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Stockgroup Reports First Quarter 2008 Results NEW YORK, NEW YORK--(MARKET WIRE)--May 14, 2008 -- Stockgroup Information Systems Inc. (OTC BB:SWEB.OB - News)(CDNX:SWB.V - News) today announced financial results for the first quarter
ended March 31, 2008. A conference call and webcast will
be held today at 4:05 PM EDT to discuss the results. All
results are reported in US Dollars under accounting principles
generally accepted in the United States of America (US GAAP).
Stockgroup revenues for the first quarter of 2008 were $3.5 million, an increase of 13 percent year-over-year. The Company posted a loss of $1.5 million, primarily due to higher costs associated with the development of Stockhouse during completion of the beta period, costs of sales associated with the mobile finance acquisition, and extraordinary professional fees related to year end filing. Stockhouse ended the quarter averaging 1.06 million unique visitors vs. 0.81 million an increase of 31% and 69 million page views vs. 79 million in Q1/08 vs. Q1/07. Q1'08 Financial Highlights Compared to Q1'07 - Increased revenues by 13% to $3.5 million - Licensing and subscription revenues increased 21% to $2.6 million - Advertising revenues decreased 5% to $875 thousand
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3-month Period 3-month Period
Ended March 31, Ended March 31,
2008 2007
($ '000's ($ '000's
except EPS) except EPS)
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Licensing/Subscription $ 2,624 $ 2,175
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Advertising $ 875 $ 925
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Total Revenues $ 3,499 $ 3,100
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Cost of Revenues
(excluding amortization) $ 1,469 $ 1,270
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Total Expenses (excluding
cost of revenues & amortization) $ 3,679 $ 2,393
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EBITDA(1) $ (1,565) $ (462)
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Net Income (Loss) $ (1,446) $ (557)
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EPS $ (0.04) $ (0.02)
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Cash $ 1,690 $ 2,821
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1. Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization is
a non-GAAP measure that does not have a standardized meaning and may not
be comparable to similar measures disclosed by other issuers. This
measure does not have a comparable US GAAP measure. EBITDA is calculated
as Income (Loss) from operations less depreciation, amortization, and
interest income and tax provision."At the end of the first quarter of FY2008 we completed the launch of Stockhouse, the largest project in the company's history," stated Marcus New CEO of Stockgroup. "The completion of the new Stockhouse enables Stockgroup to implement a number of planned initiatives to grow and monetize the site. We are now in a position to produce our own unique proprietary Stockhouse community news feed, distribute our news feed to additional media sites, and offer advertisers a single site to advertise on." Mr. New continued, "Advertising was impacted in Q1 due to having Stockhouse in beta which caused confusion for advertisers and advertising delivery problems caused by delivering to two sites. We feel these issues are now behind us. Going into Q2, we have a growing Stockhouse with one of the most lucrative demographics and the best engagement statistics in our category for advertisers, a new VP of Advertising Sales, and a new ad trafficking role filled." Stockgroup Strengthens Management Team During the quarter, Stockgroup added additional depth to its management team. Karl Buhr joined as Chief Operating Officer and brings more than 20 years experience in increasing the operations of fast growth companies. Mr. Buhr was formerly Chief Operating Officer of Telemedia where revenue grew 400 per cent before it was sold to Connectium Ltd. Prior to Telemedia he was Director of Operations at 365 Plc. an internet sports and direct response firm where revenues grew from $12 to $90 million. The company also added Dana Stetson as Vice President of licensing/subscription sales. Mr. Stetson was formerly Director of Sales for Lava Trading, which grew revenues from start up to $10 million in two years before bein sold to Citigroup. Prior to that, Mr. Stetson was VP of Sales for Dynamicsoft, which grew revenue in 5 years from start up to $25MM and was sold to Cisco. Subsequent to the quarter Theresa McVean joined as Vice President of advertising sales after a two year stint as Managing Director Online Advertising for Toronto Star/Star Media. Previously she held senior level positions at The Globe and Mail/Bell Globemedia, one of Canada's largest media companies, Euro RSCG 4D, the world's largest global interactive agency and CTVGlobemedia. Ms. McVean serves on the Interactive Advertising Bureau's (IAB) board of directors. Stockgroup Raises $3 million Subsequent to quarter end, Stockgroup announced it closed $3 million in funding from a Strategic Investor, PEAK6 Investment LP. Stockgroup's 2008 focus: 1. Increase traffic to Stockhouse We completed the new Stockhouse site during the first quarter and launched new content on Yahoo! Finance Canada. We are now in the process of implementing a new search engine optimization program as well as other marketing programs, including distributing our Stockhouse news feed to additional sites in order to increase usage on Stockhouse. Our usage remained strong during the first quarter, averaging 1.06 million unique users and generating more than 69 million page views. 2. Continue to increase the number of subscriptions to StockStream and StockStream Mobile. We announced a new distributor of our Stockstream mobile products during the first quarter. Trigcom AS entered into an agreement to sell our mobile streaming products in Norway. Trigcom imports and sells Blackberry smartphones in the Norwegian market. 3. Create and publish the Internet's first community financial news feed generated from our proprietary electronic reputation filtering system drawn from the citizen journalist and user generated content community on Stockhouse. The relaunch of Stockhouse, with our proprietary reputation content filtering technology, enables us to identify high-quality user generated content. We began testing our proprietary Stockhouse news feed and averaged over 60 stories a week by the end of the quarter. We plan on distributing our proprietary news feed to other websites and affiliates in Q2/Q3. 4. Launch a consumer wireless product. We made substantial progress in developing a consumer wireless product during the first quarter. We expect to launch the new product during at the beginning of the third quarter of 2008. Other Highlights in Q1 - Recruited new Director of Human Resources - Hired new advertising traffic manager - Implemented new client service and satisfaction program Conference Call and Web cast To participate in the conference call scheduled for 4:05pm EDT today, please call 1-866-400-3310 five to ten minutes prior to the start time. To listen to the live web cast, please go to www.stockgroup.com. The earnings call will be recorded and accessible on our website for a period of one month. Participants intending to access the web cast should have Windows Media® Player installed prior to connecting to the call. About Stockgroup Information Systems Inc. Stockgroup is a leading financial media Company focused on user-generated content and collaborative technologies. The Stockgroup(TM) platform for web-based portfolio management and financial content is licensed to top North American brokerage firms and media companies. This platform is also extended through Stockhouse.com, a leading online financial portal owned and operated by Stockgroup. Stockhouse is home to BullBoards(TM) message board - Canada's largest community of active investors. Recognized for its engaged audience, Stockhouse.com provides a sought-after demographic for advertisers. Legal notice regarding Trademarks "Stockgroup", "Stockhouse" and "BullBoards" are either registered trademarks or trademarks of Stockgroup Information Systems Inc. and/or its affiliated companies in Canada, the United States and/or other countries. "Microsoft", "Windows" and "Windows Media" are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. Other names may be trademarks of their respective owners. Legal notice regarding Forward Looking Statements This release contains "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this document include, but are not limited to, statements that: (i) Stockgroup's new "Reputation analytics" system works to solve the quality and relevancy problem associated with user generated content; (ii) the reputation of individuals who contribute content can be identified and ranked for the benefit of the community; (iii) Stockgroup believes it is at the leading edge of being able to serve citizen journalist contributors and filter the highest quality content to create a new community news feed on the stock market; (iv) the addition of reputation analytics, collaborative tools, citizen journalism and social networking features for investors to the Stockhouse website will further position Stockgroup as a leader in online financial media; (v) powerful reputation analytics will enable Stockhouse.com users to effectively search millions of user generated content items, filtered for quality and reputation of contributor, to help gain market advantage; Factors which could delay or prevent these forward looking statements from being achieved include that our product offerings may present greater technical challenges than anticipated, causing delays or preventing features we intend to offer; that competitors may offer better or cheaper alternatives to our products; we may lose key employees; we may not have sufficient capital to fund our plans; and that the market for our products may not grow. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this press release. In addition, this release should be read in conjunction with the Company's current periodic reports which are on file with the SEC and available at the SEC website at www.sec.gov. Stockgroup undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. All forward looking statements are qualified in their entirety by this cautionary statement. To find out more about Stockgroup (OTCBB: SWEB, TSX-V: SWB), visit our website at www.stockgroup.com.
Stockgroup Information Systems Inc.
CONSOLIDATED BALANCE SHEETS
(Expressed in Thousands of U.S. Dollars, except number of common shares)
(Unaudited)
March 31, December 31,
2008 2007
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ASSETS
Current Assets:
Cash and cash equivalents $ 1,690 $ 2,821
Accounts receivable (net of
allowances of $464 and $456) 2,019 1,906
Prepaid and other current assets 884 752
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TOTAL CURRENT ASSETS 4,593 5,479
Property and equipment, net (note 6) 695 703
Goodwill (note 3) 99 99
Intangible assets, net (notes 3 & 4) 1,386 1,530
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TOTAL ASSETS $ 6,773 $ 7,811
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable (note 6) $ 1,976 $ 1,818
Accrued liabilities (note 6) 2,956 2,824
Deferred revenues 1,265 1,341
Capital lease obligations 190 190
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TOTAL CURRENT LIABILITIES 6,387 6,173
Long-term payable 47 41
Long-term capital lease obligations 59 66
Long-term deferred revenues 34 15
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TOTAL LIABILITIES 6,591 6,295
Shareholders' Equity (note 5):
Common stock, no par value:
authorized 75,000,000 shares;
issued and outstanding 41,395,922 and
40,916,921 shares 19,027 18,902
Additional paid-in capital 3,703 3,652
Accumulated deficit (22,484) (21,038)
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TOTAL SHAREHOLDERS' EQUITY 246 1,516
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,773 $ 7,811
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Stockgroup Information Systems Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in Thousands of U.S. Dollars, except per share data)
(Unaudited)
Three Months Ended
March 31,
2008 2007
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REVENUES
Licensing and Subscriptions $ 2,624 $ 2,175
Advertising 875 925
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TOTAL REVENUES $ 3,499 $ 3,100
OPERATING COSTS AND EXPENSES
Cost of revenues (exclusive of
amortization) 1,469 1,270
Sales and marketing 1,385 1,093
Research and development 382 285
General and administrative 1,915 1,015
Amortization of intangible assets 144 -
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TOTAL OPERATING EXPENSES 5,292 3,663
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Loss from operations (1,793) (563)
Interest and other income, net (note 7) 347 7
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Net loss before income taxes (1,446) (556)
Provision for income taxes - 1
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Net loss and comprehensive loss $ (1,446) $ (557)
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Net loss per common share:
Basic and diluted $ (0.04) $ (0.02)
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Common shares used in computing
basic and diluted net loss per share
(thousands) 41,106 36,504
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Stockgroup Information Systems Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Thousands of U.S. Dollars)
(Unaudited)
Three Months Ended
March 31,
2008 2007
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Operating activities:
Net loss $ (1,446) (557)
Adjustments to reconcile net loss to
net cash (used in) / provided by
operating activities:
Amortization of property and equipment 84 101
Amortization of intangible assets 144 -
Stock-based compensation 60 34
Changes in operating assets and
liabilities:
Accounts receivable (113) 758
Prepaid and other current assets (132) (287)
Accounts payable 181 593
Accrued liabilities 133 (165)
Deferred revenues (57) (199)
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CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (1,146) 278
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Investing activities:
Purchases of property and equipment (13) (26)
Acquisition of Mobile
Finance Division (note 3) - (134)
Acquisition of Semotus Assets (18) -
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CASH USED IN INVESTING ACTIVITIES (31) (160)
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Financing activities:
Proceeds on exercise of stock options 116 38
Repayment of capital lease obligations (70) (39)
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CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 46 (1)
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Net (decrease) increase in
cash and cash equivalents (1,131) 117
Cash and cash equivalents,
beginning of period 2,821 2,013
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Cash and cash equivalents,
end of period $ 1,690 2,130
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Supplemental Cash Flow Information:
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Cash $ 1,689 $ 2,129
Cash Equivalents $ 1 $ 1
Interest paid $ 2 $ 5
Taxes paid $ 1 $ 1
Assets acquired through capital
lease transactions $ 63 $ 74
Value of shares issued for acquisition
of Mobile Finance Division $ - $ 840
Contact: Contacts:
Stockgroup Information Systems Inc.
Steve Gear, Director of Capital Markets
Investor Relations Contact
(604) 288-2861 or 1-800-650-1211
Email: ir@stockgroup.com
Website: http://www.stockgroup.com
Dukas Public Relations
Kathleen Corless
Media Contact
(212) 704-7385
Email: kathleen@dukaspr.com
Dukas Public Relations
Vanessa Kitchen
Media Contact
(212) 704-7385
Email: vanessa@dukaspr.com
Source: Stockgroup Information Systems Inc.
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