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

Exhibit 99.1

InfoSpace Announces Second Quarter Results

BELLEVUE, Wash., August 2, 2010 (BUSINESS WIRE) — InfoSpace, Inc. (NASDAQ: INSP) today announced financial results for the second quarter ended June 30, 2010.

Revenues for the second quarter of 2010 were $59.4 million, reflecting an increase of $15.6 million or 36 percent from the second quarter of 2009. Net income for the second quarter of 2010 was $0.7 million, or $0.02 per diluted share, compared to net income of $2.9 million, or $0.08 per diluted share, for the second quarter of 2009.

Cash, cash equivalents, and marketable securities as of June 30, 2010 totaled $223.4 million. At the end of the quarter, the Company had no debt obligations.

Adjusted EBITDA, as defined below, was $10.6 million for the second quarter of 2010, compared to $5.4 million for the second quarter of 2009.

“InfoSpace achieved solid results in the second quarter, with good performance from our search and e-commerce businesses,” said Will Lansing, president and chief executive officer of InfoSpace. “Additionally, we are pleased with the performance of our recent acquisitions of Mercantila and Make The Web Better and we continue to look for strategic opportunities to increase shareholder value.”

Second Quarter Segment Information

During the second quarter of 2010, the Company acquired Mercantila’s e-commerce business. As a result of the acquisition, the Company has changed its reporting to reflect how it measures the operating performance of its combined business. The Company will now report two segments: Core and E-Commerce. The Core segment reflects all businesses operated by InfoSpace prior to the acquisition of Mercantila. The E-Commerce segment represents the Mercantila business.

Core

Core revenue was $52.4 million in the second quarter of 2010, an increase of $8.6 million or 20 percent from the second quarter of 2009. Core income was $11.3 million for the second quarter of 2010, of which $7.1 million was contributed by Make The Web Better.

E-Commerce

E-Commerce revenue was $7.0 million in the second quarter of 2010. E-Commerce loss was $0.7 million or 12 percent of E-Commerce revenue.

Third Quarter Outlook

For the third quarter of 2010, the Company expects revenues to be between $61 million and $65 million, Adjusted EBITDA to be between $7 million and $8 million, and net income to be between $0.5 million and $1.5 million, or $0.01 and $0.04 per diluted share.

Conference Call and Webcast

A conference call will be held today at 2 p.m. Pacific time / 5 p.m. Eastern time. The live webcast can be accessed in the Investor Relations section of the InfoSpace corporate website, athttp://www.infospaceinc.com.

Non-GAAP Financial Measures

InfoSpace’s Adjusted EBITDA is calculated by adjusting net income (loss) determined in accordance with generally accepted accounting principles (“GAAP”) to exclude the effects of income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, loss (gain) on investments, and other loss (income), net (which includes such items as adjustments to the fair values of contingent liabilities related to business combinations, interest income, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed in the accompanying table to the preliminary condensed consolidated financial statements (unaudited).

InfoSpace’s management believes that Adjusted EBITDA provides meaningful supplemental information regarding the Company’s performance by excluding certain expenses and gains that management believes are not indicative of its operating results. InfoSpace 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. InfoSpace believes that Adjusted EBITDA is a common measure used by investors and analysts to evaluate its performance, that it provides a more complete understanding of the results of operations and trends affecting the Company’s business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. A table reconciling the Company’s Adjusted EBITDA to net income (loss), which the Company’s management believes to be the most comparable GAAP measure, accompanies the preliminary condensed consolidated financial statements in this release. Adjusted EBITDA should be evaluated in light of the Company’s financial results prepared in accordance with GAAP, and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss).

About InfoSpace, Inc.

InfoSpace, Inc., a leading developer of metasearch products, is focused on bringing the best of the Web to Internet users. InfoSpace’s proprietary metasearch technology combines the top results from several of the largest online search engines, providing fast and comprehensive search results. InfoSpace sites include Dogpile^® (www.dogpile.com), DoGreatGood™ (www.dogreatgood.com), InfoSpace.com^® (www.infospace.com), MetaCrawler^® (www.metacrawler.com), WebCrawler^® (www.webcrawler.com), and WebFetch^® (www.webfetch.com). InfoSpace’s metasearch technology is also available on nearly 100 partner sites, including content, community, and connectivity sites. In addition, the Company operates an e-commerce channel that includes a collection of more than 200 specialty retail stores under the Mercantila^® (www.mercantila.com) brand; a competitive shopping site, Haggle™ (www.haggle.com); and an innovative online search engine optimization tool, WebPosition^® (www.webposition.com). More information may be found atwww.infospaceinc.com.

InfoSpace.com, InfoSpace, Dogpile, DoGreatGood, MetaCrawler, WebCrawler, WebFetch, Haggle, Mercantila, and other marks are trademarks of InfoSpace, Inc. The names of other companies and products mentioned herein may be the trademarks of their respective owners.

###

Investor Contact:

Stacy Ybarra, InfoSpace

(425) 709-8127

stacy.ybarra@infospace.com

This release contains forward-looking statements relating to InfoSpace, Inc.’s operating results that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words “will,” “believe,” “expect,” “intend,” “anticipate,” 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: our expectation that we will continue to look for strategic opportunities to increase shareholder value; statements regarding our expectations for our financial performance; and results of operations for the third quarter of 2010. 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, but are not limited to, the completion of the review of our financial statements for the second quarter of 2010; 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; the successful execution of the Company’s strategic initiatives, operating plans, and marketing strategies; and the condition of our cash investments. A more detailed description of these and certain other factors that could affect actual results is included in InfoSpace’s most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q as filed from time to time, in the section entitled “Risk Factors”

and elsewhere in such documents. 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.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited)

(Amounts in thousands, except per share data)

	Three months ended						Six months ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Revenues:
Services	$	52,363		$	43,763		$	114,136		$	82,833
Product		7,039			—			7,039			—
Total revenues		59,402			43,763			121,175	��		82,833
Cost of sales:
Services(1)		29,142			26,763			72,701			49,590
Product		5,958			—			5,958			—
Total cost of sales		35,100			26,763			78,659			49,590
Gross profit		24,302			17,000			42,516			33,243
Expenses and other income:
Engineering and technology(1)		2,803			2,454			4,709			4,770
Sales and marketing(1)		8,852			5,137			15,334			12,085
General and administrative(1)		6,907			6,397			13,662			12,639
Depreciation		823			846			1,643			1,673
Amortization of other intangible assets		40			—			40			—
Loss (gain) on investments, net(2)		—			(335	)		—			5,016
Other loss (income), net(3)		3,522			(466	)		3,659			(1,073	)
Total expenses and other income		22,947			14,033			39,047			35,110
Income (loss) before income taxes		1,355			2,967			3,469			(1,867	)
Income tax expense		(685	)		(82	)		(1,255	)		(283	)
Net income (loss)	$	670		$	2,885		$	2,214		$	(2,150	)
Earnings (loss) per share - Basic	$	0.02		$	0.08		$	0.06		$	(0.06	)
Earnings (loss) per share - Diluted	$	0.02		$	0.08		$	0.06		$	(0.06	)
Weighted average shares outstanding used in computing basic income (loss) per share		35,751			35,044			35,609			34,949
Weighted average shares outstanding used in computing diluted income (loss) per share		37,353			35,069			37,207			34,949
(1)      Stock-based compensation expense for the three and six months ended June 30, 2010 and 2009 is allocated among the following captions (in thousands):
	Three months ended						Six months ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Cost of sales - services	$	145		$	60		$	253		$	206
Engineering and technology		672			23			883			355
Sales and marketing		1,204			86			1,683			454
General and administrative		1,938			1,220			3,420			2,425
Total stock-based compensation expense	$	3,959		$	1,389		$	6,239		$	3,440

⁽²⁾ In the three and six months ended June 30, 2009, the Company recorded a gain of $0.3 million and net other-than-temporary impairment charges of $5.0 million, respectively, relating to the auction rate securities investments that it held.

⁽³⁾ In the three and six months ended June 30, 2010, the Company recorded a $3.5 million charge as a result of the increase in the estimated fair value of a contingent liability related to operation of the assets acquired on April 1, 2010 from Make The Web Better.

InfoSpace, Inc.

Preliminary Condensed Consolidated Balance Sheets

(Unaudited)

(Amounts in thousands)

	June 30, 2010			December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	55,131		$	83,750
Short-term investments, available-for-sale		168,224			142,647
Accounts receivable, net		20,079			28,466
Other receivables		3,807			2,953
Prepaid expenses and other current assets		3,263			2,526
Total current assets		250,504			260,342
Property and equipment, net		9,595			12,315
Goodwill		69,878			44,815
Other intangible assets, net		1,705			457
Other long-term assets		4,001			4,287
Total assets	$	335,683		$	322,216
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	7,318		$	6,736
Accrued expenses and other current liabilities		37,801			34,131
Total current liabilities		45,119			40,867
Other long-term liabilities		1,304			1,514
Total liabilities		46,423			42,381
Stockholders’ equity:
Common stock		4			4
Additional paid-in capital		1,310,926			1,303,667
Accumulated deficit		(1,022,962	)		(1,025,176	)
Accumulated other comprehensive income		1,292			1,340
Total stockholders’ equity		289,260			279,835
Total liabilities and stockholders’ equity	$	335,683		$	322,216
Summary of cash, cash equivalents, and short-term investments:
Cash and cash equivalents	$	55,131		$	83,750
Short-term investments, available-for-sale		168,224			142,647
Cash, cash equivalents, and short-term investments	$	223,355		$	226,397

InfoSpace, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)

	Six months ended
	June 30, 2010			June 30, 2009
Operating activities:
Net income (loss)	$	2,214		$	(2,150	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss on investments, net		—			5,016
Stock-based compensation		6,239			3,440
Depreciation and amortization of intangible assets		3,527			3,622
Deferred income taxes		—			186
Excess tax benefits from stock-based award activity		(1,097	)		—
Amortization of premium on investments, net		942			17
Loss on disposal of assets		544			613
Other		(6	)		(10	)
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable		9,042			(2,757	)
Notes and other receivables		(33	)		(1,097	)
Prepaid expenses and other current assets		255			(823	)
Other long-term assets		285			247
Accounts payable		(3,626	)		(1,200	)
Accrued expenses and other current and long-term liabilities		(4,111	)		4,839
Net cash provided by operating activities		14,175			9,943
Investing activities:
Business acquisitions, net of cash acquired		(15,985	)		(395	)
Purchases of property and equipment		(997	)		(1,448	)
Other long-term assets		—			104
Proceeds from the sale of assets		306			320
Proceeds from sales and maturities of investments		115,460			43,700
Purchases of investments		(141,841	)		(38,144	)
Net cash provided (used) by investing activities		(43,057	)		4,137
Financing activities:
Proceeds from stock option exercises and issuance of stock through employee stock purchase plan		1,840			252
Repayment of capital lease obligations		(291	)		(93	)
Tax payments from shares withheld upon vesting of restricted stock units		(2,383	)		—
Excess tax benefits from stock-based award activity		1,097			—
Net cash provided by financing activities		263			159
Net increase (decrease) in cash and cash equivalents		(28,619	)		14,239
Cash and cash equivalents:
Beginning of period		83,750			49,936
End of period	$	55,131		$	64,175

InfoSpace, Inc.

Preliminary Segment Information

(Unaudited)

(Amounts in thousands)

	Three months ended						Six months ended
	June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Core:
Revenue	$	52,363		$	43,763		$	114,136		$	82,833
Cost of sales(1)		26,627			24,310			67,750			44,687
Operating expenses		14,430			14,087			28,786			29,008
Core income		11,306			5,366			17,600			9,138
E-Commerce:
Revenue		7,039			—			7,039			—
Cost of sales		5,958			—			5,958			—
Operating expenses		1,787			—			1,787			—
E-Commerce loss		(706	)		—			(706	)		—
Total:
Total revenue		59,402			43,763			121,175			82,833
Total cost of sales		32,585			24,310			73,708			44,687
Total segment operating expenses		16,217			14,087			30,573			29,008
Total segment income		10,600			5,366			16,894			9,138
Corporate:
Stock-based compensation		3,959			1,389			6,239			3,440
Depreciation		1,676			1,795			3,391			3,606
Amortization of other intangible assets		88			16			136			16
Loss (gain) on investments, net		—			(335	)		—			5,016
Other loss (income), net		3,522			(466	)		3,659			(1,073	)
Income tax expense		685			82			1,255			283
Net income (loss)	$	670		$	2,885		$	2,214		$	(2,150	)

For each of the business segments, Core and E-Commerce, the financial information above is used by the Company’s chief operating decision maker.

⁽¹⁾ Amounts do not include allocations for certain costs including amortization of acquired technology that supports Core segment services, and certain costs associated with the operation of the Company’s data centers that serve its search business, including depreciation, personnel expenses, bandwidth costs, and payment processing fees for customer transactions.

InfoSpace, Inc.

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

Preliminary Adjusted EBITDA Reconciliation⁽¹⁾

(Unaudited)

(Amounts in thousands)

	Three months ended					Six months ended
	June 30, 2010		June 30, 2009			June 30, 2010		June 30, 2009
Net income (loss)(2)	$	670	$	2,885		$	2,214	$	(2,150	)
Depreciation and amortization of intangible assets		1,764		1,811			3,527		3,622
Stock-based compensation		3,959		1,389			6,239		3,440
Loss (gain) on investments, net		—		(335	)		—		5,016
Other loss (income), net(3)		3,522		(466	)		3,659		(1,073	)
Income tax expense		685		82			1,255		283
Adjusted EBITDA	$	10,600	$	5,366		$	16,894	$	9,138

Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance

(Amounts in thousands)

	Ranges for the three months  ending September 30, 2010
Net income	$	500		$	1,500
Depreciation and amortization of intangible assets		1,900			1,900
Stock-based compensation		3,800			3,800
Other income, net(3)		(100	)		(100	)
Income tax expense		900			900
Adjusted EBITDA	$	7,000		$	8,000

⁽¹⁾ InfoSpace’s Adjusted EBITDA is calculated by adjusting net income (loss) determined in accordance with generally accepted accounting principles (“GAAP”) to exclude the effects of income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, loss (gain) on investments, and other loss (income), net (which includes such items as adjustments to the fair values of contingent liabilities related to business combinations, interest income, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed above. InfoSpace’s management believes that Adjusted EBITDA provides meaningful supplemental information regarding the Company’s performance by excluding certain expenses and gains that management believes are not indicative of its core business operating results. InfoSpace 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. InfoSpace believes that Adjusted EBITDA is a common measure used by investors and analysts to evaluate its performance, that it provides a more complete understanding of the results of operations and trends affecting the Company’s business when viewed together with GAAP results, and that management and investors benefit from referring to this non-GAAP financial measure. Adjusted EBITDA should be evaluated in light of the Company’s financial results prepared in accordance with GAAP, and should be considered as a supplement to, and not as a substitute for or superior to, GAAP net income (loss).

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

⁽³⁾ Other loss (income), net, primarily consists of adjustments to the fair values of contingent liabilities related to business combinations, interest income, gains or losses from the disposal of assets, and foreign currency transaction gains or losses.

InfoSpace, Inc.

Preliminary Condensed Consolidated Statements of Operations

(Unaudited)

(Amounts in thousands)

	Three months ended												Year ended			Three months ended
	March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			December 31, 2009			March 31, 2010
Services revenue	$	39,070		$	43,763		$	54,356		$	70,457		$	207,646		$	61,773
Cost of services sales(1)		22,823			26,763			36,577			50,456			136,619			43,559
Gross profit		16,247			17,000			17,779			20,001			71,027			18,214
Expenses and other income:
Engineering and technology(1)		2,316			2,454			2,231			2,128			9,129			1,906
Sales and marketing(1)		6,948			5,137			6,639			6,654			25,378			6,482
General and administrative(1)		6,246			6,397			6,789			4,189			23,621			6,755
Depreciation		827			846			813			797			3,283			820
Loss (gain) on investments		5,351			(335	)		—			(302	)		4,714			—
Other loss (income), net		(607	)		(466	)		(472	)		(1,137	)		(2,682	)		137
Total expenses and other income		21,081			14,033			16,000			12,329			63,443			16,100
Income (loss) before income taxes		(4,834	)		2,967			1,779			7,672			7,584			2,114
Income tax benefit (expense)		(201	)		(82	)		32			70			(181	)		(570	)
Net income (loss)	$	(5,035	)	$	2,885		$	1,811		$	7,742		$	7,403		$	1,544
(1)      Stock-based compensation expense is allocated among the following captions above (in thousands):
	Three months ended												Year ended			Three months ended
	March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			December 31, 2009			March 31, 2010
Cost of sales - services	$	146		$	60		$	202		$	127		$	535		$	108
Engineering and technology		332			23			620			448			1,423			211
Sales and marketing		368			86			920			664			2,038			479
General and administrative		1,205			1,220			2,192			1,955			6,572			1,482
Total stock-based compensation expense	$	2,051		$	1,389		$	3,934		$	3,194		$	10,568		$	2,280

InfoSpace, Inc.

Preliminary Segment Information

(Unaudited)

(Amounts in thousands)

	Three months ended												Year ended			Three  months ended
	March 31, 2009			June 30, 2009			September 30, 2009			December 31, 2009			December 31, 2009			March 31, 2010
Core:
Revenue	$	39,070		$	43,763		$	54,356		$	70,457		$	207,646		$	61,773
Cost of sales		20,377			24,310			34,019			47,825			126,531			41,123
Operating expenses		14,921			14,087			13,278			11,392			53,678			14,356
Core income		3,772			5,366			7,059			11,240			27,437			6,294
Corporate:
Stock-based compensation		2,051			1,389			3,934			3,194			10,568			2,280
Depreciation		1,811			1,795			1,771			1,765			7,142			1,715
Amortization of other intangible assets		—			16			47			48			111			48
Loss (gain) on investments, net		5,351			(335	)		—			(302	)		4,714			—
Other loss (income), net		(607	)		(466	)		(472	)		(1,137	)		(2,682	)		137
Income tax expense (benefit)		201			82			(32	)		(70	)		181			570
Net income (loss)	$	(5,035	)	$	2,885		$	1,811		$	7,742		$	7,403		$	1,544