Exhibit 99.1
iMergent Reports Record Second Quarter Revenue and Earnings
OREM, Utah--(BUSINESS WIRE)--Jan. 27, 2005--iMergent, Inc.,
(AMEX:IIG)
-- Posts Record Quarterly Revenue of $31.4 Million
-- Earnings Before Taxes Increased 234% to $4.9 Million
-- EBT per Diluted Share Increased to $0.39
-- EPS After Taxes Increased 100% to $0.24
-- Company Increases Revenue Outlook for Fiscal 2005
iMergent, Inc., (AMEX:IIG) a leading provider of eCommerce and
software for small businesses and entrepreneurs, announced its results
for the fiscal second quarter and six-months ended December 31, 2004.
Total revenue for the fiscal second quarter 2005 ended December
31, 2004 rose 78 percent to $31.4 million from $17.7 million in the
same quarter of fiscal 2004. During the quarter, the company hosted
177 workshops, of which 51 were international, compared to the second
quarter of 2004 when the company conducted 116 workshops, 13 of which
were international.
Brandon Lewis, president and chief operating officer, said,
"During the quarter, to offset what is typically a seasonally slow
sales period, we implemented specific programs, in particular
continuing to increase our marketing internationally. As a result,
sales execution across all geographic regions exceeded our
expectations, and we experienced exceptionally strong results
internationally. We held a record number of 177 workshops this
quarter, including 32 workshops in the United Kingdom, Australia and
New Zealand, where we are seeing outstanding growth and interest. In
addition to the increased capacity from our fifth sales team launched
in November, we drove incremental sales from existing customers with
compelling ancillary products."
Lewis continued, "In October, we introduced The Power of eBay(R)
workshops. By January, we were able to offer the eBay workshop as an
additional service to all of our domestic workshops. Today, over 70
percent of our customers attend our eBay workshops. Similarly, we
began offering the Links4Trade partnership option in November, and
today over 90 percent of our customers utilize the Links4Trade
feature. Both products are examples of leveraging our distribution
channels to increase sales. We will continue to drive this process
forward by developing and introducing new products and services
strategically positioning our StoresOnline(TM) software platform in
the evolving eCommerce market."
Earnings before income taxes (EBT) for the fiscal second quarter
2005 increased over 234 percent to $4.9 million from $1.5 million in
the same quarter of 2004. EBT per diluted share rose to $0.39 for the
fiscal second quarter 2005 from $0.12 for the fiscal second quarter of
2004. Net income for the second fiscal quarter was $3.1 million, or
$0.24 per diluted share, compared to net income of $1.5 million, or
$0.12 per diluted share, for the comparable quarter of the prior
fiscal year, an increase of 100 percent in net income per diluted
share.
Robert Lewis, chief financial officer, stated, "One of our goals
is to leverage our investment in corporate infrastructure and drive
increased profitability and cash flow. Our results this quarter
dramatically demonstrated the scalability of our business model. While
generating substantially higher revenue, general and administrative
expenses this quarter declined to 7.0 percent of revenue from 12.9
percent last year and down from 8.6 percent in fiscal first quarter
2005. As a result, we delivered positive cash flows from operations of
$2.0 million and were able to reduce both accounts payable and
borrowing under our line of credit by over $1.4 million. By the
quarter end, we increased our cash balance by $1.6 million to $7.2
million."
Revenue for the six-months ended December 31, 2004 grew to $55.1
million versus $36.5 million for the comparable period in 2004, an
increase of 51 percent. EBT for the six-months ended December 31, 2004
increased 113 percent to $7.7 million from $3.6 million in the same
period of 2004. EBT per diluted share also increased to $0.61 for the
six-months ended December 31, 2004, up from $0.30 for the comparable
period in fiscal 2004. Net income for the six-months ended December
31, 2004 increased to $4.8 million, or $0.38 per diluted share,
compared to $3.6 million, or $0.30 per diluted share, for the
comparable period in fiscal 2004, an increase of 32 percent.
Don Danks, chairman and chief executive officer, stated, "Our
international expansion has been extremely successful and our timing
and initial deployment of the fifth sales team was impeccable. We were
able to move international workshops planned for the fiscal third
quarter to the fiscal second quarter and more than mitigated our
typical seasonality. Our long-term goal will be to continue to reduce
the seasonality of our business. And with the world becoming so
closely tied together by the Internet, we will measure our success
within one global market, rather than by segments or countries within
that market."
Recent Highlights
-- International StoresOnline workshops contributed $9.5 million
in revenue, including $3.7 million from 19 workshops held in
Australia and New Zealand and $3.4 million from the 13 United
Kingdom workshops.
-- Launched the fifth sales team November 1st.
-- Partnered with Links4Trade to offer StoresOnline merchants a
marketing product that aids merchants in improving their
sites' visibility on the Internet in November.
-- Announced iMergent's ranking as one of Deloitte's fastest
growing technology companies in North America on the 2004
Deloitte Technology Fast 500 in November.
-- Began conducting a new full-day workshop entitled Online
Auction Success -- The Power of eBay to teach users how to
best benefit from the latest StoresOnline product enhancement,
namely using eBay, in October.
Danks added, "With strong demand for our eCommerce solutions and a
proven ability to execute globally, this is an exciting time for
iMergent. Our internal growth strategy is delivering profitable
results, and the company has never been better positioned financially.
We are on schedule to launch our sixth sales team in the second half
of fiscal 2005. We believe there are new opportunities for continued
rapid growth and intend to leverage our distribution channels,
partnerships and technology to strategically expand our business to
new vertical markets."
Outlook
Full year revenue growth in fiscal 2005 is now expected to range
from 30 to 35 percent over fiscal 2004. The company accelerated the
timing of some international workshops into the second quarter that
were originally planned for the third quarter. Consequently, third
quarter fiscal 2005 revenue is expected to be lower than fiscal second
quarter 2005 revenue, yet to exhibit continued substantial
year-over-year growth compared to fiscal third quarter 2004 revenue.
Sequentially higher revenue level is anticipated in the fiscal fourth
quarter 2005. Previous outlook had been for 20 to 30 percent revenue
growth in fiscal 2005. In addition, positive operating leverage is
expected to continue with the annual net income growth rate to
possibly exceed the annual revenue growth rate. The future tax rate is
anticipated to be 38 percent, with the majority of tax provisions
being primarily non-cash.
Conference Call
Management will hold a conference call to discuss these results on
Thursday, January 27, 2005 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 January 31,
2005; dial 706-645-9291, and enter code 3553482.
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.
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 future success of
workshops domestically and internationally; the continued success and
increase of sales execution; the ability to or maintain the number of
workshops; the ability to continue to sell and increase sales from
ancillary products; the success and the ability to continue the Power
of eBay(R) workshops; the continued ability to sell and the success of
Links4Trade; the ability to add new products; the ability to leverage
investments in corporate infrastructure to increase profitability; the
ability to continue to scale our business; the ability to continue to
reduce accounts payable and borrowing; the ability to launch a sixth
sales team; the ability partner and otherwise leverage our business;
the ability to continue to increase marketing Internationally; the
ability to offset the "seasonality" of our business; the ability to
provide revenue mix; the success of partnership programs; 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
Condensed Consolidated Balance Sheets
December 31, June 30,
2004 2004
------------ ------------
Assets (Unaudited)
Current assets
- --------------
Cash $7,222,242 $4,956,512
Trade receivables, net of allowance for
doubtful accounts of $9,386,956 at December
31, 2004 and $5,784,113 at June 30, 2004 17,297,007 12,427,366
Inventories 162,779 71,416
Prepaid expenses and other current assets 1,329,069 1,145,632
Deferred tax assets -- current 6,223,294 3,714,732
Credit card reserves 287,388 596,556
------------ ------------
Total current assets 32,521,779 22,912,214
Property and equipment, net 499,324 524,427
Goodwill, net 455,177 455,177
Trade receivables, net of allowance for
doubtful accounts of $5,578,609 at December
31, 2004 and $3,167,216 at June 30, 2004 9,238,249 6,515,102
Deferred tax assets 6,570,625 9,406,523
Other assets 349,225 612,632
------------ ------------
Total Assets $49,634,379 $40,426,075
============ ============
Liabilities and Stockholders' Equity
Current liabilities
- -------------------
Accounts payable $1,693,906 $2,849,632
Accrued expenses and other current
liabilities 5,403,845 3,367,799
Income taxes payable 1,994,599 873,235
Deferred revenue 937,008 562,076
Line of credit 2,999,739 1,377,715
Current portion of capital lease obligations 83,004 56,682
------------ ------------
Total current liabilities 13,112,101 9,087,139
Capital lease obligations, net of current
portion 124,365 201,053
Notes payable 400,000 400,000
------------ ------------
Total liabilities 13,636,466 9,688,192
------------ ------------
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 11,707,662
and 11,536,258 shares, at December 31,
2004 and June 30, 2004, respectively 11,708 11,537
Additional paid-in capital 73,792,652 73,330,600
Deferred compensation - (6,112)
Accumulated other comprehensive loss (4,902) (4,902)
Accumulated deficit (37,801,545) (42,593,240)
------------ ------------
Total stockholders' equity 35,997,913 30,737,883
------------ ------------
Total Liabilities and Stockholders' Equity $49,634,379 $40,426,075
============ ============
IMERGENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Earnings for the
Three Months and the Six Months Ended December 31, 2004 and 2003
Three Months Ended Six Months Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenue $31,393,754 $17,655,914 $55,102,491 $36,495,597
Cost of revenue 8,440,067 4,545,780 15,105,788 8,907,482
------------ ------------ ------------ ------------
Gross profit 22,953,687 13,110,134 39,996,703 27,588,115
Operating expenses
Research and
development 180,935 86,036 320,399 162,729
Selling and
marketing 8,115,775 4,533,148 14,566,754 8,974,132
General and
administrative 2,192,035 2,281,438 4,236,524 4,143,830
Bad debt expense 8,518,046 5,142,851 14,916,448 11,363,085
------------ ------------ ------------ ------------
Total operating
expenses 19,006,791 12,043,473 34,040,125 24,643,776
------------ ------------ ------------ ------------
Earnings from
operations 3,946,896 1,066,661 5,956,578 2,944,339
Other income
(expense)
Other income, net 121,753 42,318 140,479 43,288
Interest income 869,630 366,513 1,655,960 641,756
Interest expense (38,784) (9,755) (55,746) (11,565)
------------ ------------ ------------ ------------
Total other
income, net 952,599 399,076 1,740,693 673,479
------------ ------------ ------------ ------------
Earnings before
income taxes 4,899,495 1,465,737 7,697,271 3,617,818
Income tax
provision (1,847,522) - (2,905,576) -
------------ ------------ ------------ ------------
Net earnings $3,051,973 $1,465,737 $4,791,695 $3,617,818
============ ============ ============ ============
Earnings per share:
Basic $0.26 $0.13 $0.41 $0.32
Diluted $0.24 $0.12 $0.38 $0.30
Weighted average
shares
outstanding:
Basic 11,673,170 11,306,384 11,626,704 11,228,705
Diluted 12,650,277 12,275,356 12,603,810 12,189,052
Earnings Before Income Taxes Per Share Calculation
--------------------------------------------------
Three Months Ended Six Months Ended
------------------------- -------------------------
December 31, December 31, December 31, December 31,
2004 2003 2004 2003
------------ ------------ ------------ ------------
(unaudited) (unaudited) (unaudited) (unaudited)
Earnings before
income taxes
(EBIT) $4,899,495 $1,465,737 $7,697,271 $3,617,818
Basic EBIT per
share:
Basic $0.42 $0.13 $0.66 $0.32
Diluted $0.39 $0.12 $0.61 $0.30
Weighted average
shares
outstanding:
Basic 11,673,170 11,306,384 11,626,704 11,228,705
Diluted 12,650,277 12,275,356 12,603,810 12,189,052
CONTACT: iMergent, Inc.
Don Danks, 801-431-4695
Chairman and CEO
investor_relations@imergentinc.com
or
Lippert/Heilshorn & Associates
Investor Relations:
Kirsten Chapman, 415-433-3777
David Barnard, CFA, 415-433-3777
david@lhai-sf.com