For more information contact:
Investor Relations Inquiries Media Inquiries
David M. Douglass Amy Anderson
Chief Financial Officer Manager, Marketing
The Cobalt Group, Inc. Communications
206-269-6363 ext. 701 The Cobalt Group, Inc.
investor_relations@cobaltgroup.com 206-269-6363 ext. 105
amya@cobaltgroup.com
The Cobalt Group Announces Fourth Quarter and
Fiscal Year End 1999 Financial Results
- Sequential Quarterly Revenues Grow 19% to $8.4 million;
Quarter-over-Quarter Revenues Up 270%
- Strategic Initiatives, Key Partnerships and Aggressive
Product Launches Strengthen Business-to-Business Service
Offerings
- Sale of YachtWorld Division Increases Liquidity for
Continued Growth
- John Holt Named President and Chief Executive Officer
SEATTLE (January 26, 2000) - The Cobalt Group, Inc. (NASDAQ: CBLT), a leading
provider of Internet solutions for the automotive industry, today announced
financial results for its fourth quarter and fiscal year ending December 31,
1999.
Revenues for the fourth quarter of 1999 increased 19% to $8.4 million from
revenues of $7.0 million in the third quarter of 1999, and they increased 270%
from revenues of $2.3 million in the fourth quarter of 1998. For the year ending
December 31, 1999, revenues increased 273% to $23.3 million from revenues of
$6.2 million in the year ending December 31, 1998.
During the fourth quarter, $5.7 million in revenues were derived from Internet
marketing services. This compares to $4.2 million for the third quarter of 1999.
The remaining $2.7 million in fourth quarter revenues was attributable to
Cobalt's PartsVoice subsidiary. PartsVoice accounted for $2.8 million in the
third quarter of 1999.
Net loss for the fourth quarter of 1999 was $4.8 million, or $0.29 per
share, compared to a net loss of $5.5 million, or $0.37 per share for the
previous quarter and a net loss of $3.6 million or $1.15 per share in the fourth
quarter of 1998. Net loss for the year ending December 31, 1999 was $16.5
million, or $1.22 per share as compared to $5.1 million, or $1.57 per share for
the year ending December 31, 1998. All per share amounts are computed on a pro
forma diluted basis, which assumes conversion of the convertible preferred stock
from the original date of issuance.
"We are very pleased to report record results for our first full quarter as a
public company," stated John Holt, president and CEO of The Cobalt Group, Inc.
"Since completing our initial public offering in August, we have made major
strides towards becoming a leading provider of Internet-based
business-to-business solutions for the automotive industry."
The Cobalt Group ended the fourth quarter with approximately 5,200 dealer Web
site clients, over 10,000 dealers using its parts locating system and
relationships with 16 automotive manufacturers and more than 50 of the 100
largest dealer groups in the United States.
-- More --
Cobalt Q4 1999 Financial Results/2
Holt added, "In line with our strategic goals we have established the
largest dealer network in the auto industry, as well as key associations with
the National Automotive Dealers Association, Excite@Home, InfoSpace.com, and
BuySellBid.com. Combined with a number of new product launches, additional
manufacturer partners, the development of MotorPlace.com, and the acquisitions
of PartsVoice and IntegraLink, the Company is positioned to grow and leverage
its dealer network, and provide deep technology solutions for our dealer and
manufacturer clients."
RECENT HIGHLIGHTS
. On In January 20, 2000 The Cobalt Group launched MotorPlace.com, a
business-to-business vertical portal for the automotive industry. The
site aggregates vehicle and parts data from Cobalt's more than 12,000
auto dealer clients to create an e-commerce marketplace for dealers
and other industry participants. Dealers will be able to use
MotorPlace.com to buy, sell and trade new and used vehicles and
original equipment manufacturer (OEM) parts with other dealers. The
site will also allow dealers to combine their purchasing power to make
discounted purchases of goods and supplies.
. The National Automobile Dealers Association (NADA) and The Cobalt
Group announced an unprecedented partnership on January 10, 2000 to
launch an industry-wide e-commerce push aimed at increasing dealer Web
site utilization and create a comprehensive automotive consumer
portal. The partnership was launched at the recently-ended NADA
convention in Orlando, where the Company generated hundreds of leads
and signed up new dealer Web site customers at monthly subscriptions
more than double the current average dealer spend.
. The Cobalt Group announced its intention to expand the Company's data
collection capabilities on January 14, 2000 with the acquisition of
IntegraLink, a provider of advanced data extraction and reporting
services. IntegraLink provides third generation data extraction
capabilities to 2,700 dealers and will add efficiencies to Cobalt's
PartsVoice operation.
. In recent weeks, The Cobalt Group announced partnerships to expand
consumer choice in online car shopping by providing its new and/or
used vehicle listings to Excite@Home, InfoSpace.com and
BuySellBid.com. In turn, Cobalt's dealer clients have gained exposure
to millions of online car buyers nationwide.
. The Cobalt Group announced in December that Kia Motors America had
chosen Cobalt's PartsVoice subsidiary as the exclusive contract vendor
for the Kia National Parts Locator. This service markets Kia dealers'
original equipment inventory to anyone searching for Kia parts,
including Kia dealers, non-Kia dealers, repair/body shops, fleet and
insurance companies and do-it-yourselfers. Kia was the fifth
manufacturer in 1999 to choose Cobalt to provide exclusive Web site
services or parts locator services to its dealer network.
-- More --
Cobalt Q4 1999 Financial Results/3
. The Cobalt Group has recently launched new Internet-based software
applications to help dealers service their online customers,
including: Lead Manager, which tracks lead response time and sales
closing ratios for Internet leads; AdWizard Plus, an online
advertising application that allows dealers and manufacturers to
create custom advertising campaigns for their Web sites; Service
Solution 2-1-1, a Customer Relationship Management tool that helps
dealers retain owners and increase their service business; and Finance
Solution 2-1-1, an Internet services package that contains loan
calculators and Kelley Blue Book used car pricing.
SALE OF YACHTWORLD.COM DIVISION
The Cobalt Group today announced that it sold its YachtWorld.com division for
$14.0 million in cash and notes as well as warrants to purchase common stock of
Boats.com, Inc. "Though YachtWorld.com has been part of the Company since its
inception, we want to focus all of our energies on strengthening our leadership
position in the automotive industry," said Holt. "The cash proceeds will provide
us with additional liquidity and help fuel our aggressive efforts to grow market
share and develop leading technology solutions for the world's largest consumer
vertical."
HOLT BECOMES PRESIDENT AND CHIEF EXECUTIVE OFFICER
Concurrent with the announcement of the Company's 1999 financial results, John
Holt has been named to the position of president and chief executive officer.
The role of chief executive officer was previously shared between Holt and Geof
Barker. Barker will consult with the Company and remain a member of the Board of
Directors.
"Since co-founding the Company, John has become an industry spokesman for the
new, digital dealer," said Howard Tullman, chairman of The Cobalt Group's Board
of Directors. "We are delighted that he will lead the Company as it continues to
build its growing leadership position as a premier provider of
business-to-business services to auto dealers and manufacturers."
"This change formalizes an evolution that has been underway for some time," said
Barker. "John has always had a more direct involvement in day-to-day operations
as well as in setting the Company's strategic direction, while I've focused
primarily on fundraising and acquisitions and dispositions. Now that the Company
is public, I look forward to helping Cobalt with strategic initiatives at the
Board level."
"Geof has been a close friend and partner throughout Cobalt's evolution,"
commented Holt. "I would like to thank him for his support during this period of
change and I look forward to working together in our respective new roles."
Prior to Cobalt, Holt developed and directed an affiliate label publishing
program for IVI Publishing. He also served as vice president for growth and
development at Oceantrawl Inc., one of the world's largest seafood processing
companies. Holt has a master's degree from The Yale School of Management and a
bachelor's degree from Bowdoin College.
-- More --
Cobalt Q4 1999 Financial Results/4
ABOUT THE COBALT GROUP
The Cobalt GroupT (NASDAQ: CBLT), based in Seattle, is a leading provider of
Internet-based products and services for the automotive industry. Through
Internet-based application development and hosting, data management, and online
car referral services, Cobalt helps dealers, dealer groups and automobile
manufacturers harness the power of the Internet to realize new efficiencies, win
new prospects and better serve their customers.
With approximately 5,200 dealer Web site clients, over 10,000 dealers using its
parts locating system, and relationships with 16 automotive manufacturers and
more than 50 of the 100 largest dealer groups in the United States, Cobalt is
one of the leading technology companies serving the automotive industry. Cobalt
operates MotorPlace.com (www.motorplace.com), a business-to-business vertical
portal for the automotive industry; DealerNetR (www.dealernet.com), one of the
best-known automotive destination sites on the Web; and PartsVoiceR
www.partsvoice.com), a leading OEM auto parts locating and data management
service.
Cobalt offers Web site services that are endorsed by the National Automobile
Dealers Association.
For more information, please visit The Cobalt Group at
www.cobaltgroup.com
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: This release may contain forward-looking statements relating to the
development of Cobalt's products and services and future operating results,
including statements regarding future market share and new products and
services. 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. Actual
results may vary significantly from the results expressed or implied in such
statements. For a discussion of the risks that could affect Cobalt's future
performance, please see "Risk Factors" in Cobalt's most recent quarterly report
on Form 10-Q, as filed with the Securities and Exchange Commission. Cobalt
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. Cobalt, The Cobalt Group,
DealerNet, PartsVoice, IntegraLink, AdWizard, and MotorPlace.com are trademarks
of The Cobalt Group, Inc. All other trademarks are the property of their
respective owners.
(Tables to Follow)
The Cobalt Group, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
December 31, December 31,
1998 1999
------------ ------------
Assets
Current assets
Cash and cash equivalents $ 5,756 $14,224
Short-term investments 983 -
Accounts receivable, net of allowance
for doubtful accounts of $85 and
$497, respectively 1,250 4,581
Other current assets 130 2,225
---------- ----------
8,119 21,030
Capital assets, net of accumulated depreciation
of $410 and $1,707, respectively 1,453 4,636
Intangible assets, net of accumulated
amortization of $321 and $4,016,
respectively" 479 27,330
Other assets 11 1,036
---------- ----------
Total assets $10,062 $54,032
========== ==========
Liabilities, Mandatorily Redeemable Convertible Preferred Stock and
Shareholders' (Deficit) Equity
Current liabilities
Accounts payable $ 191 $ 2,020
Accrued liabilities 776 1,520
Deferred revenue 1,290 2,456
Software financing contract, current portion - 362
Capital lease obligations, current portion 328 844
---------- ----------
2,585 7,202
Non-current liabilities
Software financing contract, non-current
portion - 28
Capital lease obligations, non-current
portion 557 1,217
---------- ----------
557 1,245
Mandatorily redeemable convertible preferred stock
Series A; $0.01 par value per share;
2,106,282 and 0 shares issued
and outstanding; redemption and
liquidation value of $1,158 and $0 1,116 -
Series B; $0.01 par value per share;
7,047,620 and 0 shares issued and
outstanding; redemption and liquidation
value of $29,600 plus unpaid dividends
and $0 30,046 -
---------- ----------
31,162 -
Shareholders' (deficit) equity
Preferred stock; $0.01 par value per share;
100,000,000 shares authorized; 9,153,902
and 0 shares issued and outstanding as
mandatorily redeemable convertible
preferred stock - -
Common stock; $0.01 par value per share;
200,000,000 shares authorized; 1,343,898
and 16,855,431 issued and outstanding,
respectively 13 169
Additional paid-in capital 2,435 89,957
Deferred compensation (1,686) (3,036)
Notes receivable from shareholders (144) (144)
Accumulated deficit (24,860) (41,361)
---------- ----------
(24,242) 45,585
---------- ----------
Total liabilities, mandatorily
redeemable convertible preferred
stock and shareholders' (deficit)
equity $10,062 $54,032
========== ==========
The Cobalt Group, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share amounts)
Three months ended Twelve months ended
December 31, December 31,
----------------------------- ------------------------------
1998 1999 1998 1999
--------------- ------------- -------------- ----------------
(unaudited)
Revenues $ 2,261 $ 8,375 $ 6,245 $ 23,286
Cost of revenues 453 1,676 1,199 4,819
--------------- ------------- -------------- ----------------
Gross profit 1,808 6,699 5,046 18,467
Operating expenses
Sales and marketing 1,482 3,815 4,048 11,591
Product development 352 1,333 961 3,168
General and administrative 1,616 4,816 4,328 13,201
Amortization of intangible assets 74 1,330 299 3,694
Stock based compensation 527 424 806 2,806
--------------- ------------- -------------- ----------------
Total operating expenses 4,051 11,718 10,442 34,460
--------------- ------------- -------------- ----------------
Loss from operations (2,243) (5,019) (5,396) (15,993)
Gain on sale of HomeScout - - 1,626 -
Common stock repurchase (1,384) - (1,384) -
Interest expense (35) (67) (93) (993)
Other income, net 94 257 142 485
--------------- ------------- -------------- ----------------
Net loss $ (3,568) $ (4,829) $ (5,105) $ (16,501)
=============== ============= ============== ================
Net loss available to common
shareholders $ (12,385) $ (4,829) $ (13,930) $ (18,042)
=============== ============= ============== ================
Basic and diluted net loss per share $ (8.35) $ (0.29) $ (4.74) $ (2.26)
=============== ============= ============== ================
Weighted-average shares outstanding 1,483,686 16,850,441 2,938,460 7,971,443
=============== ============= ============== ================
Pro forma net loss available to
common shareholders (unaudited) $ (11,830) $ (4,829) $ (13,367) $ (16,501)
=============== ============= ============== ================
Pro forma basic and diluted net
loss per share (unaudited) $ (1.15) $ (0.29) $ (1.57) $ (1.22)
=============== ============= ============== ================
Pro forma weighted-average shares
outstanding (unaudited) 10,261,027 16,850,441 8,530,634 13,519,898
=============== ============= ============== ================