Edit Symbol List
Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages.
Don't know the stock symbol? Use the
Symbol Lookup tool.
Alphabetize the sort order of my symbols
Investing just got easier…
Sign up now to become a NASDAQ.com member and begin receiving instant notifications when key events occur that affect the stocks you follow.Access Now X
United Online, Inc. (UNTD)
Q2 2008 Earnings Call Transcript
August 5, 2008 4:30 pm ET
Erik Randerson – VP, IR
Mark Goldston – Chairman, President, and CEO
Scott Ray – EVP and CFO
Kevin Copeland – Cowen & Co.
Youssef Squali – Jefferies & Co.
Tom Kerr – Reed Conner
Yun Kim – Pacific Growth Equities
Previous Statements by UNTD
» United Online Inc. Q4 2008 Earnings Call Transcript
» United Online, Inc. Q3 2008 Earnings Call Transcript
» United Online, Inc. Q1 2008 Earnings Call Transcript
Thank you. Hello and welcome to United Online's conference call to discuss our financial results for the second quarter ended June 30, 2008. With me today is Mark Goldston, our 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 financial measures.
Before I get started, I also need to point out that the company applies 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 August 5 of 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. Thanks everyone to coming on to the United Online earnings call for the June 2008 quarter. I am going to begin with a high level view of our operating highlights for the second quarter, and then I'll review the operating segment performance itself. I am also going to give a highlight on the proposed acquisition of the FTD Group, including a recap of some very positive developments in our financing initiatives.
Scott Ray, our Chief Financial Officer, will conclude our prepared remarks with a look at the numbers for the quarter and guidance going forward.
Before I get started I'd like to mention we've created a PowerPoint presentation that summarizes our second quarter financial results and the operating metrics. You can download a copy of this presentation on our Internet homepage at ww.unitedonline.com 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 presentation.
Now, let me begin by saying that I am very pleased with our second quarter 2008 performance, particularly in light of the challenging macro environment that has impacted the results of several Internet companies that have reported this quarter.
There were five key highlights I hope you’ll take away from our Q2 2008 results and updated outlook for the balance of this year.
The first is that revenues came in above our guidance and adjusted OIBDA came in near the high end of guidance and both measures exceeded First Call consensus expectation.
What is really encouraging is that we achieved such strong results despite expensing $3.9 million in deferred transaction related costs relating to the proposed IPO of our wholly owned subsidiary Classmates Media Corp.
Excluding the IPO expenses, we would have achieved a new quarterly record for adjusted OIBDA both in absolute dollar terms and expressed as a percentage of consolidated revenue. Our strong results in a very difficult advertising market demonstrates the resiliency of the hybrid business model that derives revenues from both subscription and advertising.
In Q2, 2008, 74% of consolidated revenue came from subscriptions, which is something we have been targeting for a long time as a major advantage of the United Online's business model and that has come through in spades in the most recent quarter.
Number two, we had another great quarter in our Classmates Media segment, where we added 288,000 net pay account additions, second only to last quarter’s record performance of 322,000 and this is the second highest number of net pay account additions in the 13 year history of Classmates Online. We have launched several feature enhancements during 2008 that are contributing to increased traffic and growth in an user-generated content on this social networking website among both the free and the pay members. Most important, the Classmates Media segment again posted impressive top line growth and exceptional operating leverage that Scott Ray will address later in his remarks. Anecdotally, I just to point that in the 12 months ended June 30, 2008, we added 1.1 million net new paid subscribers in the Classmates Media segment going to 2.7 million up to 3.8 million paid subscribers; truly remarkable performance.