Skip to main content Reports First Quarter Financial Results: Generates Record Organic Subscriber Growth

May 4, 2006

ATLANTA, May 4, 2006 (PRIMEZONE) --, Inc. (Nasdaq:WWWW), the leading destination for websites and web services, today reported results for its first quarter ended March 31, 2006.

 Summary of First Quarter 2006 Results:

 -- Total revenues for the quarter were $12.3 million, up from
    $12.1 million in the November 2005 quarter.
 -- Net income was negative $5.5 million, or $(0.34) per share,
    including $5.3 million of stock-based compensation and income
    tax benefits of $0.9 million, versus a negative $2.6 million,
    or $(0.16) per share, in the November 2005 quarter.
 -- Adjusted net income(1) was positive $0.1 million, or $0.01
    per share, up from negative $0.9 million, or $(.05) per share,
    in the November 2005 quarter.
 -- Net subscriber growth for the quarter was approximately 12,000,
    or 9%, up from approximately 137,000 in the November 2005 quarter
    to approximately 149,000. This increase includes record organic
    growth of approximately 4,000 accounts.

"The results from this quarter demonstrate our progress in stabilizing the business, diversifying into web services and building a business model that drives subscriber growth," stated Jeff Stibel, President and CEO, "Notably, achieved record organic subscriber growth and generated positive adjusted net income, a key financial milestone. I am proud of our team and what we've been able to accomplish in a very short time."

" reported improved financial results, highlighted by positive adjusted net income, by focusing on core competencies, forging partnerships and executing the company's turn-around strategy," stated Gonzalo Troncoso, Executive Vice President and Chief Financial Officer. "We continued to maintain a firm grasp on cost controls, improve customer acquisition and build a strong infrastructure for growth."

About, Inc. (Nasdaq:WWWW), formerly Interland, Inc. (Nasdaq:INLD), is the leading destination for the simplest, yet most powerful solutions for websites and web services. offers do-it-yourself and professional website design, website hosting, ecommerce, web marketing and email. Since 1995, has been helping individuals and small businesses leverage the power of the Internet to build a web presence. More than 4 million websites have been built using's proprietary tools, services and patented technology. For more information on the company, please visit or or call at 1-800-WEB-HOST. will host a conference call today to discuss its quarterly results at 9:30AM ET (6:30AM PT). A live webcast of the call can be accessed on the investors section of the company's website at A replay of the call will be available on the site for seven days.

(1) Adjusted net income is a non-GAAP financial measure and is defined as net income from continuing operations before interest, taxes, depreciation, amortization of intangibles and stock-based compensation.

Note Regarding Use of Non-GAAP Financial Measures

The non-GAAP financial measures such as adjusted net income included in this press release are different from those otherwise presented under GAAP as these non-GAAP measures exclude certain charges, as noted below. has provided these measures in addition to GAAP financial results because management believes these non-GAAP measures provide a consistent basis for comparison between quarters and of growth rates period-over-period that are not influenced by certain charges and therefore are helpful in understanding's underlying operating results. These non-GAAP measures are some of the primary measures's management uses for planning and forecasting. These measures are not in accordance with, or an alternative to, GAAP and these non-GAAP measures may not be comparable to information provided by other companies. Reconciliations of GAAP results to non-GAAP financial measures are presented in the attached schedules.

Forward-Looking Statements

Except for the historical information contained in this press release, statements in this press release may be considered forward-looking statements. These forward-looking statements include, but are not limited to, the financial and business results of the Company's first 2006 fiscal quarter and the ability to: stabilize the company's revenues and cost structure, increase customers and revenues, create a well-known brand for the Company's product offerings, successfully access the consumer segment of the web hosting market and enter into strategic alliances with leading companies in the industry. Forward-looking statements are also identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue", similar expressions, and variations or negatives of these words. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements are based on's current expectations, estimates, projections, beliefs and assumptions. These forward-looking statements speak only as of the date hereof and are based upon the information available to the Company at this time. Such information is subject to change, and the Company will not necessarily inform you of such changes. These statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, the Company's actual results could differ materially and adversely from those expressed in any forward-looking statement as a result of various factors. Factors which could affect these forward-looking statements, and's business, include but are not limited to: the ability to operate within budgeted expense, the ability of the Company to improve customer satisfaction, reduce churn, and expand its customer base as planned, growing dependence on reseller and other indirect sales channels, general economic conditions, the impact of competition, quarterly fluctuations in operating results, the loss of customers with failing businesses and customer churn in general, customer acceptance of new products and services, the possible lack of availability of restricted investments, the retention of key employees, potential liabilities from the sale of dedicated server assets, possible disruptions for customers due to our data centers being maintained by third parties, higher than expected costs of litigation and the impact of liabilities that could carry over from the Company's discontinued operations. Certain of these and other risks associated with's business are discussed in more detail in its public filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K, its Quarterly Reports and Transition Report on Form 10-Q and its Current Reports on Form 8-K, and its most recent proxy statement. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not undertake to update its forward-looking statements., Inc.
 (In thousands, except per share amounts)
                                            For the three months ended
                                              March 31,   February 28,
                                                2006          2005
                                              --------      --------

 Revenues                                     $ 12,262      $ 22,622

 Operating costs and expenses:
  Network operating costs, exclusive
   of depreciation shown below (a)               2,384         5,304
  Sales and marketing, exclusive of
   depreciation shown below (a)                  3,150         4,381
  Technical support, exclusive of
   depreciation shown below (a)                  1,722         3,654
  General and administrative, exclusive of
   depreciation shown below (a)                  9,912         7,706
  Bad debt expense                                 277           465
  Depreciation and amortization                  1,134         5,306
  Restructuring costs                               43            --
  Other expense (income), net                       (1)           72
                                              ---------  -----------
  Total operating costs and expenses            18,621        26,888
                                              ---------  -----------
 Operating loss                                 (6,359)       (4,266)
 Interest income (expense), net                    261            83
                                              ---------  -----------
 Loss from continuing operations before
  income taxes                                  (6,098)       (4,183)
 Income tax benefit                                854            --
                                              ---------  -----------
 Net loss from continuing operations            (5,244)       (4,183)
 Loss from discontinued operations,
  net of tax                                      (259)          (89)
                                              ---------  -----------
 Net loss                                     $ (5,503)     $ (4,272)
                                              =========  ===========

 Net loss per share, basic and diluted:
  Continuing operations                       $  (0.32)     $  (0.26)
  Discontinued operations                        (0.02)        (0.01)
                                              --------      --------
                                              $  (0.34)     $  (0.27)
                                              ========      ========
 Number of shares used in per
  share calculation:
    Basic and diluted                           16,395        16,026

 (a) Includes stock-based compensation as follows:

  Network operating costs                     $      6      $   --
  Sales and marketing                               15          --
  Technical support                                  8          --
  General and administrative                     5,308          --
                                              --------      --------
    Total stock-based compensation            $  5,337      $   --
                                              ========      ========, Inc.
 (In thousands)
                                                       As of
                                              March 31,    December 31,
                                                2006          2005
                                              --------      --------
  Current assets                              
   Cash and cash equivalents                  $ 16,790      $ 17,370
   Trade receivables, net of                  
    allowance for doubtful accounts              1,559         1,812
   Other receivables                               706         1,180
   Other current assets                          1,707         2,026
   Restricted investments                          278           276
                                              --------      --------
  Total current assets                          21,040        22,664
   Restricted investments                        8,567         9,015
   Securities, held-to-maturity                     53            53
   Property, plant and equipment,             
    net                                          6,435         6,303
   Goodwill                                        907           921
   Intangibles, net                              6,233         6,568
   Other assets                                  5,606         5,600
                                              --------      --------
 Total assets                                 $ 48,841      $ 51,124
                                              ========      ========
 Liabilities and                              
 shareholders' equity                         
  Current liabilities                         
   Accounts payable                           $    910      $    934
   Accrued expenses                              6,290         6,232
   Accrued restructuring charges                 3,121         4,416
   Current portion of long-term               
    debt and capital lease                    
    obligations                                  1,708         1,693
   Deferred revenue                              4,671         4,637
                                              --------      --------
  Total current liabilities                     16,700        17,912
   Long-term debt and capital lease           
    obligations                                  3,384         3,850
   Deferred revenue, long-term                     243           206
   Other liabilities                               355           934
                                              --------      --------
 Total liabilities                              20,682        22,902
                                              --------      --------
 Shareholders' equity                         
  Common stock, $.01 par value,               
   authorized 26 million shares,              
   issued and outstanding 16.6               
   and 16.6 million shares,              
   respectively                                    166           166
  Additional capital                           330,933       325,493
  Warrants                                       2,128         2,128
  Note receivable from shareholder                (735)         (735)
  Accumulated deficit                         (304,333)     (298,830)
                                              --------      --------
 Total shareholders' equity                     28,159        28,222
                                              --------      --------
 Total liabilities and                        
  shareholders' equity                        $ 48,841      $ 51,124
                                              ========      ========
 Adjusted net income (loss) is defined as net income (loss) from
 continuing operations before (i) provision for income taxes, (ii)
 interest income or expense, and (iii) depreciation, (iv) amortization
 of intangibles, and (v) stock based compensation. Adjusted net income
 (loss) is not an indicator of financial performance under generally
 accepted accounting principles and may not be comparable to similarly
 captioned information reported by other companies. In addition, it
 does not replace net income (loss), operating income (loss), or cash
 flows from operating activities as indicators of operating
 performance. The Company believes that measuring the performance of
 the business without regard to interest, taxes and non-cash effects
 of depreciation, amortization of intangibles and stock based
 compensation can make trends in operating results more readily
 apparent, and when considered with other information, assist
 investors and other users of the Company's financial statements who
 wish to evaluate the Company's ability to generate future cash flows.

 The following table reflects the calculation of adjusted net income
 (loss) and a reconciliation to Net loss:

                                  For the              For the
                               Quarter Ended         Quarter Ended
                             ------------------    -------------------
                             3/31/06    2/28/05    3/31/06    11/30/05
                             -------    -------    -------    --------
 Net loss                    $(5,503)   $(4,272)   $(5,503)   $ (2,588)

  Depreciation and
   amortization                1,134      5,306      1,134       1,431
   compensation                5,337        --       5,337         384
  Interest expense (income)     (261)       (83)      (261)       (243)
  Income tax benefit            (854)       --        (854)        --
  Loss from discontinued
   operations, net of tax        259         89        259         122
                             -------    -------    -------    --------
 Adjusted Net Income (loss)  $   112    $ 1,040    $   112    $   (894)
                             =======    =======    =======    ========

Investor and Press Contact:
Peter Delgrosso