FOR IMMEDIATE RELEASE
---------------------
EL SITIO REPORTS SECOND QUARTER 2000 RESULTS
Net Advertising Revenues Grow 66% Over First Quarter 2000
Average Monthly Unique Users Increase to 5.1 Million
Buenos Aires and New York - August 2, 2000 - El Sitio, Inc. (Nasdaq: LCTO), a
leading Internet media company targeting Spanish and Portuguese speakers in
Latin America and the United States, today reported net revenues of $7.5
million for the second quarter ended June 30, 2000, reflecting strong growth
in advertising revenues, unique users, registered users and page views on the
Company's network. The revenue figure compares to net revenues of $0.5
million for the second quarter of 1999 and $5.6 million for the first quarter
of 2000.
Roberto Vivo-Chaneton, chairman of El Sitio, stated, "Second quarter results
were driven by a 66% increase in advertising revenues over the first quarter.
Total net revenues, which also included the initial contribution from e-
commerce, our newest revenue stream, outpaced expectations despite lower
revenues from our connectivity operations. On the expense side, El Sitio is
managing its operations in a highly efficient manner. We look forward to
improving EBITDA results in the forthcoming quarters and are on track towards
achieving profitability."
Roby Cibrian-Campoy, chief executive officer of El Sitio, added, "The strong
second quarter performance on the advertising side was driven by our ability
to monetize El Sitio's growing community and traffic. Average monthly unique
users topped the five million mark in the quarter, demonstrating that El
Sitio continues to build a leading brand at an early stage in the development
of Latin America's Internet market."
Audience Highlights
Second quarter average monthly unique users totaled 5.1 million, representing
a 34% increase over the 3.8 million average monthly unique users in the first
quarter of 2000. Total page views in the second quarter reached 592 million,
up 42% from 418 million in the first quarter. Registered users at June 30,
2000 were 1.2 million, up 33% from 0.9 million at March 31, 2000. (Unique
user and page views data have been audited by Engage I/Pro).
Financial Highlights
Second quarter performance was driven largely by the growth in net
advertising revenues, which totaled $4.8 million in the second quarter, up
66% from $2.9 million in the first quarter of 2000 and compared to $0.5
million in the second quarter of 1999. For the first six months of 2000, net
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advertising revenues totaled $7.7 million, compared to $0.8 million for the
corresponding period in 1999.
Net connectivity revenues totaled $2.3 million in the second quarter compared
to $2.8 million in the first quarter. The decrease reflects El Sitio's
response to competitive market trends in Argentina and Brazil and an
adjustment for inactive subscribers in Argentina as El Sitio took over the
billing operations from IMPSAT Fiber Networks earlier in the year. The
decrease in these revenues was partially offset by the initial contribution
from connectivity subscribers in Colombia, the acquisition of which closed at
the beginning of the second quarter. El Sitio is discussing with IMPSAT Fiber
Networks appropriate compensation to El Sitio for the revenue effect of the
subscriber adjustment in Argentina and a reduced number of active subscribers
received in Colombia.
El Sitio reported e-commerce revenues of $0.4 million in the second quarter,
representing one month of operations of DeCompras.com, the Mexican e-tailer
whose acquisition was closed in late May 2000.
The Company's EBITDA loss for the second quarter totaled $16.6 million, as
compared with $14.1 million in the first quarter of 2000 and $2.3 million in
the second quarter of 1999. EBITDA loss for the first six months of 2000
totaled $30.7 million as compared to $3.7 million for the first six months of
1999. Net loss for the second quarter of 2000 was $23.5 million, or $0.57 per
share, compared to a net loss of $20.4 million, or $0.51 per share, for the
first quarter of 2000. For the second quarter of 1999, the Company's net loss
was $2.3 million, or $0.18 per share. For the first half of 2000, the net
loss totaled $43.9 million, or $1.08 per share, compared with $3.8 million,
or $0.33 per share, for the corresponding period in 1999.
For the second half of 2000, El Sitio anticipates continued growth in
advertising revenues and the increasing contribution of its e-commerce
business to offset slower growth in connectivity revenues, resulting in total
net revenues that should meet or exceed current market expectations. The
Company also expects EBITDA losses and net losses per share to narrow in each
of the remaining quarters of 2000 due to overall revenue growth and expense
management.
As of June 30, 2000, El Sitio had a balance of cash, cash equivalents and
investments of $103 million. The Company believes this balance will be
sufficient to support its liquidity and capital resource requirements into
2002.
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Second Quarter Milestones
Network and Product Expansion
El Sitio's network now consists of seven country-specific sites and a
global site, following the second quarter launch of El Sitio Colombia.
El Sitio continued to expand the breadth and depth of its content
offering in the second quarter by completing strategic, revenue-
generating partnerships in the following vertical categories:
- Finance: El Sitio has partnered with Patagon.com and LatinStocks.com to
provide comprehensive financial news and services in co-branded sites.
- Sports: PSN.com, the Web venture of the Hicks Muse-led, pan-Latin sports
cable network, PSNSports, will operate in partnership with El Sitio via
a new co-branded sports news and programming site.
- Health: Salutia.com, the leading on-line health solutions provider for
Spanish- and Portuguese-speaking markets, and El Sitio have entered into
a strategic partnership to provide health information, applications and
other health services to El Sitio's Health Channel.
- Auctions: Lokau.com has partnered with El Sitio to distribute its
auction platform on the El Sitio network through the creation of co-
branded auction sites.
- Travel: Viajo.com and TravelYa.com are providing online travel
information and services in key El Sitio markets through co-branded
sites.
El Sitio also launched in the second quarter "Mujer, Mujer," a new content
channel produced by the Company and targeted at the growing number of
Spanish- and Portuguese-speaking women online. Less than two months following
the launch of "Mujer, Mujer," women now comprise 41% of El Sitio's registered
user base, compared to 29% prior to the launch of this channel.
Convergence and Broadband
El Sitio has been focusing on developing interactive content and services
designed for the coming broadband environment. During the second quarter, the
Company began producing live weekly video chats hosted by noted Latin
American celebrities. The Company is also developing proprietary video
content for distribution through its network. In addition, El Sitio is
enhancing its 3-D technology by which users can navigate the Internet through
a self-selected virtual world.
E-commerce
El Sitio completed the acquisition of DeCompras.com in late May.
DeCompras.com is a leading e-commerce company serving Mexico and U.S.-based
Mexican-Americans. In addition to being ranked first among Mexican Internet
companies in the Bain & Co. survey of March 2000, DeCompras.com has also been
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selected by iBest 2000 as one of three finalists for the Mexican e-commerce
category in its August survey. El Sitio expects this e-commerce operation
will be an important contributor to its revenue base and is exploring
opportunities to expand its e-commerce presence elsewhere in the Latin
American region.
About El Sitio
El Sitio, Inc. (Nasdaq: LCTO) is a leading Internet media company providing
original country-specific and global interactive content and community-
building features, e-commerce and connectivity to Spanish and Portuguese
speakers. El Sitio is designed as an Internet media destination network
(www.elsitio.com) that consists of country Web sites for Argentina, Brazil,
Chile, Colombia, Mexico, the United States and Uruguay, as well as a global
site. Founded in 1997, El Sitio has a team of more than 400 professionals in
seven offices throughout the Americas. El Sitio's common shares began trading
on the Nasdaq National Market in December 1999.
This press release contains forward-looking statements that involve risks and
uncertainties, including those relating to El Sitio's ability to expand its
user and advertiser bases, to increase its revenues, and to generate future
profits and positive cash flow from operations. Actual results may differ
materially from the results predicted, and reported results should not be
considered as an indication of future performance. The potential risks and
uncertainties include, among others, the increasingly competitive and
changing environment for advertising sales, uncertainties associated with the
Internet as an advertising and e-commerce medium, the Company's dependence on
advertising revenues and on third parties for technology, content, and
distribution, and the Company's ability to integrate acquired businesses.
Other factors that could affect the Company's business, results of
operations, financial condition and prospects are identified in the Company's
annual report on Form 20-F for the year ended December 31, 1999, including
under "Operating and Financial Review and Prospects" and "Key
Information-Risk Factors", which annual report is on file with the U.S.
Securities and Exchange Commission (http://www.sec.gov). Nothing can or
should be inferred about El Sitio's future financial performance from the
information contained in this press release. The accompanying condensed
consolidated statements of operations and balance sheets are an integral part
of this announcement.
[Financial Tables Attached]
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All other trademarks and/or registered trademarks are the property of their
respective owners.
Contacts:
Investors: Media:
Horacio Milberg Erich de la Fuente
Chief Financial Officer Vice President, Corporate Communications
El Sitio, Inc. El Sitio, Inc.
011-5411-4339-3700 011-5411-4339-3700
Or Or
Jeff Majtyka/Leonardo Santiago Barbara Shear
Brainerd Communicators TSI Communications Worldwide
212-986-6667 212-320-2262
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<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
Three Months Ended Six Months Ended
------------------ ----------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
------- ------- ------- -------
(Unaudited)(Unaudited) (Unaudited) (Unaudited)
Net revenues:
Advertising and related services $4,820 $ 488 $ 7,697 $ 764
Connectivity services . . . . . . 2,322 -- 5,091 --
E-commerce . . . . . . . . . . . 405 -- 405 --
------ ------- ---------- --------
Total revenues . . . . . . . . . 7,547 488 13,193 764
------ ------- ---------- --------
Costs and expenses:
Cost of goods sold - e-commerce . 351 -- 351 --
Product content & technology . . 6,283 1,066 11,414 1,682
Marketing and sales . . . . . . . 12,487 672 22,332 1,027
Corporate, finance and
administrative . . . . . . . . . 5,026 1,013 9,840 1,753
Depreciation and amortization . . 2,931 101 5,246 167
Share-based compensation . . . . 2,041 -- 4,081 --
------ ------- ---------- --------
Total costs and expenses . . . . 29,119 2,852 53,264 4,629
------ ------- ---------- --------
Operating loss . . . . . . . . . (21,572) (2,364) (40,071) (3,865)
Gain attributable to minority
interest . . . . . . . . . . . . 25 31
Total other income . . . . . . . 1,488 56 3,540 42
Provision for income taxes . . . (128) -- (128) --
Dividends on convertible
preferred shares(1) . . . . . . . (3,314) (7,243) --
------ -------- ---------- --------
Net loss attributable to common
shareholders $(23,501) $ (2,308) $ (43,871) (3,823)
====== ========= ========== ========
Basic and diluted net loss per
common share . . . . . . . . . . $(0.57) $(0.18) $(1.08) $(0.33)
Shares used in computing basic
and diluted loss per common
share . . . . . . . . . . . . . 41,276,845 12,499,932 40,729,454 11,460,187
(1) The difference between the initial public offering price per common
share and the $9.00 price per Class B convertible preferred share is
amortized as a deemed dividend during the six-month period ending June
15, 2000.
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<PAGE>
June 30, Dec. 31,
2000 1999
--------- ---------
(unaudited) (unaudited)
--------- ---------
Balance Sheet Data:
------------------
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and investments . . . . $102,573 $160,029
Trade accounts receivable, net . . . . . . . . 6,025 3,123
Inventory . . . . . . . . . . . . . . . . . . 977 --
Other current assets . . . . . . . . . . . . . 13,801 10,486
-------- --------
Total current assets . . . . 123,376 173,638
-------- --------
Property, plant and equipment, net . . . . . . 9,635 5,405
Intangible assets - Customer base, net . . . . 16,910 18,209
Intangible assets - Goodwill, net . . . . . . . 19,837 --
Other assets . . . . . . . . . . . . . . . . . 7,423 4,668
-------- --------
TOTAL $177,181 $201,920
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade . . . . . . . . . $ 8,945 $ 13,499
Accrued and other liabilities . . . . . . 5,303 4,796
Other current liabilities . . . . . . . . 730 986
-------- --------
Total current liabilities. . . . . . . . . 14,978 19,281
======== ========
CLASS B CONVERTIBLE PREFERRED SHARES -- 8,967
-------- --------
MINORITY INTEREST (31) --
SHAREHOLDERS' EQUITY 162,234 173,672
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $177,181 $201,920
======== ========
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