Earnings: Infospace’s Mobile Revenues Fall 6 Percent Year On Year
Infospace (Nasdaq: INSP) has announced its results for the three months ending March 31st. Revenues for the quarter were $86.6 million, a 4 percent decrease year-on-year. The company showed a net loss of $0.54 million compared to a net profit of $3 million in the first quarter of 2006.
Overall mobile revenue was down 12 percent sequentially to $41.6 million, and a fall of 6 percent year-on-year. Although the revenue fell the cost of the service remained the same, and Infospace is winding down its mobile media business with plans to close it by mid-2007. In the conference call Infospace tried to distinguish between its content services and its “core mobile services”, which was described in the answer to a question as “everything other than the aggregation and provisioning of content. If you think about the portals that the carriers have, MediaNet, Verizon Today, T-zone, when you open the phone and access that service that’s us providing it”. Jim Voelker, chairman and chief executive officer of InfoSpace, said: “Our core mobile services demonstrated strong momentum and posted an 18 percent increase in revenue in the first quarter”. Apparently more than 33 million US users accessed the portal and mobile search services, an increase of 30 percent.
The “core mobile business” came in at $11.9 million in revenue, an 18 percent increase sequentially. Before 2007 revenues for this business were mostly flat, but Infospace is renewing long term contracts on more favorable terms. The full year revenue from “core mobile” is expected to be between $50 million and $53 million, which is important because its what will be left once the media business is wound down. Infospace expects its mobile business to be profitable by the end of the year.
Special divident and shareholder revolt: Infospace plans a special dividend of $200 million, about half of the cash it has on its books. It hired Credit Suisse to advise for that, claiming that various tax issues made the decision of how to return value to shareholders complex. Speaking of shareholders, the disagreement with Sandell Asset Management has been settled and a member from the group will join the Infospace board.
One bitten twice shy: In response to a question Infospace indicated it is a lot more cautious about the mobile market. “It doesn’t mean there’s not acquisitions we won’t go out and look for, but I would say that right now in the acquisition market out there things are reasonably frothy and expensive, and particuarly on the mobile side we’ve not seen a great number of things, in fact we’ve seen very few things that we think are proven and sustainable business models yet and so we think we’ll probably have some time before we would venture out in that market.”
R&D: Infospace is working on redoing its storefront platform and plans to get a new version of that out soon. The company has been working with a partner on voice search for a number of years, but claimed that “carrier interest in that kind of waxes and wanes…I think there’s been so many false starts on voice based services with the carriers … that there’s a certain wariness to that”. It was also said that mobile search is a complex product and a complex problem and was often oversimplified. In reference to how Infospace gains revenue from the portals it operates for customers: “The carriers are still trying to decide how much monetization they can put there without disturbing their customers.”
