Exhibit 99.1
iMergent Reports Record First Quarter Revenue
OREM, Utah--(BUSINESS WIRE)--Oct. 26, 2004--
First Quarter Revenue Grew 26%; Earnings before Taxes Rose 30%;
EBT per Diluted Share Increased to $0.23; EPS of $0.14
per Diluted Share for First Quarter
iMergent, Inc., (AMEX:IIG) a leading provider of eCommerce and software for
small businesses and entrepreneurs, announced its results for the fiscal first
quarter ended September 30, 2004.
Total revenue for the fiscal first quarter 2005 ended September 30, 2004
rose 25.8 percent to $23.7 million from $18.8 million in the same quarter of
2004. In the first quarter of 2005, the company hosted 169 workshops, of which
29 were international, compared to the first quarter of 2004, when the company
conducted 118 workshops, none of which were international.
Brandon Lewis, president and chief operating officer, said, "iMergent
continued to deliver strong growth this quarter both internationally and
domestically. In order to support our rapid growth we accelerated expansion of
our sales resources and product capabilities for all markets. Our fifth sales
team has completed its extensive training and will be on the road next week. We
have also built a flexible infrastructure to deploy additional sales teams when
necessary to support our continued growth. We are particularly pleased that our
growth in earnings exceeded our growth in sales even as we accelerated our
investment in sales."
Compared to first quarter 2004, gross profit for the quarter rose 18.3
percent to $17.1 million, although gross profit as a percent of sales decreased
to 72.3 percent as the cost of revenue increased with costs associated with
training our fifth sales team prior to its launch on November 1st. Operating
expenses for the quarter were $15.1 million compared to $12.6 million in 2004,
due primarily to our sales and market expansions. As a percent of sales,
operating expenses decreased 3.1 percent to 63.8 percent of sales compared with
66.9 percent in the first quarter of 2004, reflecting continuing increasing
efficiency associated with cost management as well as the company's leverageable
business model.
Don Danks, chairman and chief executive officer, stated, "We are excited
that we have made substantial progress during the first quarter on the programs
we announced previously for fiscal 2005. We initiated testing of our model in
both additional European markets and in Asia, which provides the basis for our
continued significant international expansion. We are thrilled about our eBay
expansion, both the software functionality for uploading to eBay, and the
exceptionally well received one day training product. This eBay training
offering is an example of how we provide value to our merchants, while
increasing our revenue and earnings, and at the same time creating additional
opportunities for ancillary product sales and ongoing recurring revenues. With
our expanded global sales reach and our existing and future partnerships, we are
making progress on our goal of becoming the leading supplier of ecommerce
solutions to small business worldwide."
Earnings before income taxes (EBT) for the first quarter 2005 increased
30.0 percent to $2.8 million from $2.2 million in the same quarter of 2004. EBT
per diluted share also increased to $0.23 for the first quarter 2005 from $0.18
for the first quarter of 2004. This quarter the company recorded a 38 percent
tax provision, which is primarily non-cash, compared to no taxes in the first
quarter of 2004. Consequently, net income for the fiscal first quarter decreased
to $1.7 million, or $0.14 per diluted share, compared to net income of $2.2
million, or $0.18 per diluted share, for the comparable quarter of the prior
fiscal year when the company was not yet required to record income tax
provisions.
Recent and First Quarter Highlights
-- In October, began conducting a new full-day workshop entitled Online
Auction Success -- The Power of eBay(R) to teach users how to best
benefit from the latest StoresOnline(TM) product enhancement, namely
using eBay.
-- In October, announced plans to launch a 5th sales team on November
1st.
-- Throughout the quarter, continued the international expansion hosting
29 workshops including test workshops in Europe and initiating test
marketing in Singapore, Hong Kong and Malaysia.
-- On August 16, 2004, iMergent was listed on the American Stock
Exchange.
-- In August, improved financial flexibility to pursue growth initiatives
by establishing a $5 million line of credit with Bank One and
replacing the former line.
-- In July, unveiled the StoresOnline product enhancement providing UPS
Online(R) Tools functionality.
Robert Lewis, chief financial officer, added, "We are pleased to see our
tight financial controls and prudent financial decisions have again resulted in
a very successful quarter for iMergent. Our first quarter results are typically
tempered by the seasonality of the summer months; however, the solid results
provided today show the strength and stability of the core iMergent business. We
have increased total revenue 26 percent over the prior year quarter and
anticipate our many initiatives will provide us with increasing success in the
future."
Conference Call
Management will hold a conference call to discuss these results on Tuesday,
October 26, 2004 at 4:30 p.m. ET, 1:30 p.m. PT. The conference call will be
broadcast live over the Internet and available for replay for 90 days following
the call at the company's website, 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 call. A telephone replay will be available through October 28,
2004; dial 706-645-9291, and enter code 1660078.
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 it's 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. and StoresOnline are trademarks of iMergent, Inc.
Safe Harbor Statement
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 increase revenue; the ability to
continue to grow; both domestically and internationally; the ability to continue
to expand product capability; the ability to deploy additional sales teams; the
ability of the sales teams as well the new sales team to generate and increase
sales; the ability to maintain and increase margins; the ability to attract new
customers; sales associated with the eBay offering; the acceptance of the eBay
products; iMergent's added features gaining and continuing to gain momentum in
the marketplace; the ability to increase ancillary product sales; the ability to
continue to offer and improve product enhancement; the ability to continue to
maintain favorable lines of credit; the ability to create stronger ties with our
merchants; the ability to drive longer-term web hosting relationships and
recurring revenue the ability to continue to increase earnings; the ability to
increase the number of workshops as well as to continue to maintain/increase
training events; 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
recent Form 10-K and Form 10-Q. The Company undertakes no obligation to update
this forward-looking information.
IMERGENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
September 30, June 30,
2004 2004
-------------- ------------
Assets
Current assets
- --------------
Cash $ 5,599,609 $ 4,956,512
Trade receivables, net of allowance for
doubtful accounts of $7,565,798 at
September 30, 2004 and $5,784,113 at
June 30, 2004 15,695,131 12,427,366
Inventories 115,986 71,416
Prepaid expenses and other current assets 1,773,505 1,145,632
Deferred tax assets - current 4,842,408 3,714,732
Credit card reserves 522,671 596,556
-------------- ------------
Total current assets 28,549,310 22,912,214
Property and equipment, net 524,909 524,427
Goodwill 455,177 455,177
Trade receivables, net of allowance for
doubtful accounts of $3,909,225 at
September 30, 2004 and $3,167,216 at
June 30, 2004 7,580,826 6,515,102
Deferred tax assets 7,599,244 9,406,523
Other assets 442,521 612,632
-------------- ------------
Total Assets $45,151,987 $40,426,075
============== ===========
Liabilities and Stockholders' Equity
Current liabilities
- -------------------
Accounts payable $ 2,629,817 $ 2,849,632
Accrued expenses and other current
liabilities 4,295,877 3,367,799
Income taxes payable 320,410 873,235
Deferred revenue 953,795 562,076
Line of credit 3,483,739 1,377,715
Current portion of capital lease
obligations 89,846 56,682
-------------- ------------
Total current liabilities 11,773,484 9,087,139
Capital lease obligations, net of
current portion 146,360 201,053
Notes payable, net of current portion 400,000 400,000
-------------- ------------
Total liabilities 12,319,844 9,688,192
-------------- ------------
Stockholders' equity
- --------------------
Preferred stock - authorized 5,000,000
shares; none issued -- --
Common stock - authorized 100,000,000
shares; issued and outstanding 11,658,437
and 11,536,258 shares, at September 30,
2004 and June 30, 2004, respectively 11,658 11,537
Additional paid-in capital 73,678,902 73,330,600
Deferred compensation -- (6,112)
Accumulated other comprehensive loss (4,902) (4,902)
Accumulated deficit (40,853,515) (42,593,240)
-------------- ------------
Total stockholders' equity 32,832,143 30,737,883
-------------- ------------
Total Liabilities and Stockholders'
Equity $45,151,987 $40,426,075
============== ============
IMERGENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Earnings
For The Three Months Ended September 30, 2004 and 2003
2004 2003
-------------- ------------
Revenue $23,708,737 $18,839,683
Cost of revenue 6,575,276 4,361,702
-------------- ------------
Gross profit 17,133,461 14,477,981
Operating Expenses
Research and Development 139,464 76,694
Selling and marketing 6,541,423 4,440,984
General and administrative 2,044,489 1,862,392
Bad debt expense 6,398,401 6,220,234
-------------- ------------
Total operating expenses 15,123,777 12,600,304
-------------- ------------
Earnings from operations 2,009,684 1,877,677
Other income (expense)
Other income 18,726 970
Interest income 786,330 275,244
Interest expense (16,962) (1,810)
-------------- ------------
Total other income 788,094 274,404
-------------- ------------
Earnings before income taxes 2,797,778 2,152,081
Income tax provision (1,058,053) --
-------------- ------------
Net earnings $ 1,739,725 $ 2,152,081
============== ============
Basic earnings per share:
Basic $ 0.15 $ 0.19
Diluted $ 0.14 $ 0.18
Weighted average shares outstanding:
Basic 11,580,238 11,152,998
Diluted 12,288,075 11,966,483
Earnings Before Income Taxes Per Share Calculation
Three Months Ended
September 30, September 30,
2004 2003
------------- -------------
Earnings before income taxes (EBT) $ 2,797,778 $ 2,152,081
Basic EBT per share:
Basic $ 0.24 $ 0.19
Diluted $ 0.23 $ 0.18
Weighted average shares outstanding:
Basic 11,580,238 11,152,998
Diluted 12,288,075 11,966,483
CONTACT: iMergent, Inc.
Don Danks, 801-431-4695
investor_relations@imergentinc.com
or
Lippert/Heilshorn & Associates
Kirsten Chapman, 415-433-3777
David Barnard, 415-433-3777 (CFA)
david@lhai-sf.com