Register.com Reports Fourth Quarter and Full Year 2003 Financial Results

HostReview.com
Thursday, February 12, 2004; 12:00 AM

NEW YORK--(BUSINESS WIRE)--Feb. 12, 2004--Register.com, Inc. (Nasdaq:RCOM), a leading provider of global domain registration and Internet services, today reported net income for the quarter ended December 31, 2003 of $887,000 or $0.04 per diluted share, compared to a net loss of $(347,000), or a loss of $(0.01) per share, for the fourth quarter of 2002 and compared to net income of $2.4 million, or $0.06 per diluted share, for the third quarter of 2003.

Net Income for the year ended December 31, 2003 was $2.3 million or $0.06 per diluted share, compared to a net loss of $(10.4) million, or $(0.26) per share for 2002. Net income for the full year 2003 included a pre-tax charge of $6.8 million for advisory fees and other expenses related to the Company's consideration of various strategic alternatives following the unsolicited acquisition proposals the Company received in early 2003 and the Company's subsequent $120 million self-tender offer. Net loss for the full year 2002 included a writedown of goodwill and amortization of intangibles of $17.3 million, offset by a related tax benefit of $3.5 million.

Net revenues for the fourth quarter of 2003 were $25.3 million, compared to net revenues of $26.5 million for the fourth quarter of 2002, and $25.8 million for the third quarter of 2003. Fourth quarter 2003 revenue mix was as follows: 90% from domain name registrations, 9% from other products and services and 1% from advertising. This compares with a respective revenue mix of 86%, 9% and 5% in the third quarter of 2003 and 91%, 6% and 3% in the fourth quarter of 2002.

Net revenues for the full year 2003 were $104.3 million, compared to $106.3 million for the full year 2002. Full year 2003 revenue mix was as follows: 87% from registrations, 9% from other products and services and 4% from advertising. This compares with a respective revenue mix of 91%, 5% and 4% for the full year 2002. At the end of 2003, the Company's deferred revenue balance was $86.9 million, representing a $1.2 million decrease from the balance at the end of the third quarter of 2003, and a $191,000 decrease from the balance at the end of 2002.

Income from operations in the fourth quarter of 2003 was $250,000, compared with a loss from operations of $(1.8) million in the fourth quarter of 2002. Loss from operations for the full year 2003 was $(575,000), compared with a loss from operations of $(17.2) million in 2002, which reflects the $17.3 million writedown and amortization of goodwill and intangibles.

At the end of the fourth quarter of 2003, Register.com had $94.6 million in cash, short-term investments and marketable securities, representing a $4.4 million increase from the balance at the end of the third quarter of 2003 and a $122.5 million decrease from the balance at the end of 2002. The year-over-year decrease was due primarily to the Company's $120 million self-tender offer for common stock and warrants, which was completed in September 2003, as well as the repayment of $10.6 million of notes in connection with the Company's 2002 acquisition of Virtual Internet plc.

Cash flow from operations was $4.2 million in the fourth quarter of 2003 and $10.9 million for the full year 2003. This compares to $2.0 million in the fourth quarter of 2002, $3.5 million in the third quarter of 2003 and $16.1 million for the full year 2002.

"We are pleased with our progress in diversifying our revenue as we almost doubled our sales of value added services in 2003," said Peter A. Forman, President and Chief Executive Officer of Register.com. "This positive trend reflects our commitment to deepening the relationships with our high quality customer base by offering them more products and services, beyond domain names, to help them accomplish their online goals. Additionally, we are continuing to invest in the Company's infrastructure in order to make our operations more efficient. These two strategies, driving growth through revenue diversification and cost reductions, are key to positioning Register.com for long-term success."

Gross margin for the fourth quarter of 2003 was 68%, compared with 65% in the fourth quarter of 2002 and 70% in the third quarter of 2003. Gross margin for the full year 2003 was 69%, compared to 67% for the full year 2002. The year-over-year increase in gross margin was primarily due to lower costs of data center operations.

The Company registered, transferred and renewed approximately 509,000 domain names in the fourth quarter of 2003. This compares to approximately 501,000 registrations in the third quarter of 2003, and approximately 520,000 registrations in the fourth quarter of 2002. Of the total registrations in the fourth quarter of 2003, approximately 219,000 were new and transferred registrations, and approximately 290,000 were renewals. As of December 31, 2003, Register.com had approximately 3.1 million domain names under management. The Company's renewal rate for the twelve months of 2003 was approximately 53%.

Recent Developments
-- During the fourth quarter of 2003, Register.com entered into an agreement (with Hostway Corporation, a global leader in Web hosting and managed Internet services) to sell the core assets of its subsidiary, RegistryPro. Subject to approval by the Internet Corporation for Assigned Names and Numbers (ICANN), Hostway will become the registry operator for the .pro top-level domain for professionals. Financial terms of the deal will not be disclosed.

-- The Company introduced two new value added services in the fourth quarter of 2003: web hosting and a new email service.

Register.com will hold a conference call at 4:30 p.m. ET today to discuss the Company's fourth quarter and full year 2003 results. The Company will also provide guidance on the conference call. The event will be webcast live on the Company's investor website: http://investor.register.com. An audio archive will be available on the site beginning two hours after the call's start time.

About Register.com
Register.com, Inc. (www.register.com) is a leading provider of global domain name registration and Internet services for businesses and consumers that wish to have a unique address and branded identity on the Internet. With over three million domain names under management, Register.com has built a brand based on quality domain name management services for small and medium sized businesses, large corporations, as well as ISPs, telcos and other online businesses. The company was founded in 1994 and is based in New York.