Excite@Home Reports First Quarter 2000 Financial & Operating Results
REDWOOD CITY, Calif., April 19 /PRNewswire/ -- Excite@Home today reported first quarter 2000 revenues of $138.0 million, an increase of 75% compared to pro forma revenues of $78.7 million in the first quarter of 1999. Pro forma results combine the historical results of Excite, Inc. and At Home Corporation, which merged on May 28, 1999.
Pro forma loss for the quarter was $4.6 million, or $0.01 per share, compared to a loss of $6.0 million, or $0.02 per share, in the first quarter of 1999. Pro forma loss for the quarter excludes net expenses of $671.9 million for the amortization of goodwill and other intangible assets, as well as the cost and amortization of distribution agreements and certain other non-operational gains and expenses.
In the first quarter Excite@Home's residential broadband subscriber base grew by approximately 350,000 net new subscribers to 1,500,000, an increase of 30% from 1,150,000 at year-end 1999. Total subscribers are up more than 220% from March 31, 1999.
Commenting on the quarter, Excite@Home president and CEO George Bell said, "This was our best quarter ever for broadband subscriber growth -- the most important measure in defining broadband leadership. In addition, with the launch of @Home 2000, our leadership now extends to the delivery of broadband content, fulfilling the vision of the merger between Excite and @Home.
"We are determined to grow these two key opportunities -- broadband access and media -- as quickly as possible by driving subscriber growth and by building compelling content and applications into our broadband media service," Bell added. "Securing long-term relationships with our largest cable partners, plus the addition of 15 million new homes to our footprint through our DSL deal with Rhythms, allows us to take a longer-term view of our growth opportunities."
Excite@Home chairman Tom Jermoluk added, "The new distribution agreements with our largest cable partners, AT&T;, Comcast and Cox, prove that we are in the broadband race for the long run, and that we are critical to our partners' success in rolling out broadband services. The agreements put us and our partners in position to drive robust growth through the delivery of broadband on a global scale."
Broadband Subscription Services
@Home Consumer Broadband Service
Excite@Home's addressable market for residential broadband services grew in the first quarter to approximately 26 million upgraded cable homes passed, up approximately 75% from 15 million homes a year ago. Excite@Home's 1,500,000 broadband subscribers represent a penetration rate of 5.7% of the upgraded footprint, up from 4.8% last quarter and 3.1% a year ago. Subscriber and addressable-market figures include areas served by Excite@Home affiliates that are currently being converted to the @Home service.
Excite@Home's global broadband footprint now totals 87 million homes under contract with 20 cable partners plus Rhythms NetConnections, a leading provider of high-speed access through digital subscriber line services. Excite@Home and Rhythms recently announced an agreement for Excite@Home to offer broadband access and content services via DSL to consumers in 15 million homes located outside of Excite@Home's cable footprint. The service, to be launched later this year, will utilize Excite@Home's existing broadband network, including its 15,000-mile fiber-optic backbone and its distributed array of regional high-speed transport and data-caching facilities. Subscribers will have access to the @Home 2000 service, including Excite broadband content, currently available to Excite@Home's cable modem subscribers.
@Work Business-to-Business Services
Excite@Home's commercial services division, @Work, continues to pursue its strategy of leveraging the Excite@Home network to provide connectivity and value-added services to businesses. @Work provides high-speed access to businesses, with total accounts activated exceeding 6,200 as of March 31, 2000, up from 5,100 last quarter and 2,300 a year ago. As an extension of its strategy, @Work offers Internet content providers access to the Excite@Home network. Earlier this month @Work and Equinix, Inc. announced an agreement under which Equinix data centers, which house content providers and e-commerce companies, will be connected directly to the Excite@Home network. The deal places the content and applications of Equinix's customers within easier reach of Excite@Home's 1.5 million broadband subscribers, enhancing the broadband subscriber experience and representing an incremental source of revenue to @Work.
Broadband Network Traffic Growth
Traffic on Excite@Home's broadband network is expanding rapidly as the base of residential and commercial broadband subscribers grows and as broadband subscribers continue to generate significantly more traffic than typical narrowband ISP users. Excite@Home's broadband subscriber base now generates an average of more than two gigabits of traffic per second through public and private Internet peering points, with peak traffic reaching up to five gigabits per second. This backbone traffic actually represents less than half of all traffic generated by Excite@Home's broadband subscribers, as the majority of broadband traffic is contained within Excite@Home's regional networks through the use of caching and distributed content feeds.
Media and Marketing Services
On April 4, 2000 Excite@Home launched @Home 2000 to all of its broadband subscribers in the U.S. @Home 2000 combines a software package designed for broadband-including a customized browser, the latest multimedia plug-ins and a suite of security features from McAfee.com -- with a completely new version of the Excite portal that is optimized for broadband. @Home broadband customers now have access to the breadth and depth of information and services available through Excite, including Excite's award-winning personalization capabilities, in addition to a wealth of multimedia content made possible by the speed of a broadband connection.
Traffic on the Excite Network, which includes Excite@Home's broadband and narrowband media properties, rose to 144 million average daily page views in March, an increase of 17% over December 1999 and 85% over March 1999. Cumulative registrations to Excite services totaled 64 million as of March 31, 2000, up from 51 million last quarter and 28 million a year ago. The Excite Network remains among the top five web media networks with over 30 million unique users, or 42.9% of all web users, in February according to Media Metrix. These measures exclude Excite@Home's broadband subscribers, which are not metered by Media Metrix.
Growth in traffic was driven by Excite.com as well as recently acquired properties Excite's Bluemountain and Excite's Webshots. Bluemountain.com remains the leading provider of online greeting-card services, with 16.6 million unique users in February according to Media Metrix. Bluemountain.com customers sent over 125 million electronic greeting cards during the first quarter, including 55 million in the month of February, which generated over 100 million page views on Valentine's Day alone.
Digital Marketing Services
Excite@Home's media properties serve the dual purposes of revenue generation through advertising sales and broadband subscriber acquisition through online marketing of the @Home service. MatchLogic, Excite@Home's advertising services subsidiary, uses its databases of anonymous user and permission-based e-mail profiles to deliver banner and e-mail ads. MatchLogic delivered 22 billion banner ad impressions and 57 million targeted e-mail marketing messages during the first quarter, increases of 40% and 12%, respectively, over the fourth quarter of 1999.
Online marketing channels generated a total of nearly 70,000 qualified subscriber leads in the first quarter. Approximately 50% of these leads were converted to @Home subscribers in the first quarter. Excite@Home's free ISP offer, FreeLane powered by Excite, has been a particularly effective source of subscriber leads. The service has generated over one million downloads and 500,000 active subscribers since its introduction in January, with about 2,000 subscribers per month converting to broadband as of March.
International Services
Excite@Home's international efforts continue to parallel its focus in North America on building integrated content and broadband access services. Excite@Home currently has a broadband footprint of 13 million homes passed outside of North America in five countries -- the Netherlands, Belgium, Australia, Japan and Germany -- as well as approximately six million homes passed in Canada. Excite content services are available in five of these six countries, as well as six other countries outside the U.S.
During the first quarter Excite@Home consolidated its operations in Australia, merging Excite Australia and @Home Australia with the intention of offering Excite-branded content to Australian broadband customers. The @Home broadband service was launched in Australia in January. Service is currently available to trial customers in Japan, with a commercial launch expected during the second quarter of 2000. During the first quarter Excite@Home increased its ownership in Excite Japan to approximately 67%.
Year 2000 Financial Outlook
In addition to its first quarter results, Excite@Home announced today its expectations for financial and operating performance for the remainder of 2000 and beyond. The Company stated that its goals are to have a total of at least three million residential broadband subscribers by the end of 2000, growing to six million subscribers by the end of 2001 and ten million subscribers by the end of 2002. The Company also stated that it is intensifying its investment efforts outside North America in an effort to capitalize on the growth of broadband access and media services abroad. As a result of these international investments and increased marketing and network investments intended to support an accelerated rate of broadband subscriber growth, the Company expects to incur operating losses in 2000 totaling between $0.25 and $0.30 per share for the full year. These losses exclude the amortization of goodwill and other intangible assets, as well as the cost and amortization of distribution agreements and certain other non-operational gains and expenses. The Company also stated that its goal is to achieve annual revenues in excess of $2 billion by 2002 and that it intends to achieve long-term profitability.
Cautionary Note Regarding Forward-looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including those relating to the Company's financial outlook for future periods and its goals for the growth of its broadband subscriber base; the timing for introducing new services; and the degree of acceptance for the Company's DSL-based offering. Actual results may differ materially due to a number of factors, including the rate of increased spending to stimulate growth in broadband subscribers and expand international operations; the effectiveness those efforts, which cannot be assured; of the increasingly competitive environment for Internet advertising sales and e-commerce services, which can be expected to limit the growth of media revenues; the Company's dependence on the actions of its cable partners to upgrade the cable plant and market and install the @Home service; the Company's ability to successfully integrate its acquired companies; the Company's ability to successfully expand its online marketing programs; and the Company's ability to expand its international operations and relationships. In addition, certain transactions described in this press release, such as the restructuring of the Company's relationships with its principal cable partners, are contingent upon the parties' success in executing definitive agreements and/or obtaining corporate approvals, and there can be no assurance that such transactions will be completed. Reported results should not be considered as an indication of future performance. In particular, Excite@Home anticipates that its increased investments designed to stimulate growth of its broadband subscriber base and to expand its international activities will result in operating losses for the current year. The matters discussed in this press release also involve risks and uncertainties described in Excite@Home's filings with the Securities and Exchange Commission. Excite@Home assumes no obligation to update the forward-looking information contained in this press release.
About Excite@Home
Excite@Home, the leader in broadband, offers media services through the Excite Network (http://www.excite.com, http://www.bluemountain.com and other properties), and broadband subscription services through @Home (http://www.home.com) and @Work (www.work.home.net). The company has a worldwide footprint of 87 million broadband homes under long-term contract. Excite@Home's MatchLogic division (http://www.matchlogic.com) offers marketers industry-leading digital advertising capabilities including rich media production, ad and email services, and database analysis all integrated into a complete solutions package.
Excite@Home, @Home, @Work, Excite, Blue Mountain, the stylized "@" logo and MatchLogic are trademarks of or licensed to At Home Corporation and may be registered in certain jurisdictions. All other brand names are trademarks of their respective owners.
NOTE:The results for all periods presented have been restated to reflectthe pro forma combined operations of At Home and Excite. At Home'sacquisition of Excite was completed during the quarter ending June 30, 1999and was accounted for as a purchase.
AT HOME CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(In thousands, except per share data)
Three Months Three Months
Ended March 31, Ended December 31,
2000 1999 1999
Revenues (1) $138,063 $78,748 $128,753
Costs and expenses:
Operating costs 57,239 29,357 50,112
Product development
and engineering 20,975 14,000 20,223
Sales and marketing 56,926 34,668 49,596
General and administrative 10,724 9,140 10,722
Total costs and expenses (2) 145,864 87,165 130,653
Loss from operations (7,801) (8,417) (1,900)
Interest income, net 3,193 2,421 2,414
Pro forma net
income (loss) $(4,608) $(5,996) $514
Pro forma net income
(loss) per share - basic $(0.01) $(0.02) $0.00
Shares used in pro forma
per share calculation
- basic 387,644 356,405 374,758
(1) Revenue from
related parties $12,094 $12,039 $7,500
(2) Depreciation and
amortization included in
costs and expenses $19,589 $12,767 $17,904
Note: The above unaudited pro forma condensed consolidated statements of operations exclude the effects of the following:
AT HOME CORPORATION
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(In thousands, except per share data)
Three Months Three Months
Ended March 31, Ended December 31,
2000 1999 1999
(unaudited) (unaudited)
Revenues (1) $138,063 $ 25,098 $128,753
Costs and expenses:
Operating costs 57,239 18,600 50,112
Product development
and engineering 20,975 6,467 20,223
Sales and marketing 56,926 7,676 49,596
General and administrative 10,724 4,103 10,722
Total costs and expenses
before investment gain,
equity losses, and costs
and amortization of
distribution agreements
and acquisition-related
amounts (2) 145,864 36,846 130,653
Loss from operations before
investment gain, equity
losses, and costs and
amortization of distribution
agreements and
acquisition-related amounts (7,801) (11,748) (1,900)
Interest income, net 3,193 2,811 2,414
Net income (loss) before
investment gain, equity
losses, and costs and
amortization of
distribution agreements
and acquisition-related
amounts (4,608) (8,937) 514
Realized gain on
investment held -- 12,566 --
Equity share of losses
of affiliated companies (4,815) -- (5,956)
Cost and amortization
of distribution
agreements (93,965) (15,020) (214,312)
Costs and amortization
of goodwill, intangible
assets, deferred
compensation and other
acquisition-related
amounts (573,133) (6,733) (503,256)
Net loss $(676,521) $(18,124) $(723,010)
Net income (loss) per
share before investment
gain, equity losses,
and costs and amortization
of distribution agreements
and acquisition-related
amounts - basic $(0.01) $(0.04) $0.00
Net loss per share -
basic and diluted $(1.75) $(0.08) $(1.93)
Shares used in per share
calculations 387,644 240,966 374,758
(1) Revenue from
related parties $ 12,094 $5,439 $7,500
(2) Depreciation and
amortization included
in costs and expenses $ 19,589 $7,455 $ 17,904
AT HOME CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
March 31, December 31,
2000 1999
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $201,513 $224,548
Short-term investments 300,769 300,675
Total cash, cash equivalents
and short-term investments 502,282 525,223
Accounts receivable, net 50,260 52,200
Accounts receivable - related parties 26,925 18,332
Other current assets 40,169 35,151
Total Current Assets: 619,636 630,906
Property, equipment and improvements, net 244,596 176,077
Investments in affiliated companies 24,815 19,015
Strategic investments 281,901 273,005
Distribution agreements, net 287,878 313,557
Goodwill and other intangible assets, net 7,182,871 7,615,062
Other assets 82,988 76,657
Total Assets: $8,724,685 $9,104,279
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $55,843 $44,491
Accounts payable - related parties 14,177 23,206
Accrued compensation and related expenses 15,691 15,632
Deferred revenue 59,519 56,844
Other accrued liabilities 71,761 62,540
Current portion of capital lease
and other obligations 37,039 38,666
Total Current Liabilities: 254,030 241,379
Convertible notes and debentures 738,083 736,294
Capital lease and other obligations,
less current portion 86,337 52,552
Other liabilities 8,045 7,037
Stockholders' Equity:
Preferred stock 408,658 397,019
Common stock 9,556,140 9,312,700
Deferred compensation (50,169) (50,493)
Accumulated other comprehensive income 84,886 92,594
Accumulated deficit (2,361,325) (1,684,803)
Total Stockholders' Equity: 7,638,190 8,067,017
Total Liabilities and
Stockholders' Equity: $8,724,685 $9,104,279
SOURCE Excite@Home