Launch Announces Financial Results
Launch Media, Inc.(www.launch.com) released its financial results for the first quarter ended March 31, 2001 and stated that the company would be cutting 60 jobs as of Monday.
Launch also announced that it has signed a non-binding term sheet providing for $5 million in a secured convertible note financing. While the company expects to sign a definitive agreement within the next 10 days, they are not assuring that this transaction will close or that the company will receive the proceeds.
The company is predicting that with this cash infusion the company should be able to reach EBITDA profitability during the third quarter of this year. In a continued effort to reduce costs, Launch eliminated approximately 60 positions reducing its overall staff to 175 and will consolidate its Santa Monica operations into one facility. Its European expansion plans have been terminated along with the company's relationship with Softbank Media & Marketing for Launch Japan.
Net revenues for the first quarter 2001 were $3.8 million, compared to net revenues of $6.4 million for the first quarter 2000. The revenue mix for the quarter was 70 percent from advertising and 30 percent from content licensing. Despite lower year-over-year revenue, the pro forma EBITDA loss for the 2001 first quarter decreased to $7.8 million, or $0.54 per share, compared to an EBITDA loss of $9.2 million, or $0.69 per share, for the first quarter 2000 and an EBITDA loss of $8.0 million or $0.56 per share for the fourth quarter 2000.
Launch is reducing its full year revenue estimate from $32 million to $34 million from the previously estimated $45 million. Second quarter 2001 revenue is estimated to be $5.7 million and expenses will include charges relating to severance and other restructuring operations. The company expects to report a pro forma EBITDA loss for the full year 2001 of $11 million to $12 million, as compared to the earlier estimate of $10 million, but is still anticipating generating positive EBITDA in the third quarter.
Despite shrinking revenue Launch was able to attract a significant number of new users in the first quarter - as the user base grew to 6.4 million as of March 31, 2001, compared to 5.6 million as of December 31, 2000.
"We expected the first quarter to be challenging due to a weak advertising market, but we were still able to bring on new large brand advertisers such as Nike, Evian, Sprite and Mercedes-Benz. Also, our ability to increase traffic 34 percent over the December 2000 quarter, despite a significant decrease in marketing spending, is clear testimony to the popularity of LAUNCH.com," said Dave Goldberg, CEO of Launch in a statement.