The Cobalt Group Announces Fourth Quarter and Fiscal Year End 1999 Financial Results
26 January 2000
The Cobalt Group Announces Fourth Quarter and Fiscal Year End 1999 Financial Results
SEATTLE--Jan. 26, 2000--| - | Sequential Quarterly Revenues Grow 19% to $8.4 million; Quarter-over-Quarter Revenues Up 270% |
| - | Fourth Quarter Loss Up 33% from '98. Net Loss for the Year Up Over $11 million. |
| - | Strategic Initiatives, Key Partnerships and Aggressive Product Launches Strengthen Business-to-Business Service Offerings |
| - | Sale of YachtWorld Division Increases Liquidity for Continued Growth |
| - | John Holt Named President and Chief Executive Officer |
The Cobalt Group, Inc. , a leading provider of Internet solutions for the automotive industry, today announced financial results for its fourth quarter and fiscal year ending December 31, 1999.
Net loss for the fourth quarter of 1999 was $4.8 million, or $0.29 per share, compared to a net loss of $5.5 million, or $0.37 per share for the previous quarter and a net loss of $3.6 million or $1.15 per share in the fourth quarter of 1998. Net loss for the year ending December 31, 1999 was $16.5 million, or $1.22 per share as compared to $5.1 million, or $1.57 per share for the year ending December 31, 1998. Revenues for the fourth quarter of 1999 increased 19% to $8.4 million from revenues of $7.0 million in the third quarter of 1999, and they increased 270% from revenues of $2.3 million in the fourth quarter of 1998. For the year ending December 31, 1999, revenues increased 273% to $23.3 million from revenues of $6.2 million in the year ending December 31, 1998.
During the fourth quarter, $5.7 million in revenues were derived from Internet marketing services. This compares to $4.2 million for the third quarter of 1999. The remaining $2.7 million in fourth quarter revenues was attributable to Cobalt's PartsVoice subsidiary.
All per share amounts are computed on a pro forma basis, which assumes conversion of the convertible preferred stock from the original date of issuance.
"We are very pleased to report record results for our first full quarter as a public company," stated John Holt, president and CEO of The Cobalt Group, Inc. "Since completing our initial public offering in August, we have made major strides towards becoming a leading provider of Internet-based business-to-business solutions for the automotive industry."
The Cobalt Group ended the fourth quarter with approximately 5,200 dealer Web site clients, over 10,000 dealers using its parts locating system and relationships with 16 automotive manufacturers and more than 50 of the 100 largest dealer groups in the United States.
Holt added, "In line with our strategic goals we have established the largest dealer network in the auto industry, as well as key associations with the National Automotive Dealers Association, Excite@Home, InfoSpace.com, and BuySellBid.com. Combined with a number of new product launches, additional manufacturer partners, the development of MotorPlace.com, and the acquisitions of PartsVoice and IntegraLink, the Company is positioned to grow and leverage its dealer network, and provide deep technology solutions for our dealer and manufacturer clients."
RECENT HIGHLIGHTS
| -- | On January 20, 2000 The Cobalt Group launched MotorPlace.com, a business-to-business vertical portal for the automotive industry. The site aggregates vehicle and parts data from Cobalt's more than 12,000 auto dealer clients to create an e-commerce marketplace for dealers and other industry participants. Dealers will be able to use MotorPlace.com to buy, sell and trade new and used vehicles and original equipment manufacturer (OEM) parts with other dealers. The site will also allow dealers to combine their purchasing power to make discounted purchases of goods and supplies. |
| -- | The National Automobile Dealers Association (NADA) and The Cobalt Group announced an unprecedented partnership on January 10, 2000 to launch an industry-wide e-commerce push aimed at increasing dealer Web site utilization and create a comprehensive automotive consumer portal. The partnership was launched at the recently-ended NADA convention in Orlando, where the Company generated hundreds of leads and signed up new dealer Web site customers at monthly subscriptions more than double the current average dealer spend. |
| -- | The Cobalt Group announced its intention to expand the Company's data collection capabilities on January 14, 2000 with the acquisition of IntegraLink, a provider of advanced data extraction and reporting services. IntegraLink provides third generation data extraction capabilities to 2,700 dealers and will add efficiencies to Cobalt's PartsVoice operation. |
| -- | In recent weeks, The Cobalt Group announced partnerships to expand consumer choice in online car shopping by providing its new and/or used vehicle listings to Excite@Home, InfoSpace.com and BuySellBid.com. In turn, Cobalt's dealer clients have gained exposure to millions of online car buyers nationwide. |
| -- | The Cobalt Group announced in December that Kia Motors America had chosen Cobalt's PartsVoice subsidiary as the exclusive contract vendor for the Kia National Parts Locator. This service markets Kia dealers' original equipment inventory to anyone searching for Kia parts, including Kia dealers, non-Kia dealers, repair/body shops, fleet and insurance companies and do-it-yourselfers. Kia was the fifth manufacturer in 1999 to choose Cobalt to provide exclusive Web site services or parts locator services to its dealer network. |
| -- | The Cobalt Group has recently launched new Internet-based software applications to help dealers service their online customers, including: Lead Manager, which tracks lead response time and sales closing ratios for Internet leads; AdWizard Plus, an online advertising application that allows dealers and manufacturers to create custom advertising campaigns for their Web sites; Service Solution 2-1-1, a Customer Relationship Management tool that helps dealers retain owners and increase their service business; and Finance Solution 2-1-1, an Internet services package that contains loan calculators and Kelley Blue Book used car pricing. |
SALE OF YACHTWORLD.COM DIVISION
The Cobalt Group today announced that it sold its YachtWorld.com division for $14.0 million in cash and notes as well as warrants to purchase common stock of Boats.com, Inc. "Though YachtWorld.com has been part of the Company since its inception, we want to focus all of our energies on strengthening our leadership position in the automotive industry," said Holt. "The cash proceeds will provide us with additional liquidity and help fuel our aggressive efforts to grow market share and develop leading technology solutions for the world's largest consumer vertical."
HOLT BECOMES PRESIDENT AND CHIEF EXECUTIVE OFFICER
Concurrent with the announcement of the Company's 1999 financial results, John Holt has been named to the position of president and chief executive officer. The role of chief executive officer was previously shared between Holt and Geof Barker. Barker will consult with the Company and remain a member of the Board of Directors.
"Since co-founding the Company, John has become an industry spokesman for the new, digital dealer," said Howard Tullman, chairman of The Cobalt Group's Board of Directors. "We are delighted that he will lead the Company as it continues to build its growing leadership position as a premier provider of business-to-business services to auto dealers and manufacturers."
"This change formalizes an evolution that has been underway for some time," said Barker. "John has always had a more direct involvement in day-to-day operations as well as in setting the Company's strategic direction, while I've focused primarily on fundraising and acquisitions and dispositions. Now that the Company is public, I look forward to helping Cobalt with strategic initiatives at the Board level."
"Geof has been a close friend and partner throughout Cobalt's evolution," commented Holt. "I would like to thank him for his support during this period of change and I look forward to working together in our respective new roles."
Prior to Cobalt, Holt developed and directed an affiliate label publishing program for IVI Publishing. He also served as vice president for growth and development at Oceantrawl Inc., one of the world's largest seafood processing companies. Holt has a master's degree from The Yale School of Management and a bachelor's degree from Bowdoin College.
ABOUT THE COBALT GROUP
The Cobalt Group(TM) , based in Seattle, is a leading provider of Internet-based products and services for the automotive industry. Through Internet-based application development and hosting, data management, and online car referral services, Cobalt helps dealers, dealer groups and automobile manufacturers harness the power of the Internet to realize new efficiencies, win new prospects and better serve their customers.
With approximately 5,200 dealer Web site clients, over 10,000 dealers using its parts locating system, and relationships with 16 automotive manufacturers and more than 50 of the 100 largest dealer groups in the United States, Cobalt is one of the leading technology companies serving the automotive industry. Cobalt operates MotorPlace.com(TM) (www.motorplace.com), a business-to-business vertical portal for the automotive industry; DealerNet(R) (www.dealernet.com), one of the best-known automotive destination sites on the Web; and PartsVoice(R) (www.partsvoice.com), a leading OEM auto parts locating and data management service.
Cobalt offers Web site services that are endorsed by the National Automobile Dealers Association.
For more information, please visit The Cobalt Group at www.cobaltgroup.com
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release may contain forward-looking statements relating to the development of Cobalt's products and services and future operating results, including statements regarding future market share and new products and services. The words "believe," "expect," "intend," "anticipate," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Actual results may vary significantly from the results expressed or implied in such statements. For a discussion of the risks that could affect Cobalt's future performance, please see "Risk Factors" in Cobalt's most recent quarterly report on Form 10-Q, as filed with the Securities and Exchange Commission. Cobalt undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.
Cobalt, The Cobalt Group, DealerNet, PartsVoice, IntegraLink, AdWizard, and MotorPlace.com are trademarks of The Cobalt Group, Inc. All other trademarks are the property of their respective owners.
(Tables to Follow)
The Cobalt Group, Inc.
Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share amounts)
Three months ended Twelve months ended
December 31, December 31,
------------------ -----------------
1998 1999 1998 1999
------- ------ ------- -------
(unaudited)
Revenues $ 2,261 $ 8,375 $ 6,245 $ 23,286
Cost of revenues 453 1,676 1,199 4,819
---------- ---------- -------- ----------
Gross profit 1,808 6,699 5,046 18,467
Operating expenses
Sales and marketing 1,482 3,815 4,048 11,591
Product development 352 1,333 961 3,168
General and
administrative 1,616 4,816 4,328 13,201
Amortization of
intangible assets 74 1,330 299 3,694
Stock-based
compensation 527 424 806 2,806
---------- ---------- -------- ----------
Total operating
expenses 4,051 11,718 10,442 34,460
---------- ---------- -------- ----------
Loss from operations (2,243) (5,019) (5,396) (15,993)
Gain on sale of
HomeScout -- -- 1,626 --
Common stock repurchase (1,384) -- (1,384) --
Interest expense (35) (67) (93) (993)
Other income, net 94 257 142 485
---------- ---------- -------- ----------
Net loss $ (3,568) $ (4,829) $(5,105) $(16,501)
========== ========== ======== ==========
Net loss available to
common shareholders $ (12,385) $ (4,829) $(13,930) $ (18,042)
========== ========== ======== ==========
Basic and diluted net
loss per share $ (8.35) $ (0.29) $ (4.74) $ (2.26)
========== ========== ======== ==========
Weighted-average
shares outstanding 1,483,686 16,850,441 2,938,460 7,971,443
========== ========== ======== ==========
Pro forma net loss
available to common
shareholders
(unaudited) $ (11,830) $ (4,829) $(13,367) $ (16,501)
========== ========== ======== ==========
Pro forma basic and
diluted net loss per
share (unaudited) $ (1.15) $ (0.29) $ (1.57) $ (1.22)
========== ========== ======== ==========
Pro forma
weighted-average
shares outstanding
(unaudited) 10,261,027 16,850,441 8,530,634 13,519,898
========== ========== ======== ==========
The Cobalt Group, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
December 31, December 31,
1998 1999
-------------- --------------
Assets
Current assets
Cash and cash equivalents $ 5,756 $14,224
Short-term investments 983 --
Accounts receivable, net of
allowance for doubtful
accounts of $85 and
$497, respectively 1,250 4,581
Other current assets 130 2,225
------ ------
8,119 21,030
Capital assets, net of
accumulated depreciation
of $410 and $1,707,
respectively 1,453 4,636
Intangible assets, net of
accumulated amortization
of $321 and $4,016,
respectively 479 27,330
Other assets 11 1,036
------ ------
Total assets $10,062 $54,032
====== ======
Liabilities, Mandatorily Redeemable Convertible Preferred Stock and
Shareholders' (Deficit) Equity
Current liabilities
Accounts payable $ 191 $ 2,020
Accrued liabilities 776 1,520
Deferred revenue 1,290 2,456
Software financing
contract, current portion -- 362
Capital lease obligations,
current portion 328 844
------ ------
2,585 7,202
Non-current liabilities
Software financing
contract, non-current
portion -- 28
Capital lease obligations,
non-current portion 557 1,217
------ ------
557 1,245
Mandatorily redeemable
convertible preferred stock
Series A; $0.01 par value
per share; 2,106,282
and 0 shares issued
and outstanding; redemption
and liquidation value
of $1,158 and $0 1,116 --
Series B; $0.01 par value
per share; 7,047,620 and
0 shares issued and
outstanding; redemption
and liquidation value of
$29,600 plus unpaid
dividends and $0 30,046 --
------ ------
31,162 --
Shareholders' (deficit)
equity
Preferred stock; $0.01
par value per share;
100,000,000 shares
authorized; 9,153,902 and
0 shares issued and
outstanding as mandatorily
redeemable convertible
preferred stock -- --
Common stock; $0.01
par value per share;
200,000,000 shares
authorized; 1,343,898 and
16,855,431 issued and
outstanding, respectively 13 169
Additional paid-in capital 2,435 89,957
Deferred compensation (1,686) (3,036)
Notes receivable from
shareholders (144) (144)
Accumulated deficit (24,860) (41,361)
-------- --------
(24,242) 45,585
-------- --------
Total liabilities,
mandatorily redeemable
convertible preferred
stock and shareholders'
(deficit) equity $ 10,062 $ 54,032
======== ========