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Q3 2011 Earnings Call
October 27, 2011 5:00 pm ET
William J. Ruckelshaus - Chief Executive Officer, President and Director
Eric M. Emans - Interim Chief Financial officer and Chief Accounting officer
Stacy Ybarra - Director of Corporate Communications
James Cakmak - Sidoti & Company, LLC
Richard Tullo - Albert Fried & Company, LLC, Research Division
Ned Davis - Wm Smith & Co.
Unknown Analyst -
Previous Statements by INSP
» InfoSpace's CEO Discusses Q2 2011 Results - Earnings Call Transcript
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Good afternoon, and welcome to InfoSpace's third quarter 2011 earnings conference call. On the call today are Bill Ruckelshaus, President and Chief Executive Officer; and Eric Emans, Chief Financial Officer.
Before we begin, I'd like to remind you that during the course of this call, InfoSpace representatives will make forward-looking statements including, but not limited to, statements regarding InfoSpace's expectations about its products and services, outlook for the future of our business and growth initiatives, acquisition strategy and anticipated performance for the fourth quarter of 2011.
Other statements that refer to our beliefs, plans, expectations or intentions, which may be made in response to questions are also forward-looking statements for purposes of the Safe Harbor provided by the Private Securities Litigation Reform Act. Because these statements pertain to future events, they are subject to various risks and uncertainties, and actual results could differ materially from our current expectations and beliefs.
Factors that could cause or contribute to such differences include, but are not limited to, the risks and other factors discussed in InfoSpace's most recent quarterly report on Form 10-Q on file with the Securities and Exchange Commission. InfoSpace assumes no obligation to update any forward-looking statement, which speak only as of the date the statement is made.
In addition, during this call, our management will discuss GAAP and non-GAAP financial measures. In this press release, which has been posted on our website and the SEC on Form 8-K, we present GAAP and non-GAAP results, along with reconciliation tables and the reasons for our presentation of the non-GAAP information.
Now, I'll turn the call over to Bill Ruckelshaus. Following his comments, Eric Emans will review the third quarter results and fourth quarter outlook, then we'll open it up to your questions.
William J. Ruckelshaus
Thanks, Stacy. And good afternoon, everyone. We are pleased to report another great quarter. Operationally, we performed well, driven once again by the strength in our distribution business. Revenue in the third quarter was $56.3 million, up 11% from the prior year and adjusted EBITDA was strong at $8.5 million. Our business continues to generate substantial cash flow and as you know, our balance sheet is particularly strong. We ended the quarter with $279.3 million in cash or roughly $7.10 per share.
In the third quarter, we continued to optimize and improve performance through new product initiatives and distribution to more partners. And as a result, we're seeing strong underlying trends in the business. Excluding the impacts of Make The Web Better, revenues are up 22% year-over-year, in-line with industry growth rates. But the real story this quarter is the growth and continued growth in the distribution business. In the third quarter, distribution posted an impressive 40% year-on-year growth rate and now represents just over 80% of our total revenue.
Importantly, we're seeing success both in our sales effort to win new contracts, as well as in maintaining and growing our existing accounts. We signed 11 new distribution partners in the quarter, which brings our total to 33 new partners this year. While the lion's share of our growth is coming from long-standing partners, we are beginning to see meaningful contribution from distribution partners launched more recently. This growth is encouraging as it confirms our view that the pace of innovation on the Internet is increasing, and it also validates our unique capabilities to partner with these innovators.
Our distribution strategy allows us to leverage our domain expertise and years of end market experience and better serve medium- to smaller-sized Internet players through our core advantages of better monetization, compelling product offering and superior customer service. The search market is large and as you've seen in other announcements, quarterly announcements this year, major players in the space continues to grow at a rapid rate. With new utility applications, games and the proliferation of social media networks, increasingly more application providers are looking to search as a way to monetize and build out their revenue models. This is where we have an enormous opportunity in part because we focus on this segment and also in part because it's complementary to the areas of focus of Google and Yahoo!.
We like to think that we service an organizing influence in this marketplace that we're creating by pairing up the demand as it's represented in the ad ecosystems from Google and Yahoo!, with the supply of our distribution partners. And we sit in the middle as an aggregator and monitor of the marketplace to make sure that the quality levels are high and that both parties on either side of the equation are satisfied as it relates to their goals and objectives.