United Online, Inc. (UNTD)
Q1 2008 Earnings Call
May 6, 2008 5:00 pm ET
Erik Randerson - Vice President Investor Relations
Mark Goldston - Chairman, President, Chief Executive Officer
Scott Ray - Executive Vice President, Chief Financial Officer
Yun Kim - Pacific Growth Equities
[Sandeep] - Jefferies & Co.
Lance Ettus - Mortar Rock Capital Management
Tom Kerr - Reed Conner
Previous Statements by UNTD
» United Online Inc. Q4 2008 Earnings Call Transcript
» United Online, Inc. Q3 2008 Earnings Call Transcript
» United Online, Inc. Q2 2008 Earnings Call Transcript
Mr. Randerson, Vice President of Investor Relations, you may begin your conference.
Thank you. Hello and welcome to United Online's conference call to discuss our financial results for the first quarter ended March 31, 2008. With me today is Mark Goldston, the Chairman, President and Chief Executive Officer, and Scott Ray, our Executive Vice President and Chief Financial Officer.
In addition, on today's call and in the accompanying slides that are available within the Investor Relations section of our website, we will refer to adjusted operating income before depreciation and amortization or OIBDA, segment adjusted OIBDA, adjusted net income, adjusted net income per share, and free cash flow.
Management believes that each of these measures is useful in evaluating the company's operating performance. These measures are not determined in accordance with accounting principles generally accepted in the U.S. or GAAP and should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Definitions of these non-GAAP financial measures are provided in today's press release and the accompanying slides on our website, along with reconciliations to the most comparable GAAP financial measures.
Before we get started, I also need to point out that the company does apply the safe harbor provisions as outlined in the press release to any forward-looking statements that may be made on this call. Statements regarding our current expectations about our future operations, financial condition, performance, pay accounts, services and the industry in which we operate are forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
More information about potential risk factors that could affect the company's business and its financial results is included in today's press release under the caption, "Cautionary Information Regarding Forward-Looking Statements," and in United Online's most recent filings with the Securities and Exchange Commission.
Projections provided by management in the press release and in today's call are based on information available to us at this time, and management expects that internal projections and expectations may change over time. However, the company does not intend to revise or update this information and may not provide this type of information in the future. Any persons replaying this broadcast after May 6, 2008 should recognize that any non-historical information discussed in today's call might not be current or valid after this date because the circumstances and assumptions underlying such information may have changed.
And with that, we're going to start out with a few comments from Mark and Scott, and then we're going to open it up for questions.
So now I'll give the floor to our Chairman, President and Chief Executive Officer, Mark Goldston.
Thanks, Erik. Welcome, everyone, to the United Online March 2008 quarter earnings call. I'll look at a high level of our operating results for the first quarter, and then I'll review the performance of our operating segments. And I'll also make a comment on the United Online announcement recently that we entered into a definitive merger agreement to acquire FTD Group.
Scott Ray, our Chief Financial Officer, will conclude with our prepared remarks and look at the numbers at the quarter and give you the new guidance going forward.
Before I get started I'd like to mention that we've created a very comprehensive PowerPoint presentation that summarizes our first quarter financial results and operating metrics. You can download a copy of this presentation on our Internet homepage at www.UnitedOnline.com and within the Investor Relations section right next to the earnings press release. And I'd encourage you to do that because it's very comprehensive.
In terms of looking at a review of Q1 2008 from a financial perspective, I'd like to say that we are really very pleased with the first quarter results that were delivered by the team at United Online. We had the best Q1 in the history of United Online in terms of adjusted OIBDA, increased and paid social networking subscribers, adjusted OIBDA as a percentage of revenues in our Communications business and in our Classmates Media business.
To that end, there were really five key highlights that I'd like you to take away from our outstanding Q1 2008 results.
Number one, revenues and adjusted OIBDA came in ahead of the high end of our guidance and Street expectations. And as I said, adjusted OIBDA was the best Q1 performance in the company's history. Our hybrid business model, which derives revenues from both subscription and advertising, performed very well even in a weaker economic environment.
Number two, the strong consolidated results were driven primarily by our Classmates Media segment, where record growth in pay accounts of 322,000 was the single highest quarterly increase in the history of the company and again led to impressive revenue growth. Classmates Media segment adjusted OIBDA more than doubled versus Q1 a year ago, recording an increase of 129%.
Meanwhile, our Communications segment once again delivered a strong quarter against our objective of running this business for profitability and cash flow. In fact, the Communications segment achieved yet another record in Q1 as our Communications segment adjusted OIBDA as a percentage of segment revenue reached an all-time high of 38.4% segment revenue.