WSPI Website Pros (MM)

Net Subscriber Additions Rise 30% sequentially to 3,250, Bringing Total Subscribers to Approximately 55,000 Website Pros, Inc. (Nasdaq: WSPI), a leading provider of Web services and online marketing for small and medium-sized businesses, today announced results of operations for the quarter ended March 31, 2006. Financial Results for the First Quarter of 2006 Total revenue for the first quarter of 2006 was $11.6 million, an increase of 59% on a year-over-year basis. Revenue growth was driven by an increase in subscribers and contribution from the acquisitions of LEADS.com and substantially all of the assets of E.B.O.Z. in April 2005. Subscription revenue for the first quarter of 2006 was $10.0 million, an increase of 65% on a year-over-year basis. David Brown, President and CEO of Website Pros, stated, "We are quite pleased with the strong demand we continue to see for our comprehensive end-to-end Web services, which led to record revenue, profitability, new subscribers and an all-time low in our monthly turnover." Brown continued, "We are particularly encouraged by the success of new sales programs and distribution partnerships. These contributed to increasing momentum over the course of the first quarter and provide us with optimism for the remainder of the year." For the first quarter of 2006, the Company reported net income, determined in accordance with generally accepted accounting principles (GAAP), of $1.0 million, an increase from $276 thousand in the first quarter of 2005. Fully diluted GAAP earnings per share were $0.05 for the first quarter of 2006, compared to a loss of $0.02 in the first quarter of 2005. Fully diluted GAAP earnings per share are based on weighted average fully diluted shares of 19.4 million and 2.8 million for the first quarter of 2006 and 2005, respectively. Fully diluted GAAP earnings per share in 2005 were reduced by preferred stock dividends. All preferred stock was converted to common stock in connection with the Company's initial public offering in November 2005. Non-GAAP Financial Results for the First Quarter of 2006 Website Pros reported non-GAAP net income of $1.7 million for the first quarter of 2006, as compared to $318 thousand in the first quarter of 2005. Non-GAAP diluted net income per share was $0.09 for the first quarter of 2006, an increase from $0.03 in the first quarter of 2005. All per share numbers for non-GAAP net income per share are expressed on a weighted average diluted share basis. Preferred dividends are excluded from non-GAAP net income per share in prior periods, as all outstanding shares of preferred stock were converted into shares of common stock and all related accrued dividends were eliminated in connection with the Company's initial public offering, which was completed on November 7, 2005. A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in the press release. An explanation of these measures is also included below under the heading "Use of Non-GAAP Financial Measures." Kevin Carney, CFO of Website Pros, commented, "Solid revenue combined with continued focus on expense management enabled Website Pros to deliver an all-time high in profitability. The scalability of our business model is evidenced by the expansion in our operating income in each of the past two years, and we believe we will continue that trend in 2006." Other Quarterly Highlights The Company also had the following other financial and operating highlights for the quarter: -- The Company added over 3,250 net subscribers to its eWorks!XL and Visibility Online services, increasing total subscribers to approximately 55,000 at the end of the quarter. -- The Company's monthly customer turnover was 5.6% as compared to 6.0% in the first quarter of 2005. -- The company launched new, integrated packages of its web services and internet marketing solutions during the first quarter. These new packages combine the service offerings of LEADS.com with the Company's eWorks!XL and Visibility Online subscription packages, providing a higher level of value to customers. The monthly subscription price for these packages range between $70/month to $99/month depending on the specific package selected by the customer. Use of Non-GAAP Financial Measures Some of the measures in this press release are non-GAAP financial measures within the meaning of the SEC Regulation G. Website Pros believes presenting non-GAAP net income attributable to common stockholders and non-GAAP net income (loss) per share attributable to common stockholders is useful to investors, because it describes the operating performance of the Company and helps investors gauge the Company's ability to generate cash flow, excluding some recurring and non-recurring non-cash charges that are included in the most directly comparable measures calculated and presented in accordance with GAAP. Company management uses these non-GAAP measures as important indicators of the Company's past performance and to plan and forecast performance in future periods. The non-GAAP financial information Website Pros presents may not be comparable to similarly-titled financial measures used by other companies, and investors should not consider non-GAAP financial measures in isolation from, or in substitution for, financial information presented in compliance with GAAP. Conference Call Information Management will host a conference call to discuss the Company's results and other matters related to the Company's business today, May 2, 2006, at 5:00 p.m. Eastern Standard Time. To participate in the call, investors should dial 800-811-0667 (domestic) or 913-981-4901 (international) ten minutes prior to the scheduled call. A replay of this conference call will be available for a limited time at 888-203-1112 (domestic) or 719-457-0820 (international). The replay passcode is 9561594. A live webcast of this conference call will also be available for a limited time on the "Investor Relations" page of the Company's Web site, www.websitepros.com. For more information, including this press release and Website Pros' Current Report on Form 8-K, any non-GAAP financial measures that may be discussed on the conference call as well as the most directly comparable GAAP financial measures and a reconciliation of the difference between the GAAP and any non-GAAP financial measures discussed on the conference call (other than non-GAAP financial measures discussed and reconciled in this news release), and any other material financial and other statistical information contained in the conference call , please visit the Investor Relations section of Website Pros' Website at www.websitepros.com. About Website Pros Website Pros, Inc. (Nasdaq: WSPI) is a leading provider of comprehensive Web services and products that enable small and medium-sized businesses to establish and maintain an effective Internet presence. We offer our customers a full range of Web services on an affordable subscription basis that include website design and publishing, Internet marketing and advertising, search engine optimization, search engine submission and lead generation. The breadth and flexibility of our products allow us to meet the Web services needs of a business anywhere along their lifecycle, ranging from businesses just establishing their websites to businesses requiring more sophisticated functionality or selling online. Through a unique combination of proprietary Web publishing and management software, automated workflow processes and specialized workforce development and management techniques, we achieve production efficiencies that enable us to offer sophisticated Web services affordably and effectively to our customers. Our technology automates many aspects of creating, maintaining, enhancing and marketing websites for our approximately 55,000 business customers. For more information, contact Website Pros. Voice: 904-680-6600. Fax: 904-880-0350. Address: 12735 Gran Bay Parkway West, #200, Jacksonville, FL 32258. Website: www.websitepros.com. Forward-Looking Statements This press release includes certain "forward-looking statements" that are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" or words of similar meaning. These statements are based on our current beliefs or expectations and there are a number of important factors that could cause the actual results or outcomes to differ materially from those indicated by these forward-looking statements, including without limitation, our ability to maintain our existing, and develop new, strategic relationships, the number of our net subscriber additions, our monthly customer turnover and those risks set forth under the caption "Risk Factors" in Website Pros' Annual Report on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission. These filings are available on a Website maintained by the Securities and Exchange Commission at http://www.sec.gov. Website Pros does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. -0- *T Website Pros, Inc. Consolidated Statement of Operations (in thousands except per share data) (Unaudited) Three Months Ended March 31, 2006 2005 Revenue: Subscription $9,959 $6,043 License 1,205 972 Professional services 449 303 --------- -------- Total revenue 11,613 7,318 Cost of revenue (excluding depreciation and amortization shown separately below): Subscription (a) 4,393 2,917 License (a) 291 197 Professional services (a) 380 216 Stock based compensation 25 6 --------- -------- Total cost of revenue 5,089 3,336 --------- -------- Gross profit 6,524 3,982 Operating expenses: Sales and marketing (a) 2,765 1,971 Research and development (a) 494 349 General and administrative (a) 2,052 1,277 Stock based compensation 371 36 Depreciation and amortization 372 99 --------- -------- Total operating expenses 6,054 3,732 --------- -------- Income from operations 470 250 Other income (expense): Interest, net 551 26 Other - - --------- -------- Net income 1,021 276 Preferred Stock dividends - (340) --------- -------- Net income (loss) attributable to common stockholders $1,021 $(64) ========= ======== Net income (loss) attributable per common share Basic $0.06 $(0.02) ========= ======== Diluted $0.05 $(0.02) ========= ======== Weighted-average number of shares used in per share amounts: Basic 16,526 2,791 ========= ======== Diluted 19,343 2,791 ========= ======== (a) Stock based compensation Subscription, License and Professional services (cost of revenue) $25 $6 ========= ======== Sales and marketing $72 $13 Research and development 55 13 General and administration 244 10 --------- -------- Total $371 $36 ========= ======== Website Pros, Inc. Consolidated Balance Sheets (in thousands except per share data) March December 31, 2006 31, 2005 (unaudited) Assets Current assets: Cash and cash equivalents $55,803 $55,746 Accounts receivable, net of allowance $325 and $383, respectively 1,764 1,941 Inventories net of reserves of $1 and $51, respectively 141 138 Prepaid expenses 519 506 Prepaid marketing fees and other current assets 902 770 ----------- ----------- Total current assets 59,129 59,101 Property and equipment net 1,437 1,068 Goodwill and other intangible assets 15,897 16,105 Other assets 136 96 ----------- ----------- Total assets $76,599 $76,370 =========== =========== Liabilities and stockholders' equity Current liabilities: Accounts payable $492 $1,280 Accrued expenses 1,931 2,391 Deferred revenue 3,212 3,193 Accrued marketing fees 388 297 Notes payable, current 66 65 Other liabilities 279 340 ----------- ----------- Total current liabilities 6,368 7,566 Accrued rent space 178 177 Notes payable, long term 224 241 Other long term liabilities 31 31 ----------- ----------- Total liabilities 6,801 8,015 Stockholders' equity Common stock, $0.001 par value; 150,000,000 shares authorized at March 31, 2006 and December 31,2005; 16,541,258 shares and 16,509,602 shares issued and outstanding at March 31, 2006 and December 31, 2005, respectively. 17 17 Additional paid-in-capital 136,518 136,097 Accumulated deficit (66,737) (67,759) ----------- ----------- Total stockholders' equity 69,798 68,355 ----------- ----------- Total liabilities and stockholders' equity $76,599 $76,370 =========== =========== Website Pros, Inc. Reconciliation of GAAP to Pro Forma Results (in thousands except per share data) (unaudited) Three Months Ended March 31, 2006 2005 Reconciliation of GAAP net income (loss) attributable to common stockholders to non-GAAP pro forma net income GAAP Net income $1,021 $276 Amortization of intangibles 242 - Stock based compensation 396 42 --------- --------- Non-GAAP pro-forma net income $1,659 $318 ========= ========= Reconciliation of GAAP basic net income (loss) per share to non-GAAP pro forma net income per share GAAP net income (loss) per share attributable to common stockholders Basic $0.06 $(0.02) Amortization of intangibles per share 0.01 - Stock based compensation per share 0.03 0.02 Preferred stock dividends per share - 0.12 Preferred stock conversion - (0.08) --------- --------- Non-GAAP pro-forma net income per share attributable to common stockholders Basic $0.10 $0.04 ========= ========= Reconciliation of GAAP diluted net income (loss) per share to non-GAAP pro forma net income per share Fully diluted shares Common stock 16,526 2,791 Preferred stock - 6,115 Diluted stock options 2,535 2,192 Warrants 282 240 --------- --------- Total 19,343 11,338 ========= ========= GAAP net income (loss) per share attributable to common stockholders Diluted $0.05 $(0.02) Amortization of intangibles per share 0.02 - Stock based compensation per share 0.02 0.00 Preferred stock dividends per share - 0.03 Preferred stock conversion - 0.02 --------- --------- Non-GAAP pro-forma net income per share attributable to common stockholders Diluted $0.09 $0.03 ========= ========= Reconciliation of GAAP operating income (loss) to non-GAAP pro forma operating income (loss) GAAP operating income $470 $250 Amortization of intangibles 242 - Stock based compensation 396 42 --------- --------- Non-GAAP pro forma operating income $1,108 $292 ========= ========= Reconciliation of GAAP operating margin to non-GAAP pro forma operating margin GAAP operating margin 4% 3% Amortization of intangibles 2% 0% Stock based compensation 4% 1% --------- --------- Non-GAAP proforma operating margin 10% 4% ========= ========= Website Pros, Inc. Consolidated Statement of Cash Flows (in thousands) (unaudited) Three Months Ended March 31, 2006 2005 --------- -------- Cash flows from operating activities Net income $1,021 $276 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 372 99 Stock-based compensation expense 396 42 Changes in operating assets and liabilities: Accounts Receivable 177 (355) Inventories (3) 21 Prepaid expenses and other assets (185) (34) Accounts Payable, accrued expenses and other liabilities (763) 640 Deferred revenue 19 111 --------- -------- Net cash provided by operating activities 1,034 800 Cash flows from investing activities Purchase of property and equipment (361) (34) Other (3) - --------- -------- Net cash used in investing activities (364) (34) Cash flows from financing activities Payment of stock issuance costs (622) (4) Payment of debt obligations (16) - Proceeds from issuance of preferred stock, net - 2,990 Proceeds from exercise of stock options 25 - --------- -------- Net cash (used in) provided by financing activities (613) 2,986 --------- -------- Net increase in cash and cash equivalents 57 3,752 Cash and cash equivalents, beginning of period 55,746 6,621 --------- -------- Cash and cash equivalents, end of period $55,803 $10,373 ========= ======== *T