Exhibit 99.1
Company Contact: | Investor Relations Contacts: |
Don Danks, Chairman and CEO | Brendan Lahiff & Kirsten Chapman |
iMergent, Inc. | Lippert/Heilshorn & Associates |
801.431.4695 | 415.433.3777 |
investor_relations@imergentinc.com | Brendan@lhai-sf.com |
iMergent Announces Record Second Quarter 2004 Results
Increase in eCommerce Training Workshops and International Marketing Expansion Drives 87% Revenue Growth and 98% Earnings Growth
OREM, Utah, February 5, 2004 - iMERGENT, Inc. (OTCBB: IMGG) a leading provider of eCommerce and software for small business and entrepreneurs, announced today its results for the fiscal second quarter and six-months ended December 31, 2003.
Total revenue for the second fiscal quarter ended December 31, 2003 rose to $19.8 million from $10.6 million in the same quarter of 2002, an increase of 87 percent. The higher revenue was primarily due to an increase in the total number of workshops conducted, which included the initial stages of the expansion of international marketing efforts.
Net income for the second fiscal quarter increased to $1.5 million, or $0.12 per diluted share, compared to net income of $740,000, or $0.07 per diluted share, for the comparable quarter of the prior fiscal year, an increase of 98 percent. Net income included the additional cost of $883,000 in charges and customer returns associated with the successful settlement of several legal proceedings.
Revenue for the six-months ended December 31, 2003 grew to $40.4 million versus $21.9 million for the comparable period in 2002, an increase of 85 percent.
Net income for the six-months ended December 31, 2003 increased to $3.6 million, or $0.30 per diluted share, compared to $1.8 million, or $0.16 per diluted share for the comparable period in 2002, an increase of 98 percent.
Second Quarter and Subsequent Event Highlights | ||
• |
| Expanded iMergent’s international marketing efforts with StoresOnline™ workshops held in Australia, which provided $1.9 million in revenue. iMergent plans to continue its international expansion by conducting international workshops approximately once per month, beginning in March. |
• |
| Increased the number of StoresOnline workshops held during the quarter to 116 from 68 in the prior year. In addition, the percent of closed sales to workshop attendees increased 13 percent to 34 percent from the same period a year ago. |
• |
| Expanded our offering of Bootcamps™ to iMergent customers, offering clients intensive four-hour, face-to-face workshops to provide hands-on help with initial merchant website set up; a review of merchant marketing concepts; and support for clients’ StoresOnline technical development. These workshops increase the level of satisfaction among customers. |
1
• |
| Instituted a nationwide three-day right to rescind policy on all StoresOnline license contracts to improve service and customer satisfaction. |
• |
| Decreased the bad debt expense as a percentage of sales from 28 percent to 26 percent. The company has a goal of reducing this expense further throughout the remainder of 2004. |
Brandon Lewis, president and chief operating officer, stated, “The second quarter marked a turning point in the development of iMergent’s business strategy. In addition to entering new and lucrative markets, we settled some long-standing legal issues and implemented new collection and customer service practices, including our Bootcamps and our nationwide three-day right to rescind policy. We expect these programs will enhance our service and aid in the reduction of our bad debt expense.”
“Our base business continues to grow rapidly; and we believe our results have exceeded our expectations, given the second quarter is seasonally our slowest,” stated Don Danks, chairman and chief executive officer. “Internationally, we are expecting to continue ramping our efforts, and we will conduct workshops in South Africa and New Zealand. Internally, we are focusing on further improving our customer service and growing the operating leverage of our business.”
The company will hold a conference call to discuss these results on Thursday, February 5, 2004 at 4:30 p.m. EST; 1:30 p.m. PST. The conference call will be broadcast live over the Internet at www.imergentinc.com. If you do not have Internet access, the telephone dial-in number is 800-639-0297 for domestic and 706-634-7417 for international participants. Please dial in five to ten minutes prior to the beginning of the call. A telephone replay will be available through February 9, 2004; dial 706-645-9291, and enter access code 5161541.
About iMergent
iMergent provides eCommerce solutions to entrepreneurs and small businesses enabling them to market and sell their business product or idea via the Internet. Headquartered in Orem, Utah the company sells its proprietary StoresOnline software and training services, helping users build a successful Internet strategy to market products, accept online orders, analyze marketing performance, and manage pricing and customers. In addition to software, iMergent offers site development, web hosting, marketing and mentoring products. iMergent typically reaches its target audience through a concentrated direct marketing effort to fill Preview Sessions, in which a StoresOnline expert reviews the product opportunities and costs. These sessions lead to a follow-up Workshop Conference, where product and technology experts train potential users on the software and encourage them to make purchases.
iMergent, Inc., Bootcamp, and StoresOnline are trademarks of iMergent, Inc.
Statements made in this press release that are not historical in nature constitute forward-looking statements within the meaning of the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Such statements are based on the current expectations and beliefs of the management of iMergent and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include, without limitation, the Company’s continued ability to expand business internationally; continue to increase the number of workshops; continue to maintain/increase the closed sale to attendees percentage; continue to maintain/increase training events; the continued acceptance of Bootcamps; continue to maintain/decrees bad debt expense; continued acceptance of new customer services practices; the Company’s ability to attract and retain key management and other personnel. For a more detailed discussion of factors that affect iMergent’s operating results, please refer to its SEC reports including its most
2
recent Form 10-K and Form 10-Q. The Company undertakes no obligation to update this forward-looking information
- Tables to Follow -
3
IMERGENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations for the
Three Months and the Six Months Ended December 31, 2003 and 2002
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
|
|
|
| ||||||||||
|
| December 31, |
| December 31, |
| December 31, |
| December 31, |
| ||||
|
|
|
|
|
| ||||||||
Revenue |
| $ | 19,827,058 |
| $ | 10,588,680 |
| $ | 40,372,194 |
| $ | 21,872,529 |
|
Cost of revenue |
|
| 4,545,780 |
|
| 2,138,021 |
|
| 8,907,482 |
|
| 4,175,874 |
|
Cost of revenue - related party |
|
| — |
|
| 164,936 |
|
| — |
|
| 585,517 |
|
|
|
|
|
|
| ||||||||
Total cost of revenue |
|
| 4,545,780 |
|
| 2,302,957 |
|
| 8,907,482 |
|
| 4,761,391 |
|
|
|
|
|
|
| ||||||||
Gross profit |
|
| 15,281,278 |
|
| 8,285,723 |
|
| 31,464,712 |
|
| 17,111,138 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development |
|
| 86,036 |
|
| — |
|
| 162,729 |
|
| — |
|
Selling and marketing |
|
| 6,704,292 |
|
| 3,601,993 |
|
| 12,850,729 |
|
| 7,983,605 |
|
Selling and marketing - related party |
|
| — |
|
| 55,608 |
|
| — |
|
| 195,343 |
|
General and administrative |
|
| 2,256,990 |
|
| 1,033,681 |
|
| 4,091,958 |
|
| 1,968,099 |
|
Depreciation and amortization |
|
| 24,448 |
|
| 103,886 |
|
| 51,872 |
|
| 252,303 |
|
Bad debt expense |
|
| 5,142,851 |
|
| 2,916,827 |
|
| 11,363,085 |
|
| 5,204,560 |
|
|
|
|
|
|
| ||||||||
Total operating expenses |
|
| 14,214,617 |
|
| 7,711,995 |
|
| 28,520,373 |
|
| 15,603,910 |
|
Earnings from operations |
|
| 1,066,661 |
|
| 573,728 |
|
| 2,944,339 |
|
| 1,507,228 |
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
| 42,318 |
|
| (1,006 | ) |
| 43,288 |
|
| 699 |
|
Interest income |
|
| 366,513 |
|
| 174,284 |
|
| 641,756 |
|
| 331,216 |
|
Interest expense |
|
| (9,755 | ) |
| (6,664 | ) |
| (11,565 | ) |
| (15,652 | ) |
|
|
|
|
|
| ||||||||
Total other income (expense) |
|
| 399,076 |
|
| 166,614 |
|
| 673,479 |
|
| 316,263 |
|
|
|
|
|
|
| ||||||||
Earnings before income taxes |
|
| 1,465,737 |
|
| 740,342 |
|
| 3,617,818 |
|
| 1,823,491 |
|
Provision for income taxes |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
|
|
|
| ||||||||
Net Earnings |
| $ | 1,465,737 |
| $ | 740,342 |
| $ | 3,617,818 |
| $ | 1,823,491 |
|
|
|
|
|
|
| ||||||||
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.13 |
| $ | 0.07 |
| $ | 0.32 |
| $ | 0.17 |
|
Diluted |
| $ | 0.12 |
| $ | 0.07 |
| $ | 0.30 |
| $ | 0.16 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 11,306,384 |
|
| 11,007,226 |
|
| 11,228,705 |
|
| 11,001,417 |
|
Diluted |
|
| 12,274,437 |
|
| 11,208,171 |
|
| 12,188,132 |
|
| 11,119,593 |
|
4
IMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
|
| December 31, |
| June 30, 2003 |
| ||
|
|
|
| ||||
|
| (Unaudited) |
|
|
|
| |
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash |
| $ | 2,700,583 |
| $ | 2,319,618 |
|
Trade receivables, net of allowance for doubtful accounts of $6,146,249 at December 31, 2003 and $4,471,667 at June 30, 2003. |
|
| 7,247,042 |
|
| 4,965,769 |
|
Other receivables |
|
| — |
|
| 50,000 |
|
Inventories |
|
| 59,066 |
|
| 34,194 |
|
Prepaid expenses |
|
| 526,142 |
|
| 687,984 |
|
Credit card reserves, net of allowance for doubtful accounts of $62,266 at December 31, 2003 and $319,812 at June 30, 2003. |
|
| 465,391 |
|
| 450,200 |
|
|
|
|
| ||||
Total current assets |
|
| 10,998,224 |
|
| 8,507,765 |
|
Property and equipment, net |
|
| 162,727 |
|
| 200,174 |
|
Goodwill, net |
|
| 455,177 |
|
| 455,177 |
|
Trade receivables, net of allowance for doubtful accounts of $2,989,021 at December 31, 2003 and $2,131,593 at June 30, 2003. |
|
| 3,395,301 |
|
| 2,254,969 |
|
Other assets, net of allowance for doubtful accounts of $168,691 at December 31, 2003 and $100,783 at June 30, 2003. |
|
| 206,690 |
|
| 103,460 |
|
|
|
|
| ||||
Total Assets |
|
| 15,218,119 |
|
| 11,521,545 |
|
|
|
|
| ||||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable |
| $ | 1,628,590 |
| $ | 1,413,112 |
|
Accounts payable - related party |
|
| — |
|
| 114,925 |
|
Accrued wages and benefits |
|
| 404,312 |
|
| 411,620 |
|
Accrued liabilities |
|
| 362,812 |
|
| 204,137 |
|
Current portion of capital lease obligations |
|
| 11,171 |
|
| 26,536 |
|
Current portion of notes payable |
|
| — |
|
| 121,206 |
|
Other current liabilities |
|
| 53,392 |
|
| 35,840 |
|
Deferred revenue |
|
| 173,986 |
|
| 653,463 |
|
|
|
|
| ||||
Total current liabilities |
|
| 2,634,263 |
|
| 2,980,839 |
|
Capital lease obligations, net of current portion |
|
| 1,802 |
|
| 1,802 |
|
Notes payable, net of current portion |
|
| 400,000 |
|
| 435,857 |
|
|
|
|
| ||||
Total liabilities |
|
| 3,036,065 |
|
| 3,418,497 |
|
|
|
|
| ||||
Commitments and contingencies |
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
Capital stock, par value $.001 per share |
|
|
|
|
|
|
|
Preferred stock - authorized 5,000,000 shares; none issued |
|
|
|
|
|
|
|
Common stock - authorized 100,000,000 shares; issued and outstanding 11,321,915 and 11,062,290 shares, at December 31, 2003 and June 30, 2003, respectively |
|
| 11,322 |
|
| 11,063 |
|
Additional paid-in capital |
|
| 73,060,423 |
|
| 72,605,749 |
|
Deferred compensation |
|
| (16,219 | ) |
| (22,474 | ) |
Accumulated other comprehensive loss |
|
| (4,902 | ) |
| (4,902 | ) |
Accumulated deficit |
|
| (60,868,570 | ) |
| (64,486,389 | ) |
|
|
|
| ||||
Total stockholders’ equity |
|
| 12,182,054 |
|
| 8,103,047 |
|
|
|
|
| ||||
Total Liabilities and Stockholders’ Equity |
| $ | 15,218,119 |
| $ | 11,521,545 |
|
|
|
|
| ||||
5