Go2Net Reports Third Quarter Financial Results Third Quarter Pro Forma Income of $.07 Per Share - Company Financial Information

Edge: Work-Group Computing Report, July 26, 1999

Go2Net, Inc. (Nasdaq: GNET), a network of branded, technology and community-driven Web sites ( http://www.go2net.com ), Wednesday reported that revenue for the three months ended June 30, 1999 was $5,726,004, representing an increase of 191% from $1,969,306 for the comparable period of the previous fiscal year. Revenue for the nine months ended June 30, 1999 was $12,651,287, representing an increase of 174% from $4,622,590 for the comparable period of the previous fiscal year.

For the quarter, the company reported pro forma income of $3,057,258, or $.07 per share diluted, excluding the effects of a one-time, non-cash preferred stock dividend and non-cash charges related to amortization of intangible assets and stock compensation expenses. This compares to a loss of $(160,831), or $(.01) per share diluted, for the comparable period during the previous fiscal year, excluding merger-related and non-cash charges related to stock compensation expenses. The one-time, non-cash dividend is related to the purchase of preferred stock from the company by Vulcan Ventures during the quarter. The number of shares used in the computation of pro forma income per share at June 30, 1999 and 1998 were 41,050,743 and, 19,396,120, respectively.

For the nine months ended June 30, 1999, the company reported pro forma income of $4,183,241, or $.12 per share diluted, excluding the effects of a one-time, non-cash preferred stock dividend, merger-related expenses and non-cash charges related to amortization of intangibles and stock compensation expenses. This compares to a loss of $(591,941), or $(.04) per share diluted, for the comparable period during the previous fiscal year, excluding merger related and non-cash charges related to stock compensation expenses. The number of shares used in the computation of pro forma income per share at June 30, 1999 and 1998 were 36,413,782 and, 15,329,666, respectively.

Net loss for the quarter including the one-time, non-cash preferred stock dividend, other non-cash charges related to amortization of intangible assets, and stock compensation and merger-related expenses was $(107,567,393) or $(4.07) per share basic and diluted, as compared to $(1,363,623) or $(.07) per share basic and diluted for the three months ended June 30, 1998. The number of shares used in the computation of basic and diluted net loss per share at June 30, 1999 and 1998 were 26,401,610 and, 19,396,120 respectively.

Gross profit as a percentage of net sales increased to 79.0% for the three months ended June 30, 1999, as compared to 65.4% for the three months ended June 30, 1998.

"During the recently completed quarter, we accelerated our pace of strategic acquisitions, continued to make significant progress in our market position and operating metrics, and positioned the company effectively for continued growth," said Go2Net CEO Russell C. Horowitz. "Our acquisitions of Virtual Avenue, USA Online, IQC.com and Haggle Online added important components to the Go2Net Network."

"With the Paul Allen and Vulcan Ventures $300 million investment and with the significant internal growth rates of our narrowband services, we look forward to extending Go2Net's proven strategy onto the broadband platform being developed by Paul Allen and Vulcan Ventures."

* Overview of company's quarter: * Usage and Reach Growth * The company also announced Wednesday that traffic on the Go2Net Network grew to an average of 18.5 million page views per day in June 1999, compared to an average of 12.3 million page views per day in March 1999. This represents sequential quarterly growth of 50.4%.

Go2Net's reach continues to grow across its Network. According to the Media Metrix Web Report for June 1999 regarding Web properties, The Go2Net Network continues to be the fastest growing property among the Media Metrix top 20 destinations, climbing to a number 9 ranking in reach among home and work users in June, up from a number 21 ranking in March. This represents an increase of 57% in reach over the past three months.

"Several months ago, we publicly stated our company goal of becoming a Top 10 Web property by the end of calendar year 1999. We're very pleased to have reached this milestone ahead of schedule," Horowitz said. "We understand what it takes to operate category-leading sites and look forward to continuing to enhance our existing properties and to possibly expand into complementary new strategic categories."

Finance and Investment

On June 17, Go2Net announced that its shareholders approved elements of an investment by Paul Allen and his investment organization, Vulcan Ventures Inc. that bring Mr. Allen's direct cash investment in the company to $300 million. At a special meeting, shareholders approved Allen's purchase of additional preferred shares of Go2Net stock for $133 million cash. This complements Allen's $167 million purchase of preferred stock made on March 15. As a separate part of the March 15 investment agreement made between Mr. Allen and Go2Net, shareholders also approved Allen's purchase of approximately 1.4 million shares of Go2Net's common stock from company directors for approximately $126 million cash. The transactions bring Mr. Allen's ownership stake in Go2Net to approximately 34 percent for a total investment of $426 million. The transaction positions Go2Net to be a primary point of convergence and content delivery on Paul Allen's rapidly emerging base of cable subscribers.