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

Exhibit 99.1

InfoSpace Announces Third Quarter Results

BELLEVUE, Wash., November 4, 2010 (BUSINESS WIRE) — InfoSpace, Inc. (NASDAQ: INSP) today announced financial results for the third quarter ended September 30, 2010.

Revenues for the third quarter of 2010 were $61.7 million, reflecting an increase of $7.4 million or 14 percent from the third quarter of 2009. Net loss for the third quarter of 2010 was $0.1 million, or $0.00 per share, compared to net income of $1.8 million, or $0.05 per diluted share, for the third quarter of 2009.

Cash, cash equivalents, and marketable securities as of September 30, 2010 totaled $227.9 million. At the end of the quarter, the Company had no debt obligations.

Adjusted EBITDA, as defined below, was $4.8 million for the third quarter of 2010, which includes a $2.4 million charge relating to the separation of service of a departing executive, and compares to $7.1 million for the third quarter of 2009.

“Our core search business continues to consistently generate significant cash flow, and we remain focused on maximizing the value of this business,” said Will Lansing, president and chief executive officer of InfoSpace. “Additionally, our recently acquired
e-commerce business delivered strong revenue growth this quarter. Moving forward, we are committed to our strategy of investing in both businesses for long-term growth, as well as pursuing strategic opportunities to increase shareholder value.”

Third Quarter Segment Information

Core

Core revenue was $50.5 million in the third quarter of 2010, a decrease of $3.8 million or 7 percent from the third quarter of 2009. Core income was $6.6 million for the third quarter of 2010, which includes the $2.4 million separation expense, and represents a decrease of $0.5 million or 7 percent from the third quarter of 2009.

E-Commerce

E-Commerce revenue was $11.2 million in the third quarter of 2010. E-Commerce loss was $1.8 million or 16 percent of
E-Commerce revenue.

Fourth Quarter Outlook

For the fourth quarter of 2010, the Company expects revenues to be between $57 million and $60 million, Adjusted EBITDA to be between $4 million and $6 million, and the total results to be between net loss of $1 million and net income of $1 million, or net loss of $0.03 per share to net income of $0.03 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 on investments, net, 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 as presented by the Company is not necessarily comparable to similarly titled measures used by other companies. 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), 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 and an innovative online search engine optimization tool, WebPosition^® (www.webposition.com). More information may be found at www.infospaceinc.com.

InfoSpace.com, InfoSpace, Dogpile, MetaCrawler, WebCrawler, WebFetch, 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. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict, including, but not limited to: the completion of the review of our financial statements for the third 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 subsequent reports filed with or furnished to the Securities and Exchange Commission. 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						Nine months ended
	September 30, 2010			September 30, 2009			September 30, 2010			September 30, 2009
Revenues:
Services	$	50,524		$	54,356		$	164,660		$	137,189
Product		11,193			—			18,232			—
Total revenues		61,717			54,356			182,892			137,189
Cost of sales:
Services(1)		28,849			36,577			101,550			86,167
Product		9,860			—			15,818			—
Total cost of sales		38,709			36,577			117,368			86,167
Gross profit		23,008			17,779			65,524			51,022
Expenses and other income:
Engineering and technology(1)		2,661			2,231			7,370			7,001
Sales and marketing(1)		10,087			6,639			25,421			18,724
General and administrative(1)(2)		9,479			6,789			23,141			19,428
Depreciation		818			813			2,461			2,486
Amortization of other intangible assets		122			—			162			—
Loss on investments, net(3)		—			—			—			5,016
Other loss (income), net(4)		427			(472	)		4,086			(1,545	)
Total expenses and other income		23,594			16,000			62,641			51,110
Income (loss) before income taxes		(586	)		1,779			2,883			(88	)
Income tax benefit (expense)		484			32			(771	)		(251	)
Net income (loss)	$	(102	)	$	1,811		$	2,112		$	(339	)
Earnings (loss) per share - Basic	$	(0.00	)	$	0.05		$	0.06		$	(0.01	)
Earnings (loss) per share - Diluted	$	(0.00	)	$	0.05		$	0.06		$	(0.01	)
Weighted average shares outstanding used in computing basic income (loss) per share		35,969			35,035			35,731			34,945
Weighted average shares outstanding used in computing diluted income (loss) per share		35,969			35,766			36,770			34,945

⁽¹⁾ Stock-based compensation expense for the three and nine months ended September 30, 2010 and 2009 is allocated among the following captions (in thousands):

	Three months ended				Nine months ended
	September 30, 2010		September 30, 2009		September 30, 2010		September 30, 2009
Cost of sales - services	$	137	$	202	$	390	$	408
Engineering and technology		252		620		1,135		975
Sales and marketing		1,106		920		2,789		1,374
General and administrative		1,567		2,192		4,987		4,617
Total stock-based compensation expense	$	3,062	$	3,934	$	9,301	$	7,374

⁽²⁾ In the three and nine months ended September 30, 2010, the Company recorded a $2.4 million charge related to the separation from service of a departing executive.

⁽³⁾ In the nine months ended September 30, 2009, the Company recorded net other-than-temporary impairment charges of $5.0 million relating to the auction rate securities investments that it held.

⁽⁴⁾ In the nine months ended September 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)

	September 30, 2010			December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	136,035		$	83,750
Short-term investments, available-for-sale		91,869			142,647
Accounts receivable, net		16,721			28,466
Other receivables		4,071			2,953
Prepaid expenses and other current assets		2,888			2,526
Total current assets		251,584			260,342
Property and equipment, net		8,432			12,315
Goodwill		69,878			44,815
Other intangible assets, net		1,536			457
Other long-term assets		4,035			4,287
Total assets	$	335,465		$	322,216
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,258		$	6,736
Accrued expenses and other current liabilities		35,954			34,131
Total current liabilities		42,212			40,867
Other long-term liabilities		1,304			1,514
Total liabilities		43,516			42,381
Stockholders’ equity:
Common stock		4			4
Additional paid-in capital		1,313,546			1,303,667
Accumulated deficit		(1,023,064	)		(1,025,176	)
Accumulated other comprehensive income		1,463			1,340
Total stockholders’ equity		291,949			279,835
Total liabilities and stockholders’ equity	$	335,465		$	322,216
Summary of cash, cash equivalents, and short-term investments:
Cash and cash equivalents	$	136,035		$	83,750
Short-term investments, available-for-sale		91,869			142,647
Cash, cash equivalents, and short-term investments	$	227,904		$	226,397

InfoSpace, Inc.

Preliminary Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Amounts in thousands)

	Nine months ended
	September 30, 2010			September 30, 2009
Operating activities:
Net income (loss)	$	2,112		$	(339	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss on investments, net		—			5,016
Stock-based compensation		9,301			7,374
Depreciation and amortization of intangible assets		5,397			5,440
Deferred income taxes		—			186
Excess tax benefits from stock-based award activity		(1,097	)		—
Amortization of premium (accretion of discount) on investments, net		1,271			(26	)
Loss on disposal of assets		1,180			635
Other		(18	)		254
Cash provided (used) by changes in operating assets and liabilities:
Accounts receivable		12,404			(6,234	)
Notes and other receivables		(297	)		(3,042	)
Prepaid expenses and other current assets		866			(426	)
Other long-term assets		251			359
Accounts payable		(5,307	)		144
Accrued expenses and other current and long-term liabilities		(6,141	)		6,984
Net cash provided by operating activities		19,922			16,325
Investing activities:
Business acquisitions, net of cash acquired		(15,985	)		(395	)
Purchases of property and equipment		(1,598	)		(1,654	)
Other long-term assets		—			159
Proceeds from the sale of assets		307			611
Proceeds from sales and maturities of investments		208,727			75,600
Purchases of investments		(159,091	)		(47,317	)
Net cash provided by investing activities		32,360			27,004
Financing activities:
Proceeds from stock option exercises and issuance of stock through employee stock purchase plan		2,236			405
Repayment of capital lease obligations		(439	)		(420	)
Tax payments from shares withheld upon vesting of restricted stock units		(2,891	)		—
Excess tax benefits from stock-based award activity		1,097			—
Net cash provided (used) by financing activities		3			(15	)
Net increase in cash and cash equivalents		52,285			43,314
Cash and cash equivalents:
Beginning of period		83,750			49,936
End of period	$	136,035		$	93,250

InfoSpace, Inc.

Preliminary Segment Information

(Unaudited)

(Amounts in thousands)

	Three months ended						Nine months ended
	September 30, 2010			September 30, 2009			September 30, 2010			September 30, 2009
Core:
Revenue	$	50,524		$	54,356		$	164,660		$	137,189
Cost of sales(1)		26,111			34,019			93,861			78,706
Operating expenses		17,814			13,278			46,600			42,286
Core income		6,599			7,059			24,199			16,197
E-Commerce:
Revenue		11,193			—			18,232			—
Cost of sales		9,860			—			15,818			—
Operating expenses		3,160			—			4,947			—
E-Commerce loss		(1,827	)		—			(2,533	)		—
Total:
Total revenue		61,717			54,356			182,892			137,189
Total cost of sales		35,971			34,019			109,679			78,706
Total segment operating expenses		20,974			13,278			51,547			42,286
Total segment income		4,772			7,059			21,666			16,197
Corporate:
Stock-based compensation		3,062			3,934			9,301			7,374
Depreciation		1,701			1,771			5,092			5,377
Amortization of other intangible assets		168			47			304			63
Loss on investments, net		—			—			—			5,016
Other loss (income), net		427			(472	)		4,086			(1,545	)
Income tax expense (benefit)		(484	)		(32	)		771			251
Net income (loss)	$	(102	)	$	1,811		$	2,112		$	(339	)

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, certain costs associated with the operation of the Company’s data centers that serve its search business, including depreciation, personnel expenses, energy, and 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						Nine months ended
	September 30, 2010			September 30, 2009			September 30, 2010		September 30, 2009
Net income (loss)(2)	$	(102	)	$	1,811		$	2,112	$	(339	)
Depreciation and amortization of intangible assets		1,869			1,818			5,396		5,440
Stock-based compensation		3,062			3,934			9,301		7,374
Loss on investments, net		—			—			—		5,016
Other loss (income), net(3)		427			(472	)		4,086		(1,545	)
Income tax expense (benefit)		(484	)		(32	)		771		251
Adjusted EBITDA	$	4,772		$	7,059		$	21,666	$	16,197

Preliminary Adjusted EBITDA Reconciliation for Forward-Looking Guidance

(Amounts in thousands)

	Ranges for the three months ending December 31, 2010
Net income (loss)	$	(1,000	)	$	1,000
Depreciation and amortization of intangible assets		1,900			1,900
Stock-based compensation		3,400			3,400
Other income, net(3)		(300	)		(300	)
Income tax expense		—			—
Adjusted EBITDA	$	4,000		$	6,000

⁽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 on investments, net, 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.