IGN Reports Third Quarter 2002 Results

Business Wire, Oct 29, 2002

Business Editors/High-Tech Writers

SAN FRANCISCO--(BUSINESS WIRE)--Oct. 29, 2002

IGN Entertainment (Nasdaq:IGNX)

-- Revenue Up 8% Year-Over-Year

-- Subscription Revenue Up 20% Over Prior Quarter

-- Q3 Bookings Drive Large Q4 Backlog

-- Q4 Revenue Expected to Increase 50+% Over Q3

-- Pro Forma Breakeven Forecast for Q4

IGN Entertainment (Nasdaq:IGNX) -- home to IGN.com, the web's largest information and entertainment destination for gamers -- announced today its third quarter 2002 results. For the quarter ended September 30, 2002, IGN reported revenue of $2.3 million, compared to $2.1 million for the same period a year ago and $2.6 million for the previous quarter.

Year-Over-Year GAAP Based Net Loss Improves

The GAAP based net loss for the third quarter of 2002 was $3.9 million, or $1.82 per share. This compares to $4.9 million, or $2.60 per share, for the year ago quarter, and $1.3 million, or $0.71 per share, for the prior quarter.

Year-Over-Year Pro Forma Loss Improves

Pro forma net loss before significant non-cash items, restructuring charges and gain on sale of assets was $1.1 million, or $0.53 per share, for the third quarter of 2002, compared to $2.9 million, or $1.58 per share, for the year ago period and $970,000, or $0.53 per share, for the prior quarter.

The difference between the $1.1 million pro-forma net loss and the $3.9 million GAAP net loss this quarter consists of $263,000 of depreciation expense, $141,000 of stock-based compensation and a $2.3 million previously disclosed one-time charge to account for the decision to abandon and sublet the company's New York and Connecticut office space. Overall, the company expects that this facilities decision will result in approximately a $100,000 per quarter expense savings.

Year-Over-Year Revenue Growth and Strong Bookings

"Our Q3 revenue increased over the same period a year ago, even though last year's third quarter included approximately $450,000 of revenue from operations that we have since sold or discontinued," said Mark Jung, IGN's CEO. "Taking this into account, year-over-year third quarter IGN revenue growth was up almost 40 percent."

Jung continued, "Sequentially, this quarter's revenue was slightly lower than the prior quarter, reflecting the seasonality of the video gaming and advertising markets, the transition from our previous e-commerce marketing partnership to our current direct e-commerce store and slippage of select video game title releases into Q4.

"While revenue was down from the prior quarter, Q3 bookings for fourth quarter deliveries were exceptionally strong, with the dollar amount of third quarter bookings up 50 percent over the second quarter. This, combined with the fact that bookings have continued to remain strong in the month of October, leave us confident that Q4 revenue will be up at least 50 percent over Q3."

New Product Launches Add to Revenue Diversity

During the third quarter, IGN launched its IGN Gamestore e-commerce initiative with fulfillment partner GameStop.com. In addition, during October, IGN launched an online game arcade, which allows IGN users to play online games or to download or purchase games for off-line play. IGN expects these two new products to increasingly contribute to the company's revenue in future quarters.

For the third quarter, impression-based advertising represented 58 percent of IGN's revenue. The company's third quarter advertising customers included such well-known consumer brands as Adidas, Best Buy, Carl's Jr., McDonald's, Motorola, Toys "R" Us, Visa and Wrigley's, as well as top games companies Acclaim, Activision, Electronic Arts, Microsoft, Nintendo, Sega and Sony. Subscriptions accounted for $444,000, or 20 percent of revenue for the quarter. Other product lines -- including e-commerce, direct response marketing and content licensing -- generated the remaining 22 percent of revenue.

Subscription Revenue Continues to Grow

The company added 12,000 net new subscribers to its IGN Insider program during the third quarter, increasing its subscriber base to 68,000 as of September 30, 2002. As a result, subscription revenue grew by 20 percent over the prior quarter.

Fourth Quarter Forecast

The company currently anticipates that its fourth quarter 2002 revenue will increase by at least 50 percent over third quarter revenue, reaching $3.6 million at a minimum. The company also forecasts that its Q4 expenses will be up only slightly over Q3, and that, as a result, it expects to breakeven on a pro forma basis in the fourth quarter of 2002.

IGN's earnings conference call can be heard live on the Internet at 1:30 p.m. PST on Tuesday, October 29. To listen to the call, visit the Investor Relations section of the IGN web site at http://corp.ign.com. The call will be archived and available until November 12, 2002.

About IGN Entertainment

IGN Entertainment (Nasdaq:IGNX), through its IGN.com network, is the Internet's leading information and entertainment destination for teen and young adult gamers. IGN serves its audience by providing both free and subscription-based content, services and gameplay. IGN' s award winning content -- two Webby People's Voice Awards and two Wired Magazine's Readers Raves Awards -- attracts more than eight million unique visitors a month, including over 5.4 million registered users and 68,000 paying subscribers. IGN offers its business customers a full spectrum of integrated marketing solutions to reach this large web-centric audience. These products include impression-based advertising and sponsorships, permission marketing, custom publishing, e-commerce, direct e-mail marketing and content licensing. The company is headquartered in San Francisco, with sales offices in New York and Los Angeles. For more information, please visit http://www.ign.com.