UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1999
or
|_| Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period ended from _____ to _____
Commission File Number 000-25943
Media Metrix, Inc.
(Exact name of registrant as specified in its charter)
Delaware 11-3374729
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
35 East 21st Street
New York, NY 10010
(Address of principal executive offices) (Zip Code)
(212) 460-7980
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes of
Common Stock, as of the latest practicable date:
Common Stock, par value $.01 per share, 17,302,448 shares outstanding as of
August 9, 1999
<PAGE>
Media Metrix, Inc.
Index
PART I Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets--
June 30, 1999 and December 31, 1998..............................1
Condensed Statements of Operations--
Three and Six Months Ended June 30, 1999 and 1998................2
Condensed Statement of Stockholders' Equity--
Six Months Ended June 30, 1999...................................3
Condensed Statements of Cash Flows--
Six Months Ended June 30, 1999 and 1998..........................4
Notes to Condensed Financial Statements .........................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..............................7
PART II Other Information
Item 1. Legal Proceedings...............................................14
Item 2. Changes in Securities and Use of Proceeds.......................14
Item 3. Defaults Upon Senior Securities.................................14
Item 4. Submission of Matters to a Vote of Security Holders ............14
Item 5. Other Information...............................................14
Item 6. Exhibits and Reports on Form 8-K ..............................14
Signatures
<PAGE>
Part I. Financial Information
Media Metrix, Inc.
Condensed Balance Sheets
<TABLE>
<CAPTION>
December 31,
June 30, 1999 1998
-------------------------------
Assets (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 36,382,986 $ 8,012,020
Marketable securities 10,453,998 --
Receivables:
Trade, less allowance for doubtful accounts of $318,000 in 1999
and $220,000 in 1998 2,797,790 1,119,905
Expenditures billable to clients 169,695 250,432
-------------------------------
Total receivables 2,967,485 1,370,337
Prepaid expenses and other current assets 402,531 207,333
-------------------------------
Total current assets 50,207,000 9,589,690
Property and equipment, at cost, net of accumulated depreciation
and amortization of $187,355 in 1999 and $75,930 in 1998 875,149 649,790
Intangibles acquired, net of accumulated amortization
of $1,976,105 in 1999 and $479,000 in 1998 4,439,661 5,736,766
Other assets 219,889 83,774
-------------------------------
Total assets $ 55,741,699 $ 16,060,020
===============================
Liabilities and stockholders' equity Current liabilities:
Accounts payable and accrued liabilities $ 3,426,953 $ 2,308,323
Due to The NPD Group, Inc. 557,360 4,705,825
Advance billings to clients 2,961,132 1,391,275
Current portion of long-term debt 139,471 127,179
-------------------------------
Total current liabilities 7,084,916 8,532,602
Long-term debt 151,463 225,353
Redeemable Preferred Stock--$1 par value; 41,446 shares issued
and outstanding; liquidation and redemption value--
$4,679,760 in 1998 -- 4,679,760
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value--5,000,000 shares authorized -- --
Common stock, $.01 par value--60,000,000 shares authorized; shares issued
and outstanding--17,302,448 in 1999 and 13,098,808 in 1998 173,024 130,988
Additional paid-in capital 70,757,192 18,149,203
Common stock issuable -- 1,999,831
Accumulated other comprehensive loss (27,382) --
Accumulated deficit (21,153,681) (16,093,242)
Deferred compensation (1,243,833) (1,564,475)
-------------------------------
Total stockholders' equity 48,505,320 2,622,305
===============================
Total liabilities and stockholders' equity $ 55,741,699 $ 16,060,020
===============================
</TABLE>
See accompanying notes.
1
<PAGE>
Media Metrix, Inc.
Condensed Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------------- ------------------------------
1999 1998 1999 1998
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $ 4,257,583 $ 1,344,824 $ 7,435,122 $ 2,504,542
Costs of revenues 2,118,162 800,878 3,838,152 1,600,550
------------ ------------ ------------ ------------
Gross profit 2,139,421 543,946 3,596,970 903,992
Operating expenses:
Research and development 992,048 259,966 1,672,939 508,133
Sales and marketing 1,812,587 711,101 3,147,133 1,286,219
General and administrative 1,287,704 412,046 2,337,014 846,241
Amortization of deferred compensation 197,000 -- 304,917 --
Amortization of intangibles 748,505 -- 1,497,105 --
------------ ------------ ------------ ------------
Total operating expenses 5,037,844 1,383,113 8,959,108 2,640,593
------------ ------------ ------------ ------------
Loss from operations (2,898,423) (839,167) (5,362,138) (1,736,601)
Interest and other income, net 331,593 3,283 410,894 48,589
------------ ------------ ------------ ------------
Net loss (2,566,830) (835,884) (4,951,244) (1,688,012)
Preferred stock dividends (27,299) (77,742) (109,195) (154,147)
------------ ------------ ------------ ------------
Net loss applicable to common stockholders $ (2,594,129) $ (913,626) $ (5,060,439) $ (1,842,159)
============ ============ ============ ============
Basic and diluted net loss per share applicable
to common stockholders $ (0.16) $ (0.14) $ (0.35) $ (0.28)
============ ============ ============ ============
Shares used in the calculation of basic and
diluted net loss per share applicable to
common stockholders 15,865,519 6,523,330 14,583,630 6,523,330
============ ============ ============ ============
</TABLE>
See accompanying notes.
2
<PAGE>
Media Metrix, Inc.
Condensed Statement of Stockholders' Equity
Six months ended June 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Additional Common
Common Stock Paid-in Stock
Shares Amount Capital Issuable
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 13,098,808 $ 130,988 $ 18,149,203 $ 1,999,831
Net loss -- -- -- --
Unrealized losses on marketable securities -- -- -- --
Total comprehensive loss
Issuance of common stock issuable 194,380 1,944 1,997,887 (1,999,831)
Initial public offering, net of $5,867,500
of related costs and expenses 3,250,000 32,500 49,350,000 --
Exercise of warrants and stock options 759,260 7,592 1,250,237 --
Amortization of deferred compensation -- -- -- --
Reversal of deferred compensation on options
forfeited -- -- (15,725) --
Acceleration of vesting on options -- -- 25,590 --
Accrual of Redeemable Preferred Stock
dividends -- -- -- --
---------------------------------------------------------------------
Balance at June 30, 1999 17,302,448 $ 173,024 $ 70,757,192 $ --
=====================================================================
<CAPTION>
Accumulated
Other Total
Comprehensive Accumulated Deferred Stockholders'
Loss Deficit Compensation Equity
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $ -- $(16,093,242) $ (1,564,475) $ 2,622,305
Net loss -- (4,951,244) -- (4,951,244)
Unrealized losses on marketable securities (27,382) -- -- (27,382)
------------
Total comprehensive loss (4,978,626)
Issuance of common stock issuable -- -- -- --
Initial public offering, net of $5,867,500
of related costs and expenses -- -- -- 49,382,500
Exercise of warrants and stock options -- -- -- 1,257,829
Amortization of deferred compensation -- -- 304,917 304,917
Reversal of deferred compensation on options
forfeited -- -- 15,725 --
Acceleration of vesting on options -- -- -- 25,590
Accrual of Redeemable Preferred Stock
dividends -- (109,195) -- (109,195)
---------------------------------------------------------------------
Balance at June 30, 1999 $ (27,382) $(21,153,681) $ (1,243,833) $ 48,505,320
=====================================================================
</TABLE>
See accompanying notes.
3
<PAGE>
Media Metrix, Inc.
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Six months ended June 30
1999 1998
-------------------------------
<S> <C> <C>
Operating activities
Net loss $ (4,951,244) $ (1,688,012)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss on disposal of equipment 8,455 --
Provision for bad debts 98,144 19,400
Depreciation and amortization of property and equipment 120,849 14,613
Amortization of intangibles 1,497,105 --
Acceleration of vesting on options 25,590 --
Amortization of deferred compensation 304,917 --
Changes in operating assets and liabilities:
Receivables (1,695,292) (70,771)
Prepaid expenses and other current assets (195,198) (13,905)
Accounts payable and accrued liabilities 918,630 (263,169)
Advance billings to clients 1,569,857 91,611
Due to The NPD Group, Inc. (4,148,465) 700,730
-------------------------------
Net cash used in operating activities (6,446,652) (1,209,503)
Investing activities
Purchase of marketable securities (10,481,380) --
Purchases of property and equipment (354,663) (13,925)
Security deposits (136,115) --
-------------------------------
Net cash used in investing activities (10,972,158) (13,925)
Financing activities
Repayments on long-term debt (61,598) --
Redemption of redeemable preferred stock (4,788,955) --
Net proceeds from initial public offering 49,382,500 --
Proceeds from exercise of warrants and options 1,257,829 --
-------------------------------
Net cash provided by financing activities 45,789,776 --
-------------------------------
Net increase (decrease) in cash and cash equivalents 28,370,966 (1,223,428)
Cash and cash equivalents at beginning of period 8,012,020 1,869,013
===============================
Cash and cash equivalents at end of period $ 36,382,986 $ 645,585
===============================
Supplemental information
Interest paid $ 30,487 $ --
===============================
</TABLE>
See accompanying notes.
4
<PAGE>
Media Metrix, Inc.
Notes to Condensed Financial Statements
June 30, 1999
A. Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three- and six- month periods ended June 30,
1999 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required to by generally accepted accounting principles for
complete financial statements.
For further information, refer to the financial statements and footnotes thereto
for the year ended December 31, 1998 included in Media Metrix's Prospectus dated
May 7, 1999.
B. Marketable Securities
Media Metrix accounts for its investments in accordance with Statement of
Financial Accounting Standard No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". All investments have been classified as
available-for-sale securities as of June 30, 1999. Available-for-sale securities
are stated at fair value, with the unrealized gains and losses reported in other
comprehensive income (loss). Realized gains and losses and declines
other-than-temporary on available-for-sale securities are included in interest
and other income. The cost of securities sold is based on the specific
identification method. Interest and dividends on securities classified as
available-for-sale are included in interest income.
C. Basic and Diluted Net Loss Per Share
Basic and diluted net loss per share is calculated in accordance with Statement
of Financial Accounting Standards No. 128, "Earnings Per Share". The denominator
used in the computation of basic and diluted net loss per share is the weighted
average number of common shares outstanding for the respective period. The
calculation of diluted net loss per share excludes shares of common stock
issuable upon exercise of employee stock options and warrants and conversion of
convertible preferred stock as the effect would be anti-dilutive.
5
<PAGE>
D. Initial Public Offering
In May 1999, Media Metrix consummated an initial public offering (the "IPO") of
3,000,000 shares of common stock at a price of $17 per share. The underwriters
in connection with the IPO exercised their over-allotment option to purchase an
additional 250,000 shares from Media Metrix and 200,000 shares from existing
shareholders at a price of $17 per share. The total net proceeds to Media Metrix
amounted to approximately $49,383,000 after deducting the underwriters' discount
and related expenses of $5,867,000.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
Statements in this Form 10-Q concerning our future prospects are "forward
looking statements" under the federal securities laws. Forward looking
statements involve risks and uncertainties, and future events and circumstances
could differ significantly from those anticipated in the forward-looking
statements. We cannot assure you that future results will be achieved, and
actual results could differ materially from forecasts and estimates. Important
factors that could cause actual results to differ materially are discussed in
the section "Risk Factors" included in our prospectus dated May 7, 1999. You are
encouraged to review such risk factors carefully.
Overview
We provide Internet audience measurement products and services to leading
Internet advertisers and advertising agencies, Internet properties, technology
companies and financial institutions.
Our business was originally conducted as a division within The NPD Group,
Inc., a leading marketing research firm. Prior to March 1996, we were engaged
primarily in product research and development. In March 1996, PC Meter, L.P.,
was formed to further commercialize our Internet audience measurement business
in an entity separate from NPD, although NPD has continued to provide PC Meter
with administrative and support services and technology licenses. By July 1996,
we increased the size of our panel to over 10,000 individuals and significantly
increased our product offerings. In April 1997, PC Meter was merged into Media
Metrix and we raised approximately $4.0 million in a private placement to fund
the expansion of our business. The assets and liabilities and related revenues
and expenses of PC Meter have been reflected in our financial statements at
their historical book values.
In November 1998, we merged with RelevantKnowledge, our leading
competitor. After giving effect to the merger, the former stockholders of
RelevantKnowledge were issued 3,890,874 shares of Media Metrix common stock.
Following the merger, we increased our panel size and began to integrate the
best technological features from each company into our systems and processes.
Due to the combination, in the fourth quarter of 1998 we had considerable
expenses due to costs incurred by operating two distinct panels, production
systems and administrative infrastructures. We anticipate that these costs will
decrease as we more fully integrate the business and operations of the two
companies. In connection with the merger, we acquired $6.4 million of
intangibles, which are being amortized over periods varying from one to three
years.
Our revenues are derived from our measurement products and services. Our
product offerings include both syndicated products and customized products. We
sell our syndicated products on an annual subscription basis. We typically bill
our syndicated clients, in advance, for the next three months of products. Since
1997, syndicated products have accounted for
7
<PAGE>
approximately 90% of our revenues, while customized products and services have
accounted for approximately 10%. Our combined customer base increased from
approximately 100 customers at the end of 1997 to more than 420 as of June 30,
1999. Of the 75 customers subscribing under annual contracts for our syndicated
products and services at the end of 1997, over 95% remained customers at the end
of 1998.
We recognize revenues for the syndicated products and services over the
term of the related contract as services are provided. Revenues for customized
products and services are recognized in the period in which the product or
service is delivered.
Our business model is based on creating multiple products and services
from our core panel-based market research, technologies and databases. The core
panel of 40,000 individuals under continuous measurement has been established
over the past three years. We recruit individuals to become members of our panel
through random direct mail and telephone solicitations. We incur costs in
connection with recruiting and retaining members of our panel. These costs are
expensed in the year incurred. We plan to introduce a new version of our
patented metering technology in 1999, which is expected to reduce the use of
mail in connection with the panel and provide cost savings. Our rate of expense
growth, other than panel and production, is primarily driven by increases in
headcount and sales and marketing expenditures.
We have incurred significant losses from operations since our inception.
We incurred losses from operations of $3.4 million in 1996, $4.7 million in
1997, $7.2 million in 1998 and $5.4 million in the six months ended June 30,
1999. If the merger with RelevantKnowledge had taken place on January 1, 1998,
our pro forma loss from operations for 1998 would have been $16.0 million. This
pro forma loss from operations includes a full year of amortization of $2.9
million of intangibles and a non-cash expense recorded for the issuance of
warrants of $971,000. As of June 30, 1999, we had an accumulated deficit of
$21.2 million. As of December 31, 1998, we had an outstanding payable to NPD for
$4.7 million under the management services agreement, $4.1 million of which was
paid in January 1999. As of June 30, 1999, we had an outstanding payable to NPD
for $557,000. Charges from NPD have decreased in 1999 as we have taken on the
direct management of our own payroll and computer systems.
We expect that we will incur significant expenses in the future associated
with our planned international expansion. In particular, we plan on hiring
senior personnel to manage the anticipated international operations and on
entering into joint ventures with local partners. This will probably involve the
recruitment of a panel and the expenditure of significant funds. In addition, we
intend to invest heavily in further development and improvement of our
technologies and development of additional products and services.
Results of Operations
The following table sets forth for the periods indicated our results of
operations expressed as a percentage of revenues:
8
<PAGE>
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------ ------------------
1998 1999 1998 1999
<S> <C> <C> <C> <C>
Revenues ....................... 100.0% 100.0% 100.0% 100.0%
Costs of revenues .............. 59.6 49.8 63.9 51.6
------ ------ ------ ------
Gross profit (loss) ............ 40.4 50.2 36.1 48.4
Operating expenses:
Research and development ..... 19.3 23.3 20.3 22.5
Sales and marketing .......... 52.9 42.6 51.3 42.3
General and administrative ... 30.6 30.2 33.8 31.4
Amortization of intangibles .. -- 17.6 -- 20.2
Amortization of deferred
compensation ................. -- 4.6 -- 4.1
------ ------ ------ ------
Total operating expenses ....... 102.9 118.3 105.4 120.5
------ ------ ------ ------
Loss from operations ........... (62.3) (68.1) (69.3) (72.1)
Interest income, net ........... 0.3 7.8 1.9 5.5
------ ------ ------ ------
Net loss ....................... (62.1)% (60.3)% (67.4)% (66.6)%
====== ====== ====== ======
</TABLE>
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1999
Revenues. Revenues increased 216.6% from $1.3 million for three months
ended June 30, 1998 to $4.3 million for the three months ended June 30, 1999.
Sales of syndicated audience measurement products and services accounted for
approximately 90% of revenues for each of the three months ended June 30, 1998
and 1999. Sales of customized products and services accounted for the remaining
revenues. The increase in revenues was due primarily to a substantial increase
in the number of our customers, including customers acquired in connection with
the RelevantKnowledge merger, and an increase in the amount of products and
services sold to our customers. No single customer accounted for more than 10%
of revenues during either of the three months ended June 30, 1998 and 1999.
Costs of Revenues. Costs of revenues consist primarily of costs associated
with the recruitment and maintenance of the panel, data collection and
production costs. Panel and data collection costs include costs associated with
mailing and printing, incentives, help desk and associated personnel. Production
costs include computer usage charges, printing, report distribution costs and
personnel costs. Gross profit was $544,000 for the three months ended June 30,
1998, or 40.4% of revenues. Gross profit was $2.1 million for the three months
ended June 30, 1999, or 50.2% of revenues. The increase in gross profit as a
percentage of revenues for the three months ended June 30, 1999 over the prior
period was due to an increase in revenues, without a commensurate increase in
costs.
9
<PAGE>
Research and Development. Research and development costs consist primarily
of personnel and other related costs attributable to the development of new
products and services. All research and development costs have been expensed as
incurred. Research and development costs were $260,000 for the three months
ended June 30, 1998, or 19.3% of revenues. Research and development costs were
$992,000 for the three months ended June 30, 1999, or 23.3% of revenues. The
increase in research and development costs as a percentage of revenues for the
three months ended June 30, 1999 was due primarily to increases in research and
development personnel, including the addition of personnel and consulting costs.
Sales and Marketing. Sales and marketing costs consist of personnel,
commissions, travel and entertainment expenses, public relation costs, trade
show expenses, seminars and marketing materials. Sales and marketing costs were
$711,000 for the three months ended June 30, 1998, or 52.9% of revenues. Sales
and marketing costs were $1.8 million for the three months ended June 30, 1999,
or 42.6% of revenues. The increase in absolute dollars was due primarily to the
increase in sales and marketing personnel, including the addition of personnel
in connection with the RelevantKnowledge merger, and additional marketing costs.
The decrease in sales and marketing costs as a percentage of revenues was due
primarily to revenues increasing at a greater rate.
General and Administrative. General and administrative costs consist
primarily of personnel, lease payments for our facilities, telephone and
utilities and professional services fees. General and administrative costs were
$412,000 for the three months ended June 30, 1998, or 30.6% of revenues. General
and administrative costs were $1.3 million for the three months ended June 30,
1999, or 30.2% of revenues. The increase in absolute dollars was due to the
expenses associated with becoming a public company and increased personnel and
expansion of our office facilities, including the addition of personnel and
office facilities in connection with the RelevantKnowledge merger. The decrease
in general and administrative costs as a percentage of revenues was due
primarily to revenues increasing at a greater rate.
Amortization of Deferred Compensation. Deferred compensation of $197,000
for the three months ended June 30, 1999 relates to a non-cash compensation
expense recorded in connection with stock options granted in December 1998.
Amortization of Intangibles. Amortization charges of $749,000 for the
three months ended June 30, 1999 represent the amortization of
RelevantKnowledge's panel, which is being amortized over 12 months, and
amortization of other intangibles acquired in our merger with RelevantKnowledge,
which are being amortized over three years.
Loss from Operations. Our loss from operations was $839,000 for the three
months ended June 30, 1998, or 62.3% of revenues. Loss from operations was $2.9
million for the three months ended June 30, 1999, or 68.1% of revenues. Loss
from operations was higher in the three months ended June 30, 1999 due to the
continued expansion of our business, the merger with RelevantKnowledge and
amortization of intangibles.
10
<PAGE>
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1999
Revenues. Revenues increased 196.9% from $2.5 million for six months ended
June 30, 1998 to $7.4 million for the six months ended June 30, 1999. Sales of
syndicated audience measurement products and services accounted for
approximately 90% of revenues for each of the six months ended June 30, 1998 and
1999. Sales of customized products and services accounted for the remaining
revenues. The increase in revenues was due primarily to a substantial increase
in the number of our customers, including customers acquired in connection with
the RelevantKnowledge merger, and an increase in the amount of products and
services sold to our customers. No single customer accounted for more than 10%
of revenues during either of the six months ended June 30, 1998 and 1999.
Costs of Revenues. Gross profit was $904,000 for the six months ended June
30, 1998, or 36.1% of revenues. Gross profit was $3.6 million for the six months
ended June 30, 1999, or 48.4% of revenues. The increase in gross profit as a
percentage of revenues for the six months ended June 30, 1999 over the prior
period was due to an increase in revenues, without a commensurate increase in
costs.
Research and Development. Research and development costs were $508,000 for
the six months ended June 30, 1998, or 20.3% of revenues. Research and
development costs were $1.7 million for the six months ended June 30, 1999, or
22.5% of revenues. The increase in research and development costs as a
percentage of revenues for the six months ended June 30, 1999 was due primarily
to increases in research and development personnel and consulting costs.
Sales and Marketing. Sales and marketing costs were $1.3 million for the
six months ended June 30, 1998, or 51.3% of revenues. Sales and marketing costs
were $3.1 million for the six months ended June 30, 1999, or 42.3% of revenues.
The increase in absolute dollars was due primarily to the increase in sales and
marketing personnel, including the addition of personnel in connection with the
RelevantKnowledge merger, and additional marketing costs. The decrease in sales
and marketing costs as a percentage of revenues was due primarily to revenues
increasing at a greater rate.
General and Administrative. General and administrative costs were $846,000
for the six months ended June 30, 1998, or 33.8% of revenues. General and
administrative costs were $2.3 million for the six months ended June 30, 1999,
or 31.4% of revenues. The increase in absolute dollars was due to the expenses
associated with becoming a public company and increased personnel and expansion
of our office facilities, including the addition of personnel and office
facilities in connection with the RelevantKnowledge merger. The decrease in
general and administrative costs as a percentage of revenues was due primarily
to revenues increasing at a greater rate.
11
<PAGE>
Amortization of Deferred Compensation. Deferred compensation of $305,000
for the six months ended June 30, 1999 relates to a non-cash compensation
expense recorded in connection with stock options granted in December 1998.
Amortization of Intangibles. Amortization charges of $1.5 million for the
six months ended June 30, 1999 represent the amortization of RelevantKnowledge's
panel and amortization of other intangibles acquired in our merger with
RelevantKnowledge.
Loss from Operations. Our loss from operations was $1.7 million for the
six months ended June 30, 1998, or 69.3% of revenues. Loss from operations was
$5.0 million for the six months ended June 30, 1999, or 72.1% of revenues. Loss
from operations in terms of absolute dollars was higher in the six months ended
June 30, 1999 due to the continued expansion of our business, the merger with
RelevantKnowledge and amortization of intangibles. The decrease in loss from
operations as a percentage of revenues was due to an increase in revenues
relative to the increases in costs of revenues and operating costs.
Liquidity and Capital Resources
Since our inception, we have financed our operations primarily through an
initial investment and loan by NPD, the private placement of equity securities,
RelevantKnowledge's cash on hand at the time of the merger, cash from operations
and the proceeds of an initial public offering. On May 12, 1999, we completed
the initial public offering of 3,250,000 shares of our common stock for gross
proceeds of $55.3 million, and net proceeds of $49.4 million.
Net cash used in operating activities was $1.2 million for the six months
ended June 30, 1998, compared with $6.4 million for the six months ended June
30, 1999. The variance for the 1998 period compared to the 1999 period was due
to the repayment of $4.1 million to NPD, in addition to a higher net loss for
the period.
Net cash used in investing activities was $14,000 for the six months ended
June 30, 1998, compared with $11.0 million for the six months ended June 30,
1999. The increase was primarily attributable to the purchase of investment
securities with the proceeds from our initial public offering of common stock
pending the use of these proceeds for working capital purposes.
Net cash provided by financing activities was $45.8 million for the six
months ended June 30, 1999. Cash provided by financing activities for the six
months ended June 30, 1999 resulted from the receipt of the proceeds of our
initial public offering, plus $1.3 million in proceeds received from the
exercise of warrants and stock options, offset by the redemtpion of our
redeemable preferred stock for $4.8 million.
As of June 30, 1999, we had $36.4 million of cash and cash equivalents. As
of June 30, 1999, our principal commitments consisted of accrued obligations
under our agreements with NPD in the amount of $557,000.
12
<PAGE>
Although we have no material commitments for capital expenditures,
management anticipates that we will experience an increase in our capital
expenditures and lease commitments consistent with our anticipated growth in
operations, infrastructure and personnel, including in connection with the
anticipated separation of our systems from those of NPD. We currently anticipate
that we will continue to experience growth in our operating expenses for the
foreseeable future and that operating expenses will be a material use of our
cash resources.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2: Changes in Securities and Use of Proceeds.
The effective date of our first registration statement, filed on Form S-1
under the Securities Act of 1933 (No. 333-72883) relating to the initial public
offering of our Common Stock, was May 6, 1999. A total of 3,250,000 shares of
our common stock were sold at a price of $17.00 per share to an underwriting
syndicate led by Donaldson, Lufkin & Jenrette Securities Corporation, BancBoston
Robertson Stephens Inc. and Thomas Weisel Partners LLC. The offering commenced
on May 7, 1999, and closed on May 12, 1999. An additional 200,000 shares of
common stock were sold on behalf of selling stockholders as part of the same
offering. The initial public offering resulted in gross proceeds of $55.3
million, $3.9 million of which was applied toward the underwriting discount.
Expenses related to the offering totaled approximately $2.0 million. Net
proceeds to us and the selling stockholders were $49.4 million and $3.2 million,
respectively. From the time of receipt through June 30, 1999, all proceeds were
applied as follows:
o $4.8 million towards the redemption of our redeemable preferred
stock from The NPD Group, Inc.;
o $450,000 for working capital purposes; and
o the remainder has been invested in short term, investment grade
securities.
From April 1, 1999 through June 30, 1999, we issued and sold 205,050
shares of our common stock pursuant to the exercise of warrants to investors for
aggregate consideration of $34,132. We also issued 104,666 shares of our common
stock pursuant to the exercise of warrants to investors who elected to exercise
such warrants pursuant to their cashless exercise provisions. These investors
surrendered that number of warrant shares the value of which at the initial
public offering price of $17 equaled the aggregate exercise price of the
remaining warrant shares.
No underwriters were engaged in connection with the sale of the shares
pursuant to the exercise of outstanding warrants. The issuance of the shares
upon the exercise of the warrant was made in reliance upon the exemption from
registration set forth in Section 4(2) of the Securities Act of 1933.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K.
None
14
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Media Metrix, Inc.
(Registrant)
Dated: August 10, 1999 By: /s/ Tod Johnson
--------------------------------------
Tod Johnson
Chief Executive Officer
Dated: August 10, 1999 By: /s/ Thomas A. Lynch
--------------------------------------
Thomas A. Lynch
Chief Financial Officer, Secretary and
Treasurer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Registrant Company
Condensed Consolidated Balance Sheet (Unaudited) for June 30, 1999 and Condensed
Consolidated Statement of Income (Unaudited) for the Six Months ended June 30,
1999 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 36,383
<SECURITIES> 10,454
<RECEIVABLES> 3,185
<ALLOWANCES> (318)
<INVENTORY> 0
<CURRENT-ASSETS> 50,207
<PP&E> 1,062
<DEPRECIATION> (187)
<TOTAL-ASSETS> 55,742
<CURRENT-LIABILITIES> 7,085
<BONDS> 0
0
0
<COMMON> 173
<OTHER-SE> 48,332
<TOTAL-LIABILITY-AND-EQUITY> 55,742
<SALES> 7,435
<TOTAL-REVENUES> 7,435
<CGS> 3,838
<TOTAL-COSTS> 3,838
<OTHER-EXPENSES> 8,759
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,951)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,951)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,951)
<EPS-BASIC> (.35)
<EPS-DILUTED> (.35)
</TABLE>
