CoolSavings Reports First Quarter 2005 Financials Company Generates
Record Revenues of $15.3 Million, a 91% Increase Over Prior Year;
First Quarter Net Income Reaches $1.0 Million CHICAGO, May 3
/PRNewswire-FirstCall/ -- CoolSavings, Inc. (OTC:CSAV) (BULLETIN
BOARD: CSAV) , a leading interactive marketing services provider,
today reported results for the first quarter ended March 31, 2005.
The Company recorded a 91% increase in revenue in the first quarter
compared to the same quarter of 2004, driven primarily by the
continued success of CoolSavings' Lead Generation Network. Net
revenues in the first quarter were $15.3 million compared to $8.0
million in the first quarter of 2004. The Company reported 11.7
million new registering consumers across its network for the
quarter, driven primarily by consumer registrations on the Lead
Generation Network, which launched late in the first quarter of
2004. Registering consumers are defined as individuals presented
with targeted offers from a CoolSavings advertiser while
registering on a CoolSavings Marketing Network site. CoolSavings
also reported a 35% increase in the number of consumer responses
(previously referred to as revenue producing actions or RPAs)
across its network during the first quarter, as compared to the
same period last year. Net income was $1.0 million in the first
quarter of 2005, compared to a net loss of $1.0 million in the same
quarter of 2004, a $2.0 million improvement. (Logo:
http://www.newscom.com/cgi-bin/prnh/20050203/CGTH021LOGO ) The
Company's total operating costs and expenses in the first quarter
of 2005 rose to $14.1 million from $8.9 million in the first
quarter of 2004. The increase was primarily the result of the fees
paid to partners related to the increased revenue from the Lead
Generation Network in 2005. Income applicable to common
stockholders was $0.5 million in the first quarter of 2005, or
$0.01 per basic share and $0.00 per diluted share, as compared to a
net loss applicable to common stockholders in the first quarter of
2004 of $1.5 million, or $0.04 per basic and diluted share. Cash
flows used in operations for the first quarter of 2005 were $0.1
million. Working capital increased from $0.0 million at December
31, 2004 to $1.5 million at March 31, 2005. At March 31, 2005, the
Company had cash and cash equivalents of $6.9 million, compared to
$7.2 million at December 31, 2004. Accounts receivable, net of
allowances for doubtful accounts, were $9.7 million at March 31,
2005, compared to $6.7 million at the end of 2004. Current
liabilities totaled $15.5 million and $14.1 million at March 31,
2005 and December 31, 2004, respectively. Growth of the CoolSavings
Marketing Network During the first quarter of 2005, CoolSavings
continued to build out and scale its distribution network for
targeted offers, the CoolSavings Marketing Network. The Company
increased the number of partner sites participating in the network
by 102% from the end of the fourth quarter of 2004 to the end of
the first quarter of 2005. CoolSavings' network partners include
leading publishers such as Meredith Publishing, Knight Ridder, The
Weather Channel, AOL, iVillage and The Kroger Co. "CoolSavings'
impressive 91% year-over-year revenue growth is directly
attributable to the expansion and success of the CoolSavings
Marketing Network," said Matthew Moog, President and CEO of
CoolSavings, Inc. "Our focus on delivering a significant volume of
high quality leads to our clients has made Lead Generation a
successful addition to the CoolSavings Marketing Network for both
our clients and distribution partners." While the CoolSavings
Marketing Network grows, CoolSavings continues to invest in four
key interactive marketing services that allow advertisers to engage
millions of consumers across its network of partner sites: Lead
Generation, E-mail, Coupons and Loyalty. These investments have led
to a 26% increase in the number of total unique visitors to the
CoolSavings' domain, which includes traffic driven by CoolSavings
Marketing Network partners during the first quarter of 2005
compared to the fourth quarter of 2004 as reported by comScore
Media Metrix. Specifically, comScore Media Metrix reported an
average of 13.9 million unique visitors for CoolSavings during the
first quarter of 2005 vs. 11.0 million in fourth quarter of 2004.
Lead Generation In the first quarter of 2005, CoolSavings launched
a number of innovative new enhancements related to its Lead
Generation service, which enables advertisers to build their
customer and prospect databases with high quality, double-opt-in
consumers. In January, the Company introduced Soft Offer Scoring, a
groundbreaking new proprietary solution that utilizes robust data
services from Alliant Cooperative Data Solutions to target soft
offers to consumers who have a high propensity to pay. Soft offers,
also known as 'bill me' offers, are promotions used by publishers,
music clubs and other marketers to provide their product to
consumers up front while requiring payment at a later date.
CoolSavings also added block group data targeting to ensure
advertisers are able to target relevant offers to the right
consumers. Finally, in March The Weather Channel Interactive became
the Company's first partner to deliver its advertisers' lead
generation offers to consumers during the download of an
application, Desktop Weather 4.0. This new capability is available
in addition to CoolSavings' other lead generation delivery
capabilities for network partners, which include making the offers
available to consumers during partners' registration processes or
through contextual placements throughout partners' sites. E-mail In
the first quarter of 2005, CoolSavings was accepted as a member of
Return Path's Bonded Sender(TM) Program, the industry's leading
third-party e-mail certification program. As a TRUSTe-certified
Bonded Sender, CoolSavings is placed on the 'white list' of major
ISPs to help its e-mail bypass their filters. Through Bonded Sender
and CoolSavings' own strict, real-time delivery monitoring system,
CoolSavings maintains 97% aggregate inbox delivery for the top four
ISPs: Yahoo!, AOL, Hotmail and MSN. According to a March 2005 study
by Return Path, on average, 22% of legitimate commercial e-mail was
blocked by ISP filters in 2004.* Coupons Dozens of top brand
manufacturers utilized CoolSavings' printable and electronic coupon
technology and distribution across the CoolSavings Marketing
Network in the first quarter of 2005, including Dannon,
GlaxoSmithKline, Georgia Pacific, Gorton's, Hormel, Eastman Kodak,
Sargento and Campbell's. In addition, CoolSavings' flagship Web
property, coolsavings.com, was ranked the #1 Coupon Site on the
Internet by comScore Media Metrix for each month during the first
quarter, bringing the Company's tenure as the Internet's top coupon
provider on the comScore Media Metrix list to 63 consecutive
months. CoolSavings' consumer audience represented an average of
61.3% of the total audience for Internet coupons for each month of
the first quarter according to comScore Media Metrix. Loyalty In
February, CoolSavings launched a new Web site,
FreeStyleRewards.com, in support of its points-based loyalty
program, FreeStyle Rewards, which was introduced in late 2004.
Previously available only to consumers of coolsavings.com,
FreeStyle Rewards allows registering consumers to earn points for
their online purchases and redeem them for MasterCard prepaid debit
cards, which they can spend at millions of locations across the
United States and online. While FreeStyle Rewards experienced
strong user growth in the first quarter of 2005, the service is
still in its infancy and the Company expects that it will remain a
nominal percentage of revenue for the next several quarters. Client
Retention In the first quarter of 2005, CoolSavings recorded a 91%
retention rate among the Company's top 100 revenue-producing
clients from 2004. CoolSavings provided marketing services to
nearly 450 advertisers during the quarter. Business Outlook The
following statements are based on current expectations, are
forward- looking and actual results may differ materially. See
"Cautionary Note Regarding Forward-Looking Statements" below.
CoolSavings remains focused on its mission to provide best-in-class
interactive marketing solutions to its clients and partners that
deliver value to consumers, protect their privacy and earn their
trust. To achieve this mission, CoolSavings intends to continue to
develop third-party network marketing relationships to grow the
CoolSavings Marketing Network and distribute offer content to
consumers through high quality online partners. The Company will
invest in and launch its own media properties, including
coolsavings.com, to improve the user experience to increase
acquisition, return visitation, transactions and total lifetime
value of its registered consumers. CoolSavings plans to enhance its
analytics infrastructure by continuing to grow and refine
targeting, optimization and predictive modeling capabilities and
technologies for advertisers. The Company also plans to continue to
improve its inventory management methodology and processes to
provide greater yield for its network partners. Lastly, CoolSavings
plans to build out its consumer rewards program, FreeStyle Rewards,
through its new Web property, FreeStyleRewards.com. The Company
plans to take steps to increase its registered consumers and
merchant participation and to continue to improve upon the program
infrastructure. CoolSavings has improved its 2005 guidance to
project full-year revenues to grow 40-50% as compared to 2004
results. This projected revenue of $53.7 million to $57.6 million
is anticipated to result in 2005 operating income between 8% and
12% of revenues. The Company expects its current liquidity position
to meet its anticipated cash needs for working capital and capital
expenditures, excluding potential acquisitions that may require
large cash outlays, or any accelerated payments that Landmark may
require, for the foreseeable future. Landmark has informed the
Company that it plans to exercise its warrant for approximately
13.2 million shares of the Company's common stock at an exercise
price of $0.50 per share during the second quarter. If this right
is exercised in full before July 30, 2005, it would result in gross
proceeds to the Company of approximately $6.6 million. After July
30, 2005, the exercise price increases to $0.75 per share. The
Company intends to use the proceeds, if any, to repay debt or for
working capital of the business. There can be no assurance that
Landmark will decide to exercise such warrant or exercise such
warrant in full. If Landmark decides to exercise such warrant in
part or in full, it would likely have a significant dilutive effect
on CoolSavings' common stock. "CoolSavings continues to scale the
CoolSavings Marketing Network to deliver improvements and
innovations across our four key service areas," commented Moog. "We
are committed to providing our clients and partners with
cutting-edge services and technology to better meet their marketing
objectives." CoolSavings will host a first quarter earnings
conference call and simultaneous Web cast today at 11:00 a.m. EDT.
To participate on the conference call, please dial the following
number 15 minutes prior to start time: 888.482.0024 - Domestic
617.801.9702 - International Confirmation code: 24334973 There will
be a live Web broadcast of the conference call. To participate via
the Internet, please go to the investor relations section of
CoolSavings' Web site at http://www.coolsavings.com/news 15 minutes
prior to the start of the call. A replay of the conference call
will also be available through the investor relations section of
CoolSavings' Web site at http://www.coolsavings.com/news until the
next quarter's results. * Return Path, "Email Blocking and
Filtering Report", March 2005 About CoolSavings CoolSavings is a
leading interactive marketing services company for advertisers and
publishers. The Company provides superior lead generation, e- mail,
coupon and loyalty programs across its extensive network of Web
properties and top partner sites. The Company maximizes results
using sophisticated targeting, optimization and predictive modeling
capabilities. Together these services could enable leaders in the
consumer packaged goods, retail and direct marketing industries to
reach more than 35 million registering consumers and potentially
generate more than 100 million responses in 2005, while delivering
valuable content and revenue for the Company's network partners.
Cautionary Note Regarding Forward-Looking Statements This press
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including
statements under the caption "Business Outlook" and other
statements regarding the Company's expectations, beliefs, hopes,
intentions, or strategies. Where possible, these forward-looking
statements have been identified by use of words such as "project,"
"target", "forecast," "anticipate," "intend," "believe," "plan,"
"will," "expect," and similar expressions but such words are not
the exclusive means of identifying these statements. Known and
unknown risks, uncertainties and other factors, both general and
specific to the matters discussed in this press release, may cause
the Company's actual results and performance to differ materially
from the future results and performance expressed in, or implied
by, such forward-looking statements. These risks, uncertainties,
and other factors include, without limitation, the Company's
ability to secure financing to meet its long-term capital needs;
CoolSavings' ability to secure long-term contracts with existing
advertisers and Lead Generation Network partners, and attract new
advertisers and Lead Generation Network partners; CoolSavings'
ability to add new consumers; CoolSavings' successful introduction
of new services and features, CoolSavings' ability to compete
successfully against current and future competitors, CoolSavings'
ability to protect its patents, trademarks and proprietary rights,
CoolSavings' ability to continue to attract, assimilate and retain
highly skilled personnel, general industry, economic and market
conditions and growth rates, the potential for higher actual media
costs, and other costs and expenses when compared to estimated
costs and projections. For a discussion of these and other risks,
uncertainties and factors which could cause actual results to
differ materially from those expressed in, or implied by, the
forward-looking statements, see "Risk Factors" in the Company's
annual report on Form 10-K for the year ended December 31, 2004, as
filed with the SEC. The Company undertakes no obligation to update
any of the forward-looking statements after the date of this press
release to conform these statements to actual results or otherwise
reflect new developments or changed circumstances, unless expressly
required by applicable federal securities laws. You should not
place undue reliance on any such forward-looking statements.
COOLSAVINGS, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands, except share and per share data) For the Three
Months Ended March 31, March 31, 2005 2004 Net revenues 15,278
7,981 Operating costs and expenses: Cost of revenues 5,055 662
Sales and marketing 5,798 5,393 Product development 935 973 General
and administrative 2,298 1,779 Lease exit costs 23 54 Total
operating costs and expenses 14,109 8,861 Income (loss) from
operations 1,169 (880) Other income (expense): Interest and other
income 23 8 Interest expense (133) (124) Total other income
(expense) (110) (116) Income (loss) before income taxes 1,059 (996)
Income taxes (16) (2) Net income (loss) 1,043 (998) Cumulative
dividend on Series B Preferred Stock (547) (506) Income (loss)
applicable to common stockholders $496 $(1,504) Basic and diluted
net loss per share $0.01 $(0.04) Weighted average shares used in
the calculation of basic net income (loss) per share 39,479,795
39,218,799 Diluted net income (loss) per share $0.00 $(0.04)
Weighted average shares used in the calculation of diluted net
income (loss) per share 244,422,405 39,218,799 COOLSAVINGS, INC.
CONDENSED BALANCE SHEETS (Unaudited) (in thousands) March 31,
December 31, 2005 2004 ASSETS Current assets: Cash and cash
equivalents $6,856 $7,162 Accounts receivable, net 9,730 6,681
Prepaid and other assets 338 258 Total current assets 16,924 14,101
Property and equipment, net 2,464 2,634 Intangible assets, patents
and licenses, net 17 18 Goodwill - TMS 569 569 Total assets $19,974
$17,322 LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS'
DEFICIT Current liabilities: Accounts payable $479 $655 Accrued
expenses and other current liabilities 7,772 6,365 Lease exit cost
liability 187 210 Deferred revenue 313 312 Senior secured note
payable due to related party 6,701 6,567 Total current liabilities
15,452 14,109 Long-term liabilities: Deferred revenue 248 260 Lease
exit cost liability 942 980 Deferred income tax liability 17 13
Other long-term liabilities - 4 Total long-term liabilities 1,207
1,257 Convertible redeemable cumulative Series B Preferred Stock
27,387 26,850 Convertible redeemable Series C Preferred Stock 1,913
1,950 Total stockholders' deficit (25,985) (26,844) Total
liabilities, convertible redeemable preferred stock, and
stockholders' deficit $19,974 $17,322
http://www.newscom.com/cgi-bin/prnh/20050203/CGTH021LOGO
http://photoarchive.ap.org/ DATASOURCE: CoolSavings, Inc. CONTACT:
Melissa Lederer of CoolSavings, Inc., +1-312-224-5153, , or Mary
Scholz Barber of Kupper Parker Communications, +1-314-290-2013, Web
site: http://www.coolsavings.com/
Copyright