Avantax (AVTA) 8-K InfoSpace Announces Second Quarter Results

Exhibit 99.1

InfoSpace Announces Second Quarter Results

Posts Record Revenues of $95.8 Million

BELLEVUE, Wash. (August 2, 2006) – InfoSpace, Inc. (NASDAQ: INSP) today announced financial results for the three months ended June 30, 2006.

Revenues for the second quarter of 2006 were a record $95.8 million, reflecting an increase of $12.6 million or 15 percent over the second quarter 2005 and an increase of $5.5 million or six percent from the first quarter of 2006.

Net income for the second quarter of 2006 was $1.0 million, or $0.03 per diluted share, compared to net income of $16.3 million, or $0.44 per diluted share, in the second quarter of 2005. Net income in the second quarter of 2006 includes a $4.6 million deduction for stock-based compensation expense.

Cash, cash equivalents, and marketable investments at June 30, 2006, totaled $407.0 million, an increase of $11.5 million from March 31, 2006. At the end of the second quarter, the Company had no debt obligations.

“Our results were ahead of our expectations in the second quarter, primarily driven by growth in mobile media downloads and an increase in online monetization,” said Jim Voelker, chairman and chief executive officer of InfoSpace, Inc. “We are pleased with the strength of our online business and the growth in the number of users accessing our mobile products.”

Second Quarter Segment Information and Adjusted EBITDA

Mobile

Mobile revenues were $45.5 million in the second quarter of 2006, an increase of $8.4 million or 23 percent from the second quarter of 2005. Mobile segment gross profit totaled $17.5 million or 38 percent of mobile revenue for the second quarter of 2006.

Online

Online revenues were $50.4 million in the second quarter of 2006, an increase of $4.3 million or nine percent from the second quarter of 2005. Online segment gross profit was $32.3 million or 64 percent of online revenue for the second quarter of 2006.

Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization (“Adjusted EBITDA”)

Adjusted EBITDA was $8.9 million in the second quarter of 2006, a decrease of $10.3 million from the second quarter of 2005 Adjusted EBITDA of $19.2 million. InfoSpace’s Adjusted EBITDA is calculated by adjusting GAAP net income to exclude the effects of income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, and other income, net (including such items as interest income, litigation settlements, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed in the accompanying table to the condensed consolidated financial statements.

InfoSpace’s management believes that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses and gains that are not indicative of our core business operating results. InfoSpace believes that management and the investors benefit from referring to this non-GAAP financial measure in assessing InfoSpace’s performance. Adjusted EBITDA should be evaluated in light of the Company’s financial results

prepared in accordance with GAAP. A table reconciling the Company’s Adjusted EBITDA to net income in accordance with GAAP accompanies the condensed consolidated financial statements in this release.

Outlook

The Company’s guidance excludes the potential impact of any future one-time gains or losses. The Adjusted EBITDA guidance below has been prepared in a manner consistent with the historical Adjusted EBITDA data provided above and in the accompanying table.

Third Quarter 2006 Outlook

For the third quarter of 2006, the Company expects revenue to be between $95 million and $97 million. The Company expects that Adjusted EBITDA will be between $3.5 million and $4.5 million, and a net loss between $2.5 million and $3.5 million or $0.08 and $0.11 per share. Included in the net loss outlook is the impact of approximately $6.5 million of stock-based compensation expense.

A conference call will be held today at 2 p.m. Pacific/ 5 p.m. Eastern. The live Webcast can be accessed in the Investor Relations section of the InfoSpace corporate Web site, at http://www.infospaceinc.com. A replay of the call will be available approximately one hour after the call through August 16, 2006, at 7:30 p.m. Pacific/ 10:30 p.m. Eastern.

All information in this release is as of August 2, 2006. InfoSpace undertakes no duty to update any forward-looking statements to actual results or changes in the Company’s expectations.

About InfoSpace, Inc.

A leading mobile media and technology company, InfoSpace, Inc. (NASDAQ: INSP) develops and distributes content, products and services that are creating a robust mobile marketplace and make it easy for consumers to discover, personalize and enjoy their experiences. Founded in 1996, InfoSpace leverages its online and mobile assets to potentially reach more than 90 percent of mobile subscribers in North America through partnerships with operators such as Cingular Wireless, Sprint, T-Mobile, Verizon Wireless, and Virgin Mobile and through its direct to consumer channel Moviso^® (Moviso.com). The Company’s mobile portal services are also available to more than 60 percent of the U.S. market. Online, the Company showcases its leading metasearch technology though Web sites such as Dogpile^® (Dogpile.com) and its comprehensive directory listings in such properties as Switchboard^® (Switchboard.com). For more information, please visit www.infospaceinc.com.

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Source: InfoSpace, Inc.

Contacts:

Media:

Jeff Hasen, InfoSpace

425.201.8618

jeff.hasen@infospace.com

Investors:

Stacy Ybarra, InfoSpace

425.709.8127

stacy.ybarra@infospace.com

This release contains forward-looking statements relating to InfoSpace, Inc.’s products and services and future operating results that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words “believe,” “expect,” “intend,” “anticipate,” variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward- looking. Forward-looking statements include without limitation statements regarding the projected results of the Company’s strategic plan and efforts to achieve long-term sustainable growth; projected financial performance for the Company for the third quarter of 2006; and material reductions of the reserve on its deferred tax asset. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect InfoSpace’s actual results include general economic, industry and market sector conditions, the progress and costs of the development of our products and services, the timing and extent of market acceptance of those products and services, our dependence on companies to distribute our products and services, the ability to successfully integrate acquired businesses and the successful execution of the Company’s strategic initiatives. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in InfoSpace’s most recent Annual Report on Form 10-K and quarterly reports on form 10-Q as filed from time to time, in the section entitled “Risk Factors.” Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. InfoSpace undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

InfoSpace, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands)

	June 30, 2006			December 31, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	182,701		$	153,013
Short-term investments, available-for-sale		222,612			222,360
Accounts receivable, net		64,555			71,661
Other receivables		3,564			3,972
Prepaid expenses and other current assets		10,397			12,639
Total current assets		483,829			463,645
Property and equipment, net		28,512			26,889
Long-term investments, available-for-sale		1,712			—
Goodwill		171,948			176,979
Other intangible assets, net		36,761			44,080
Deferred tax assets, net		22,235			25,000
Other long-term assets		9,101			6,786
Total assets	$	754,098		$	743,379
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	9,391		$	11,585
Accrued expenses and other current liabilities		52,818			51,917
Short-term deferred revenue		2,991			2,474
Total current liabilities		65,200			65,976
Long-term liabilities:
Other liabilities and long-term deferred revenue		1,722			2,011
Deferred tax liabilities		5,390			10,421
Total long-term liabilities		7,112			12,432
Total liabilities		72,312			78,408
Stockholders’ equity:
Common stock		3			3
Additional paid-in capital		1,697,365			1,684,974
Accumulated deficit		(1,016,501	)		(1,020,525	)
Accumulated other comprehensive income		919			519
Total stockholders’ equity		681,786			664,971
Total liabilities and stockholders’ equity	$	754,098		$	743,379
Summary of cash and marketable investments:
Cash and cash equivalents	$	182,701		$	153,013
Short-term investments, available-for-sale		222,612			222,360
Long-term investments, available-for-sale		1,712			—
Cash and marketable investments	$	407,025		$	375,373

InfoSpace, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(Amounts in thousands, except per share data)

	Three months ended						Six months ended
	June 30, 2006			June 30,     2005			June 30, 2006			June 30,     2005
Revenues	$	95,846		$	83,181		$	186,120		$	170,203
Operating expenses: (1)
Content and distribution		46,121			34,864			87,733			69,694
Systems and network operations		7,880			4,899			14,988			9,312
Product development		12,467			7,596			21,775			14,967
Sales and marketing		12,567			7,030			22,130			14,902
General and administrative		12,547			9,729			26,633			20,334
Depreciation		3,457			1,941			6,774			3,715
Amortization of intangible assets		3,611			3,763			7,319			7,846
Total operating expenses		98,650			69,822			187,352			140,770
Operating income (loss)		(2,804	)		13,359			(1,232	)		29,433
Gain on equity investments, net		—			154			—			154
Other income, net(2)		4,723			2,838			8,595			82,992
Income before income taxes		1,919			16,351			7,363			112,579
Provision for income taxes(3)		(900	)		(65	)		(3,339	)		(2,394	)
Net income	$	1,019		$	16,286		$	4,024		$	110,185
Earnings per share - Basic	$	0.03		$	0.49		$	0.13		$	3.33
Weighted average shares outstanding used in computing basic net income per share		31,239			33,108			31,162			33,081
Earnings per share - Diluted	$	0.03		$	0.44		$	0.12		$	2.98
Weighted average shares outstanding used in computing diluted net income per share		32,931			36,720			32,925			37,024
(1)      Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards 123(R), “Share-Based Payment,” which requires an enterprise to expense the fair value of an award of an equity instrument. Operating expenses includes $4.6 million and $8.7 million of stock compensation expense for the three and six months ended June 30, 2006, respectively, allocated among the following captions (in thousands):
	Three months ended June 30, 2006						Six months ended June 30, 2006
Systems and network operations	$	464					$	654
Product development		714						1,129
Sales and marketing		1,509						2,551
General and administrative		1,948						4,410
	$	4,635					$	8,744

⁽²⁾ Includes a net gain of $79.3 million in the six months ended June 30, 2005 from the settlement of certain litigation matters, comprised of proceeds of $83.2 million less related legal expenses.

⁽³⁾ In December 2005, the Company recognized a portion of its deferred tax assets related to its operating loss carryforwards. As a result, commencing in January 2006 the Company began recognizing income taxes. For the six months ended June 30, 2005, the Company recorded income taxes of $2.0 million related to the gain from the settlement of certain litigation matters.

InfoSpace, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)

	Six months ended
	June 30, 2006			June 30, 2005
Operating activities:
Net income	$	4,024		$	110,185
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,093			11,561
Stock-based compensation expense		8,744			—
Deferred income taxes		2,765			(992	)
Bad debt expense		67			318
Net gain on equity investment		—			(154	)
Other		11			(90	)
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable		7,039			(5,038	)
Other receivables		408			15,153
Prepaid expenses and other current assets		2,242			(2,380	)
Other long-term assets		(2,315	)		(1,699	)
Accounts payable		(1,701	)		(2,463	)
Accrued expenses and other current and long-term liabilities		2,524			(743	)
Deferred revenue		119			(2,021	)
Net cash provided by operating activities		38,020			121,637
Investing activities:
Business acquisition, net of cash acquired		—			(26,364	)
Purchases of property and equipment		(10,082	)		(8,057	)
Proceeds from the sale of assets and equity investments		33			194
Proceeds from sales and maturities of investments		231,263			106,232
Purchases of investments		(233,053	)		(117,018	)
Net cash used by investing activities		(11,839	)		(45,013	)
Financing activities:
Common stock repurchases		—			(10,101	)
Proceeds from exercise of stock options		2,564			6,798
Proceeds from employee stock purchase plan		943			766
Net cash provided (used) by financing activities		3,507			(2,537	)
Net increase in cash and cash equivalents		29,688			74,087
Cash and cash equivalents:
Beginning of period		153,013			85,245
End of period	$	182,701		$	159,332

InfoSpace, Inc.

Segment Information⁽¹⁾

(Unaudited)

(Amounts in thousands)

	Three Months Ended						Six months ended
	June 30, 2006			June 30, 2005			June 30, 2006			June 30, 2005
Mobile
Revenue	$	45,473		$	37,091		$	89,617		$	76,144
Content and distribution costs(2)		27,999			17,821			53,336			35,243
Gross profit		17,474			19,270			36,281			40,901
Gross profit margin		38.4	%		52.0	%		40.5	%		53.7	%
Online
Revenue		50,373			46,090			96,503			94,059
Content and distribution costs(2)		18,122			17,043			34,397			34,451
Gross profit		32,251			29,047			62,106			59,608
Gross profit margin		64.0	%		63.0	%		64.4	%		63.4	%
Total
Total segment revenue		95,846			83,181			186,120			170,203
Total segment content and distribution costs		46,121			34,864			87,733			69,694
Total segment gross profit		49,725			48,317			98,387			100,509
Total segment gross profit margin		51.9	%		58.1	%		52.9	%		59.1	%
Corporate
Operating expenses		40,826			29,254			76,782			59,515
Stock-based compensation expense(3)		4,635			—			8,744			—
Depreciation		3,457			1,941			6,774			3,715
Amortization of intangible assets		3,611			3,763			7,319			7,846
Gain on equity investments, net		—			(154	)		—			(154	)
Other income, net(4)		(4,723	)		(2,838	)		(8,595	)		(82,992	)
Provision for income taxes(5)		900			65			3,339			2,394
		48,706			32,031			94,363			(9,676	)
Net income	$	1,019		$	16,286		$	4,024		$	110,185

⁽¹⁾ In the six months ended June 30, 2006, the Company realigned its operations and, as a result, changed the way it presents its financial information to its chief operating decision maker to better reflect how management measures operating performance.

⁽²⁾ Amounts primarily include royalties and license fees related to the Company’s Mobile products and other content or data licenses, and primarily include revenue sharing arrangements with the Company’s Online distribution partners as well as online content and data licenses. Amounts do not include allocations for systems and network operations, product development, sales and marketing, general, administrative and overhead costs, depreciation and amortization expense, restructuring and other charges and non-operating gains and losses.

⁽³⁾ Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards 123(R), “Share-Based Payment,” which requires an enterprise to expense the fair value of an award of an equity instrument.

⁽⁴⁾ Includes a net gain of $79.3 million in the six months ended June 30, 2005 from the settlement of certain litigation matters, comprised of proceeds of $83.2 million less related legal expenses.

⁽⁵⁾ In December 2005, the Company recognized a portion of its deferred tax assets related to its operating loss carryforwards. As a result, commencing in January 2006 the Company began recognizing income taxes. For the six months ended June 30, 2005, the Company recorded income taxes of $2.0 million related to the gain from the settlement of certain litigation matters.

InfoSpace, Inc.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measure

Adjusted EBITDA Reconciliation⁽¹⁾

(Unaudited)

(Amounts in thousands)

	Three months ended						Six months ended
	June 30, 2006			June 30, 2005			June 30, 2006			June 30, 2005
Net income(2)	$	1,019		$	16,286		$	4,024		$	110,185
Depreciation		3,457			1,941			6,774			3,715
Amortization of intangible assets		3,611			3,763			7,319			7,846
Stock-based compensation expense(3)		4,635			—			8,744			—
Other income, net(4)		(4,723	)		(2,838	)		(8,595	)		(82,992	)
Provision for income taxes		900			65			3,339			2,394
Adjusted EBITDA	$	8,899		$	19,217		$	21,605		$	41,148

Adjusted EBITDA Reconciliation for Forward Looking Guidance

(Amounts in thousands)

	Ranges for the three months ended September 30, 2006
Net loss	$	(3,500	)	$	(2,500	)
Depreciation & amortization of intangible assets		7,500			7,300
Other income, net(4)		(4,100	)		(4,700	)
Stock-based compensation expense(3)		6,500			6,500
Provision for income taxes		(2,900	)		(2,100	)
Adjusted EBITDA	$	3,500		$	4,500

⁽¹⁾ Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) is a non-GAAP financial measure and is reconciled to net income, which the Company’s management believes to be the most comparable generally accepted accounting principles (“GAAP”) measure. Adjusted EBITDA results are calculated by adjusting GAAP net income to exclude the effects of income taxes, depreciation, amortization of intangible assets, stock-based compensation expense and other income, net (including such items as interest income, a gain from the settlement of certain litigation matters, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed above. The Company uses this non-GAAP financial measure for internal management purposes, when publicly providing guidance on possible future results, and as a means to evaluate period to period comparisons. The Company’s management believes that this non-GAAP financial measure is a common measure used by investors and analysts to evaluate its performance. This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the results of operations and trends affecting the Company’s business. This non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, or superior to, income from continuing operations in accordance with GAAP.

⁽²⁾ As presented in the unaudited Condensed Consolidated Statements of Income.

⁽³⁾ Effective January 1, 2006, the Company has adopted the provisions of Statement of Financial Accounting Standards 123(R), “Share-Based Payment,” which requires an enterprise to expense the fair value of an award of an equity instrument.

⁽⁴⁾ Other income, net, primarily consists of the settlement of certain litigation matters, interest income, gains or losses from the disposal of assets, and foreign currency transaction gains or losses.