InfoSpace Announces Fourth Quarter and Full Year 2006 Results

InfoSpace Announces Fourth Quarter and Full Year 2006 Results

InfoSpace, Inc. (NASDAQ: INSP) today announced financial results for the fourth quarter and the year ended December 31, 2006.

Revenues for the fourth quarter of 2006 were $89.3 million, reflecting a $2.8 million or 3% increase over the fourth quarter of 2005. Net income for the fourth quarter of 2006 was $30.0 million or $0.91 per diluted share versus net income of $37.9 million or $1.13 per diluted share in the fourth quarter of 2005. The fourth quarters of 2006 and 2005 included a tax benefit of $32.6 million and $25.4 million, respectively, primarily from realizing a deferred tax asset related to a portion of the Company’s net operating loss carryforwards. Additionally, the Company recorded stock-based compensation costs of $3.3 million and a restructuring charge of $4.5 million in the fourth quarter of 2006.

Revenues for the full year 2006 were $371.7 million, reflecting a $31.8 million or 9% increase over the full year 2005. Net loss for 2006 was $12.7 million or $0.41 per share versus net income of $159.4 million or $4.47 per diluted share in 2005. Included in the full year 2006 net loss were restructuring charges of $62.3 million, stock-based compensation costs of $16.9 million and the tax benefit referred to above. For the full year 2005, net income included a gain on the settlement of certain litigation matters of approximately $77 million, net of fees and income taxes, and also the tax benefit referred to above.

Cash, cash equivalents, and marketable investments as of December 31, 2006 totaled $401.9 million, a net increase of $26.6 million from the end of 2005. At the end of the year, the Company had no debt obligations.

“As we emerge from restructuring, our remaining business continues to generate solid cash flow and our strong balance sheet positions us for growth,” said Jim Voelker, chairman and chief executive officer of InfoSpace Inc.

Fourth Quarter and 2006 Segment Information and Adjusted EBITDA

Mobile

Mobile revenues were $47.5 million in the fourth quarter of 2006, an increase of $5.2 million or 12% from the fourth quarter of 2005. Mobile gross profit totaled $18.7 million or 39% of Mobile revenue for the fourth quarter of 2006. For the full year, Mobile revenues were $184.8 million, an increase of $27.4 million or 17% from 2005. Mobile gross profit totaled $73.2 million or 40% of Mobile revenue for 2006.

Online

Online revenues were $41.8 million in the fourth quarter of 2006, a decrease of $2.5 million or 6% from the fourth quarter of 2005. Online gross profit was $27.8 million or 66% of Online revenue for the fourth quarter of 2006. For the full year, Online revenues were $186.9 million, an increase of $4.3 million or 2% from 2005. Online gross profit totaled $120.2 million or 64% of Online revenue for 2006.

Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization (”Adjusted EBITDA”)

Adjusted EBITDA was $1.9 million in the fourth quarter of 2006, compared to Adjusted EBITDA of $15.8 million in the fourth quarter of 2005. For the full year, Adjusted EBITDA was a negative $27.8 million, compared to Adjusted EBITDA of $70.9 million for the full year 2005. InfoSpace’s Adjusted EBITDA is calculated by adjusting GAAP net income, which includes the effects of the restructuring charges, to exclude the effects of income taxes, depreciation, amortization of intangible assets, stock-based compensation expense, and other income, net (including such items as interest income, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed in the accompanying table to the condensed consolidated financial statements.

InfoSpace’s management believes that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses and gains that are not indicative of our core business operating results. InfoSpace believes that management and the investors benefit from referring to this non-GAAP financial measure in assessing InfoSpace’s performance. Adjusted EBITDA should be evaluated in light of the Company’s financial results prepared in accordance with GAAP. A table reconciling the Company’s Adjusted EBITDA to net income in accordance with GAAP accompanies the condensed consolidated financial statements in this release.

First Quarter Outlook

The Company’s guidance excludes the potential impact of any future one-time gains or losses. The Adjusted EBITDA guidance below has been prepared in a manner consistent with the historical Adjusted EBITDA data provided above and in the accompanying table.

For the first quarter of 2007, the Company expects revenue to be between $82 million and $84 million. Additionally, the Company expects Adjusted EBITDA to be between $6.5 million and $7.5 million and GAAP net loss to be between $1.0 million and $1.5 million, or $0.03 and $0.05 per share.

A conference call will be held today at 2 p.m. Pacific/ 5 p.m. Eastern. The live Webcast can be accessed in the Investor Relations section of the InfoSpace corporate Web site, at http://www.infospaceinc.com. A replay of the call will be available approximately one hour after the call through February 14, 2007, at 7:30 p.m. Pacific/ 10:30 p.m. Eastern.

About InfoSpace, Inc.

InfoSpace, Inc. is a leading developer of tools and technologies to help people discover and enjoy content and information — whether on a mobile phone or on the PC. The Company’s mobile platform and applications, such as InfoSpace Find It! (www.infospacefindit.com), create programming and sales opportunities for carriers, while satisfying consumer demand for highly relevant mobile functionality and content. InfoSpace uses its proprietary metasearch technology to power a portfolio of branded Web sites, including Dogpile (www.dogpile.com) and Zoo (www.zoo.com), a new kid-friendly search engine, and provide private-label search and online directory services to consumers on a global basis. More information can be found at www.infospaceinc.com.