InsWeb Reports Second Quarter 2008 Results

SOURCE:

InsWeb

2008-07-24 15:15:00

InsWeb Reports Second Quarter 2008 Results

InsWeb Reports Second Quarter 2008 Results

Reminder: Conference Call and Webcast Today at 5:00 pm ET; Dial-In: (800) 257-2101

SACRAMENTO, CA–(EMWNews – July 24, 2008) – InsWeb Corp. (NASDAQ: INSW), a leading

online insurance marketplace, today announced results for the second

quarter ended June 30, 2008.

Revenues for the second quarter of 2008 were $8.8 million, an increase of

approximately 8% as compared to $8.1 million in the second quarter of 2007.

InsWeb reported a net loss for the second quarter of 2008 of $977,000, or

$0.21 per diluted share. This compares to net income in the second quarter

of 2007 of $214,000, or $0.04 per diluted share.

Adjusted EBITDA, a non-GAAP financial measure used by InsWeb’s management

and defined below, amounted to a loss of $518,000 in the second quarter of

2008, as compared to income of $715,000 in the second quarter of 2007.

“While we posted a modest year-over-year revenue increase of 8% in the

seasonally slower second quarter, our financial performance reflects

several unanticipated factors that had a short-term negative impact on our

results. These include fluctuations in traffic and carrier participation

levels, as well as previously disclosed post-employment contractual

obligations and other non-recurring expenses. At the same time, we made

strong progress across our key initiatives as we continued to add personnel

dedicated to expanding our network of providers, welcomed a seasoned online

advertising executive to our senior management team and signed two new

syndication partners,” stated InsWeb Chairman & CEO Hussein Enan.

“As we look at the second half of the year, we are reaffirming our guidance

for 2008 revenue growth of approximately 25%. We are in the process of

ramping traffic back up, but given the net loss in the second quarter and

uncertainty regarding temporary disruptions in certain states by carriers

undergoing rate revisions, we are unlikely to achieve our previous forecast

for annual net income growth of 25% and are suspending our bottom-line

guidance at this time. Notwithstanding these short-term issues, we had a

strong first half of 2008 and have full confidence in our business and the

Company’s ability to grow profitably,” concluded Mr. Enan.

Non-GAAP Financial Information

In evaluating InsWeb’s business, the Company’s management considers and

uses Adjusted EBITDA as a supplemental measure of operating performance.

Adjusted EBITDA refers to a financial measure that the Company defines as

net income (loss) excluding interest, taxes, depreciation, amortization,

share-based compensation, and other non-recurring gains and losses that are

not related to the Company’s continuing operations. This measure is an

essential component of InsWeb’s internal planning process because it

facilitates period-to-period comparisons of the Company’s operating

performance by eliminating potential differences in net income (loss)

caused by the existence and timing of non-cash charges and non-recurring

gains and losses. Furthermore, Adjusted EBITDA reflects the key revenue

and expense items for which InsWeb’s operating managers are responsible.


                            InsWeb Corporation

              NON-GAAP FINANCIAL MEASURE AND RECONCILIATION

                              (In thousands)

                                (unaudited)



                                                  Three months Ended

                                            June 30,   March 31,  June 30,

                                           ---------  ---------- ----------

                                              2008       2008       2007

                                           ---------  ---------- ----------

Net income (loss)                          $    (977) $      670 $      214

  Less

    Interest Income                               60          89        107

  Add

    Provision (credit) for income taxes           (9)          9          -

    Share-based compensation expense              78         334        260

    Depreciation and amortization of property,

     equipment and intangible assets from

     continuing operations                        40          34         40

    Non-recurring expenses                       410           -        308

                                           ---------  ---------- ----------

      Adjusted EBITDA from continuing

       operations                          $    (518) $      958 $      715

                                           =========  ========== ==========

Adjusted EBITDA is not a measurement of the Company’s financial performance

under U.S. GAAP and has limitations as an analytical tool. You should not

consider it in isolation or as a substitute for the Company’s U.S. GAAP net

income (loss). The principal limitations of this measure are that: 1) it

does not reflect the Company’s actual expenses and may thus have the effect

of inflating or reducing the Company’s net income (loss) and net income

(loss) per share; and 2) it may not be comparable to Adjusted EBITDA as

reported by other companies.

Earnings Call Information

The InsWeb second quarter teleconference and webcast is scheduled to begin

at 2:00 p.m., Pacific Time, on Thursday, July 24, 2008. To participate on

the live call, analysts and investors should dial 800-257-2101 at least ten

minutes prior to the call. InsWeb will also offer a live and archived

webcast of the conference call, accessible from the “Investor Relations”

section of the Company’s Web site at http://investor.insweb.com/index.cfm.

About InsWeb

InsWeb (NASDAQ: INSW) enables consumers to compare multiple, actionable

quotes for auto, term life, health, homeowners, renters and condominium

insurance offerings from many of the nation’s highly rated insurers. The

top-rated online insurance marketplace also provides interactive tools and

independent research. Headquartered in Sacramento, Calif., InsWeb is

accessible at www.insweb.com.

For further information regarding InsWeb Corporation, please review the

Company’s filings with the Securities and Exchange Commission, including

Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, and in

particular Management’s Discussion and Analysis of Financial Condition and

Results of Operations.

This news release contains forward-looking statements reflecting

management’s current forecast of certain aspects of the Company’s future.

It is based on current information, which we have assessed, but which by

its nature is dynamic and subject to rapid and even abrupt changes.

Forward-looking statements include statements expressing the intent, belief

or current expectations of the Company and members of our management team

regarding: projected future revenues, revenue growth, expenses,

profitability and financial position; marketing and consumer acquisition;

the results of strategic initiatives, including AgentInsider and the Agent

Directory; increased or decreased participation by insurance companies,

agents and other purchasers of consumer leads; and product and

technological implementations. The Company’s actual results might differ

materially from those stated or implied by such forward-looking statements

due to risks and uncertainties associated with the Company’s business,

which include, but are not limited to: variations in consumer usage of the

internet to shop for and purchase insurance; the willingness and capability

of insurance companies or other insurance entities to offer their products

or instant quotes on the Company’s website or through the Company’s

licensed subsidiaries; changes in the Company’s relationships with existing

insurance companies or other customers, including, changes due to

consolidation within the insurance industry; changes in the Company’s

relationship with strategic and/or marketing partners; the Company’s

ability to attract and integrate new insurance providers and strategic

partners; implementation of competing Internet strategies by existing and

potential competitors; implementation and consumer acceptance of new

product or service offerings; the outcome of litigation in which the

Company is a party; insurance and financial services industry regulation;

fluctuations in operating results; or other unforeseen factors. The

forward-looking statements should be considered in the context of these and

other risk factors disclosed in the Company’s filings with the Securities

and Exchange Commission.

“INSWEB” and “AGENTINSIDER” are registered service marks of InsWeb

Corporation. All marks above are those of InsWeb Corporation, except for

those of insurance insurers, brokers, agents, industry organizations,

financial institutions, online partners, service providers, other mentioned

companies and educational institutions, which are the marks of their

respective entities.




                            INSWEB CORPORATION

              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

            [ Amounts in thousands, except per share amounts ]

                              [  unaudited  ]



                                 Three months ended     Six months ended

                                       June 30,              June 30,

                                --------------------- ---------------------

                                   2008       2007       2008       2007

                                ---------  ---------- ---------  ----------

Revenues:

  Transactions                  $   8,751  $    8,063 $  21,722  $   16,106

  Other                                58          66       119         133

                                ---------  ---------- ---------  ----------

Total revenues                      8,809       8,129    21,841      16,239



Operating expenses:

  Direct marketing                  6,238       4,597    15,543       9,125

  Sales and marketing               1,433       1,327     2,728       2,805

  Technology                          811         777     1,627       1,653

  General and administrative        1,373       1,323     2,399       2,225

                                ---------  ---------- ---------  ----------

Total operating expenses            9,855       8,024    22,297      15,808

                                ---------  ---------- ---------  ----------

Income (loss) from operations      (1,046)        105      (456)        431

  Interest income                      60         107       149         179

  Other income (expense), net           -           2         -           6

                                ---------  ---------- ---------  ----------

Income (loss) before income

 taxes                               (986)        214      (307)        616

Provision (credit) for income

 taxes                                 (9)          -         -           -

                                ---------  ---------- ---------  ----------

Net income (loss)               $    (977) $      214 $    (307) $      616

                                =========  ========== =========  ==========



Net income (loss) per share:

   Basic                        $   (0.21) $     0.05 $   (0.07) $     0.15

                                =========  ========== =========  ==========

   Diluted                      $   (0.21) $     0.04 $   (0.07) $     0.13

                                =========  ========== =========  ==========



Weighted average shares used in

 computing net income (loss) per

 share:

   Basic                            4,689       4,340     4,665       4,208

                                =========  ========== =========  ==========

   Diluted                          4,689       5,267     4,665       4,840

                                =========  ========== =========  ==========









                            INSWEB CORPORATION

                  CONDENSED CONSOLIDATED BALANCE SHEETS

                          [Amounts in thousands]

                                [unaudited]



                                                    June 30,   December 31,

                                                      2008         2007

                                                  -----------  -----------

ASSETS



Current assets:

      Cash and cash equivalents                   $    10,674  $    10,777

      Accounts receivable, net                          2,360        2,428

      Prepaid expenses and other current assets

       (including related party receivable of $48

       as of December 31, 2007)                           469          596

                                                  -----------  -----------

                  Total current assets                 13,503       13,801



Property and equipment                                    270          257

Other assets                                              293           75

                                                  -----------  -----------

                    Total assets                  $    14,066  $    14,133

                                                  ===========  ===========



LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:

      Accounts payable                            $     2,288  $     2,118

      Accrued expenses                                  1,594        1,426

      Deferred revenue                                    239          246

                                                  -----------  -----------

                  Total current liabilities             4,121        3,790



Commitments and contingencies



Shareholders' equity:

      Common stock                                          8            8

      Paid-in capital                                 206,117      206,208

      Treasury stock                                   (6,334)      (6,334)

      Accumulated deficit                            (189,846)    (189,539)

                                                  -----------  -----------

                  Total shareholders' equity            9,945       10,343

                                                  -----------  -----------

                    Total liabilities and

                     Shareholders' equity         $    14,066  $    14,133

                                                  ===========  ===========







The following financial highlights and key metrics are provided as a

resource for our investors. Please refer to the Company’s filings with the

Securities and Exchange Commission for additional information regarding our

business.



                                            Three months Ended

                                  ----------------------------------------

                                    June 30,      March 31,     June 30,

                                  ------------  ------------  ------------

                                      2008          2008          2007

                                  ------------  ------------  ------------

Revenues:

     Auto                         $  7,266,000  $ 11,197,000  $  6,566,000

     Home/Condo/Renters           $  1,015,000  $    931,000  $    373,000

     Term Life                    $    360,000  $    485,000  $  1,107,000

     Agent Directory              $    105,000  $    351,000  $          -

     All other                    $      5,000  $      7,000  $     17,000

                                  ------------  ------------  ------------

     Total transaction fees       $  8,751,000  $ 12,971,000  $  8,063,000

# of Consumers:

     Auto                            2,033,000     2,862,000     1,448,000

     Home/Condo/Renters                211,000       184,000        70,000

     Term Life                          16,000         9,000        14,000

     Agent Directory                   478,000       719,000           N/M

                                  ------------  ------------  ------------

     Total                           2,738,000     3,774,000     1,532,000

Transaction revenue per consumer:

     Auto                         $       3.57  $       3.91  $       4.53

     Home/Condo/Renters           $       4.81  $       5.06  $       5.33



Auto Segment B Revenue per Click  $       6.26  $       6.70  $       6.24

Avg. Times Lead Sold- (Auto and

 Home)                                     3.7           3.7           N/M

Agent Network (Auto and Home):

    Carrier Sponsored Agents               N/A         2,390           N/M

    AgentInsider Approved Agents         6,402         5,764         4,742



Direct Marketing Costs:           $  6,238,000  $  9,305,000  $  4,597,000

Marketing Costs Per Consumer:

     Total                        $       2.28  $       2.47  $       3.00

     Excluding Agent Directory    $       2.71  $       2.90  $       3.00

Direct Marketing Costs as a

 percent of Revenues:                       71%           71%           57%



Cash and Cash Equivalents:        $ 10,674,000  $ 12,161,000  $  8,293,000

Account Receivable:               $  2,360,000  $  3,548,000  $  3,658,000

Day Sales Outstanding (DSO):                31            21            40

Staffing:                                   84            72            64





Definitions:



"# of consumers"          Represents consumers acquired from marketing

                          activities



"Per Consumer             Represents Revenues earned or marketing costs

 Information"             incurred per consumer  who has started a quote

                          form



"Segment B"               Auto Insurance consumers classified as

                          non-standard (bad driving record, not enough

                          experience, or not permanently insured for

                          3 years)



"Avg. Times Lead Sold"    Total # of times a lead is sold, including leads

                          sold by NetQuote on our behalf

"Carrier-Sponsored        Carriers buying leads through InsWeb on behalf of

 Agents"                  their Agents



"AgentInsider approved    # of agents approved to buy leads through

 Agents"                  AgentInsider



"Direct Marketing Costs"  Represents expenses incurred by InsWeb to drive

                          the consumers to InsWeb’s online insurance

                          marketplace



"N/M"                     Information not meaningful



"N/A"                     Information not available

Investor Relations Contact:
Jennifer Jarman
The Blueshirt Group
415-217-7722

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