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FORT MYERS, FL. - November 8, 2007 - MIVA, Inc. (NASDAQ: MIVA), today reported financial results for the third quarter ended September 30, 2007.
Third Quarter 2007 Results from Continuing Operations Summary:
"We are clearly dissatisfied with our consolidated revenues and operating results. While our MIVA Media U.S. and Media E.U. businesses performed below our original Q3 2007 expectations, our MIVA Direct business generated significantly higher operating profits through increased monetization per user and more efficient ad spend on more profitable toolbar channels. Additionally, consolidated gross margins increased sequentially as we anticipated," said Peter Corrao, chief executive officer of MIVA.
"We believe our third quarter 2007 results underscore the rationale for our strategy to build MIVA-owned consumer media. We are making progress against this strategy, as evidenced by our recently launched ALOT brand and our ALOT start page initiative. ALOT represents a rich, integrated user experience with multiple consumer touch points across toolbars, web search and start pages. The new ALOT properties incorporate premium content and provide search with attribution for our monetization partner. The early ALOT metrics are encouraging and we expect to ramp the distribution of ALOT toolbars off our now more profitable toolbar base."
Third Quarter Results From Continuing Operations
Revenue was $36.4 million in Q3 2007, compared to revenue of $39.2 million in Q2 2007. MIVA Direct contributed 33.5% of total revenue in Q3 2007, compared to 34.4% in Q2 2007 as we reduced our overall ad spend by focusing against more profitable toolbar channels. MIVA Direct's revenue was down approximately $1.3 million sequentially from Q2 2007 to Q3 2007 and MIVA Direct's ad spend was down approximately $2.1 million over the same period.
Gross margins were 52.9% in Q3 2007, compared to 52.1% in Q2 2007. Gross margins increased in Q3 2007, primarily due to our initiative for scaling out of unprofitable revenue share deals in Media E.U. and a reduction in Searchfeed's traffic acquisition cost.
Operating expenses were $23.3 million in Q3 2007, compared to $37.1 million in Q2 2007. Excluding the $1.4 million non-cash tangible and intangible asset impairment charge related to our Media E.U. business in Q3 2007, and the $14.0 million non-cash goodwill impairment charge in Q2 2007, operating expenses were $21.8 million in Q3 2007 and $23.1 million in Q2 2007. Adjusting for the non-cash impairment charges, the approximate $1.3 million decrease in operating expenses included an approximate $2.1 million decrease in advertising spend for MIVA Direct.
Q3 2007 operating expenses included $1.0 million in non-cash compensation expense. Q2 2007 operating expenses included $1.2 million in non-cash compensation expense.
EBITDA was a loss of $1.7 million in Q3 2007, compared to an EBITDA loss of $14.2 million in Q2 2007. Q3 2007 EBITDA included a $1.4 million non-cash impairment charge and Q2 2007 EBITDA included a $14.0 million non-cash impairment charge.
Adjusted EBITDA was $0.8 million in Q3 2007, compared to Adjusted EBITDA of $1.0 million in Q2 2007. Q3 2007 Adjusted EBITDA excluded the $1.4 million non-cash impairment charge and $1.0 million non-cash compensation expense. Q2 2007 Adjusted EBITDA excluded the $14.0 million non-cash impairment charge and $1.2 million in non-cash compensation expense.
GAAP net loss was $3.7 million or $(0.11) per basic share in Q3 2007. This compares to GAAP net loss of $16.4 million, or $(0.52) per basic share in Q2 2007.
Adjusted net loss was $0.0 million or $0.00 per diluted share in Q3 2007, compared to Adjusted net income of $0.0 million or $0.00 per diluted share in Q2 2007. Q3 2007 Adjusted net loss excluded the $1.4 million non-cash impairment charge, $1.0 million non-cash compensation expense and $1.2 million in amortization. Q2 2007 Adjusted net income excluded the $14.0 million non-cash impairment charge, $1.2 million in amortization and $1.2 million non-cash compensation expense.
Cash and cash equivalents were $24.8 million at September 30, 2007, an increase of $0.9 million from June 30, 2007 cash of $23.9 million.
As of September 30, 2007, the Company had an active base of 229 full time employees, down from 265 at June 30, 2007, and 401 at December 31, 2006. The decrease from December 2006 is due primarily to the Company's Q1 2007 restructuring and Q2 2007 Perot outsourcing plan.
Third Quarter Metrics by Business
Business Outlook
The Company is forecasting Q4 2007 revenue, EBITDA and cash below Q3 2007, due primarily to an anticipated decline in MIVA Media third-party ad network revenue. The Company is forecasting MIVA Direct's Q4 2007 revenue and active toolbar users will be above Q3 2007.
Management Conference Call
Management will participate in a conference call to discuss the full results for the Company on November 8, 2007, at approximately 5:00 p.m. ET. The conference call will be simulcast on the Internet at http://ir.miva.com/medialist.cfm.
A replay of the conference call will be available on the investor relations area of MIVA's website at http://ir.miva.com/medialist.cfm. Interested parties may email questions in advance to Peter Weinberg of MIVA, Inc. at peter.weinberg@miva.com.
MIVA believes that "Adjusted EBITDA", "Adjusted net income/loss" and "Adjusted net income/loss per share" provide meaningful measures for comparison of the Company's current and projected operating performance with its historical results due to the significant increase in non-cash amortization that began in 2004 primarily due to certain intangible assets resulting from mergers and acquisitions. MIVA defines Adjusted EBITDA as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business. MIVA uses Adjusted EBITDA as an internal measure of its business and believes it is utilized as an important measure of performance by the investment community. MIVA sets goals and awards bonuses in part based on performance relative to Adjusted EBITDA. MIVA defines Adjusted net income/loss as net income/loss plus amortization and non-cash compensation expense, plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business, in each case including the tax effects (if any) of the adjustment. MIVA believes the use of these measures does not lessen the importance of GAAP measures. In Q4 2006 and Q1 2007, MIVA calculated Adjusted EBITDA and Adjusted net income/loss without adding non-cash compensation expense to the calculation. Beginning in Q2 2007, MIVA calculates Adjusted EBITDA and Adjusted net income/loss by adding non-cash compensation to the calculation. MIVA defines Adjusted net income/loss per share as the Adjusted net income/loss, as previously described, divided by the average basic, or fully-diluted number of outstanding shares of MIVA common stock over the reported period.
About MIVA®, Inc.
MIVA, Inc. (NASDAQ:MIVA) is a global digital media company with a mission to deliver valuable digital audiences to advertisers. MIVA has two focuses to its business: owning and operating a growing portfolio of consumer destination sites and category specific toolbars, through its MIVA Direct division; and running a third-party contextual Pay-Per-Click ad network focused on key vertical sectors, through its MIVA Media ad network division. MIVA, Inc. operates across North America and Europe.
Forward-looking Statements
This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "plan," "intend," "believe," "expect" or "forecast" or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation, the risks associated with the fact that we have material weaknesses in our internal control over financial reporting that may prevent us from being able to accurately report our financial results or prevent fraud; the risk that we have in the past and may in the future incur goodwill and other intangible, and tangible asset impairment charges that materially adversely affect our earnings and our operating results; the potential that demand for our services will decrease; the risk that we will not be able to continue to enter into new online marketing relationships to drive qualified traffic to our advertisers; the risk that our distribution partners will use unacceptable means to obtain users or that we will need to remove traffic generated by distribution partners; risks associated with our ability to compete with competitors and increased competition for distribution partners; political and global economic risks attendant to our business; risks associated with legal and cultural pressures on certain of our advertiser's service and/or product offerings; other economic, business and competitive factors generally affecting our business; the risk that operation of our business model infringes upon intellectual property rights held by others; our reliance on distribution partners for revenue generating traffic; risks associated with maintaining an international presence; difficulties executing integration strategies or achieving planned synergies with acquired businesses and private label initiatives; the risk that we will not be able to effectively achieve ongoing growth or return to profitability; the risk that new technologies could emerge which could limit the effectiveness of our products and services; risks associated with the operation of our technical systems, including system interruptions, security breaches and damage; risks associated with Internet security, including security breaches which, if they were to occur, could damage our reputation and expose us to loss or litigation; risks relating to regulatory and legal uncertainties, both domestically and internationally. Additional key risks are described in MIVA's reports filed with the U.S. Securities and Exchange Commission, including the Form 10-K for fiscal 2006 and its most recent Form 10-Q. MIVA undertakes no obligation to update the information contained herein.
Non-GAAP Financial Measures
This press release includes discussion of additional financial measures "Adjusted EBITDA," "Adjusted Net Loss," "Adjusted Net Income," "Adjusted Net Loss Per Share" and "Adjusted Net Income Per Share," which are not considered generally accepted accounting principle (GAAP) measures by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. MIVA provides reconciliations of these two financial measures to GAAP measures in its press releases regarding actual financial results. A reconciliation of these financial measures to net income/loss and net income/loss per share for the three and nine month periods ended September 30, 2007 included in this press release is set forth below.
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MIVA Contact
Peter Weinberg, Investor Relations
peter.weinberg@miva.com
(239) 561-7229