[JA] NetZero Reports Fourth-Quarter Results
- From: "Roland Stiner" <nk2u@xxxxxxxxxxxxxx>
- To: "NetZero Mail List" <netzero@xxxxxxxxxxx>,"Juno Mail List" <juno_accmail@xxxxxxxxxxxxxxxxx>
- Date: Tue, 28 Aug 2001 09:17:23 -0400
NetZero Reports Fourth-Quarter Results; Billable Services
Revenues Grow 137% vs. Preceding Quarter; Cash Balances
of $135 Million At Quarter End; Pro Forma Net Loss
of $0.33 Per Share
WESTLAKE VILLAGE, Calif., Aug. 27, 2001 (PRIMEZONE) -- NetZero, Inc.
(Nasdaq:NZRO), a leading provider of Internet access services, today
reported total revenues of $12.0 million for its fourth fiscal quarter
ended June 30, 2001. Billable services revenues, which comprised $4.2
million or 35 percent of total revenues, increased 137 percent versus
the March 2001 quarter, in which billable services comprised $1.8
million or 14 percent of total revenues of $12.8 million. Billable
services include NetZero's new pay service introduced earlier this
year, "NetZero Platinum" -- a $9.95 monthly subscription service with
no ad banner window. Total revenues in the June 2000 quarter were $18.7
million and included $226,000 from billable services. The decrease in
total revenues in the June 2001 quarter versus the June 2000 and March
2001 quarters was driven by a decline in advertising and commerce
revenues.
The pro forma net loss for the June 2001 quarter was $38.5 million,
compared to a pro forma net loss of $23.0 million in the year-ago
quarter and a pro forma net loss of $31.6 million in the March 2001
quarter. On a per-share basis, the pro forma net loss for the June 2001
quarter was $0.33 per share, compared to a pro forma net loss of $0.22
in the prior-year quarter and a pro forma net loss of $0.27 in the
March 2001 quarter. The pro forma net loss excludes stock-based
charges, amortization of intangible assets, and, in the March 2001
quarter, a non-cash charge of $48.6 million ($0.42 per share)
associated primarily with a write-down of goodwill and intangible
assets related to the acquisitions of AimTV, RocketCash, Simpli.com and
Freei Networks.
The net loss for the June 2001 quarter was $42.1 million, versus a net
loss of $26.9 million for the year-ago quarter and a net loss of $91.4
million for the March 2001 quarter, which includes the non-cash charge
to write down goodwill and intangible assets of $48.6 million. On a
per-share basis, the net loss for the June 2001 quarter was $0.36.
NetZero ended the June 2001 quarter with $135 million of cash and cash
equivalents, short-term investments and restricted cash. These balances
decreased during the quarter by $28.0 million versus $18.8 million
during the March 2001 quarter, primarily reflecting increased spending
in the June 2001 quarter for pre-existing marketing commitments that
terminated in June, including the company's "NetZero @ the Half"
sponsorship of the NBA on NBC.
Approximately 3.4 million users accessed NetZero's service during the
month of June 2001 ("active users"), including 210,000 billable
subscribers to the company's pay services as of June 30, 2001. Billable
subscribers grew by 180 percent during the quarter and represented 6
percent of total active users in June 2001, up from 2 percent in March
2001 when the company had 3.9 million active users.
In an effort to manage the growth in its free user base and control
telecommunications costs, the company launched its "Extended Access
Pass" in January 2001, which limited free access to 40 hours per month
(previously unlimited) and requires users to pay $9.95 if they need to
exceed that limit in a given month. As a result, average hours per
average active user were reduced by 33 percent in the June 2001 quarter
versus the December 2000 quarter. During this period,
telecommunications cost per average active user was reduced by 22
percent and cost of revenues per average active user fell 13 percent.
The company recently announced that is taking further actions to
streamline its cost structure and improve financial results, including
additional limitations on its free services and a reduction in
personnel. Expected to be effective in October 2001, free access will
be limited to 10 hours per month per household. In addition, NetZero's
free service will no longer be offered in certain outlying areas where
high telecommunications costs make the free offering cost prohibitive.
The company will continue to offer users in these areas a subscription
service for a monthly fee. During June 2001, approximately 30 percent
of NetZero's free users accessed the Internet for more than 10 hours,
and approximately 8 percent of NetZero's free users accessed the
Internet solely from dial-up numbers where the free service will no
longer be available. Due to multiple users within many households, a
significantly greater number of users may be impacted by the 10-hour
limit.
The company also recently announced that it has reduced its employee
base by approximately 26 percent effective August 1, 2001. The
reductions included the company's first-ever layoffs, affecting 66
employees in six of its U.S. locations. This 26 percent workforce
reduction also included an additional 27 employees at the company's
RocketCash business, which was sold on August 1, 2001. These employees
are expected to remain at the RocketCash business under its new
ownership.
"Over the past two quarters, we've made some very aggressive moves
inaltering NetZero's business model to meet the demands of a rapidly
changing environment," said Mark R. Goldston, chairman, president and
CEO of NetZero. "We are proud of the progress we've made in such a
short time, particularly in adding more than 200,000 paying subscribers
to our NetZero Platinum service less than four months after its launch.
As we look ahead to our merger with Juno Online Services to form the
new United Online, we see valuable opportunities to leverage the
strengths of both these franchises to create a major force in the
market for billable Internet access services."
"As anticipated, the company's operating expenses in the June 2001
quarter were adversely impacted by legacy marketing agreements that
terminated in June," said Charles S. Hilliard, NetZero senior vice
president and CFO. "Looking ahead, we expect to reduce total operating
expenses by 40 to 45 percent sequentially in the September 2001
quarter, excluding merger- and restructuring-related charges, as a
result of decreased marketing spending, savings from the recent
headcount reductions and the sale of the RocketCash business."
The terms of the strategic merger agreement announced on June 7, 2001
call for Juno and NetZero to become wholly owned subsidiaries of United
Online, Inc., a newly formed company. United Online filed its initial
Form S-4 with the Securities and Exchange Commission on June 22, 2001
and, following the closing of the merger, is expected to trade on the
Nasdaq National Market under the symbol UNTD.
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