Investor and Media Contacts:
Alex Wellins or Molly Plyler
The Blueshirt Group, for Napster
(415) 217-7722
alex@blueshirtgroup.com; molly@blueshirtgroup.com
NAPSTER REPORTS RECORD THIRD QUARTER REVENUE AND POSTS THIRD CONSECUTIVE QUARTER OF POSITIVE CASH FLOW
LOS ANGELES - February 6, 2008 - Napster (Nasdaq: NAPS) today reported financial results for its fiscal third quarter ended December 31, 2007.
“Napster made strong progress during the quarter as we delivered record revenues of $32.8 million, posted our third consecutive quarter of positive cash flow, and rolled out new content and features for Napster 4.0, our award-winning, web-based music subscription service. On the wireless front, Napster Mobile recently launched with two new leading carriers that expand our footprint in Europe and establish our entry into Latin America,” said Chris Gorog, Napster's chairman and chief executive officer.
Net revenue for Napster’s third quarter of fiscal 2008 grew to $32.8 million, up 15 percent from $28.4 million in the third quarter of fiscal 2007. Excluding non-recurring breakage revenue, third quarter fiscal 2008 revenue totaled $30.0 million. Net loss for the third quarter of fiscal 2008 narrowed to $2.8 million, or $0.06 per basic and diluted share, compared to a net loss of $9.5 million, or $0.22 per basic and diluted share, in the third quarter of fiscal 2007.
| Napster 3Q08 Earnings Release, 2/6/08 | Page 2 |
Napster ended the third fiscal quarter with $69.3 million of cash, cash equivalents and short-term investments, an increase of $900,000 from the prior quarter. Napster had approximately 743,000 paid subscribers at December 31, 2007, down less than 1% from September 30, 2007.
Business Outlook
“Looking to the balance of our fiscal year, excluding breakage revenue, our fourth quarter revenue is expected to be relatively flat with the third quarter, in the range of $29 to $31 million. Revenue for fiscal 2008 is expected to exceed $125 million, and excluding breakage revenue, fiscal 2008 revenue is expected to grow more than 17% year over year. We believe that Napster will be cash flow positive for fiscal 2008 as previously projected,” said Suzanne M. Colvin, Napster’s interim chief financial officer.
“We expect that the coming year will be an exciting period of growth for Napster as we convert our download sales catalog to the MP3 format and dramatically expand our available market for Napster’s streaming service and download sales to now include customers with virtually any MP3 player or music phone, including the popular iPod and iPhone. We believe that Napster’s multi-platform, web-based services, combined with DRM-free downloads, complemented by the continuing expansion and development of our wireless partnerships, create a very compelling and attractive choice for music fans globally and provide strong growth drivers for the coming year,” concluded Mr. Gorog.
| Napster 3Q08 Earnings Release, 2/6/08 | Page 3 |
Corporate Highlights
Napster recently:
| | · | Launched the Napster Mobile music service with Telecom Italia through its mobile brand TIM, the leading mobile carrier serving the Italian market with more than 35 million subscribers. |
| | · | Launched Napster Mobile in Latin America with Entel PCS, the leading Chilean mobile operator with more than 5.5 million subscribers. |
| | · | Announced that it will shift its download sales catalog on its award-winning PC service to the MP3 format in the second calendar quarter of 2008. |
| | · | Napster Japan announced the compatibility of Napster Mobile for NTT DoCoMo customers through nine new models of the mobile company's line of music-enabled handsets, allowing DoCoMo customers to seamlessly download music directly, or download music and playlists from their PC to their phones. Additionally, Napster Japan announced the launch of a Napster-Tower Records music channel for NTT DoCoMo mobile customers. |
Conference Call Information
The Napster third-quarter teleconference and webcast is scheduled to begin at 2:00 p.m. PST on Wednesday, February 6, 2008. To participate on the live call, analysts and investors should dial 800-366-3908 at least ten minutes prior to the call. Napster will also offer a live and archived webcast of the conference call, accessible from the "Investor Relations" section of the Company’s Web site at http://investor.napster.com.
| Napster 3Q08 Earnings Release, 2/6/08 | Page 4 |
About Napster
Napster, the pioneer of digital music, offers the ultimate in interactive music experiences, creating better ways to discover, share, acquire and enjoy music -- anytime, anywhere. The Company's offerings include "Napster" (www.Napster.com <http://www.napster.com/> ) -- the most popular on-demand music subscription service in the world; "Freenapster" (www.freenapster.com <http://www.freenapster.com/> ) -- a unique Web experience offering free on demand music legally; and "Napster Mobile" -- one of the industry's fastest growing mobile music platforms. Headquartered in Los Angeles, Napster's services are available in markets across the Americas, Europe and Japan.
Safe Harbor Statement
Except for historical information, the matters discussed in this press release, including all of the statements under the heading “Business Outlook” above, are forward-looking statements that are subject to certain risks and uncertainties such as our limited operating history; failure to develop new products and services; flaws inherent in our products or services; decreased demand for our products and services; failure of our products to interoperate with the hardware products of our customers; the adoption rate of mobile platforms as a method of digital music purchase, including the rate of adoption of music-enabled cell phones compatible with the Company’s service offerings; intense and varied competition; failure to maintain relationships with strategic partners and content providers; and general economic conditions; that could cause actual results to differ materially from those projected. Additional information on these and other factors are contained in Napster's reports filed with the Securities and Exchange Commission (SEC), including the Company's Quarterly Report on Form 10-Q as filed with the SEC on February 6, 2008, copies of which are available at the website maintained by the SEC at http://www.sec.gov. Napster assumes no obligation to update the forward-looking statements included in this press release.
Copyright © 2008 Napster, LLC. All rights reserved. Napster is a registered trademark of Napster, Inc. or its subsidiaries in the United States and/or other countries. All other trademarks are owned by their respective owners.
