Exhibit 99.1
iMergent Announces Third Quarter Fiscal 2007 Financial Results
- Reports Total Revenue of $42.6 Million -
- Reports Record $49.1 Million in Net Dollar Volume of
Contracts Written -
- Delivers $6.0 Million of Net Cash Provided by Operating
Activities Increasing Cash and Cash Equivalents to $39.0 Million -
- Posts GAAP Net Income of $4.7 Million -
- Raises Guidance for Fiscal 2007 Net Dollar Volume of
Contracts Written to Grow Approximately 60% to 65% Over Fiscal 2006 -
- Repurchases 180,100 Shares for $3.4 Million -
OREM, Utah--(BUSINESS WIRE)--May 7, 2007--iMergent, Inc.
(AMEX:IIG), a leading provider of eCommerce software for small
businesses and entrepreneurs, today announced its financial results
for the three and nine months ended March 31, 2007.
Don Danks, chairman and chief executive officer, stated, "We have
accomplished and exceeded our goals this past quarter by continuously
focusing on our growth strategy. To demonstrate our commitment to
shareholder value, we initiated a quarterly cash dividend during March
2007, which is another way for our shareholders to participate in our
continued success. We are very excited about the 68 percent increase
in net income to $4.7 million during the quarter, compared to $2.8
million during the third quarter of fiscal 2006. Net income per
diluted common share was $0.36 this quarter, compared to $0.22 in the
prior year. We are also very excited about the 129 percent increase in
non-GAAP net income to $7.9 million during the quarter, compared to
$3.5 million during the third quarter of fiscal 2006. Non-GAAP net
income per diluted common share was $0.61 this quarter, compared to
$0.28 in the prior year."
Danks continued, "The key driver for our strong revenue growth
during the quarter was an increase in the number of workshops in
combination with the improvement in the percentage of attendees
purchasing our software at our workshops. This improvement was
attributable to refinements made in our workshop and preview
presentations, which resulted in increased revenue and Net Dollar
Volume of Contracts Written per workshop and strengthened our margins.
In addition, the rising demand for our StoresOnline Pro(TM) software
was complemented by the traction we are seeing from new sales teams.
The number of workshops we held during the quarter grew significantly
to 320 workshops, including 91 internationally, compared to 189
workshops, including seven internationally, during the same quarter
last year."
Danks added, "We remain focused on consistently offering our
customers ancillary products and services that help our customers run
their businesses effectively, and drive recurring revenue for
iMergent. For example, we offer ancillary products such as Money
Resource Network, TaxVantage and AVAIL. Our goal is to continue to
develop and market products that assist small businesses and
entrepreneurs, which we expect will contribute to our growth."
"This quarter we set another record for Net Dollar Volume of
Contracts Written, which reached $49.1 million, representing an 86
percent increase over the third quarter of fiscal 2006," stated Robert
Lewis, chief financial officer. "Also during the quarter, we generated
$6.0 million in net cash from operating activities, some of which was
used to facilitate our stock purchase plan. We purchased 180,100
shares of our common stock for $3.4 million, bringing the total to
293,900 shares purchased for $5.0 million during fiscal 2007."
Generally Accepted Accounting Principles (GAAP) and Non-GAAP
Metrics
In December 2005, the company changed its business model to: (1)
limit certain "free" services to a period of one year for all
customers who purchased the StoresOnline software prior to December
20, 2005, and (2) begin charging customers for those services as part
of customer support. This change in business model resulted in the
recognition of previously deferred product and other revenue of $108.0
million in December 2005, which would have been recognized in future
periods had the change in business model not occurred.
Because of the change in business model described above, the
company believes the Net Dollar Volume of Contracts Written during
each period is a consistent and relevant measure to understand the
operations of the company. Net Dollar Volume of Contracts Written
represents the gross dollar amount of contracts executed during the
period less estimates for bad debts, discounts incurred on sales of
trade receivables, and estimates for customer returns. The company
also believes non-GAAP net income and non-GAAP net income per diluted
common share are useful measures. These non-GAAP measures assume 1)
the Net Dollar Volume of Contracts Written is recognized as revenue at
the time of sale; 2) certain corresponding costs of product and other
revenue and selling and marketing expenses are also recognized at the
time of sale; and 3) the income tax provision is based upon an
estimated federal, state, and foreign statutory blended rate of 40
percent. Non-GAAP net income per diluted common share is defined as
non-GAAP net income divided by the weighted average of diluted common
shares outstanding. Tables reconciling GAAP and non-GAAP measures
follow in this press release.
Fiscal Third Quarter 2007 Compared to 2006
-- Revenues for the third quarter of fiscal 2007 were $42.6
million, representing a 71 percent increase from revenues of
$25.0 million for the third quarter of fiscal 2006. Net Dollar
Volume of Contracts Written was $49.1 million for the quarter,
an increase of 86 percent from $26.3 million for the
comparable quarter last year. The increase in both revenues
and Net Dollar Volume of Contracts Written is attributable to
increased demand for our StoresOnline Pro software,
contribution from our new sales teams, and an increase in
percentage of attendees purchasing our software at our
workshops.
-- Total operating expenses were $36.7 million for the quarter,
compared to $21.5 million for the same quarter of fiscal 2006.
The increase in costs of product and other revenues and
selling and marketing expenses was primarily attributable to
the increase in revenue and Net Dollar Volume of Contracts
Written.
-- Net cash provided by operating activities for the quarter was
$6.0 million, compared to $5.1 million for the second quarter
of fiscal 2007 and $2.4 million for the third quarter of
fiscal 2006.
-- For the three months ended March 31, 2007, net income was $4.7
million, an increase of 68 percent compared to net income of
$2.8 million for the same quarter of fiscal 2006. Net income
per diluted common share was $0.36 for the quarter, compared
to $0.22 for the same quarter of fiscal 2006.
-- For the three months ended March 31, 2007, non-GAAP net income
was $7.9 million, up 129 percent compared to non-GAAP net
income of $3.5 million for the same quarter of fiscal 2006.
Non-GAAP net income per diluted share was $0.61 for the
quarter, compared to $0.28 for the same quarter of fiscal
2006.
Nine Months Ended March 31, 2007 Compared to 2006
-- Revenues for the nine months ended March 31, 2007 were $107.3
million, compared to $156.9 million for the same period last
year, which prior year period included the recognition of
previously deferred product and other revenue of $108.0
million due to the change in our business model in December
2005. Net Dollar Volume of Contracts Written was $119.1
million for the nine months ended March 31, 2007, compared to
$68.4 million for the same period last year. The increase in
Net Dollar Volume of Contracts written is attributable to
increased demand for our StoresOnline Pro software,
contribution from our new sales teams, and an increase in
percentage of attendees purchasing our software at our
workshops.
-- Total operating expenses were $94.0 million, for the nine
months ended March 31, 2007 compared to $60.2 million for the
same period last year.
-- Net cash provided by operating activities for the nine months
ended March 31, 2007 was $14.0 million, compared to $17.7
million for the same period last year, which prior year period
included the sale of our domestic trade receivables in August
2005 for $14.0 million.
-- For the nine months ended March 31, 2007, GAAP net income was
$18.7 million, or $1.45 per diluted common share, which
included an income tax benefit of $676,000. This compares to
GAAP net income of $108.5 million, or $8.56 per diluted share,
in the same period last year, which prior year period included
the aforementioned recognition of previously deferred product
and other revenues of $108.0 million and an income tax benefit
of $9.8 million.
-- Non-GAAP net income for the nine months ended March 31, 2007
was $17.3 million, or $1.34 per diluted common share, compared
to non-GAAP net income of $6.1 million, or $0.48 per diluted
common share, for the same period last year.
Outlook
Danks reiterated, "We delivered a robust third quarter in fiscal
2007 and anticipate this growth to continue for the remainder of
fiscal 2007. As such, we are increasing our expectations for fiscal
2007 annual growth of Net Dollar Volume of Contracts Written to
approximately 60 percent to 65 percent over fiscal 2006 Net Dollar
Volume of Contracts Written of $99.8 million."
On March 27, 2007, iMergent had increased guidance for fiscal 2007
to grow Net Dollar Volume of Contracts Written approximately 45
percent to 50 percent over fiscal 2006 to reflect continued strong
demand for StoresOnline Pro software and benefits of the company's
ninth sales team.
Conference Call
The company is hosting a conference call today at 1:30 p.m. PT
(4:30 p.m. ET). The 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. A telephone replay
will be available through May 9, 2007; dial 706-645-9291, and enter
access code 5021133.
Safe Harbor Statement
The statements made in this press release regarding (i)
iMergent continuously focusing on its growth strategy, (ii) iMergent
providing and continuing to provide uninterruptible commitment to
shareholder value, (iii) iMergent continuing to provide a cash
dividend, (iv) iMergent continuing to improve the sales close rates of
its workshops, (v) iMergent continuing to make refinements to its
workshop and preview presentations, (vi) iMergent continuing to see
rising demand for its StoresOnline Pro(TM) software, (vii) iMergent
continuing to see traction from its new sales teams, (viii) iMergent
continuing to increase the number of workshops held both domestically
and internationally, (ix) iMergent continuing to offer its customers
ancillary products and services which may help to run their businesses
effectively, (x) iMergent being able to drive recurring revenue, (xi)
iMergent being able to monetize its database and build ancillary and
residual products, (xii) iMergent's ability to develop and market
products that assist small businesses and entrepreneurs, (xiii)
iMergent's ability to continue to grow its business throughout the
remainder of fiscal 2007 and beyond, (xiv) iMergent's commitment to
providing its customers with the highest level of products and
services, (xv) iMergent's expectation that Net Dollar Volume of
Contracts Written is a consistent and relevant metric to understand
the operations of the Company as a result of the change in business
model in December 2005, (xvi) iMergent's expectation that fiscal 2007
Net Dollar Volume of Contracts Written will grow approximately 60 to
65 percent over fiscal 2006, and other statements that are not
historical in nature constitute forward-looking statements within the
meaning of the Safe Harbor Provisions 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 risks 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 ability to increase the Net Dollar
Volume of Contracts Written; the Company properly estimating customer
returns and cash collections on financed contracts; the Company's
ability to continue to evaluate and find ancillary products; the
Company's ability to offer best solutions to its customers; the
Company's ability to maintain a very solid customer base; the
Company's ability to have lucrative long-term relationships with its
customers; that the market for the Company's products will continue to
grow; whether regulatory authorities will bring future actions against
the Company; the success of StoresOnline(TM) Pro; the continued
ability to increase the number of workshops; the ability to expand
operating margins; fluctuations in the Company's operating results
because of negative publicity, seasonality, weather, competition and
other factors; adverse international or domestic regulatory
developments affecting the internet or the Company's business; the
effect of competitive and economic factors and the Company's reaction
to them; possible disruption in commercial activities caused by
terrorist activity and armed conflicts; changes in logistics and
security arrangements; reduced purchases relative to security
expectations; possible disruption in commercial activity as a result
of natural disasters or major health concerns including epidemics;
continued competitive pressures in the marketplace; the ability of the
Company to successfully evolve its products; costs of and developments
in the Company's pending litigation and SEC investigation; the
Company's ability to generate revenue and profits from current
strategic partnerships; the Company continuing to experience traction
from marketing partnerships; the Company's ability to generate
positive cash flows from operating activities; the Company's ability
to sell receivables; the continued ability of the Company to
repurchase its common shares and what effect those transactions may
have on cash and liquidity; the Company's ability to expand current
markets and develop new markets and establish profitable strategic
partnerships; the Company's ability to continue to finance extended
payment term arrangement customer contracts; whether there is
continual demand for the Company's products and services in its target
market of small businesses and entrepreneurs for assistance in
establishing websites; that the Company can successfully adjust its
product financing policy and that such adjustments to the policy will
not negatively impact business or revenues; that the Company is able
to leverage its business; that the Company does improve margins and
can continue to improve margins; that new products and initiatives in
the pipeline will be implemented; that new products and initiatives,
if implemented, will improve the customer base and margins of the
Company; that the Company's customer service will be adequate to meet
the needs of its customers; that the Company's customer service will
continue to improve; that the Company can broaden its training and
education programs as well as offer new products and solutions; that
if the Company is able to broaden its training and education programs
as well as offer new products and solutions that such actions will
have a positive impact on the Company, its customers, its customer
relationships, and its margins or revenues; and that the growth
strategy undertaken by the Company will be successful. For a more
detailed discussion of risk factors that may affect iMergent's
operations, please refer to the Company's Form 10-K for the year ended
June 30, 2006 and the Forms 10-Q for the periods ended September 30,
2006 and December 31, 2006. These forward-looking statements speak
only as of the date on which such statements are made and the Company
undertakes no obligation and expressly disclaims any obligation to
update such forward-looking statements, except as required by law.
About iMergent
iMergent provides eCommerce solutions to entrepreneurs and small
businesses enabling them to market and sell their business products or
ideas via the Internet. Headquartered in Orem, Utah, the Company sells
its proprietary StoresOnline software and training services which help
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 and marketing 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.
- Financial Statements and Reconciling Tables to Follow -
iMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(unaudited)
March 31, 2007 June 30, 2006
-------------- -------------
Assets
Current Assets:
Cash and cash equivalents $ 38,981 $ 30,023
Certificate of deposit - 500
Trade receivables, net of allowance for
doubtful accounts of $15,940 as of
March 31, 2007 and $6,894 as of June
30, 2006 24,282 13,419
Inventories 207 151
Prepaid expenses and other 7,250 2,739
-------------- -------------
Total Current Assets 70,720 46,832
Certificate of deposit 500 -
Long-term trade receivables, net of
allowance for doubtful accounts of $7,783
as of March 31, 2007 and $4,117 as of
June 30, 2006 11,239 7,508
Property and equipment, net 1,778 696
Deferred income tax assets 11,091 9,976
Merchant account deposits and other 580 1,000
-------------- -------------
Total Assets $ 95,908 $ 66,012
============== =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 2,792 $ 2,752
Accrued expenses and other 4,722 4,085
Dividends payable 1,230 -
Income taxes payable 843 348
Deferred revenue, current portion 29,313 20,064
Capital lease obligations 42 91
-------------- -------------
Total Current Liabilities 38,942 27,340
Deferred revenue, net of current portion 11,239 8,693
-------------- -------------
Total Liabilities 50,181 36,033
-------------- -------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $0.001 per
share - authorized 5,000,000 shares;
none issued - -
Common stock, par value $0.001 per share
- authorized 100,000,000 shares;
12,302,067 shares outstanding as of
March 31, 2007 and 12,375,313 shares
outstanding as of June 30, 2006 12 12
Additional paid-in capital 76,012 77,762
Accumulated deficit (30,297) (47,795)
-------------- -------------
Total Stockholders' Equity 45,727 29,979
-------------- -------------
Total Liabilities and Stockholders'
Equity $ 95,908 $ 66,012
============== =============
iMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Income Statements
(Dollars in thousands, except per share data)
(unaudited)
Three Months Ended March Nine Months Ended March
31, 31,
------------------------- -------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Revenues:
Product and other $ 35,593 $ 21,508 $ 90,728 $ 147,970
Commission and
other 7,043 3,497 16,592 8,923
------------ ------------ ------------ ------------
Total revenues 42,636 25,005 107,320 156,893
------------ ------------ ------------ ------------
Operating expenses:
Cost of product
and other
revenues 12,850 7,567 33,534 21,847
Selling and
marketing 19,408 10,215 47,658 27,760
General and
administrative 4,102 3,473 11,976 9,931
Research and
development 371 208 858 677
------------ ------------ ------------ ------------
Total operating
expenses 36,731 21,463 94,026 60,215
------------ ------------ ------------ ------------
Income from
operations 5,905 3,542 13,294 96,678
------------ ------------ ------------ ------------
Other income
(expense):
Interest income 1,836 819 4,831 2,099
Interest expense - (3) (3) (17)
Other income
(expense), net (91) 158 (70) (117)
------------ ------------ ------------ ------------
Total other
income, net 1,745 974 4,758 1,965
------------ ------------ ------------ ------------
Income before
income tax
(provision)
benefit 7,650 4,516 18,052 98,643
Income tax
(provision)
benefit (2,953) (1,716) 676 9,829
------------ ------------ ------------ ------------
Net income $ 4,697 $ 2,800 $ 18,728 $ 108,472
============ ============ ============ ============
Net income per
common share:
Basic $ 0.38 $ 0.23 $ 1.51 $ 8.94
Diluted $ 0.36 $ 0.22 $ 1.45 $ 8.56
Weighted average
common shares
outstanding:
Basic 12,389,854 12,135,889 12,373,728 12,133,971
Diluted 12,952,954 12,691,997 12,911,557 12,674,550
iMERGENT, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
Nine Months Ended March 31,
-----------------------------
Increase (decrease) in cash and cash
equivalents 2007 2006
- --------------------------------------- ------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 18,728 $ 108,472
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 440 212
Expense for stock options issued
to employees 1,710 898
Expense for stock options issued
to consultants 34 44
Changes in assets and liabilities:
Trade receivables and trade
receivables held for sale (14,594) 7,546
Inventories (56) (18)
Prepaid expenses and other (4,511) (830)
Restricted cash - (50)
Merchant account deposits and
other 420 (739)
Deferred income tax assets (1,115) (10,639)
Accounts payable, accrued
expenses and other liabilities 677 1,026
Deferred revenue 11,795 (88,469)
Income taxes payable 495 242
------------- --------------
Net cash provided by operating
activities 14,023 17,695
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and
equipment (1,522) (286)
------------- --------------
Net cash used in investing
activities (1,522) (286)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock (4,965) -
Proceeds from exercise of stock
options and related income tax
benefit 1,471 42
Principal payments on capital
lease obligations (49) (59)
------------- --------------
Net cash used in financing
activities (3,543) (17)
------------- --------------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 8,958 17,392
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE PERIOD 30,023 10,691
------------- --------------
CASH AND CASH EQUIVALENTS AT THE END OF
THE PERIOD $ 38,981 $ 28,083
============= ==============
NON-GAAP MEASURES
The following non-GAAP measures assume:
-- The Net Dollar Volume of Contracts Written is recognized as
revenue at the time of sale;
-- Certain corresponding costs of revenue and selling and
marketing expenses are also recognized at the time of sale;
and
-- The income tax provision is based upon an estimated federal,
state, and foreign statutory blended rate of 40%.
Net Dollar Volume of Contracts Written
Until the change in our business model in late December 2005, the
Company recognized product and other revenue ratably over a period of
five years and not at the time contracts were written. Effective
December 2005, the Company began recognizing product and other revenue
after the expiration of the three-day cancellation period for
contracts written for which cash payments were received. For products
purchased by customers under extended payment term arrangements, the
Company continues to defer and recognize revenue as cash payments are
received from customers, typically over two years.
Because of the changes in the Company's revenue recognition
policies resulting from the change in business model noted above and
due to the Company's growth, management believes that the Net Dollar
Volume of Contracts Written is a consistent and relevant measure to
understand the operations of the Company. Net Dollar Volume of
Contracts Written represents the gross dollar amount of contracts
executed during the period less estimates for bad debts, discounts
incurred on sales of trade receivables (financial discounts), and
estimates for customer returns. Net Dollar Volume of Contracts Written
is not equivalent to revenue recognized in accordance with US GAAP. In
contrast, revenue recognized in accordance with US GAAP consists of
cash contracts written net of estimated customer returns plus actual
cash collections on financed contracts. Actual collections on financed
contracts and customer returns may differ materially from original
estimates. However, the Company has several years of experience with
the financing arrangements and products and services offered to its
customers. Consequently, management believes it has a reasonable basis
for its estimates.
Management uses the following non-GAAP measures to evaluate the
results of the Company's operations because Net Dollar Volume of
Contracts Written is the primary factor that influences costs of
revenue and selling and marketing expenses, which are typically
recognized at the time the contract is written but no later than the
expiration of the customer's three-day cancellation period.
Consequently, management measures the Company's operating performance
and sets its future operating budgets based upon the Net Dollar Volume
of Contracts Written during the period.
The following non-GAAP measures assume that the Net Dollar Volume
of Contracts Written is recognized as revenue at the time of sale,
regardless of the three-day cancellation period.
Certain Costs of Revenue and Selling and Marketing Expenses
The Company recognizes sales commissions and software royalties as
costs of revenue at the time the related sales are deemed final, i.e.
upon expiration of the customers' three-day cancellation period in
accordance with U.S. GAAP. Additionally, the Company recognizes
direct-response advertising costs as selling and marketing expenses in
accordance with SOP 93-7 as the related cash sales are recognized as
revenues.
Because the following non-GAAP measures assume that Net Dollar
Volume of Contracts Written is recognized as revenue at the time of
sale, the non-GAAP measures also assume that the related costs
described above are recognized as expenses at the time of sale,
regardless of the three-day cancellation period.
The Company conducted 23 workshops during the last three business
days of March 2007. Consequently, $2,258,000 of cash sales were
deferred and recognized in April 2007. Additionally, the related costs
of revenue totaling $395,000 and the related selling and marketing
expenses totaling $547,000 were recognized in April 2007. The Company
conducted 3 workshops during the last three business days of March
2006. Consequently, $147,000 of cash sales were deferred and
recognized in April 2006. Additionally, the related costs of revenue
totaling $25,000 and the related selling and marketing expenses
totaling $74,000 were recognized in April 2006. No workshops were
conducted during the last three business days of December 2006 or
December 2007.
Income Tax Provision
Due to the change in business model in December 2005, the Company
determined that it was more likely than not that $11,877,000 of its
net deferred income tax assets, which had a valuation allowance
against them, would be realized. The benefit recorded upon the removal
of the corresponding valuation allowance was partially offset by an
income tax provision of $2,048,000, resulting in a net income tax
benefit of $9,829,000 for the nine months ended March 31, 2006.
Due to management's increased taxable earnings projections and
discrete event developments in the resolution of certain contingencies
during the three months ended December 31, 2006, the Company
determined that it was more likely than not that its remaining
deferred income tax assets of $7,746,000 would be realized. The
benefit resulting from the removal of the corresponding valuation
allowance was partially offset by an income tax provision of
$7,070,000, resulting in a net income tax benefit of $676,000 for the
nine months ended March 31, 2007.
The Company has recognized and expects to continue to recognize
income tax expense commensurate with federal, state, and foreign
statutory rates in periods subsequent to December 2006. Consequently,
the following non-GAAP measures assume an income tax provision based
upon an estimated federal, state, and foreign statutory blended rate
of 40%. Because of the change in business model in December 2005 and
the resulting impacts on income tax provision/benefit mentioned above,
management believes that this non-GAAP measure provides a consistent
and relevant metric to understand the operations of the Company.
Reconciliation of Net Dollar Volume of Contracts Written
The following table summarizes the activity within deferred
revenue and the Net Dollar Volume of Contracts Written for the three
and nine months ended March 31, 2007 and 2006, and reconciles the Net
Dollar Volume of Contracts Written (NDVCW) with US GAAP revenue as
reported in the Company's financial statements.
Three Months Ended Nine Months Ended
March 31, March 31,
------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ----------
(in thousands)
Deferred revenue, beginning
of period $ 34,125 $ 24,256 $ 28,757 $ 114,050
Plus: Cash product sales
during the last three
business days of March 2007 $ 2,258 $ 147 $ 2,258 $ 147
Remaining net change in
deferred revenue 4,169 1,178 9,537 (88,616)
--------- --------- --------- ----------
Deferred revenue, end of
period $ 40,552 $ 25,581 $ 40,552 $ 25,581
========= ========= ========= ==========
2007 2006 2007 2006
--------- --------- --------- ----------
(in thousands)
Total revenue recognized in
financial statements in
accordance with US GAAP $ 42,636 25,005 107,320 156,893
Plus: Cash product sales
during the last three
business days of March 2007 2,258 147 2,258 147
Remaining net change in
deferred revenue 4,169 1,178 9,537 (88,616)
--------- --------- --------- ----------
Net Dollar Volume of
Contracts Written, non-GAAP $ 49,063 $ 26,330 $119,115 $ 68,424
========= ========= ========= ==========
iMERGENT, INC. AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliation Tables
(Dollars in thousands, except per share data)
(unaudited)
Three Months Ended March 31, 2007
-------------------------------------------------
Expense assuming
NDVCW is recognized
as revenue and
related expenses
are recognized at
time of sale (Non-
GAAP Adj. GAAP).
-------------- ----------- --------------------
Cost of product and
other revenue $ 12,850 $ 395 (1) $ 13,245
Selling and marketing 19,408 547 (1) 19,955
Three Months Ended March 31, 2007
-------------------------------------------------
Assumes NDVCW is
recognized as
revenue and related
expenses are
recognized at time
of sale, including
income tax
provision at 40
GAAP Adj. percent (Non-GAAP).
-------------- ----------- --------------------
Income before income
tax provision $ 7,650 $ 5,485 (2) $ 13,135
Income tax provision (2,953) (2,301)(3) (5,254)
-------------- ----------- --------------------
Net income $ 4,697 $ 3,184 $ 7,881
============== =========== ====================
Net income per common
share:
Basic $ 0.38 $ 0.64
============== ====================
Diluted $ 0.36 $ 0.61
============== ====================
Weighted average
common shares
outstanding:
Basic 12,389,854 12,389,854
Diluted 12,952,954 12,952,954
Three Months Ended March 31, 2006
-------------------------------------------------
Expense assuming
NDVCW is recognized
as revenue and
related expenses
are recognized at
time of sale (Non-
GAAP Adj. GAAP).
-------------- ----------- --------------------
Cost of product and
other revenue $ 7,567 $ 25 (4) $ 7,592
Selling and marketing 10,215 74 (4) 10,289
Three Months Ended March 31, 2006
-------------------------------------------------
Assumes NDVCW is
recognized as
revenue and related
expenses are
recognized at time
of sale, including
income tax
provision at 40
GAAP Adj. percent (Non-GAAP).
-------------- ----------- --------------------
Income before income
tax provision $ 4,516 $ 1,226 (5) $ 5,742
Income tax provision (1,716) (581)(3) (2,297)
-------------- ----------- --------------------
Net income $ 2,800 $ 645 $ 3,445
============== =========== ====================
Net income per common
share:
Basic $ 0.23 $ 0.28
============== ====================
Diluted $ 0.22 $ 0.27
============== ====================
Weighted average
common shares
outstanding:
Basic 12,135,889 12,135,889
Diluted 12,691,997 12,691,997
Note explanations follow the tables.
iMERGENT, INC. AND SUBSIDIARIES
GAAP to Non-GAAP Reconciliation Tables
(Dollars in thousands, except per share data)
(unaudited)
Nine Months Ended March 31, 2007
------------------------------------------------
Expense assuming
NDVCW is
recognized as
revenue and
related expenses
are recognized at
time of sale
GAAP Adj. (Non-GAAP).
-------------- ------------ ------------------
Cost of product and
other revenue $ 33,534 $ 395 (1) $ 33,929
Selling and marketing 47,658 547 (1) 48,205
Nine Months Ended March 31, 2007
------------------------------------------------
Assumes NDVCW is
recognized as
revenue and
related expenses
are recognized at
time of sale,
including income
tax provision at
40 percent (Non-
GAAP Adj. GAAP).
-------------- ------------ ------------------
Income before income
tax benefit
(provision) $ 18,052 $ 10,853 (6) $ 28,905
Income tax benefit
(provision) 676 (12,238)(3) (11,562)
-------------- ------------ ------------------
Net income $ 18,728 $ (1,385) $ 17,343
============== ============ ==================
Net income per common
share:
Basic $ 1.51 $ 1.40
============== ==================
Diluted $ 1.45 $ 1.34
============== ==================
Weighted average
common shares
outstanding:
Basic 12,373,728 12,373,728
Diluted 12,911,557 12,911,557
Nine Months Ended March 31, 2006
------------------------------------------------
Expense assuming
NDVCW is
recognized as
revenue and
related expenses
are recognized at
time of sale
GAAP Adj. (Non-GAAP).
-------------- ------------ ------------------
Cost of product and
other revenue $ 21,847 $ 25 (4) $ 21,872
Selling and marketing 27,760 74 (4) 27,834
Nine Months Ended March 31, 2006
------------------------------------------------
Assumes NDVCW is
recognized as
revenue and
related expenses
are recognized at
time of sale,
including income
tax provision at
40 percent (Non-
GAAP Adj. GAAP).
-------------- ------------ ------------------
Income before income
tax benefit
(provision) $ 98,643 $ (88,370)(7) $ 10,273
Income tax benefit
(provision) 9,829 (13,938)(3) (4,109)
-------------- ------------ ------------------
Net income $ 108,472 $(102,308) $ 6,164
============== ============ ==================
Net income per common
share:
Basic $ 8.94 $ 0.51
============== ==================
Diluted $ 8.56 $ 0.49
============== ==================
Weighted average
common shares
outstanding:
Basic 12,133,971 12,133,971
Diluted 12,674,550 12,674,550
Note explanations follow the tables.
- ----------------------------------------------------------------------
(1) Represents certain expenses, described above, related to revenues
that were deferred to April 2007 as a result of workshops
conducted during the last three business days of March 2007.
(2) Represents the net adjustment to revenues of $6,427,000 to derive
the Net Dollar Volume of Contracts Written during the period
(including $2,258,000 of cash sales that were deferred to April
2007 as a result of workshops conducted during the last three
business days of March 2007), and the adjustments to expenses
noted above in cost of product and other revenues of $395,000 and
selling and marketing expenses of $547,000.
(3) Represents the adjustment necessary to recognize the income tax
provision based upon an estimated federal, state, and foreign
statutory blended rate of 40%.
(4) Represents certain expenses, described above, related to revenues
that were deferred to April 2006 as a result of workshops
conducted during the last three business days of March 2006.
(5) Represents the net adjustment to revenues of $1,325,000 to derive
the Net Dollar Volume of Contracts Written during the period
(including $147,000 of cash sales that were deferred to April
2006 as a result of workshops conducted during the last three
business days of March 2006), and the adjustments to expenses
noted above in cost of product and other revenues of $25,000 and
selling and marketing expenses of $74,000.
(6) Represents the net adjustment to revenues of $11,795,000 to derive
the Net Dollar Volume of Contracts Written during the period
(including $2,258,000 of cash sales that were deferred to April
2007 as a result of workshops conducted during the last three
business days of March 2007), and the adjustments to expenses
noted above in cost of product and other revenues of $395,000
and selling and marketing expenses of $547,000.
(7) Represents the net adjustment to revenues of ($88,469,000) to
derive the Net Dollar Volume of Contracts Written during the
period (including $147,000 of cash sales that were deferred to
April 2006 as a result of workshops conducted during the last
three business days of March 2006), and the adjustments to
expenses noted above in cost of product and other revenues of
$25,000 and selling and marketing expenses of $74,000.
- ----------------------------------------------------------------------
CONTACT: iMergent, Inc.
Robert Lewis, CFO, 801-431-4695
investor_relations@imergentinc.com
or
Lippert/Heilshorn & Associates
Kirsten Chapman or Mary Magnani,
415-433-3777 (Investor Relations)
kchapman@lhai.com