Banks.com, Inc. Reports Second Quarter 2008 Financial Results

SAN FRANCISCO--(BUSINESS WIRE)--Banks.com, Inc. (AMEX:BNX), a leading financial services focused web property, announced today its results for the second quarter 2008.

Financial Highlights

For the quarter ended June 30, 2008, Banks.com reported revenue of $3.2 million. This compares to revenue of $5.0 million reported in the first quarter 2008. GAAP¹ net loss was $677 thousand or $0.03 per diluted share versus a loss of $367 thousand or $0.01 per diluted share reported in the prior quarter. Adjusted EBITDA² was negative $10 thousand, compared to adjusted EBITDA of $278 thousand reported in the first quarter 2008.

“We continue to make progress in transitioning our business towards the Financial Services vertical and diversifying our revenue streams,” said Dan O’Donnell, CEO of Banks.com. “During the second quarter, we signed two new strategic advertising partnerships and completed the successful launch of our tax preparation service offering. At the same time, our financial results reflect the ongoing challenges we face in our business transition as well as a difficult environment for online financial services advertising. We continue to take proactive measures to rationalize our expenses in light of the current environment. Additionally, we have retained an investment bank to explore a number of strategic alternatives for our business, including the sale of our non-financial domains.”

Select Business Highlights

• Doubled organic traffic to Banks.com for the third consecutive quarter
• Signed strategic advertising partnerships with Marchex’s IndustryBrains and Business.com
• Fully integrated the Banks.com Advertising Network on the Banks.com homepage

Conference Call

Banks.com will host a conference call at 2:00 PM PST / 5:00 PM EST to discuss its second quarter 2008 results. To listen to the call and have the opportunity to ask questions, please dial 800-659-2037 (domestic) or 617-614-2713 (International) five to ten minutes before the call and reference the passcode 20424582. A replay of the call will be available by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and referencing passcode 67448633. Investors will also have the opportunity to listen to the conference call and the replay on the Investor Relations section of the Banks.com website at: http://www.banks.com.

Forward Looking Statements

This press release contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties, including statements regarding our expected financial results for the fiscal year 2008. Forward looking statements, which are based on management’s current expectations, are generally identifiable by the use of terms, such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions. The forward looking statements in this press release include statements regarding: management’s expectations regarding our strategy, our focus on higher-quality content and traffic in the financial services vertical; our commitment to becoming the premier source of targeted financial traffic; and guidance for the fiscal year 2008 with respect to revenue and Adjusted EBITDA. The potential risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein include, among others, unanticipated slowdown in the financial services vertical; market acceptance of the enhanced version of Banks.com; introduction of additional competitors in the Internet search services space; unexpected diversion of advertising dollars away from the Internet; slower than anticipated growth rate of our advertising base; dependence on our search providers; market development of Internet advertising and paid search services; and the stability of our infrastructure. Further information on the factors that could affect our financial results is included in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007, our quarterly reports on Form 10-Q and our Current Reports on Form 8-K. Except as required by law, we assume no responsibility to update these forward looking statements publicly, even if new information becomes available in the future.

Non-GAAP Financial Measures

This press release includes the following financial measure defined as a non-GAAP financial measure by the Securities and Exchange Commission: Adjusted EBITDA. This supplemental financial measure is not required by GAAP, nor is the presentation of this financial information intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with Banks.com’s earnings results as determined in accordance with GAAP. However, for the reasons described below, management uses this non-GAAP measure to evaluate the performance of Banks.com’s business. Banks.com’s management believes that it is important to provide investors with these same tools, together with a reconciliation to GAAP, for evaluating the performance of Banks.com’s business, as it may provide additional insight into Banks.com’s financial results. See “Reconciliation of GAAP Net (Loss) Earnings to Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Stock Compensation Expense (Adjusted EBITDA)” table included in this press release for further information regarding these non-GAAP financial measures. In addition, Adjusted EBITDA is presented because management believes it is frequently used by securities analysts, investors and others in the evaluation of companies.

Adjusted EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization to net earnings, adjusted for certain items management believes should be excluded in order to reflect a more meaningful representation of Banks.com’s financial performance, including stock compensation expense. Banks.com’s management excludes the impact of equity-based compensation to eliminate the effects of this non-cash item, which, because it is based upon estimates on the grant dates, may bear little resemblance to the actual values realized upon the future exercise, expiration, termination or forfeiture of the stock-based compensation. Adjusted EBITDA is not defined under GAAP and should not be considered in isolation or as a substitute for net earnings and other consolidated earnings data prepared in accordance with GAAP or as a measure of Banks.com’s profitability.

About Banks.com

Banks.com is a leading Financial Services portal containing a unique breadth and depth of products and services. Our mission is to bring our users and subscribers the most relevant financial information on the web. Banks.com provides access to thousands of pages of current financial content, including: articles, stock quotes, audio, video, blogs and much more. In addition, Banks.com provides free tools to assist visitors with their financial decision-making including stock tracking and financial calculators. Our site contains information and products on a variety of topics such as Banking, Stocks & Bonds, Taxes, Mortgages, Personal Finance, Credit Cards, Insurance and Retirement Planning. Banks.com, Inc. is headquartered in San Francisco, California at 222 Kearny Street, Suite 550 and can be reached at 415.962.9700. More information about Banks.com, Inc. can be found at: www.Banks.com.

¹ Generally accepted accounting principles in the United States of America.

² Adjusted EBITDA is calculated by adding income taxes, interest expense, depreciation and amortization to net earnings, adjusted for certain items management believes should be excluded in order to reflect a more meaningful representation of our financial performance, including stock compensation expense. Adjusted EBITDA is a non-GAAP financial measure. This measure may be different from non-GAAP financial measures used by other companies. We encourage investors to review the section below entitled “Non-GAAP Financial Measures” and to review the reconciling adjustments between the GAAP and non-GAAP measures attached to this press release.

BANKS.COM, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except share and per share data)
(Unaudited)
			Three Months Ended
			June 30,
			2008				2007
Revenues			$	3,184			$	7,164
Cost of revenues				1,391				3,241
Gross profit				1,793				3,923
Operating expenses:
	Sales and marketing expense			312				254
	General and administrative expense			2,109				2,790
	Total operating expenses			2,421				3,044
(Loss) earnings from operations				(628	)			879
Interest expense				297				288
(Loss) earnings before income taxes (benefit)				(925	)			591
Income taxes (benefit)				(248	)			259
Net (loss) earnings			$	(677	)		$	332
Basic (loss) earnings per share			$	(0.03	)		$	0.01
Diluted (loss) earnings per share			$	(0.03	)		$	0.01

BANKS.COM, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
(In thousands, except share and per share data)
(Unaudited)
			Six Months Ended
			June 30,
			2008				2007
Revenues			$	8,179			$	18,008
Cost of revenues				3,939				6,612
Gross profit				4,240				11,396
Operating expenses:
	Sales and marketing expense			651				492
	General and administrative expense			4,478				5,327
	Total operating expenses			5,129				5,819
(Loss) earnings from operations				(889	)			5,577
Interest expense				596				594
(Loss) earnings before income taxes (benefit)				(1,485	)			4,983
Income taxes (benefit)				(441	)			2,012
Net (loss) earnings			$	(1,044	)		$	2,971
Basic (loss) earnings per share			$	(0.04	)		$	0.12
Diluted (loss) earnings per share			$	(0.04	)		$	0.10

BANKS.COM, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
		June 30,			December 31,
		2008			2007
Assets
Current assets:
Cash		$	1,661		$	2,300
Accounts receivable, net of allowances			1,667			2,703
Prepaid expenses and other			285			481
Deferred income taxes			-			40
Total current assets			3,613			5,524
Office equipment and leasehold improvements, net			1,284			1,323
Debt issuance costs, net			498			579
Patents and trademarks, net			69			73
Domains, net			12,619			13,165
Goodwill			573			573
Other intangible assets, net			1,118			-
Other assets			125			279
Deferred income taxes			707			363
Total assets		$	20,606		$	21,879
Liabilities and Stockholders' Equity
Current liabilities:
Accrued liabilities			277			918
Accounts payable			561			655
Deferred revenue			9			2
Deferred income taxes			3			-
Notes payable, net of discount			6,473			-
Total current liabilities			7,323			1,575
Notes payable, net of discount			-			6,658
Total liabilities			7,323			8,233
Stockholders' equity:
Common stock			25			25
Additional paid-in capital			10,143			9,462
Retained earnings			3,115			4,159
Total stockholders' equity			13,283			13,646
Total liabilities and stockholders' equity		$	20,606		$	21,879

BANKS.COM, INC. AND SUBSIDIARIES
Reconciliation of GAAP Net Earnings to Earnings Before
Interest, Taxes, Depreciation, Amortization, and Stock Compensation Expense (Adjusted EBITDA)
	(In thousands)
	(Unaudited)
			Three Months Ended
			June 30,
			2008				2007
Net (loss) earnings			$	(677	)		$	332
	Income taxes (benefit)			(248	)			259
(Loss) earnings before income taxes				(925	)			591
	Interest expense			297				288
(Loss) earnings from operations				(628	)			879
	Depreciation			119				105
	Amortization			337				255
	Stock compensation expense			162				248
Adjusted earnings before interest, taxes, depreciation, amortization, and stock compensation expense (Adjusted EBITDA)			$	(10	)		$	1,487
			Six Months Ended
			June 30,
			2008				2007
Net (loss) earnings			$	(1,044	)		$	2,971
	Income taxes (benefit)			(441	)			2,012
(Loss) earnings before income taxes				(1,485	)			4,983
	Interest expense			596				594
(Loss) earnings from operations				(889	)			5,577
	Depreciation			230				210
	Amortization			667				510
	Stock compensation expense			260				396
Adjusted earnings before interest, taxes, depreciation, amortization, and stock compensation expense (Adjusted EBITDA)			$	268			$	6,693