SAN DIEGO, Nov. 6 /PRNewswire-FirstCall/ -- WebSideStory, Inc.
(NASDAQ:WSSI), a leading provider of digital marketing and
analytics solutions, today announced the results of operations for
the third quarter ended September 30, 2006. Financial and operating
highlights for the quarter include: * Non-GAAP earnings per share
of $0.16, compared to previously issued guidance of $0.13 to $0.14
per share. Non-GAAP earnings per share excludes stock-based
compensation expenses, amortization of intangibles and other
non-cash items described below. GAAP loss per share of $0.09 with a
reconciliation provided in the table below. * Non-GAAP revenue of
$18.9 million, which compares favorably to previously issued
guidance of $17.9 million to $18.5 million. Non-GAAP revenue
includes $1.5 million in deferred revenue related to the company's
merger with Visual Sciences. * GAAP revenue of $17.4 million. *
Strong year-over-year organic revenue growth from all product
lines, yielding 34% growth company-wide, highlighted by 65% growth
in the Visual Sciences Division. * The company's 12th consecutive
quarter of positive cash generation, adding $2.4 million in cash to
the balance sheet, raising cash and short-term investments at
quarter end to $19.4 million. * 85 new bookings for various modules
of the WebSideStory and Visual Sciences suites, expanding the
enterprise customer base to 1,450 worldwide. * KMWorld Magazine
named WebSideStory Search 4.0 one of its Trend-Setting Products of
the Year. WebSideStory Search 4.0 introduced a number of industry
first capabilities into the market, including Active Ranking -- a
patent-pending capability that enables marketers to automatically
drive site search results based on the full spectrum of web site
behavioral data. * WebSideStory was named one of the 50 fastest
growing software companies in the U.S by Baseline Magazine. * The
announcement of new, industry leading Web 2.0 solutions, including
Active Browsing, a patent-pending capability that enables any site
to use Ajax to optimize site search results. "WebSideStory is
performing very well across the board. HBX Analytics, Search and
Publish continue to grow at healthy rates, and Visual Sciences
exceeded our internal projections," said Jim MacIntyre, who will
take over as WebSideStory's CEO on November 20, 2006. "WebSideStory
continues to differentiate from point solution providers, offering
an integrated suite of online marketing optimization solutions. Our
recent ActiveInsights user forum was a defining event for the
industry, where customers using two or more of our solutions, such
as WebSideStory Search and HBX Analytics, stood on stage and
validated the power of our integrated offerings with powerful
return-on- investment success stories. I am proud and excited to be
taking over for Jeff Lunsford as WebSideStory's new CEO. I look
forward to working with our new chairman, Bill Harris, and the
whole WebSideStory team as we continue our record of growth and
innovation." "The strength in earnings was a direct result of the
strength in revenue, combined with our operating team doing a good
job keeping costs in line across the board," said Claire Long,
Chief Financial Officer for WebSideStory. "We enjoyed robust margin
expansion, up to a 17 percent net margin from 12 percent last
quarter, and continued driving the company toward our goals for
2007. We ended the quarter with approximately $19.4 million in cash
and investments, which does not include an additional $400,000
committed to a letter of credit for Visual Sciences new offices. We
currently expect to have between $23 and $25 million of
cash-on-hand by the end of March 2007." "I am proud to have helped
build such a differentiated market leader as WebSideStory -- one
that continues to innovate and produce stellar results like the Q3
results we announced today," said Jeff Lunsford, WebSideStory's
outgoing CEO. "We have built a world-class management team that
will continue to grow this business and design innovative solutions
for our global customer base." The company's guidance for the
fourth quarter 2006 and full year 2006 and 2007 is as follows: Q4
2006 Full Year 2006 Revenue Guidance (millions) Low High Low High
Estimated non-GAAP revenue range $19.2 $19.7 $69.6 $70.1 Deferred
revenue related to Visual Sciences merger (1.0) (1.0) (5.1) (5.1)
Estimated GAAP revenue range $18.2 $18.7 $64.5 $65.0 Earnings per
share guidance Estimated non-GAAP EPS range $0.15 $0.16 $0.53 $0.54
Estimated amortization of intangibles (0.08) (0.08) (0.29) (0.29)
Estimated stock-based compensation (0.17) (0.15) (0.58) (0.56)
Deferred revenue related to Visual Sciences merger (0.05) (0.05)
(0.26) (0.26) Estimated non-cash tax benefit (expense) 0.05 0.04
0.24 0.23 Estimated non-cash interest expense (0.01) (0.01) (0.05)
(0.05) Effect of using non- GAAP dilutive shares (0.01) (0.01)
(0.02) (0.02) Estimated GAAP EPS range $(0.12) $(0.10) $(0.43)
$(0.41) Estimated shares used in per share calculations 20,500,000
20,500,000 20,000,000 20,000,000 Full Year 2007 Revenue Guidance
(millions) Low High Estimated non-GAAP revenue range $89.5 $91.5
Deferred revenue related to Visual Sciences merger (0.2) (0.2)
Estimated GAAP revenue range $89.3 $91.3 Earnings per share
guidance Estimated non-GAAP EPS range $0.69 $0.74 Estimated
amortization of intangibles (0.24) (0.24) Estimated stock-based
compensation (0.48) (0.38) Deferred revenue related to Visual
Sciences merger (0.01) (0.01) Estimated non-cash tax benefit
(expense) 0.02 (0.04) Estimated non-cash interest expense (0.01)
(0.01) Effect of using non-GAAP dilutive shares (0.01) -- Estimated
GAAP EPS range $(0.04) $0.06 Estimated shares used in per share
calculations 22,125,000 22,125,000 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, 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. In addition, bonus
payments to our officers and employees under our corporate bonus
plan are based on the achievement of specified non-GAAP revenue and
non-GAAP EPS targets. Investors should not consider non-GAAP
financial measures in isolation from, or in substitution for,
financial information presented in compliance with GAAP. Quarterly
Conference Call and Webcast Information As previously announced,
management will host a quarterly conference call and simultaneous
webcast to discuss WebSideStory's third quarter results at 1:30
p.m. PST on Nov. 6. To participate in the call, investors should
dial 866.700.7441 (domestic) or 617.213.8839 (international) 10
minutes prior to the scheduled call. The passcode is 26500360.
Additionally, a live audio- only webcast of the call may be
accessed via the Internet at http://www.websidestory.com/ir.
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;
the risks associated with the company's indebtedness; 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 digital marketing and
analytics solutions that improve online marketing, sales and
business operations. Its WebSideStory division 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/. WebSideStory is a
registered trademark of WebSideStory. Visual Sciences is a
registered trademark of Visual Sciences, LLC. Other trademarks
belong to their respective owners. WEBSIDESTORY, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share
data) September 30, December 31, 2006 2005 Assets Current assets
Cash and cash equivalents $10,050 $19,968 Investments 9,320 11,712
Accounts receivable, net 14,468 7,842 Deferred tax assets 2,726 507
Prepaid expenses and other current assets 3,858 2,304 Total current
assets 40,422 42,333 Property and equipment, net 6,260 2,532
Investments -- 3,276 Goodwill 49,759 21,286 Intangible assets, net
21,277 6,901 Deferred tax assets 11,737 9,166 Other assets 1,508
2,249 $130,963 $87,743 Liabilities and Stockholders' Equity Current
liabilities Accounts payable $1,808 $877 Accrued liabilities 7,584
3,880 Deferred revenue 17,649 12,801 Capital lease short-term 50 83
Current maturities of notes payable 19,432 -- Total current
liabilities 46,523 17,641 Capital lease long-term 56 90 Other
liabilities 604 196 Total liabilities 47,183 17,927 Commitments and
contingencies Stockholders' equity Preferred stock, $0.001 par
value; 10,000,000 shares authorized and no shares issued and
outstanding at September 30, 2006 and December 31, 2005 -- --
Common stock, $0.001 par value; 75,000,000 shares authorized,
18,879,509 and 18,401,180 shares issued and outstanding at
September 30, 2006 and December 31, 2005, respectively 19 18
Additional paid-in capital 133,937 114,934 Unearned stock-based
compensation (46) (630) Accumulated other comprehensive income 326
103 Accumulated deficit (50,456) (44,609) Total stockholders'
equity 83,780 69,816 $130,963 $87,743 WEBSIDESTORY, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands,
except share and per share data) Three Months Ended Nine Months
Ended September 30, September 30, 2006 2005 2006 2005 Revenues
Subscription, hosting and support $13,877 $10,341 $38,700 $26,043
License 1,332 -- 2,027 -- Professional services 1,681 368 3,575 607
Advertising 557 628 1,834 1,056 Total revenues 17,447 11,337 46,136
27,706 Cost of revenues* Cost of revenue 4,287 1,979 11,445 4,619
Amortization of intangible assets 715 67 1,931 126 Total cost of
revenues 5,002 2,046 13,376 4,745 Gross profit 12,445 9,291 32,760
22,961 Operating expenses* Sales and marketing 6,852 3,934 19,738
10,485 Technology development 3,384 1,342 9,403 3,351 General and
administrative 4,014 1,886 9,997 4,669 Amortization of intangible
assets 830 515 2,372 717 Total operating expenses 15,080 7,677
41,510 19,222 (Loss) income from operations (2,635) 1,614 (8,750)
3,739 Interest expense (505) (8) (1,274) (26) Interest income 161
241 454 633 Other expense 2 -- 2 (51) (Loss) income before
provision for income taxes (2,977) 1,847 (9,568) 4,295 (Benefit
from) provision for income taxes (1,304) 88 (3,708) 205 (Loss)
income before cumulative effect of change in accounting principle
(1,673) 1,759 (5,860) 4,090 Cumulative effect of change in
accounting principle (net of tax) -- -- 13 -- Net (loss) income
$(1,673) $1,759 $(5,847) $4,090 Basic net (loss) income per share:
(Loss) income before cumulative effect of change in accounting
principle $(0.09) $0.10 $(0.32) $0.24 Cumulative effect of change
in accounting principle -- -- -- -- Basic net (loss) income per
share $(0.09) $0.10 $(0.32) $0.24 Diluted net (loss) income per
share: (Loss) income before cumulative effect of change in
accounting principle $(0.09) $0.09 $(0.32) $0.22 Cumulative effect
of change in accounting principle -- -- -- -- Diluted net (loss)
income per share $(0.09) $0.09 $(0.32) $0.22 Shares used in per
share calculations: Basic 18,737,879 18,093,867 18,540,356
16,890,651 Diluted 18,737,879 19,756,635 18,540,356 18,398,107 (*)
Stock-based compensation: Three Months Ended Nine Months Ended
September 30, September 30, 2006 2005 2006 2005 Cost of revenues
$601 $24 $1,576 $45 Sales and marketing 1,000 53 2,760 141
Technology development 676 48 1,919 221 General and administrative
666 94 1,818 331 WebSideStory, Inc. (unaudited) (in thousands,
except share and per share data) Reconciliation of GAAP net (loss)
income Three months ended Nine months ended attributable to common
September September September September stockholders 30, 30, 30,
30, to Non-GAAP net income 2006 2005 2006 2005 Net (loss) income
$(1,673) $1,759 $(5,847) $4,090 Amortization of intangibles 1,545
582 4,303 843 Stock-based compensation 2,943 219 8,073 738 Deferred
revenue related to Visual Sciences merger * 1,456 -- 4,144 --
Non-cash tax (benefit) (1,336) -- (3,883) -- Non-cash interest
expense 265 -- 692 -- Cumulative effect of change in accounting
principle -- -- (13) -- Non-GAAP net income $3,200 $2,560 $7,469
$5,671 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) $0.10 $(0.32) $0.24 Diluted
$(0.09) $0.09 $(0.32) $0.22 Amortization of intangibles 0.08 0.03
0.22 0.05 Stock-based compensation 0.15 0.01 0.41 0.04 Deferred
revenue related to Visual Sciences merger * 0.07 -- 0.21 --
Non-cash tax (benefit) (0.07) -- (0.20) -- Non-cash interest
expense 0.01 -- 0.03 -- Effect of using non-GAAP dilutive shares
0.01 -- 0.03 -- Cumulative effect of change in accounting principle
-- -- -- -- Non-GAAP net income per share attributable to common
stockholders: Diluted $0.16 $0.13 $0.38 $0.31 GAAP weighted-average
number of shares used in per share amounts: Basic 18,737,879
18,093,867 18,540,356 16,890,651 Diluted 18,737,879 19,756,635
18,540,356 18,398,107 Non-GAAP weighted- average number of shares
used in per share amounts: Basic 18,737,879 18,093,867 18,540,356
16,890,651 Diluted 19,936,045 19,756,635 19,827,840 18,398,107
WebSideStory, Inc. (unaudited) (in thousands) Three months ended
Nine months ended Reconciliation of September September September
September GAAP revenue 30, 30, 30, 30, to Non-GAAP revenue 2006
2005 2006 2005 GAAP revenue $17,447 $11,337 $46,136 $27,706
Deferred revenue related to Visual Sciences merger * 1,456 -- 4,144
-- Non-GAAP revenue $18,903 $11,337 $50,280 $27,706 * 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 $5.4 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, ext. 365, , or Claire Long, CFO, ext. 387,
both of WebSideStory, Inc., +1-858-546-0040 Web site:
http://www.websidestory.com/
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