WSSI Websidestory (MM)

SAN DIEGO, May 10 /PRNewswire-FirstCall/ -- WebSideStory, Inc. (NASDAQ:WSSI), a leading provider of on-demand digital marketing and customer analytics solutions, today announced the results of operations for the first quarter ended March 31, 2006. Financial and operating highlights for the quarter include: * Record non-GAAP revenue of $14.5 million, an increase of 109% percent over the comparable period last year on an as-reported basis and 37% on an organic basis. Non-GAAP revenue includes $1.1 million in deferred revenue related to the company's merger with Visual Sciences. The first quarter of 2006 includes the results of operations from Visual Sciences from the period beginning February 1, 2006. * GAAP revenue of $13.4 million, an increase of 93% over the comparable period last year on an as-reported basis and 20% on an organic basis. * Raised non-GAAP revenue guidance for the second quarter of 2006 from between $15.8 million and $16.4 million to between $16.0 million and $16.7 million, and raised GAAP revenue guidance for the second quarter of 2006 from between $14.6 and $15.2 million to between $14.7 and $15.4 million. * Non-GAAP earnings per share of $0.12, compared to previously issued guidance of $0.10 to $0.12 per share. Non-GAAP earnings per share excludes stock-based compensation expenses, amortization of intangibles and other non-cash items described below. On a GAAP basis, the company reported a loss of $0.09 per share. * Strong year-over-year organic revenue growth from core product lines, including 40% growth in the Active Marketing Suite, comprised of HBX, Search and Publish, and 55% growth in the Visual Sciences business unit. * Signing of 120 new contracts for various modules of the WebSideStory Active Marketing and Visual Sciences suites, surpassing 1,300 enterprise customers worldwide. * The company's 10th consecutive quarter of positive cash generation and non-GAAP profitability, including non-GAAP net income of $2.3 million, which includes deferred revenue related to the Visual Sciences merger and excludes stock-based compensation, amortization of intangibles and other non-cash items. On a GAAP basis, the company reported a net loss of $1.7 million for the quarter. "We are pleased to post another strong quarter, highlighted by record non-GAAP revenue and strong cash generation, while continuing to deliver new and innovative products that are changing the landscape of digital marketing and real-time enterprise analytics," said Jeff Lunsford, chairman and CEO of WebSideStory. "Our customers are now seeing the synergies of the Active Marketing Suite in action, as exemplified by the recent launch of WebSideStory Search 4.0, the first site search solution to automatically integrate site search with web site behavioral data. As part of a live test, Brooks Brothers enjoyed a 25 percent increase in online sales from visitors using site search, directly attributable to this innovative capability. Additionally, demand for HBX and Visual Sciences solutions continues to meet or exceed our goals as real-time web analytics and real-time enterprise intelligence are gaining mainstream recognition as required capabilities for competing in the global marketplace." Financial Guidance Q206 Full Year 2006 Revenue Guidance (millions) Low High Low High Estimated Non-GAAP revenue range $16.0 $16.7 $67.0 $68.5 Deferred revenue related to Visual Sciences merger (1.3) (1.3) (4.1) (4.1) Estimated GAAP revenue range $14.7 $15.4 $62.9 $64.4 Earnings per share guidance Estimated Non-GAAP EPS range $0.10 $0.13 $0.50 $0.54 Estimated amortization of intangibles (0.07) (0.07) (0.27) (0.27) Estimated stock-based compensation (0.20) (0.21) (0.60) (0.63) Deferred revenue related to Visual Sciences merger (0.06) (0.06) (0.20) (0.20) Estimated non-cash tax benefit 0.05 0.05 0.14 0.16 Estimated non-cash interest expense (0.01) (0.01) (0.05) (0.05) Estimated GAAP EPS range $(0.19) $(0.17) $(0.49) $(0.45) Estimated Shares used in per share calculations 20,270,000 20,270,000 20,368,000 20,368,000 Note on the Use of Non-GAAP Financial Measures Some of the financial measures in this press release, including some of our financial guidance, are non-GAAP financial measures within the meaning of SEC Regulation G. WebSideStory believes that this presentation is useful to investors because it more accurately describes the operating performance of the company on a period-to-period basis and helps investors gauge the company's ability to generate cash flow, excluding specific costs and expenses that we believe are not indicative of our core operating results. Company management uses these non-GAAP measures as important indicators of the company's past performance and to plan and forecast performance in future periods. Investors should not consider non-GAAP financial measures in isolation from, or in substitution for, financial information presented in compliance with GAAP. Conference Call and Webcast Information Management will host a quarterly conference call and simultaneous webcast to discuss the results Wed., May 10, 2006, at 6:00 a.m. Pacific Time. To participate in the call, investors should dial 866.578.5788 (domestic) or 617.213.8057 (international) 10 minutes prior to the scheduled call. The passcode is 32454916. Additionally, a live audio-only webcast of the call may be accessed via the internet at http://www.websidestory.com/. An archived version of the webcast will also be available for at least twelve months, beginning two hours after completion of the call, at the same location. Forward-Looking Statements Statements in this press release that are not a description of historical facts are forward-looking statements. You should not regard any forward- looking statement as a representation by WebSideStory that any of its plans will be achieved. Actual results may differ materially from those set forth in this release due to the risks and uncertainties inherent in WebSideStory's business, including, without limitation: WebSideStory's reliance on its web analytics services for the majority of its revenue; blocking or erasing of cookies or limitations on our ability to use cookies; WebSideStory's limited experience with digital marketing applications beyond web analytics; the risks associated with integrating the operations and products of Avivo Corporation and Visual Sciences, LLC with those of WebSideStory; privacy concerns and laws or other domestic or foreign regulations that may subject WebSideStory to litigation or limit our ability to collect and use Internet user information; WebSideStory's ability to defend itself against claims of patent infringement alleged by NetRatings, Inc.; WebSideStory's ongoing ability to protect its own intellectual property rights and to avoid violating the intellectual property rights of third parties; the highly competitive markets in which we operate that could make it difficult for WebSideStory to acquire and retain customers; the risk that WebSideStory's customers fail to renew their agreements; WebSideStory's recent achievement of profitability and the risk that it may not maintain its profitability; the risk that WebSideStory's services may become obsolete in a market with rapidly changing technology and industry standards; and other risks described in WebSideStory's Securities and Exchange Commission filings, including WebSideStory's annual report on Form 10-K for the year ended December 31, 2005 and quarterly reports on Form 10-Q. Do not place undue reliance on these forward-looking statements which speak only as of the date of this news release. All forward-looking statements are qualified in their entirety by this cautionary statement, and WebSideStory undertakes no obligation to revise or update this news release to reflect events or circumstances after the date of this news release. About WebSideStory, Inc. Founded in 1996, WebSideStory, Inc. (NASDAQ:WSSI) is a leading provider of on-demand digital marketing and customer analytics solutions that improve online marketing, sales and business operations. Its Active Marketing Suite(TM) consists of web analytics, site search, web content management, and keyword bid management. WebSideStory also provides customer analytics solutions through its wholly owned subsidiary, Visual Sciences, LLC, a leading provider of streaming data analysis and visualization software. WebSideStory is headquartered in San Diego, California, and has European headquarters in Amsterdam, The Netherlands. For more information, contact WebSideStory. Voice: 858.546.0040. Fax: 858.546.0480. Address: 10182 Telesis Court, 6th Floor, San Diego, CA 92121. Web site: http://www.websidestory.com/. HBX and Active Marketing Suite are trademarks and WebSideStory is a registered trademark of WebSideStory. Visual Sciences is a registered trademark of Visual Sciences, LLC. Other trademarks belong to their respective owners. Contact Information For additional information, please contact: CEO Jeff Lunsford at (858) 546-0040 ext. 388; or CFO Claire Long at (858) 546-0040 ext. 387. WebSideStory, Inc. - Consolidated Statement of Operations All numbers in thousands except for per share data Three months ended March 31, March 31, 2006 2005 Unaudited Unaudited Revenues Subscription, hosting and support $11,768 $6,901 License 251 -- Professional services 759 45 Advertising 665 11 Total revenues 13,443 6,957 Cost of revenues* Cost of revenue 3,136 1,007 Amortization of intangibles 502 -- Total cost of revenues 3,638 1,007 Gross profit 9,805 5,950 Operating expenses* Sales and marketing 5,938 2,968 Technology development 2,672 752 General and administrative 2,693 1,284 Amortization of intangibles 713 - Total operating expenses 12,016 5,004 (Loss) income from operations (2,211) 946 Interest expense (307) (9) Interest income 157 183 (Loss) income before provision for income taxes (2,361) 1,120 (Benefit from) provision for income taxes (606) 53 (Loss) income before cumulative effect of a change in accounting principle (1,755) 1,067 Cumulative effect of change in accounting principle (net of tax) 13 -- Net (loss) income $(1,742) $1,067 (Loss) income per share before cumulative effect of a change in accounting principle: Basic $(0.09) $0.07 Diluted $(0.09) $0.06 Cumulative effect of change in accounting principle per share: Basic $-- $-- Diluted $-- $-- Net income (loss) per share: Basic $(0.09) $0.07 Diluted $(0.09) $0.06 Weighted average number of shares used in per share amounts: Basic 18,405,000 15,446,842 Diluted 18,405,000 16,921,915 ________________________________ (*) Stock-based compensation Cost of revenues $411 $2 Sales and marketing 786 34 Technology development 550 2 General and administrative 488 144 $2,235 $182 WebSideStory, Inc. -- Consolidated Balance sheet (in thousands) March 31, March 31, 2006 2005 Assets Unaudited Unaudited Current assets Cash and cash equivalents $6,619 $19,968 Investments 7,735 11,712 Accounts receivable, net 10,378 7,842 Deferred tax assets 1,012 507 Prepaid expenses and other current assets 2,721 2,304 Total current assets 28,465 42,333 Property and equipment, net 4,617 2,532 Investments 1,294 3,276 Goodwill 46,233 21,286 Intangible assets, net 24,366 6,901 Deferred tax assets 9,852 9,166 Other assets 2,404 2,249 $117,231 $87,743 Liabilities and stockholders' equity Current liabilities Accounts payable $1,783 $877 Accrued liabilities 4,032 3,880 Deferred revenue 15,769 12,801 Capital lease short term 77 83 Total current liabilities 21,661 17,641 Capital lease long term 75 90 Notes payable 18,911 -- Other liabilities 196 196 Total liabilities 40,843 17,927 Commitments and contingencies Stockholders' equity Preferred stock, 10,000,000 shares authorized and no shares issued and outstanding at March 31, 2006 and December 31, 2005 -- -- Common stock, $0.001 par value; 75,000,000 shares authorized, 18,462,336 and 18,401,180 shares issued and outstanding at March 31, 2006 and December 31, 2005, respectively 18 18 Additional paid in capital 122,672 114,934 Unearned stock-based compensation (96) (630) Accumulated other comprehensive income 145 103 Accumulated deficit (46,351) (44,609) Total stockholders' equity 76,388 69,816 $117,231 $87,743 WebSideStory, Inc. Reconciliation of GAAP net (loss) Three months ended income attributable to common March 31, March 31, stockholders to Non-GAAP net income 2006 2005 (in thousands) Unaudited Unaudited Net (loss) income $(1,742) $1,067 Amortization of intangibles 1,215 -- Stock-based compensation 2,235 182 Deferred revenue related to Visual Sciences merger * 1,105 -- Non-cash tax expense (benefit) (675) -- Non-cash interest expense 171 -- Cumulative effect of change in accounting principle (13) -- Non-GAAP net income $2,296 $1,249 Reconciliation of GAAP (loss) income per share to Non-GAAP income per share GAAP (loss) income per share attributable to common stockholders Basic $(0.09) $0.07 Diluted $(0.09) $0.06 Amortization of intangibles 0.06 -- Stock-based compensation 0.11 0.01 Deferred revenue related to Visual Sciences merger * 0.06 -- Non-cash tax expense (benefit) (0.03) -- Non-cash interest expense 0.01 -- Cumulative effect of change in accounting principle -- -- Non-GAAP net income per share attributable to common stockholders: Diluted $0.12 $0.07 GAAP weighted-average number of shares used in per share amounts: Basic 18,405,000 15,446,842 Diluted 18,405,000 16,921,915 Non-GAAP weighted-average number of shares used in per share amounts: Basic 18,405,000 15,446,842 Diluted 19,774,782 16,855,949 WebSideStory, Inc. Reconciliation of GAAP revenue Three months ended to Non-GAAP revenue March 31, March 31, (in thousands) 2006 2005 Unaudited Unaudited GAAP revenue $13,443 $6,957 Deferred revenue related to Visual Sciences merger * 1,105 -- Non-GAAP revenue $14,548 $6,957 ____________________________________________ * In accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations," the deferred revenue obligation on the ending balance sheet of Visual Sciences was reduced to fair value when recorded on the beginning balance sheet within WebSideStory. This fair value adjustment resulted in a write-down of $4.5 million of deferred revenue which would otherwise have been recognized as revenue by Visual Sciences on a stand-alone basis in periods subsequent to the merger date. DATASOURCE: WebSideStory, Inc. CONTACT: Erik Bratt, +1-858-546-0040 ext. 365, , or Jeff Lunsford, CEO, +1-858-546-0040 ext. 388, or Claire Long, CFO, +1-858-546-0040 ext. 387, all of WebSideStory, Inc. Web site: http://www.websidestory.com/

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