InfoSpace's CEO Discusses Q1 2012 Results - Earnings Call Transcript

InfoSpace (INSP)

Q1 2012 Earnings Call

May 09, 2012 5:00 pm ET

Executives

Stacy Ybarra - Director of Corporate Communications

William J. Ruckelshaus - Chief Executive Officer, President and Director

Eric M. Emans - Chief Financial Officer and Treasurer

Analysts

Clayton F. Moran - The Benchmark Company, LLC, Research Division

Unknown Analyst

Michael Millman - Millman Research Associates

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2012 InfoSpace Earnings Conference Call. My name is Regina, and I will be your conference operator for today. [Operator Instructions] Today's event is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Ms. Stacy Ybarra, Senior Director of Investor Relations. Please go ahead, ma'am.

Stacy Ybarra

Good afternoon, and welcome to InfoSpace's First Quarter 2012 Earnings Conference Call. On the call today are Bill Ruckelshaus, President and Chief Executive Officer; and Eric Emans, Chief Financial Officer.

Before we begin, I'd like to remind you that during the course of this call, InfoSpace representatives will make forward-looking statements, including but not limited to, statements regarding InfoSpace's expectations about its products and services, outlook for the future of our business and growth initiatives, and anticipated financial performance for second quarter 2012. Other statements that refer to our beliefs, plans, expectations or intentions, which may be made in response to questions, are also forward-looking statements for purposes of the Safe Harbor provided by the Private Securities Litigation Reform Act. Because these statements pertain to future events, they are subject to various risks and uncertainties, and actual results could differ materially from our current expectations and beliefs. Factors that could cause or contribute to such differences, include but are not limited to, the risks and other factors discussed in InfoSpace's most recent annual report on Form 10-K on file with the Securities and Exchange Commission. InfoSpace assumes no obligation to update any forward-looking statements, which speak only as of the date the statement is made.

In addition, during our call, our management will discuss GAAP and non-GAAP financial measures. In this press release, which has been posted on our website and filed with the SEC on Form 8-K, we present GAAP and non-GAAP results along with reconciliation tables and the reasons for our presentation of the non-GAAP information. We have also provided supplemental financial information to our results on the Investor Relations section of our corporate website at www.infospaceinc.com.

Now I'll turn the call over to Bill. Following his comments, Eric will review the first quarter results and second quarter outlook, and then we'll open up the call to your questions.

William J. Ruckelshaus

Thank you, Stacy, and good afternoon, everyone. Today we are pleased to discuss financial results for the first quarter 2012 and provide an update as we approach the midpoint of the year. Performance in both our search and tax preparation businesses exceeded our expectations with total company revenue of $115.7 million, adjusted EBITDA of $31.7 million, and non-GAAP net income of $28.5 million. Our first quarter results begin to highlight the momentum, profitability and strong cash generation of our consolidated company.

Let me spend a few minutes on the performance of our search and tax preparation businesses during the period. Search revenue for the first quarter was up 46% from the prior year, driven by strong growth in distributed search. Search distribution revenue posted an impressive 75% growth rate this quarter, continuing a momentum uptick that began for us early last year. We are seeing growth across the board in distribution from long-standing partners, new design partners and across our partner categories.

As I detailed on our last call, momentum in the distribution business reflects broader market dynamics. But also reflects the hard work and execution of our search team. Over the past year, this group has sharpened its focus on meeting the evolving needs of our global search partners. We are now seeing the benefits of this focus delivering on multiple fronts including product, search content and mobile enhancement.

In products, we recently launched our new portal offering that provides ISP customers a hub of adaptable, localized content including news, weather, sports and entertainment. This information is delivered through a flexible user interface that adopts seamlessly to different devices, including mobile phones, tablets, laptops and PCs. Our new offering is being rolled out to our current portal customers and also gives us access to a new set of addressable market.

To deepened our search content we've recently signed with the Yandex, the leading search engine in Russia, to deliver Yandex result into our network of search properties and affiliates. Yandex adds to our long-standing partnerships of Google, Yahoo! and Bing, and increases the relevance of our result sets in servicing international partner traffic. Additionally, we are extending our platform to allow partners to reach and monetize their audiences in mobile. We are encouraged by the results thus far. As the mobile search market matures, we will continue to refine our offerings here to capitalize on this significant trend.

Moving now to our TaxACT business. We are pleased with the performance of TaxACT during the 2011 tax season. The team executed well and exceeded our expectations. On a preliminary basis, results for the 12 months ending April 30, 2012, showed 10% year-on-year revenue growth, supported by 8% growth in in-season consumer digital do-it-yourself e-file. For the season, TaxACT generated over 5 million consumer electronic filings and grew roughly in line with the category. Including filings generated by paid preparers using the company's professional product, TaxACT accounted for over 6.2 million e filed in 2011, up 10% over tax year 2010.

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