El Sitio
www.elsitio.com
EL SITIO REPORTS THIRD QUARTER 2000 RESULTS
Net Revenues Grow 39% Over Second Quarter
Third Quarter 2000 Loss Per Share 18% Narrower Than Previous Quarter
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Buenos Aires and New York - November 15, 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 $10.5
million for the third quarter ended September 30, 2000. The revenue figure
compares to net revenues of $7.5 million for the second quarter of 2000 and
$0.8 million for the third quarter of 1999. Revenues for the 2000 period
were primarily driven by advertising revenue growth as El Sitio increased the
monetization of page views generated by its core community.
Roby Cibrian-Campoy, chief executive officer of El Sitio, stated, "In the
third quarter, we intensified our effort to monetize our inventory, and that
effort resulted in continued strong growth in advertising revenues. At the
same time, our EBITDA losses narrowed from the second quarter due to our
revenue growth and our ongoing expense management initiatives. Finally,
during the quarter we launched El Sitio Venezuela, our eighth country-
specific website, furthering our pan-regional coverage. Overall, we are
pleased with our performance and believe we have good business momentum as we
prepare to leverage El Sitio's Internet presence across traditional media
platforms as part of the new Claxson Interactive Group."
As announced on October 30, 2000, El Sitio has agreed to merge with Ibero
American Media Partners and Cisneros Television Group, whose affiliates are
strategic investors in El Sitio, to form a new multi-media content company
under the name of Claxson Interactive Group. The merger is expected to close
in the first quarter of 2001.
Roberto Vivo-Chaneton, El Sitio's Chairman and the newly appointed Chairman
and CEO of Claxson, noted, "Claxson Interactive Group is the realization of
El Sitio's and our partners' shared vision to be the first mover in media
convergence in Latin America. This new company will combine the strong
assets of El Sitio, including its loyal core user community and interactive
content, with the leading entertainment brands of Cisneros Television Group
and the broadcast television and radio assets of IberoAmerican Media
Partners. Claxson will have $600 million in assets, a strong cash position,
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an even stronger market position and a clear path to profitability. Claxson
will also field a talented and seasoned management team with extensive
experience in the Ibero-American media and Internet industries."
Financial Highlights
El Sitio's financial performance in the third quarter of 2000 was largely
driven by the growth in net advertising revenues, which totaled $6.3 million
in the quarter, up 31% from $4.8 million in the second quarter of 2000 and
compared to $0.8 million in the third quarter of 1999. For the first nine
months of 2000, net advertising revenues totaled $14.0 million, compared to
$1.5 million for the corresponding period in 1999.
Net connectivity service revenues totaled $2.1 million in the third quarter
of 2000 compared to $2.3 million in the second quarter. Decreased revenues
for connectivity services primarily reflect a decline in average subscriber
fees in Argentina, Brazil and Colombia where El Sitio offers these services.
El Sitio reported e-commerce revenues of $2.1 million in the third quarter of
2000, representing the first full quarter of operations of DeCompras.com, the
Mexican e-tailer which was acquired in late May 2000. DeCompras.com is
beginning to ramp up its operations and has commenced the implementation of
its "Paisano" program, which targets Mexican-Americans in the United States
with a main focus in three U.S. cities that have large Hispanic communities.
El Sitio reported EBITDA loss of $15.9 million for the third quarter of 2000,
down from a $16.6 million loss in the second quarter and up from an $8.9
million loss in the third quarter of 1999.
El Sitio's net loss for the third quarter of 2000 totaled $20.5 million, or
$0.47 per share, down from $23.5 million or $0.57 per share in the second
quarter of 2000, and compared to $10.1 million, or $0.80 per share, in the
third quarter of 1999. El Sitio's net loss for the first nine months of 2000
was $64.3 million, or $1.54 per share, as compared with $13.9 million, or
$1.18 per share, in the corresponding period in 1999.
As of September 30, 2000, El Sitio had a balance of cash, cash equivalents
and investments of $83.4 million. El Sitio's management believes that
Claxson Interactive Group, the proposed combined company which will include
El Sitio, will become EBITDA positive twelve months after the closing of the
merger.
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Audience Update
El Sitio will not currently report audited traffic metrics for the quarter
ended September 30, 2000, after detecting, in conjunction with Engage I/Pro,
its auditing service, that incomplete logs prevented the service from
providing a full audit report. This situation has been addressed and El
Sitio plans to continue reporting audited traffic data for future periods on
a regular basis.
Based on company estimates, total page views in the third quarter of 2000
exceeded 600 million, compared to 592 million and 418 million reported for
the second and first quarters respectively. Registered users at September
30, 2000 reached almost 1.6 million, up 33% from June 30, 2000. The network
added 350,000 new registered users during the third quarter, up 24% from the
282,000 registered users added in the second quarter, indicating continued
growth in the company's core user community.
Network and Product Expansion
El Sitio's network now consists of eight country-specific sites, following
the third quarter launch of El Sitio Venezuela. El Sitio continued to expand
the breadth and depth of its content offering in the third quarter by
completing strategic content partnerships and launching new products
including the following:
. Employment Channel: an employment and career counseling service
site launched in partnership with Jobshark.com to provide services
in a manner previously unavailable in Latin America;
. Messenger: the first instant messaging service in Spanish that
allows users to connect with others surfing the same page;
. Sports Channel: PSN.com, a sports news and programming site was
incorporated into El Sitio's network pursuant to the previously
announced strategic alliance between PSN Sports and El Sitio;
. Health Channel: an El Sitio channel launched in partnership with
Salutia.com to provide health information, applications and other
health services;
. Golden Games: a series of interactive games based on Olympic
sports, such as swimming and track and field, specially created and
designed in connection with the Sydney Olympic Games;
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. Cravo y Canela: an adult content channel available at OSite, El
Sitio's Brazilian site, which reveals relationships among local
celebrities;
. Mascotas: a channel available at El Sitio Mexico dedicated to
providing health tips and information related to pets.
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, Uruguay and Venezuela. Founded
in 1997, El Sitio has teams of local professionals in each of its country
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, to generate future
profits and positive cash flow from operations and to complete its proposed
business combination with Ibero-American Media Partners and Cisneros
Television Group. 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
other factors, 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, any
problems encountered in integrating acquired businesses and any failure to
receive the necessary shareholder, regulatory and other approvals relating to
the above mentioned business combination. 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 Audrey Mann
Brainerd Communicators TSI Communications Worldwide
212-986-6667 212-320-2234
# # #
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CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
<TABLE>
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 30, 2000 Sept. 30, 1999 Sept. 30, 2000 Sept. 30, 1999
-------------- -------------- -------------- --------------
(Unaudited) (Unaudited) (Unaudited) (Audited)
<S> <C> <C> <C> <C>
Net revenues:
Advertising and related services $6,324 $760 $14,021 $1,524
Connectivity services 2,066 -- 7,157 --
E-commerce 2,078 -- 2,483 --
------- ----- ------ ------
10,468 760 23,661 1,524
Costs and expenses:
Cost of goods sold, E-commerce 1,823 -- 2,174 --
Product, content & technology 6,871 1,499 18,285 3,181
Marketing and sales 11,916 6,130 34,248 7,157
Corporate, finance and administrative 5,843 1,983 15,683 3,736
Depreciation and amortization 3,786 169 9,032 336
Share-based compensation 1,639 499 5,720 499
------- ------- ------- -------
31,878 10,280 85,142 14,909
------- ------- ------- -------
Operating loss (21,410) (9,520) (61,481) (13,385)
Gain attributable to minority interest 28 -- 59 --
Total other income 1,006 224 4,546 266
Provision for income taxes (100) -- (228) --
Dividends on convertible preferred
shares <1> -- (784) (7,243) (784)
----------- ----------- -------- ----------
Net loss attributable to common $(20,476) $(10,080) $(64,347) $(13,903)
shareholders ========== ========== ======== ==========
Basic and diluted net loss per common
share $(0.47) $(0.80) $(1.54) $(1.18)
Shares used in computing basic and
diluted loss per common share $43,919,851 12,568,098 41,800,682 11,777,516
<1> The difference between the initial public offering price per common share
and the $9.00 price per Class B convertible preferred share was amortized
as a deemed dividend during the six-month period ended June 15, 2000.
</TABLE>
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BALANCE SHEET
(in thousands)
<TABLE>
As of As of
Sept. 30, 2000 Dec. 31, 1999
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Assets (Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash, cash equivalents and investments $83,420 $160,029
Trade accounts receivable, net 7,328 3,123
Inventory 1,437 --
Other current assets 14,681 10,486
---------- --------
Total current assets 106,866 173,638
---------- --------
Property, plant and equipment, net 11,684 5,405
Intangible assets - Customer base, net 14,479 18,209
Intangible assets - Goodwill, net 18,978 --
Other assets 10,636 4,668
---------- --------
TOTAL ASSETS $162,643 $201,920
========== ========
Liabilities and shareholders' equity
Current Liabilities
Accounts payable - trade $11,604 $13,499
Accrued and other liabilities 5,918 4,796
Other current liabilities 535 986
---------- --------
Total current liabilities 18,057 19,281
---------- --------
Class B Convertible Preferred Shares -- 8,967
Minority Interest (59) --
Shareholders' Equity 144,645 173,672
---------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' $162,643 $201,920
EQUITY ========== ========
</TABLE>
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