CONTACTS:
Becky Yeamans, Juno Investor Relations
(212) 597-9274 or ir@support.juno.com
Gary Baker, Juno Public Relations
(212) 597-9005 or pr@support.juno.com
JUNO REPORTS STRONG FIRST-QUARTER RESULTS
* NET LOSS SHRINKS BY FACTOR OF FIVE YEAR-OVER-YEAR
* SUBSCRIBER BASE GROWS TO 15.9 MILLION REGISTERED, 4.1 MILLION ACTIVE
* BILLABLE SUBSCRIBER BASE GROWS TO 910,000
* "OPERATIONS, FREE SERVICE" COST DECREASES BY 42% COMPARED WITH PRIOR QUARTER
NEW YORK, NY (April 24, 2001) -- Juno Online Services, Inc. (Nasdaq: JWEB), one
of the nation's largest Internet access providers, today reported revenues of
$28.7 million and a net loss of $9.6 million ($0.23 per share) for the first
quarter of 2001. This net loss represents an improvement by about a factor of
five compared with the net loss of $47.6 million ($1.28 per share) the company
reported for the year-ago quarter. Cash losses, as reflected by the company's
EBITDA (earnings before interest, taxes, depreciation, and amortization), were
even lower, totaling $8.3 million ($0.20 per share) for the first quarter of
2001. Revenues for the first quarter of 2001 were up 19% compared with the $24.0
million reported for the year-ago quarter. Juno derives revenue primarily from
subscription fees it charges for its premium Web access services, and to a
lesser extent, from the sale of advertising and from various forms of electronic
commerce.
Juno continued to reduce expenditures for subscriber acquisition, to $6.3
million in the first quarter of 2001, down from $44.8 million in the year-ago
quarter and $8.7 million in the fourth quarter of 2000. In spite of this
reduction in spending, Juno's base of active subscribers grew to 4.1 million in
the month of March 2001, up from 4.0 million in December 2000. Juno's BILLABLE
subscriber base also grew during the first quarter, to 910,000 at March 31,
2001, up from 842,000 as of December 31, 2000. Juno's total registered
subscriber base increased 12% to 15.9 million at March 31, 2001.
The net increase of 68,000 billable subscribers during the first quarter was
largely attributable to migrations from Juno's free basic service to its
billable premium services. Toward the end of 2000, Juno began implementing
measures designed to encourage heavier users of the free service to modify their
usage patterns or upgrade to a billable service. While these measures are
believed to have caused a certain amount of subscriber attrition from the free
service and are likely to contribute to a projected decline in Juno's active
subscriber count over the coming quarters, management believes the measures are
also responsible in part for the increase in migrations to Juno's billable
services (and for the associated increase in billable service revenues) that the
company experienced in December 2000 and the beginning of the first quarter of
2001.
Furthermore, these measures, which were designed primarily to address resource
consumption by heavier users of the free service, have led to a substantial
reduction in the cost of operating this service. Operations, free service
expenses declined by 42% to $6.3 million in the first quarter of 2001, down from
$10.9 million in the fourth quarter of 2000. This improvement occurred largely
as a result of a reduction in average monthly Web connection time per free
service subscriber, which declined by 45% in the first quarter as compared to
the immediately preceding quarter.
On a combined basis, Operations, free service expenses and the portion of cost
of revenues that is associated with the free service averaged approximately
$0.81 per active free subscriber per month in the first quarter, down 41% from
approximately $1.38 per month in the fourth quarter. This per-subscriber cost is
substantially lower than Juno's management has seen reported by other Internet
access providers. In addition to the effects of the measures described above,
Juno believes its cost advantage to be due in part to the use of its patented
offline technology to minimize connection time per subscriber while preserving
the revenue opportunity associated with offline usage hours.
"We are very pleased with the continued improvement in Juno's operating results,
and expect to report additional improvements in our bottom-line financial
results over the next two quarters," said Charles Ardai, Juno's president and
chief executive officer. "The advantages associated with Juno's flexible
business model and with the free-to-billable conversion strategy that has long
been central to our business are increasingly evident in the current market
environment, and we believe they will become even clearer over time."
At March 31, 2001, the company had approximately $46.8 million in cash and cash
equivalents, an amount management continues to believe should be sufficient to
fund Juno's operations until the business becomes cash-flow positive.
Of Juno's total revenues of $28.7 million for the first quarter, approximately
80% came from billable services, while the remaining 20% came from various forms
of advertising sales and electronic commerce. Management currently expects this
mix of revenues to remain roughly constant for the remainder of the year.
Billable service revenues totaled $22.9 million in the first quarter, up from
$19.8 million in the fourth quarter of 2000. Management attributes this increase
in part to the growth of its billable subscriber base and in part to measures
the company began implementing to increase average revenue per billable
subscriber, largely by reducing its use of discounted promotional pricing plans.
The billable service offer showcased on the company's home page and through
certain other marketing channels was increased from $9.95 per month to $14.95
per month, for example. The company also began adjusting the discounted prices
offered to certain of its current subscribers. Although the company expects its
reduction of discounted pricing to cause attrition from its billable services,
management currently projects that revenue lost due to a decline in billable
subscriber count is likely to be largely counterbalanced by the higher revenues
collected from the subscribers that remain and the cost savings associated with
the elimination of the usage hours of any billable subscribers that leave the
service. Other things being equal, management would expect the net result of its
pricing changes to be roughly flat quarter-over-quarter billable service
revenues, strengthened billable service margins, and an improved contribution to
the company's bottom line.
Revenue from advertising and transaction fees totaled $5.8 million in the first
quarter of 2001, down from $10.5 million in the fourth quarter of 2000. This
decrease in advertising revenues can be attributed in large part to the widely
reported decline in the market for Internet advertising, manifested in part
through reduced signings, the reduction or cancellation of certain existing
advertising contracts, and an increase in uncollectible receivables. These
factors have also contributed to the reduction of Juno's backlog of advertising
revenue to about $7 million at the end of the first quarter, down from about $12
million at the end of the fourth quarter. In response to these market
conditions, the company is drawing on the flexibility associated with its
multiple revenue streams and tiered service levels to reduce its reliance on
advertising revenue (which management currently expects to decline further over
the coming quarters) and to increase its focus on billable service revenues, at
least for the time being.
Cost of revenues increased sequentially as a percentage of total revenues, to
58.8% in the first quarter, as compared with 47.0% in the quarter ended December
31, 2000. Cost of revenues for billable services increased in relation to
corresponding revenues primarily as a result of increased average monthly usage
per subscriber, offset slightly by cost efficiencies achieved in customer
service operations and a 5% increase in average monthly subscription fees
realized per billable subscriber. The increase in the costs of advertising and
transaction fees as a percentage of related revenues was primarily attributable
to smaller average deal sizes and a reduced revenue base over which to allocate
related overhead costs.
Overall operating expenses dropped to $22.1 million in the first quarter, down
from $58.7 million in the year-ago quarter and $28.6 million in the fourth
quarter of 2000. Management expects operating expenses to improve further over
the coming quarters. Savings are expected to be driven by further reductions in
telecommunications hours associated with the free service and, to a lesser
extent, in expenditures for subscriber acquisition, as well as by certain
reductions in staff-related expenses achieved by scaling back selected
departments in response to the evolving business environment and expanding the
use of the company's resources in Hyderabad, India. In April 2001, Juno
eliminated approximately forty positions (net of ongoing replacement searches)
that management concluded were no longer necessary due to shifts in the business
and the relocation of certain functions to its India office. Worldwide headcount
stands at 259 as of April 24, 2001.
Management continues to expect Juno's net loss for the remaining nine months of
2001 to total $15 million or less.
"With an established brand, a large audience, cost-saving technology, and a
strong balance sheet, Juno is in a good position to weather the difficult market
conditions facing companies throughout the Internet industry," said Harshan
Bhangdia, Juno's chief financial officer. "We believe that our years of
experience building and managing a multi-million-subscriber Internet service and
our proven multi-tiered service model provide us with the flexibility and
stability necessary to maintain a leadership position within our industry."
ABOUT JUNO
Juno Online Services, Inc. is one of the nation's leading Internet access
providers, with 15.9 million total registered subscribers as of March 31, 2001
and 4.1 million active subscribers during that month.
Founded in 1995, Juno provides multiple levels of service, including free basic
Internet access, billable premium dial-up service, and (in certain markets)
high-speed broadband access. The company's revenues are derived primarily from
the subscription fees charged for its billable premium services, from the sale
of advertising, and from various forms of electronic commerce.
For more information about Juno, visit www.juno.com/corp. To get a copy of the
Juno software, go to www.juno.com or call 1-800-TRY-JUNO.
# # #
STATEMENTS IN THIS PRESS RELEASE REGARDING JUNO ONLINE SERVICES, INC. THAT ARE
NOT HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS AND ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE SUCH STATEMENTS TO DIFFER MATERIALLY FROM ACTUAL
FUTURE EVENTS OR RESULTS. ANY SUCH FORWARD-LOOKING STATEMENTS ARE MADE PURSUANT
TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995. MANAGEMENT EXPECTS THAT INTERNAL PROJECTIONS AND EXPECTATIONS MAY CHANGE
OVER TIME. READERS SHOULD NOTE THAT THE INTERNAL PROJECTIONS AND BELIEFS UPON
WHICH MANAGEMENT HAS BASED ITS EXPECTATIONS MAY CHANGE PRIOR TO THE END OF THE
QUARTER. JUNO'S POLICY IS TO PROVIDE SUCH MANAGEMENT EXPECTATIONS ONLY ONCE PER
QUARTER, AND GENERALLY NOT TO UPDATE SUCH INFORMATION UNTIL THE SUBSEQUENT
QUARTERLY EARNINGS RELEASE. ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY FROM
THOSE CONTAINED IN THE PROJECTIONS OR FORWARD-LOOKING STATEMENTS. THE FOLLOWING
FACTORS, AMONG OTHERS, COULD CAUSE JUNO'S ACTUAL RESULTS TO DIFFER: LIMITED
HISTORY OF OFFERING JUNO'S BILLABLE PREMIUM SERVICES AND FREE BASIC SERVICE IN
ITS CURRENT FORM; HISTORY OF LOSSES; POSSIBLE UNAVAILABILITY OF FINANCING AS AND
IF NEEDED; RISKS THAT JUNO MAY BE UNABLE TO DERIVE SIGNIFICANT REVENUES FROM THE
SALE OF ADVERTISING, DUE TO MARKET CONDITIONS OR OTHER FACTORS; INABILITY TO
SUCCESSFULLY MIGRATE FREE SUBSCRIBERS TO, OR TO RETAIN SUBSCRIBERS IN, JUNO'S
BILLABLE PREMIUM SERVICES; INCREASING COMPETITION FROM EXISTING OR NEW
COMPETITORS; RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON A LIMITED NUMBER OF
TELECOMMUNICATIONS CARRIERS AND OTHER THIRD PARTY VENDORS; POSSIBLE INDUSTRY
CONSOLIDATION; AND POTENTIAL FLUCTUATIONS IN QUARTERLY AND ANNUAL RESULTS. THIS
LIST IS INTENDED TO IDENTIFY ONLY CERTAIN OF THE PRINCIPAL FACTORS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER. READERS ARE REFERRED TO THE REPORTS AND
DOCUMENTS FILED FROM TIME TO TIME BY JUNO WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THE ANNUAL REPORT ON FORM 10-K FILED MARCH 16, 2001, FOR A
DISCUSSION OF THESE AND OTHER IMPORTANT RISK FACTORS.
"EBITDA" IS NOT A MEASUREMENT OF FINANCIAL PERFORMANCE UNDER GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES AND SHOULD NOT BE CONSIDERED AN ALTERNATIVE TO NET LOSS.
EBITDA EXCLUDES INTEREST, TAXES, AND NON-CASH EXPENSES SUCH AS DEPRECIATION,
AMORTIZATION, AND CHARGES FOR STOCK-BASED SUBSCRIBER ACQUISITION.
JUNO ONLINE SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS
ENDED MARCH 31,
------------------------
2001 2000
-------- --------
Revenues:
Billable services .............................. $ 22,913 $ 16,736
Advertising and transaction fees ............... 5,790 6,409
Direct product sales ........................... -- 902
-------- --------
Total revenues ............................... 28,703 24,047
-------- --------
Cost of revenues:
Billable services .............................. 15,358 12,040
Advertising and transaction fees ............... 1,531 1,750
Direct product sales ........................... -- 856
-------- --------
Total cost of revenues ....................... 16,889 14,646
-------- --------
Operating expenses:
Operations, free service ....................... 6,296 6,144
Subscriber acquisition ......................... 6,299 44,751
Sales and marketing ............................ 3,728 3,615
Product development ............................ 2,390 2,463
General and administrative ..................... 3,381 1,776
-------- --------
Total operating expenses ..................... 22,094 58,749
-------- --------
Loss from operations ......................... (10,280) (49,348)
Interest income, net ............................. 646 1,722
-------- --------
Net loss ..................................... $ (9,634) $(47,626)
======== ========
Basic and diluted net loss per share ............. $ (0.23) $ (1.28)
======== ========
Weighted average shares outstanding used
in basic and diluted per share calculation ...... 41,362 37,086
======== ========
JUNO ONLINE SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, DECEMBER 31,
2001 2000
----------- ----------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents ................................ $ 46,820 $ 55,729
Accounts receivable, net of allowance for
doubtful accounts of $2,828 and $2,688 in
2001 and 2000, respectively ............................ 7,749 9,420
Prepaid expenses and other current assets ................ 1,354 3,141
----------- ----------
Total current assets ................................... 55,923 68,290
Fixed assets, net .......................................... 8,354 9,164
Other assets ............................................... 831 917
----------- ----------
Total assets ........................................... $ 65,108 $ 78,371
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses .................... $ 25,702 $ 29,287
Current portion of capital lease obligations ............. 692 1,209
Deferred revenue ......................................... 14,596 14,578
----------- ----------
Total current liabilities .............................. 40,990 45,074
Capital lease obligations .................................. 415 402
Deferred rent .............................................. 122 150
Liabilities expected to be settled with common stock ....... 4,000 4,000
Stockholders' equity:
Preferred stock--$.01 par value; 5,000,000 shares
authorized, none issued and outstanding ............... -- --
Common stock--$.01 par value; 133,333,334 shares
authorized, 41,650,581 and 41,134,350 shares issued and
outstanding in 2001 and 2000, respectively ........... 417 411
Additional paid-in capital .............................. 211,935 211,550
Unearned compensation ................................... (250) (333)
Cumulative translation adjustment ....................... (5) (1)
Accumulated deficit ..................................... (192,516) (182,882)
----------- ----------
Total stockholders' equity ........................... 19,581 28,745
----------- ----------
Total liabilities and stockholders' equity ........... $ 65,108 $ 78,371
=========== ==========
JUNO ONLINE SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
----------------------
2001 2000
--------- ----------
Cash flows from operating activities:
Net loss ......................................... $ (9,634) $ (47,626)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization .................. 1,028 729
Amortization of unearned compensation .......... 34 61
Changes in operating assets and liabilities:
Accounts receivable .......................... 1,671 (1,939)
Prepaid expenses and other current assets .... 1,686 2,149
Accounts payable and accrued expenses ........ (3,590) 2,391
Deferred revenue ............................. 18 2,359
--------- ----------
Net cash used in operating activities ...... (8,787) (41,876)
--------- ----------
Cash flows from investing activities:
Purchases of fixed assets ........................ (140) (1,886)
Other assets ..................................... 86 (329)
--------- ----------
Net cash used in investing activities ...... (54) (2,215)
--------- ----------
Cash flows from financing activities:
Payments on capital lease obligations ............ (504) (829)
Net proceeds from issuance of common stock ....... -- 81,080
Proceeds from issuance of common stock
in connection with employee stock purchase plan. 126 715
Proceeds from issuance of common stock in
in connection with equity line facility,
net of offering costs .......................... 232 --
Proceeds from issuance of common stock
upon exercise of stock options ................. 82 446
--------- ----------
Net cash provided by financing activities .. (64) 81,412
--------- ----------
Effect of exchange rate changes on cash and
cash equivalents ........................ (4) --
Net increase in cash and cash equivalents .. (8,909) 37,321
Cash and cash equivalents, beginning of period ..... 55,729 91,497
--------- ----------
Cash and cash equivalents, end of period ........... $ 46,820 $ 128,818
========= ==========
Supplemental disclosure of cash flow information:
Cash paid for interest ........................... $ 19 $ 20
JUNO ONLINE SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SEQUENTIAL QUARTERLY COMPARISON
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
----------------------
MARCH 31, DECEMBER 31,
2001 2000
--------- ------------
Revenues:
Billable services ............................... $ 22,913 $ 19,784
Advertising and transaction fees ................ 5,790 10,509
-------- --------
Total revenues ................................ 28,703 30,293
-------- --------
Cost of revenues:
Billable services ............................... 15,358 12,297
Advertising and transaction fees ................ 1,531 1,929
-------- --------
Total cost of revenues ........................ 16,889 14,226
-------- --------
Operating expenses:
Operations, free service ........................ 6,296 10,888
Subscriber acquisition .......................... 6,299 8,717
Sales and marketing ............................. 3,728 3,870
Product development ............................. 2,390 2,249
General and administrative ...................... 3,381 2,902
-------- --------
Total operating expenses ...................... 22,094 28,626
-------- --------
Loss from operations .......................... (10,280) (12,559)
Interest income, net .............................. 646 974
-------- --------
Net loss ...................................... $ (9,634) $(11,585)
======== ========
Basic and diluted net loss per share .............. $ (0.23) $ (0.29)
======== ========
Weighted average shares outstanding used
in basic and diluted per share
calculations ................................. 41,362 40,278
======== ========
JUNO ONLINE SERVICES, INC. AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT FOR SELECTED SUBSCRIBER DATA)
(UNAUDITED)
EBITDA: THREE MONTHS ENDED
----------------------------
MARCH 31, DECEMBER 31,
----------- ------------
2001 2000
-------- ---------
Net loss ....................... $(9,634) $(11,585)
Depreciation and amortization 1,062 1,190
Noncash subscriber acquisition 884 1,866
Interest income, net ......... (646) (974)
-------- ---------
EBITDA .................. $(8,334) $ (9,503)
======== =========
SELECTED SUBSCRIBER DATA: MAR. 31, DEC. 31, SEPT. 30, JUN. 30, MAR. 31,
------------------------- ---------- ---------- ---------- ---------- ---------
2001 2000 2000 2000 2000
---------- ---------- ---------- ---------- ---------
Total registered subscriber
accounts as of (1) ............ 15,890,000 14,153,000 12,771,000 11,048,000 9,430,000
Active subscriber accounts
in month ended (2) ........... 4,133,000 4,001,000 3,700,000 3,379,000 3,053,000
Active Web-enabled
subscribers in month ended (3) 3,743,000 3,587,000 3,251,000 2,876,000 2,358,000
Billable subscription service
accounts as of (4) ........... 910,000 842,000 750,000 730,000 661,000
---------------------------------------
(1) Includes all subscriber accounts created since Juno's inception,
computed after deduction of any accounts that have since been
cancelled, but regardless of current activity, if any.
(2) Encompasses all registered subscriber accounts that connected at least
once during the month, together with all subscribers to a billable
service, in each case regardless of the type of activity or activities
engaged in by such subscribers.
(3) Refers to the subset of active subscriber accounts that have been
centrally provisioned for, and provided with the client-side software
necessary to access, not only e-mail, but also the World Wide Web,
regardless of the extent, if any, to which such subscribers have
actually used the Web.
(4) Represents the subset of active subscriber accounts that carry a
charge for premium functionality.