Exhibit 99.1
iMergent Reports Record Fiscal Third Quarter Revenue,
Pre-Tax Earnings and Cash Flows
OREM, Utah--(BUSINESS WIRE)--April 28, 2005--iMergent, Inc.
(AMEX:IIG)
-- Revenue Increased 57% Compared to Third Quarter 2004
-- March 2005 Highest Revenue Month in Company History
-- Fiscal 2005 Annual Revenue Guidance Raised to Approximately
40% Over Fiscal 2004
-- Earnings Before Taxes (EBT) Increased 159% Compared to Third
Quarter 2004
-- EBT per Diluted Share Increased to $0.47
-- EPS per Diluted Share $0.31
-- Cash Flow from Operations During the Quarter of $5.1 Million
iMergent, Inc., (AMEX:IIG) a leading provider of eCommerce and
software for small businesses and entrepreneurs, announced its results
for the fiscal third quarter and nine-months ended March 31, 2005.
Total revenue for the fiscal third quarter 2005 ended March 31,
2005 rose 57 percent to $30.8 million from $19.6 million in the same
quarter of fiscal 2004. During the quarter, the company hosted 184
workshops, 32 of which were outside the U.S., compared to the third
quarter of 2004 when the company conducted 146 workshops, 8 of which
were international.
Brandon Lewis, president and chief operating officer, said, "Sales
execution exceeded our expectations, with March delivering our highest
revenue month in the company's history. In the quarter, we balanced
our marketing with a solid mix of domestic and international workshops
and continued to drive strong financial results. Incremental sales to
existing customers and high levels of sales of ancillary products also
contribute to these results, as our merchants continue to recognize
the value of our comprehensive solutions."
Lewis added, "At iMergent, we are constantly evaluating the
products and services offered to our customers to build on our
competitive advantage in the marketplace and to ensure the highest
levels of customer satisfaction. In late 2004, we commissioned Dan
Jones & Associates, a market research and public opinion polling firm,
to conduct nationwide telephone surveys of recent StoresOnline(TM)
customers about their experience with iMergent customer service. This
process validated our internal evaluation methods and our customers'
satisfaction. We remain firmly confident our platform and service
capabilities are the most compelling value in the marketplace."
Earnings before income taxes (EBT) for the fiscal third quarter
2005 increased 159 percent to $6.0 million from $2.3 million in the
same quarter of 2004. EBT per diluted share were $0.47 for the fiscal
third quarter 2005, compared to $0.19 for the fiscal third quarter of
2004. Net income for the fiscal third quarter 2005 was $4.0 million,
or $0.31 per diluted share, compared to net income of $15.8 million,
or $1.28 per diluted share, for the comparable quarter of the prior
fiscal year. During the fiscal third quarter of 2004, iMergent
recognized a $13.5 million non-cash income tax benefit based on the
reversal of the valuation allowance against its deferred tax asset,
which consisted mainly of net operating losses carried forward (NOL)
from prior periods, effectively eliminating a $14.1 million tax burden
on future earnings.
Robert Lewis, chief financial officer, stated, "Building on the
strength of our previous quarter, we delivered increased cash flow
from operations in the fiscal third quarter 2005 of $5.1 million, our
highest level ever, and our cash balance rose to $12.2 million. We
continue to leverage our business model and drive efficiencies and
productivity, as operating income as a percentage of revenue increased
to 16 percent for the quarter from 13 percent in the fiscal second
quarter 2005. Profitability was also boosted by an increase in gross
margin as a percent of revenue, which improved to 79 percent for the
quarter compared to 73 percent in the fiscal second quarter 2005."
Revenue for the nine-months ended March 31, 2005 grew to $85.9
million versus $56.1 million for the comparable period in 2004, an
increase of 53 percent. EBT for the nine-months ended March 31, 2005
increased 131 percent to $13.7 million from $5.9 million in the same
period of 2004. EBT per diluted share also rose to $1.11 for the
nine-months ended March 31, 2005, up from $0.49 for the comparable
period in fiscal 2004. Net income for the nine-months ended March 31,
2005 decreased to $8.8 million, or $0.71 per diluted share, compared
to $19.4 million, or $1.61 per diluted share, for the comparable
period in fiscal 2004, which included a $13.5 million non-cash income
tax benefit.
Don Danks, chairman and chief executive officer, stated, "Our
sales teams continue to execute well in all geographic regions and
ongoing customer interest and growth reinforces our confidence in the
strength and value of our product offerings. Earlier in April, we
announced the successful results of our workshops in the United
Kingdom. As we continue to deepen our reach into the global
marketplace, while at the same time growing our domestic presence, we
are proactively working to gain a competitive advantage in new areas.
For example, during the quarter, we opened an office in Singapore to
increase our strategic presence in the international marketplace."
Recent Highlights
-- Delivered $5.1 million in cash flow from operations in the
fiscal third quarter 2005.
-- Held 18 StoresOnline workshops in the United Kingdom during
March that contributed $3.8 million in revenue.
-- Held the first iMergent Analyst Day at the company's
headquarters in Orem on March 18th.
-- Increased line of credit with JPMorgan Chase & Co. to $15
million.
-- Recognized in the January 31st, 2005 edition of the Investor's
Business Daily (IBD) 100.
Danks added, "We remain confident in our outlook for the balance
of fiscal 2005 and look forward to continued growth in the global
eCommerce marketplace. Internal growth remains strong, and substantial
cash is being generated from operations. In addition, we continue to
evaluate opportunities to expand our product and service offerings
into new vertical markets as part of our long-term growth strategy."
Outlook
Management raised its full year fiscal 2005 revenue growth outlook
to around 40 percent over fiscal 2004. Previous outlook had been for
30 percent to 35 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, April 28, 2005 at 4:30 p.m. ET, 1:30 p.m. PT. The conference
call will be broadcast live over the Internet at www.imergentinc.com.
If you do not have Internet access, the telephone dial-in number is
800-639-0297 for domestic participants and 706-634-7417 for
international participants. Please dial in five to ten minutes prior
to the beginning of the call at 1:30 p.m. PT (4:30 p.m. ET). A
telephone replay will be available through May 2nd, 2005; dial
706-645-9291, and enter access code 5524366.
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
its proprietary StoresOnline(TM) 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 connection with 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 ability to continue to
increase additional ancillary product revenue; the ability to increase
incremental sales to existing customers; the ability to build on our
competitive advantage in the marketplace and to ensure the highest
levels of customer satisfaction; the ability to maintain the success
of our platform and service capabilities; the ability to continue to
increase cash flow and maintain or increase our cash balance; the
continued ability to leverage our business model and drive
efficiencies and productivity; the ability to maintain or increase
gross margins; the ability to maintain growth in the global eCommerce
marketplace; the continuation of substantial cash being generated from
operations; the ability to provide merchants services which grow their
business; the Company's ability to attract and retain key management
and other personnel; the results of Class Action suits filed; the
company's resolution of the Texas proceeding; employees complying with
company policy and laws. 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
March 31, June 30,
2005 2004
------------- -------------
Assets (Unaudited)
Current assets
- -------------------------------------------
Cash $ 12,232,593 $ 4,956,512
Trade receivables, net of allowance for
doubtful accounts of $11,246,980 at March
31, 2005 and $5,784,113 at June 30, 2004 17,975,508 12,427,366
Inventories 172,236 71,416
Prepaid expenses and other current assets 2,370,554 1,145,632
Deferred tax assets - current 6,631,690 3,714,732
Credit card reserves 287,854 596,556
------------- -------------
Total current assets 39,670,435 22,912,214
Property and equipment, net 505,822 524,427
Goodwill, net 455,177 455,177
Trade receivables, net of allowance for
doubtful accounts of $6,271,293 at
March 31, 2005 and $3,167,216 at June 30,
2004 9,308,747 6,515,102
Deferred tax assets 6,814,069 9,406,523
Other assets 409,078 612,632
------------- -------------
Total Assets $ 57,163,328 $ 40,426,075
============= =============
Liabilities and Stockholders' Equity
Current liabilities
- -------------------------------------------
Accounts payable $ 3,362,231 $ 2,849,632
Accrued expenses and other current
liabilities 5,564,294 3,367,799
Income taxes payable 2,472,356 873,235
Deferred revenue 1,185,882 562,076
Line of credit 2,499,739 1,377,715
Current portion of capital lease
obligations 87,777 56,682
------------- -------------
Total current liabilities 15,172,279 9,087,139
Capital lease obligations, net of current
portion 101,904 201,053
Notes payable - 400,000
------------- -------------
Total liabilities 15,274,183 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
12,124,172 and 11,536,258 shares, at
March 31, 2005 and June 30, 2004,
respectively 12,125 11,537
Additional paid-in capital 75,713,501 73,330,600
Deferred compensation - (6,112)
Accumulated other comprehensive loss (4,902) (4,902)
Accumulated deficit (33,831,579) (42,593,240)
------------- -------------
Total stockholders' equity 41,889,145 30,737,883
------------- -------------
Total Liabilities and Stockholders' Equity $ 57,163,328 $ 40,426,075
============= =============
IMERGENT, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Earnings for the
Three Months and the Nine Months Ended March 31, 2005 and 2004
Three Months Ended Nine Months Ended
------------------------- -------------------------
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Revenue $30,781,896 $19,564,954 $85,884,388 $56,060,551
Cost of revenue 6,553,940 4,059,290 21,659,728 12,966,772
------------ ------------ ------------ ------------
Gross profit 24,227,956 15,505,664 64,224,660 43,093,779
Operating expenses
Research and
development 230,471 93,485 550,870 256,214
Selling and
marketing 8,052,263 5,580,894 22,619,017 14,555,026
General and
administrative 3,087,562 1,970,383 7,324,085 6,114,212
Bad debt expense 8,044,824 6,020,349 22,961,271 17,383,435
------------ ------------ ------------ ------------
Total operating
expenses 19,415,120 13,665,111 53,455,243 38,308,887
------------ ------------ ------------ ------------
Earnings from
operations 4,812,836 1,840,553 10,769,417 4,784,892
Other income
(expense)
Other income, net 241,828 6,645 382,307 49,933
Interest income 937,660 468,661 2,593,619 1,110,418
Interest expense (22,221) (8,721) (77,967) (20,286)
------------ ------------ ------------ ------------
Total other
income, net 1,157,267 466,585 2,897,959 1,140,065
------------ ------------ ------------ ------------
Earnings before
income taxes 5,970,103 2,307,138 13,667,376 5,924,957
Income tax
(provision)
benefit (2,000,139) 13,515,081 (4,905,715) 13,515,081
------------ ------------ ------------ ------------
Net earnings $ 3,969,964 $15,822,219 $ 8,761,661 $19,440,038
============ ============ ============ ============
Earnings per share:
Basic $ 0.33 $ 1.39 $ 0.75 $ 1.72
Diluted $ 0.31 $ 1.28 $ 0.71 $ 1.61
Weighted average
shares
outstanding:
Basic 11,965,993 11,368,868 11,738,149 11,275,086
Diluted 12,654,448 12,353,626 12,327,647 12,111,583
IMERGENT, INC. AND SUBSIDIARIES
Earnings Before Income Taxes Per Share Calculation
Three Months Ended Nine Months Ended
------------------------- -------------------------
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Earnings before
income taxes
(EBT) $ 5,970,103 $ 2,307,138 $13,667,376 $ 5,924,957
Basic EBT per
Share:
Basic $ 0.50 $ 0.20 $ 1.16 $ 0.53
Diluted $ 0.47 $ 0.19 $ 1.11 $ 0.49
Weighted average
shares
outstanding:
Basic 11,965,993 11,368,868 11,738,149 11,275,086
Diluted 12,654,448 12,353,626 12,327,647 12,111,583
CONTACT: iMergent, Inc.
Rob Lewis, 801-431-4695
investor_relations@imergentinc.com
or
Lippert/Heilshorn & Assoc.
David Barnard, 415-433-3777 (Investor Relations)
David@lhai-sf.com
Kirsten Chapman, 415-433-3777 (Investor Relations)
Chenoa Taitt, 212-838-3777 (Media)
ctaitt@lhai.com