The Cobalt Group Announces Record Second Quarter 2000 Financial Results
25 July 2000
Revenue Grows 18% Sequentially and 103% Year-over-Year
SEATTLE - The Cobalt Group, Inc. today confirmed its leadership position among suppliers of Internet-based products and services for the automotive industry with its announcement of record financial results for the second quarter ended June 30, 2000."We are pleased with the strong operating and financial progress we made in the second quarter," said John Holt, president and CEO of The Cobalt Group. "Our partnerships with DaimlerChrysler and Thrifty Car Sales as well as our launches of the DriversSeat.com and buyatoyota.com Web portals represent important strategic advances. The company's financial results reflect this strategic momentum. "
Revenue for the second quarter of 2000 increased to $11.0 million, up from $9.3 million for the first quarter of 2000 and $5.4 million for the second quarter of 1999, increases of 18% and 103% respectively. Revenue for the six months ended June 30, 2000 was $20.3 million, up from $7.9 million for the comparable six-month period in 1999. Cobalt's revenue was earned primarily from:
| -- | network products and services revenue of $7.9 million or 71% of total revenue, as compared to $6.3 million or 67% of total revenue in the first quarter of 2000 and $3.6 million or 67% of revenue in the second quarter of 1999; and |
| -- | vehicle parts locating and data collection services revenue of $ 3.1 million or 29% of revenue, as compared to $3.0 million or 33% of total revenue in the first quarter of 2000 and $1.8 million or 33% of revenue in the second quarter of 1999. Cobalt reported a net loss of $4.7 million or $0.27 per share for the second quarter, ahead of First Call consensus estimates of a $0.36 per share loss. The company reported a net loss of $3.4 million or $0.20 per share in the first quarter of 2000, excluding a one-time gain of $6.4 million on the sale of the company's YachtWorld division. For the second quarter of 1999 the company reported a net loss of $3.8 million or $0.33 per share. Per share amounts for 1999 are computed on a pro forma basis, assuming conversion of convertible preferred stock that was outstanding in 1999 from the original date of issuance. "Revenue for the second quarter benefited from a number of special Web site development projects," said David Snyder, executive vice president and chief financial officer of The Cobalt Group, "while also reflecting the significant expenses associated with work Cobalt completed in advance of rolling out the DaimlerChrysler dealer Web site initiative. Second quarter results also reflect new investments the company is making in customer care and technology infrastructure." "We will continue to strategically invest to secure our position as one of the leading business-to-business solution providers to the automotive industry," stated Holt. "We are enthusiastic about our plans to launch our eCare customer service group and our progress in laying the groundwork for a major rebuilding of our core technology architecture. Cobalt's additional financial backing from Warburg Pincus and First Analysis, announced in June, supports our growth strategy, and gives us the resources to continue attracting talented employees." Cobalt ended the second quarter with approximately 6,000 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. Recent Highlights - Building For Growth |
| -- | On June 27, 2000, a group of private investors including
Warburg, Pincus Equity Partners, L.P., First Analysis Venture
Capital and Third Point Partners L.P. committed to make a $15
million equity investment in Cobalt. The investment was
structured as a market-priced put option expiring in November
of 2000, which provides the company with the opportunity to
raise more attractive financing should the capital markets be
receptive. |
| -- | On June 26, 2000, Cobalt and the National Automobile Dealers
Association launched DriversSeat.com, a comprehensive Internet
portal that links consumers directly to dealer Web sites,
giving them instant access to over 550,000 listings of new and
used vehicles. |
| -- | On May 22, 2000, Thrifty Car Sales selected Cobalt to be the
exclusive provider of Internet services to its 60 planned
nationally-franchised used car dealerships. Cobalt will
provide its industry-leading Internet solutions to all dealers
who join the Thrifty Car Sales dealer network. Following the
launch of the dealer Web sites, Cobalt will develop a national
consumer automotive portal for Thrifty Car Sales and an
Intranet that will include reporting services, inventory
distribution and Internet marketing services. |
| -- | On May 15, 2000, Cobalt and Chrome Data announced a
partnership to implement Chrome's vehicle data and
configuration tool, Web Carbook, in Cobalt-built dealer Web
sites. Chrome's Web Carbook ensures accurate pricing and
vehicle specification information on dealer Web sites. |
| -- | On May 2, 2000, DaimlerChrysler chose Cobalt to be its partner
in a significant e-commerce initiative grounded in Cobalt's
Web site development, management and hosting expertise. Cobalt
will build custom Web sites for more than 2,000 Chrysler, Jeep
and Dodge Five Star Dealers and integrate them with
DaimlerChrysler's corporate Web site and central database. The
initial term of the agreement is through the year 2002, with
an optional contract extension through 2004. |
| -- | On April 25, 2000, Cobalt and Toyota Motor Sales, USA, Inc.
launched buyatoyota.com in the Northwest. Buyatoyota.com is an
Internet retailing pilot program that partners Cobalt's
Internet technology with Toyota Motor Sales, USA, Inc. and 19
dealerships from the Western Washington Toyota Dealers
Association. |
| -- | During the second quarter, Cobalt strengthened its management team to support its long-term growth initiatives. New executives include: David Snyder as executive vice president and chief financial officer; Terry Smail as executive vice president of sales and account services; Mike Bell as vice president and general manager of PartsVoice; Chuck Russo as vice president of account services and general manager, Detroit; Kevin Distelhorst as vice president and general manager, IntegraLink; and Julia Pizzi, vice president of human resources. These executives bring deep experience and records of significant achievement to their new positions at Cobalt. |
The Cobalt Group , based in Seattle, is a leading provider of Internet-based products and services for the automotive industry. 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 6,000 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, a business-to-business vertical portal for the automotive industry; DealerNet, one of the best-known automotive destination sites on the Web; and PartsVoice, a leading OEM auto parts locating and data management service. The Cobalt Group also owns IntegraLink Corporation, the auto industry's premier provider of advanced data collection and reporting services. Cobalt offers Web site services that are endorsed by the National Automobile Dealers Association.
The Cobalt Group has offices in Seattle, WA; Portland, OR; Detroit, MI; Columbus, OH; and Austin, TX.
The Cobalt Group
Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
---------- ---------- ---------- ----------
2000 1999 2000 1999
---------- ---------- ---------- ----------
Gross revenues $ 10,988 $ 5,409 $ 20,272 $ 7,862
Less: Amortization
of non-cash equity
discounts 14 -- 14 --
---------- ---------- ---------- ----------
Net Revenues 10,974 5,409 20,258 7,862
Cost of Revenues 2,192 1,097 3,967 1,637
---------- ---------- ---------- ----------
Gross Profit 8,782 4,312 16,291 6,225
Operating expenses
Sales and Marketing 5,172 2,449 9,448 4,099
Product development 1,682 601 2,936 1,002
General and
administrative 5,020 2,685 8,803 4,493
Amortization of
intangible assets 1,584 924 3,092 986
Stock-based
compensation 250 995 540 1,330
---------- ---------- ---------- ----------
Total operating
expenses 13,708 7,654 24,819 11,910
---------- ---------- ---------- ----------
Loss from operations (4,926) (3,342) (8,528) (5,685)
Interest expense ( 151) ( 503) ( 219) ( 552)
Interest income 381 36 698 93
Gain on sale of
YachtWorld -- -- 6,446 --
Other income, net 10 -- ( 56) --
---------- ---------- ---------- ----------
Net loss $ (4,686) $ (3,809) $ (1,659) $ (6,144)
========== ========== ========== ==========
Net loss available to
common shareholders $ (4,686) $ (4,457) $ (1,659) $ (7,383)
========== ========== ========== ==========
Basic and diluted net
loss per share $ ( 0.27) $ ( 2.32) $ ( 0.10) $ ( 4.33)
========== ========== ========== ==========
Weighted-average
shares outstanding 17,430,769 1,920,262 17,254,883 1,703,204
========== ========== ========== ==========
Pro forma net loss
available to common
shareholders $ (3,809) $ (6,144)
========== ==========
Pro forma basic and
diluted net loss per
share $ ( 0.33) $ ( 0.56)
========== ==========
Pro forma weighted-
average shares
outstanding 11,417,708 11,029,827
========== ==========
The Cobalt Group
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
June 30, December 31
2000 1999
------- -------
(unaudited)
Assets
Current Assets
Cash and cash equivalents $12,530 $14,224
Accounts receivable, net of allowance for
doubtful accounts of $794 and $497
respectively 7,720 4,581
Note receivable from Boats.com, Inc. 7,146 --
Other current assets 972 2,225
------- -------
28,368 21,030
Capital assets, net 7,121 4,636
Intangible assets, net 27,971 27,330
Other assets 1,487 1,036
------- -------
Total assets $64,947 $54,032
======= =======
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 1,724 $ 2,020
Accrued liabilities 1,807 1,520
Deferred revenue 3,195 2,456
Deferred gain on sale of YachtWorld 7,000 --
Notes payable 258 --
Software financing contract, current
portion 777 362
Capital lease obligation, current portion 656 844
------- -------
15,417 7,202
Non-current liabilities
Software financing contract, non-current
portion 262 28
Capital lease obligations, non-current
portion 1,986 1,217
------- -------
2,248 1,245
Shareholders' equity
Preferred stock; $0.01 par value per
share; 100,000,000 shares authorized;
0 shares issued and outstanding -- --
Common stock; $0.01 par value per share;
200,000,000 shares authorized;
17,563,942 and 16,855,431 issued and
outstanding, respectively 176 169
Additional paid-in capital 106,336 89,957
Deferred equity expenses (16,066) ( 3,036)
Notes receivable from shareholders ( 144) ( 144)
Accumulated deficit (43,020) (41,361)
------- -------
47,282 45,585
------- -------
Total liabilities and shareholders'
equity $64,947 $54,032
======= =======