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Press release from Marketwire

Cyberplex Reports Record Third Quarter Results

Thursday, November 11, 2010

Cyberplex Reports Record Third Quarter Results16:01 EST Thursday, November 11, 2010TORONTO, ONTARIO--(Marketwire - Nov. 11, 2010) - Cyberplex Inc. (TSX:CX) a leader in online publishing and customer acquisition strategies today announced financial results for the third quarter ended September 30, 2010.2010 Third Quarter HighlightsQuarterly revenue of $44.7 million, highest in the history of the Company Revenue increased 145% quarter-over-quarter and 59% compared to the same quarter in the previous year Record EBITDA of $5.3 million, on an adjusted basis, versus $0.5 million in the prior quarter and $2.9 million during same period a year ago 75% of owned websites promoting cost-per-action advertisements from the performance network division, as compared to 10% from the previous quarter Acquisition of Surebaby.com, a content rich website adding to our Family category of websites Results for the Third Quarter of 2010"During the third quarter, the Company generated its best quarterly results ever with record revenue and adjusted EBITDA" said Geoffrey Rotstein, Chief Executive Officer of Cyberplex. "Cyberplex has a unique value proposition, which is resonating strongly in our industry. With over 300 owned and operated websites and access to thousands of other web publishers, we can now connect advertisers to relevant and targeted customers more effectively than ever before."Third quarter revenue of $44.7 million was up over 145% from the $18.2 million recorded in the second quarter of 2010 and up significantly over the $28.2 million generated during the same quarter of last year. Gross margin for the quarter was 29%, which is consistent with the 30% from last quarter, and income before amortization, interest, and income taxes and certain non-recurring restructuring costs for the quarter was $5.3 million. The net loss for the quarter of $488,000 was a direct result of additional amortization charges relating to the intangible assets acquired and to a lesser extent, additional interest expense relating to certain debt instruments. In the future, the Company expects to have significant amortization resulting from these intangible assets and as a result, the Company will use financial metrics excluding these amounts to evaluate its performance.During the quarter, three new web properties were added to the publishing operations. The Company developed two new websites for its Health and Home verticals, and completed the acquisition of Surebaby.com, a leading web property that will add strength to its Family vertical. All of these properties further the Company's strategy of owning content-rich publishing assets in important advertising sectors that help advertisers achieve better conversions. The acquisition of Surebaby.com, although small, exemplifies one strategy the Company is taking to increase targeted organic traffic. "Strategic websites with strong organic traffic represent great acquisition opportunities for us" said Ted Hastings, President of Cyberplex. "Once added to our publishing and search marketing platform, we are able to optimize and significantly grow both organic and targeted paid search traffic to these sites and enhance their profitability."The performance marketing network demonstrated continued progress during the quarter, with a reduced cost structure and a more diverse base of publishers capable of accelerating efforts to attract and retain more established and brand name advertisers. With a stronger foundation for cost-per-action marketing, the performance network is better positioned to build back to historical levels of profitability.The Company is very pleased with its progress to date, and expects to meet or exceed the financial guidance provided last quarter. The financial guidance figures provided last quarter were for second half 2010 revenue to range between $75 million and $85 million and second half 2010 adjusted EBITDA to be in the $10 million to $12 million range.Non-GAAP Financial MeasuresThis press release includes a discussion of "Adjusted EBITDA," which is a non-GAAP financial measure. The Company defines Adjusted EBITDA as net income before (a) interest income (expense); (b) income tax provision (recovery); (c) amortization of capital and intangible assets; (d) foreign exchange loss (gain); (e) stock-based compensation expense related to the Company's grant of stock options and (f) employee termination costs.Management uses Adjusted EBITDA as a measurement of the Company's operating performance because it provides information related to the Company's ability to provide cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.The non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.The table below reconciles net income (loss) and Adjusted EBITDA for the periods presented:Three months ended September 30,Nine months ended September 30,2010200920102009Net income (loss)$(488,180)$712,371$(1,306,916)$5,846,892Add:Amortization of capital and intangible assets4,800,937112,2906,212,101284,080Interest expense (income), net1,018,479(4,270)1,302,80651,831Foreign exchange (gain) loss(369,097)1,635,637(716,487)2,448,228Employee termination costs159,822-159,822-Stock-based compensation98,362232,077332,958537,813Income tax expense (recovery)65,820246,883(41,046)384,457Adjusted EBITDA$5,286,143$2,934,988$5,943,238$9,553,301Conference Call DetailsIn conjunction with the release, Cyberplex will host a conference call on Thursday November 11, 2010 at 4:30 p.m. EST to discuss the financial results and walk through an investor presentation. To access the call, please dial 1-888-892-3255. Please call five minutes prior to the call and for access to the presentation please visit the investor relations section of the Company's website at www.cyberplex.com. A replay of the conference call will be available as of 12:00 a.m. November 12, 2010. To access the replay of the conference call dial the toll free number: 1-800-937-6305, followed by the playback pass-code: 577517.About CyberplexCyberplex Inc. (www.cyberplex.com) is a North American leader in online publishing and customer acquisition strategies. The Company, through its subsidiaries, leverages over 300 proprietary web properties and its vast publisher network to efficiently connect advertisers to their most relevant online customers and prospects. By combining high quality publishing initiatives with efficient technology solutions and online marketing expertise, the Company is able to deliver the optimal targeted audience to online advertisers. Cyberplex delivers measurable results that improve advertiser ROI, monetize the value of online properties, and build targeted, loyal online audiences.Forward-Looking StatementsThis news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward- looking statements. Cyberplex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.CYBERPLEX INC.UNAUDITED INTERIM CONSOLIDATED BALANCE SHEETSas atas atSeptember 30,December 31,20102009ASSETSCurrent Assets:Cash$5,271,293$10,222,001Restricted marketable securities4,302,613-Short-term investments3,208,78411,540,642Accounts receivable, net of allowance for doubtful accounts of $2,564,758 (2009 -$2,270,977)28,997,4049,930,149Prepaid expenses and other assets5,252,0043,303,81947,032,09834,996,611Capital assets3,588,5851,432,309Intangible assets59,700,321287,500Goodwill19,290,97314,095,708Future tax assets1,320,266582,740$130,932,243$51,394,868LIABILITIES AND SHAREHOLDERS' EQUITYCurrent Liabilities:Accounts payable and accrued liabilities$17,770,652$4,270,080Current portion of term loans8,657,831-Unearned revenue630,798668,255Income taxes payable555,504631,465Deferred lease inducements110,420106,61827,725,2055,676,418Long-term portion of term loans26,893,630-Future income tax liabilities652,287-Deferred lease inducements217,336156,119Shareholders' equity75,443,78545,562,331$130,932,243$51,394,868CYBERPLEX INC.UNAUDITED INTERIM CONSOLIDATED STATEMENT OF OPERATIONSThree months endedNine months endedSeptember 30, 2010September 30, 2009September 30, 2010September 30, 2009Revenue$44,719,634$28,198,918$75,229,598$86,063,630Cost of revenue31,558,26120,337,52353,367,63360,557,84813,161,3737,861,39521,861,96525,505,782Expenses:Sales and marketing3,287,6603,083,3847,437,27310,593,528General and administrative4,845,7542,075,1008,974,2355,896,766Foreign exchange (gain) loss(369,097)1,635,637(716,488)2,448,228Income before the undernoted5,397,0561,067,2746,166,9456,567,260Amortization of capital assets809,832112,2901,141,955284,080Amortization of intangible assets3,991,105-5,070,146-Income (loss) from operations596,119954,984(45,156)6,283,180Interest expense(1,026,896)(12,761)(1,355,666)(74,518)Interest income8,41717,03152,52922,687Gain on sale of investment--331-Income (loss) before income taxes(422,360)959,254(1,347,962)6,231,349Income tax expense (recovery)65,820246,883(41,046)384,457Net income (loss)(488,180)712,371(1,306,916)5,846,892Unrealized gain (loss) on available-for-sale securities, net of tax of nil(41,690)207,625(102,936)308,680Foreign currency translation adjustment(2,774,565)-(1,597,245)-Comprehensive income (loss)$(3,304,435)$919,996$(3,007,097)$6,155,572Income (loss) per share:Basic$(0.00)$0.01$(0.01)$0.10Diluted(0.00)0.01(0.01)0.09Weighted average number of common shares used in income (loss) per share:Basic128,056,88168,260,32488,670,86260,660,408Diluted128,056,88170,626,98288,670,86263,072,304CYBERPLEX INC.UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWSThree monthsNine monthsended September 30ended September 302010200920102009Cash flows from (used in) operating activities:Net income (loss)$(488,180)$712,371$(1,306,916)$5,846,892Items not involving cash:Amortization of capital assets809,832112,2901,141,955284,080Amortization of intangible assets3,991,105-5,070,146-Amortization of deferred lease inducements(29,182)(23,189)(83,428)(55,903)Stock-based compensation98,362232,077332,958537,813Unrealized foreign exchange loss (gain)57,814259,579102,416401,867Future income taxes458,179-255,606-Change in non-cash operating assets & liabilities569,928(1,420,187)(1,021,337)(649,953)5,467,858(127,059)4,491,4006,364,796Cash flows from (used in) financing activities:Decrease in bank indebtedness---(3,535,264)Proceeds from exercise of stock options28,60043,66637,000231,932Proceeds from exercise of warrants-106,166-216,667Proceeds from public offering, net of issuance costs-(55,510)-15,887,291Proceeds from private placement, net of issuance costs(26,482)-30,772,593-2,11894,32230,809,59312,800,626Cash flows from (used in) investing activities:Sale (purchase) of short-term investments(3,043,919)(2,446,750)8,228,922(13,867,443)Sale (purchase) of restricted marketable securities(403,040)-(403,040)-Acquisition of TSAVO, net of cash acquired(4,524,426)-(46,486,064)-Acquisition of CXD, net of cash acquired---(2,400,000)Acquisition of Eidenai Innovations Inc., net of cash acquired---(91,330)Additions to intangible assets(419,704)-(520,487)-Additions to capital assets(607,974)(240,883)(968,616)(552,841)(8,999,063)(2,687,633)(40,149,285)(16,911,614)Foreign exchange gain (loss) on cash held in foreign currency(57,814)(259,579)(102,416)(401,867)Increase (decrease) in cash(3,586,901)(2,979,949)(4,950,708)1,851,941Cash beginning of period8,858,1949,828,78710,222,0014,996,897Cash end of period$5,271,293$6,848,838$5,271,293$6,848,838FOR FURTHER INFORMATION PLEASE CONTACT: David KatzCyberplex Inc.EVP Corporate Development416.597.8889416.597.2345 (FAX)press@cyberplex.com