expenses and other current
assets |
452 |
604 |
Total current assets |
18,365 |
26,951 |
Property and equipment, net |
378 |
1,941 |
Capitalized software and other assets,
net |
122 |
1,220 |
Total assets |
$ 18,865 |
$ 30,112 |
LIABILITIES & STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Trade accounts payable |
$ 1,427 |
$ 1,682 |
Accrued liabilities |
1,278 |
895 |
Deferred revenue and customer
deposits |
1,147 |
1,143 |
Current portion of capital lease
obligations |
110 |
515 |
Total current liabilities |
3,962 |
4,235 |
Capital lease and other obligations, net of
current portion |
177 |
296 |
Total liabilities |
4,139 |
4,531 |
Stockholders' equity: |
|
|
Convertible preferred stock, $0.001 par
value; Authorized: 5,000 shares at December 31, 2012 and 2011;
Issued and Outstanding: none at December 31, 2012 and 2011 |
-- |
-- |
Common stock, $0.001 par value;
Authorized: 80,000 shares; Issued and Outstanding: 17,305 shares
and 17,288 shares at December 31, 2012 and 2011, respectively |
17 |
17 |
Additional paid-in capital |
262,463 |
262,201 |
Accumulated other comprehensive loss |
(46) |
(24) |
Accumulated deficit |
(247,660) |
(236,613) |
Treasury stock at cost: 56 shares at
December 31, 2012 |
(48) |
-- |
Total stockholders' equity |
14,726 |
25,581 |
Total liabilities and stockholders'
equity |
$ 18,865 |
$ 30,112 |
|
|
LOOKSMART,
LTD |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(In thousands, except per share
data) |
|
|
|
|
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2012 |
2011 |
2012 |
2011 |
Revenue |
$ 4,189 |
$ 5,284 |
$ 15,691 |
$ 27,634 |
Cost of revenue |
3,014 |
2,914 |
10,163 |
15,195 |
Gross profit |
1,175 |
2,370 |
5,528 |
12,439 |
Operating expenses: |
|
|
|
|
Sales and marketing |
386 |
1,085 |
2,527 |
2,332 |
Product development and technical
operations |
1,256 |
1,831 |
6,036 |
6,742 |
General and
administrative |
1,111 |
1,299 |
5,579 |
5,312 |
Asset impairment charge |
2,303 |
-- |
2,303 |
-- |
Restructuring charge |
10 |
-- |
169 |
889 |
Total operating expenses |
5,066 |
4,215 |
16,614 |
15,275 |
Loss from operations |
(3,891) |
(1,845) |
(11,086) |
(2,836) |
Non-operating income (expense),
net |
|
|
|
|
Interest income |
14 |
21 |
78 |
89 |
Interest expense |
2 |
(17) |
(26) |
(81) |
Other income (expense),
net |
(3) |
(2) |
(7) |
323 |
Loss from operations before income
taxes |
(3,878) |
(1,843) |
(11,041) |
(2,505) |
Income tax expense |
(6) |
-- |
(6) |
(3) |
Net loss |
$ (3,884) |
$ (1,843) |
$ (11,047) |
$ (2,508) |
Net loss per share - Basic and
Diluted |
$ (0.23) |
$ (0.11) |
$ (0.64) |
$ (0.15) |
Weighted average shares outstanding
used in computing basic and diluted net loss per share |
17,253 |
17,287 |
17,281 |
17,287 |
CONTACT: Bill O'Kelly,
Chief Financial Officer
(415) 348-7208
bo'kelly@looksmart.net
John Evans
LookSmart Investor Relations
(310) 331-8529
ir@looksmart.net
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