MIVA Announces Second Quarter 2008 Results  

FORT MYERS, Fla.--(BUSINESS WIRE)--MIVA, Inc. (NASDAQ: MIVA), today reported financial results for the second quarter ended June 30, 2008.

Second Quarter 2008 Results from Continuing Operations Summary:

• Revenue of $30.2 million in Q2 2008, compared to revenue of $32.7 million in Q1 2008. MIVA Direct, our primary traffic business, contributed 34.2% of total revenue in Q2 2008, compared to 36.9% in Q1 2008;
• Gross margins of 50.4% in Q2 2008, compared to 52.0% in Q1 2008;
• EBITDA loss of $5.2 million in Q2 2008, which included a $0.7 million non-cash compensation expense, $0.8 million in restructuring charges, and $0.2 million in litigation settlement charges, compared to an EBITDA loss of $3.7 million in Q1 2008. Q1 2008 EBITDA included $0.7 million in non-cash compensation expense and $0.1 million in restructuring charges;
• Adjusted EBITDA loss of $3.5 million in Q2 2008, excluding $0.7 million non-cash compensation expense, $0.8 million in restructuring charges, and $0.2 million in litigation settlement charges, compared to Adjusted EBITDA loss of $2.9 million in Q1 2008, excluding the $0.7 million in non-cash compensation expense and $0.1 million in restructuring charges; and
• GAAP net loss of $6.3 million or $(0.19) per basic share in Q2 2008, compared to GAAP net loss of $5.0 million or $(0.16) per basic share in Q1 2008.

“The most recent quarter has been a transitional one for our business. We are encouraged by the results of the growth initiatives that we’ve been working towards, such as the continued roll-out of our ALOT toolbar and homepage brand and the continued growth of destination sites like Spill.com. In addition, our new MIVA Media technology platform remains on schedule for a US release in the fourth quarter of this year.”

“Over the quarter, we also announced a restructuring program that we expect to deliver $4.0 million in annualized cost savings through a 15% reduction in headcount and closure of our Italian Media operation. We are continuing to evaluate our options for the EU Media business. However, we anticipate reducing our total company ongoing operational losses, of which a majority currently reside within our EU Media operations, through possible additional restructurings across our EU operations, which could include further office closures and consolidations. We also anticipate additional corporate cost reductions. With these restructurings and continued focus on our growth initiatives, we anticipate reaching profitability in 2009,” commented Peter Corrao, Chief Executive Officer and President, MIVA.

Second Quarter Results from Continuing Operations

Revenue was $30.2 million in Q2 2008, compared to revenue of $32.7 million in Q1 2008. MIVA Direct, our primary traffic business, contributed 34.2% of total revenue in Q2 2008, compared to 36.9% in Q1 2008. MIVA Direct’s revenue declined $1.8 million from Q1 2008 to Q2 2008.

Gross margins were 50.4% in Q2 2008, compared to 52.0% in Q1 2008. Gross margins decreased due to lower consolidated revenues combined with a decrease in the higher margin revenue contributed from our MIVA Direct division.

Total operating expenses were $21.5 million in Q2 2008, compared to $22.1 million in Q1 2008. The operating expenses in Q2 2008 included non-cash compensation expense of $0.7 million, restructuring charges of $0.8 million and a one-time litigation settlement charge of $0.2 million. The operating expenses in Q1 2008 included non-cash compensation expense of $0.7 million, and restructuring charges of approximately $0.1 million. Adjusting for these one-time expenses, our adjusted operating expenses were approximately $20.5 million in Q2 2008 compared to adjusted Q1 2008 operating expenses of $22.0 million.

EBITDA was a loss of $5.2 million in Q2 2008, compared to an EBITDA loss of $3.7 million in Q1 2008. Q2 2008 EBITDA included the $0.7 million in non-cash compensation expense, $0.8 million in restructuring charges, and $0.2 million in litigation settlement charges. Q1 2008 EBITDA included the $0.7 million in non-cash compensation expense and $0.1 million in restructuring charges.

Adjusted EBITDA was a loss of $3.5 million in Q2 2008, compared to Adjusted EBITDA loss of $2.9 million in Q1 2008. Q2 2008 Adjusted EBITDA loss excluded $0.7 million in non-cash compensation expense, $0.8 million in restructuring expense, and $0.2 million in litigation settlement fees. Q1 2008 Adjusted EBITDA loss excluded $0.7 million in non-cash compensation expense and $0.1 million in restructuring charges.

GAAP net loss from continuing operations was $6.3 million or $(0.19) per basic share in Q2 2008. This compares to GAAP net loss from continuing operations of $5.0 million, or $(0.16) per basic share in Q1 2008.

Adjusted net loss from continuing operations was $3.9 million or $(0.12) per diluted share in Q2 2008, compared to Adjusted net loss from continuing operations of $3.5 million or $(0.10) per diluted share in Q1 2008. Q2 2008 Adjusted net loss excluded the $0.7 million in amortization, $0.7 million non-cash compensation expense, $0.8 million in restructuring charges, and $0.2 million in litigation settlement fees. Q1 2008 Adjusted net loss excluded $0.7 million in amortization, $0.7 million in non-cash compensation expense and $0.1 million in restructuring charges.

Cash and cash equivalents were $17.2 million at June 30, 2008, a decrease of $5.4 million from March 31, 2008 cash of $22.6 million.

As of June 30, 2008, the Company had an active base of 184 full time employees, down from 213 at March 31, 2008, and 230 at December 31, 2007. The decrease from December 31, 2007 is due primarily to the Company’s Q1 2008 and Q2 2008 restructuring plans.

Second Quarter Metrics by Business

Business Outlook

We are forecasting 2008 revenues between $125.0 million to $130.0 million and EBITDA loss between $(8.0) million and $(12.0) million, excluding restructuring charges. Excluding non-cash compensation expense, MIVA’s EBITDA adjusted net loss is expected to be approximately ($5.0) million to ($9.0) million. Revenues for MIVA Direct and MIVA Media are anticipated to be below last year’s revenue. However with the anticipated growth in ALOT and its expected higher monetization, reduced corporate expenses, and the anticipated introduction of the new platform, we expect operating performance to improve in 2009.

Management Conference Call

Management will participate in a conference call to discuss the full results for the Company on August 11, 2008, at approximately 4:30 p.m. ET. The conference call will be simulcast on the Internet at http://ir.miva.com/medialist.cfm.

A replay of the conference call will be available on the investor relations area of MIVA’s website at http://ir.miva.com/medialist.cfm. Interested parties may email questions in advance to Lowell Robinson of MIVA, Inc. at lowell.robinson@miva.com

MIVA believes that “Adjusted EBITDA”, “Adjusted net income/loss” and “Adjusted net income/loss per share” provide meaningful measures for comparison of the Company’s current and projected operating performance with its historical results due to the significant increase in non-cash amortization that began in 2004 primarily due to certain intangible assets resulting from mergers and acquisitions. MIVA defines Adjusted EBITDA as EBITDA (earnings before interest, income taxes, depreciation and amortization) plus non-cash compensation expense and plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business. MIVA uses Adjusted EBITDA as an internal measure of its business and believes it is utilized as an important measure of performance by the investment community. MIVA sets goals and awards bonuses in part based on performance relative to Adjusted EBITDA. MIVA defines Adjusted net income/loss as net income/loss plus amortization and non-cash compensation expense, plus or minus certain identified revenues or expenses that are not expected to recur or be representative of future ongoing operation of the business, in each case including the tax effects (if any) of the adjustment. MIVA believes the use of these measures does not lessen the importance of GAAP measures. In Q4 2006 and Q1 2007, MIVA calculated Adjusted EBITDA and Adjusted net income/loss without adding non-cash compensation expense to the calculation. Beginning in Q2 2007, MIVA calculates Adjusted EBITDA and Adjusted net income/loss by adding non-cash compensation to the calculation. Adjusted EBITDA and Adjusted net income/loss amounts for Q1 2007 referred to in this press release are calculated by adding non-cash compensation expense.

About MIVA^®, Inc.

MIVA, Inc. is an online advertising and media company that operates across the US and Europe. MIVA's mission is to deliver valuable digital audiences to advertisers, which is achieved through two distinct divisions: MIVA Media, which offers Pay-Per-Click Ads across both vertical and contextual networks and MIVA Direct, which offers display and toolbar advertising solutions and focuses on the development and monetization of consumer sites.

Forward-looking Statements

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as “plan,” “intend,” “believe,” “anticipate,” “will,” “expect” or “forecast’’ or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation, the potential that the information and estimates used to predict anticipated revenues and expenses were not accurate; the risks associated with the fact that we have material weaknesses in our internal control over financial reporting that may prevent us from being able to accurately report our financial results or prevent fraud; the risk that we have in the past and may in the future incur goodwill impairment charges that materially adversely affect our earnings and our operating results; the potential that demand for our services will decrease; the risk that we will not be able to continue to enter into new online marketing relationships to drive qualified traffic to our advertisers; the risk that our distribution partners will use unacceptable means to obtain users or that we will need to remove traffic generated by distribution partners; risks associated with our ability to compete with competitors and increased competition for distribution partners; political and global economic risks attendant to our business; risks associated with legal and cultural pressures on certain of our advertiser’s service and/or product offerings; other economic, business and competitive factors generally affecting our business; the risk that operation of our business model infringes upon intellectual property rights held by others; our reliance on distribution partners for revenue generating traffic; risks associated with maintaining an international presence; difficulties executing integration strategies or achieving planned synergies with acquired businesses and private label initiatives; the risk that we will not be able to effectively achieve ongoing growth or return to profitability; the risk that new technologies could emerge which could limit the effectiveness of our products and services; risks associated with the operation of our technical systems, including system interruptions, security breaches and damage; risks associated with Internet security, including security breaches which, if they were to occur, could damage our reputation and expose us to loss or litigation; risks relating to regulatory and legal uncertainties, both domestically and internationally. Additional key risks are described in MIVA's reports filed with the U.S. Securities and Exchange Commission, including the Form 10-K for fiscal 2007 and its most recent Form 10-Q. MIVA undertakes no obligation to update the information contained herein.

Non-GAAP Financial Measures

This press release includes discussion of additional financial measures “Adjusted EBITDA,” “Adjusted Net Loss,” “Adjusted Net Income,” “Adjusted Net Loss Per Share” and “Adjusted Net Income Per Share,” which are not considered generally accepted accounting principle (GAAP) measures by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. MIVA provides reconciliations of these two financial measures to GAAP measures in its press releases regarding actual financial results. A reconciliation of these financial measures to net income/loss and net income/loss per share for the three and six months ended June 30, 2008 included in this press release is set forth below.

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U.S. MIVA Investor Relations
Lowell Robinson, 212-736-9151
Lowell.robinson@miva.com