InfoUSA Q2 Net Profit Halved On Higher Revenue

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Database giant InfoUSA reported on July 21 second-quarter net income of $3.2 million, a 49.8 percent decrease from $6.36 million in the same quarter last year.

Revenue for the quarter, which ended on June 30, was $100.3 million, up 7 percent from $93.7 million in the same period last year .

"During the second quarter, which is historically the slowest quarter in the direct mail industry, we made considerable progress and delivered solid year-to-year top-line growth," Vin Gupta, chairman/CEO of infoUSA, said in conference call July 21. "We are also pleased with organic revenue growth across the company."

InfoUSA, Omaha, NE, also said operating income was $7.5 million versus $11.8 million during the corresponding quarter of 2005. This was due to the company's investment in advertising and marketing for its subscription products and the losses in its seasonal list brokerage businesses.

Also during the quarter, $1.7 million was spent on the proxy contest -- referring to a minority shareholder's bid to oust Mr. Gupta and other board members -- and other shareholder matters.

Meanwhile, net income for the first half of the year was $11.1 million, a decrease of 27.7 percent from last year, and first half sales were $203.4 million, up 7.7 percent from $188.3 million. Operating income was $23 million for the first six months of 2006 compared to $27.4 million for the first six months of 2005.

In order to reduce operating costs, infoUSA (www.infousa.com) said it has taken cost-cutting measures throughout the company. It is examining all of its advertising and marketing expenses, and eliminating programs that are not producing results.

In addition, it has initiated a hiring freeze and is reducing overhead costs in divisions that are not growing.

infoUSA said it is investing heavily in branding and advertising to promote SalesGenie.com, infoUSA.com and Credit.net. The company increased its advertising by $2.9 million over the second quarter of 2005 and by $5.4 million year-to-date over the same period last year.

The increased ad spending was across radio, television, Google and other mass advertising.

While the advertising effort has led to an increase in expense, as the subscription base builds and the advertising costs remain stable, infoUSA said it expects that sales and profitability will increase.

The company has retained two agencies, A. Eicoff in Chicago and DDB in San Francisco, to develop TV ads.

The company is promoting its SalesGenie product in a nationwide radio ad campaign that is proving to be very effective in reaching outside salespeople and small business owners.

To take advantage of revenue growth opportunities, infoUSA also continues to expand its international sales force.

In the second quarter, additional sales people were added in Hong Kong, Mexico and South America.

Going forward, infoUSA expects to see continued revenue growth as the number of new subscribers continues to grow. It also confirms that it believes its 2006 revenue will be on the high side of a previously provided range of $410 million to $420 million.

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