IGN Makes a profit

Admin · February 5, 2003

w00t w00t!!!

I am a moderator there so it's nice to see they will be in business for the forseeable future...

Press Release Source: IGN Entertainment, Inc.

IGN Reports First-Ever Profitable Quarter

Wednesday February 5, 8:50 am ET

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 5, 2003--IGN Entertainment (Nasdaq:IGNX - News)

Q4'02 GAAP EPS of $0.09 and Pro Forma EPS of $0.17

Q4 Revenue Up 51% Year-Over-Year and 84% Over Q3

IGN Entertainment (Nasdaq:IGNX - News) -- home to IGN.com, the web's largest information and entertainment destination for video gamers -- today announced its fourth quarter and fiscal year 2002 results. For the quarter ended December 31, 2002, IGN reported revenue of $4.2 million, representing a 51 percent increase from $2.8 million for the same period a year ago and an 84 percent increase from $2.3 million for the previous quarter.

Q4 GAAP-Based Profitability

In the fourth quarter of 2002, the company achieved its first quarter of GAAP-based profitability, reporting net income of $204,000, or $0.09 per share. This compares to a net loss of $3.2 million, or $1.80 per share, for the year ago quarter, and a net loss of $3.9 million, or $1.82 per share, for the prior quarter.

Q4 Pro Forma-Based Profitability

The company also achieved profitability on a pro forma basis during the fourth quarter of 2002, with net income before significant non-cash items, restructuring charges and gain on sale of assets of $410,000, or $0.17 per share. This compares to a pro forma net loss of $1.5 million, or $0.87 per share, for the year ago period and a pro forma net loss of $1.1 million, or $0.53 per share, for the prior quarter.

The difference between the $410,000 pro-forma net income and the $204,000 GAAP net income this quarter consists of $206,000 of depreciation expense.

FY 2002 Results Improve Over FY 2001

Revenue for fiscal year 2002 was $11.4 million, a 17 percent increase over fiscal year 2001 revenue of $9.7 million. GAAP based net loss for fiscal year 2002 was $11.3 million, or $5.74 per share, compared to a net loss of $30.4 million, or $16.21 per share, for fiscal year 2001. Pro forma net loss before significant non-cash items, restructuring charges and gain on sale of assets for fiscal year 2002 was $3.1 million, or $1.59 per share, compared to $16.4 million, or $8.76 per share, for fiscal year 2001.

Year-Over-Year Revenue Growth

"Our Q4 revenue increased 51 percent over the same period a year ago, even though the fourth quarter of 2001 included approximately $275,000 of revenue from operations that we have since sold or discontinued," said Mark Jung, IGN's CEO. "Taking this into account, year-over-year fourth quarter IGN revenue growth was up 68 percent."

Jung continued, "Sequentially, this quarter's revenue came in 84 percent higher than the prior quarter, due to the seasonally strong nature of the fourth quarter in the gaming and consumer sectors and our improved advertising solutions set, which helps differentiate us from the competition."

For the fourth quarter, advertising and marketing programs represented 82 percent of IGN's revenue. The company's fourth quarter advertising customers included well-known consumer brands such as Best Buy, Cingular Wireless, Coca Cola, Honda, Intel, Nokia and Starburst, as well as top games companies Acclaim, Activision, Electronic Arts, Microsoft, Nintendo, Sega and Sony. Subscriptions accounted for $542,000, or 13 percent of revenue for the quarter. Other product lines -- including e-commerce and content licensing -- generated the remaining five percent of revenue.

Subscription Revenue Continues to Grow

The company added 5,000 net new subscribers to its IGN Insider program during the fourth quarter, increasing its subscriber base to 73,000 as of December 31, 2002. As a result, subscription revenue grew by 22 percent over the prior quarter. While new subscriber signups remained strong in the fourth quarter of 2002, this growth was offset by attrition associated with the large number of annual subscriptions up for renewal during the quarter. As of January 31, 2003, total subscribers numbered 75,000.

2003 Forecast

The company currently anticipates that its FY 2003 revenue will increase by approximately 45 to 50 percent over FY 2002 revenue, ranging between $16 million and $17 million. As the company's business is seasonal, IGN anticipates that the 2003 revenue cycle will be similar to that of 2002, with first quarter being the weakest revenue period of the year and fourth quarter being the strongest. We expect that Q1 will represent approximately 16 to 17 percent of fiscal year 2003 revenue, that Q2 and Q3 will each represent between 22 and 25 percent of the total, and that Q4 will represent approximately 35 to 37 percent. IGN forecasts that its gross margin percentage for fiscal year 2003 will be between 90 and 92 percent, and that its total cash-based operating expenses will increase by 18 to 21 percent from 2002 levels. As a result, the company expects to approximately breakeven on a pro forma basis for the entire fiscal year in 2003, excluding significant non-cash items, restructuring charges and gain on sale of assets.

Forward-Looking Statements

The forward-looking statements in this press release reflect IGN's expectations as of February 5, 2003. As mentioned below, a wide variety of factors, most notably ongoing market uncertainties, may cause actual results to differ materially from forecast. IGN does not expect to update its forward-looking statements until the company's next quarterly results announcement. The company, however, does reserve the right to update its financial outlook at any time for any reason.