Irvine, California – (The Hosting News) – August 1, 2006 – Integrated web hosting and audio and video streaming provider, VitalStream Holdings, Inc., has reported record revenue of $6.2 million, up 57% year-over-year and 12% over the first quarter.
The 2006 revenue guidance has been raised to $25 million – $27 million and the company projects positive net income for the fourth quarter of 2006. The Company’s GAAP results of operations for 2006 include the impact of expensing stock options resulting from the adoption of Statement of Financial Accounting Standards No. 123R.
Jack Waterman, VitalStream’s Chairman and CEO explained, ”VitalStream’s ability to deliver unique solutions that meet the unprecedented growth in the demand for delivery of audio and video content has resulted in record revenue during what is traditionally a slower growth quarter for online businesses. Our confidence in our business and outlook, especially as it relates to the online advertising opportunities now available to us as a result of the integration of the ad insertion and reporting technology we acquired from Eonstreams, enables us to raise our 2006 guidance. Not only do we expect demand for our content delivery solutions among content owners and enterprise customers to continue to accelerate, but we have begun to capitalize on the synergies inherent in providing both streaming and ad-insertion and delivery capabilities over the Internet.”
Revenues for the quarter ended June 30, 2006 were $6.2 million, an increase of approximately 57 percent over revenues of $4.0 million in the second quarter of 2005.
Net loss for the quarter ended June 30, 2006 was ($1,403,000), or ($0.06) per share, which includes $313,000, or $0.01 per share, of non-cash share-based compensation charges. This compares to a net loss in the same period last year of ($528,000), or ($0.03) per share. Gross margins for the second quarter of 2006 were 50%. Adjusted EBITDA loss for the quarter ended June 30, 2006 was ($168,000), which includes approximately $300,000 in non-recurring charges related to the Company’s acquisition of Eonstreams on May 20, 2006 and to its application for the Nasdaq Capital Market listing that occurred during the quarter. It also includes approximately $100,000 in higher than expected costs related to Sarbanes-Oxley compliance. (See ”Use of Non-GAAP Financial Measures” below for definition of Adjusted EBITDA).
Mr. Waterman added, ”While the short-term factors detailed above impacted our second quarter bottom-line results, these investments are critical to the growth of VitalStream as we seek to capitalize on the opportunities in front of us. We are supporting extremely strong demand for VitalStream’s streaming solutions by enterprise customers in the U.S. and are setting the stage for international growth moving forward.”
VitalStream’s customer base includes many of the largest and fastest growing streamers of audio and video content, including Disney and Myspace.com. Notable new customers added during the second quarter of 2006 include Greyhound, the United Nations, Microsoft Prodigy, Buy.com, QuePasa, Home Depot and Gillette.
In a strategic initiative designed to expand VitalStream’s market opportunity beyond the storage and streaming of rich media content, the Company acquired the business of privately-held Eonstreams on May 20, 2006. Since the close of the transaction, the former Eonstreams business has been re-branded VitalStream Advertising Services, and the technical integration of online advertising insertion technology has been largely completed.
Steve Newman, Former CEO of Eonstreams, now Executive Vice-President of VitalStream Advertising Services commented, ”We are very encouraged by the activity levels and sales pipeline for our services, which has increased significantly since the acquisition. The addition of these new solutions is already providing us an entry point to up-sell new solutions to VitalStream’s current client base, while simultaneously expanding our market opportunity beyond content owners to leading brands that have an online presence but have not yet fully monetized their brand equity online.”
VitalStream raised its full-year 2006 revenue guidance to $25 million to $27 million from $23 million to $25 million and continues to expect gross margins to expand beyond second quarter levels in the third and fourth quarters of 2006. The Company expects to achieve positive net income in the fourth quarter of 2006. Mr. Waterman concluded, ”We believe that the combination of our streaming solutions plus our new online advertising capabilities will result in robust growth in the second half of 2006 leading to record revenue for the year. We expect that the combination of margin expansion and the absence of non-recurring costs we had in the second quarter will permit us to achieve positive net income during the fourth quarter of 2006, a first for VitalStream. This outlook reflects management’s focus on building shareholder value by capturing top-line growth while positioning the company for long-term profitability.”
VitalStream defines Adjusted EBITDA as net income (loss) before interest, income taxes, depreciation, amortization, non-recurring asset sales, and stock-based compensation. Adjusted EBITDA attempts to eliminate significant non-cash items and items that are not part of the Company’s core operations. Adjusted EBITDA is not a measure used in financial statements reported in accordance with generally accepted accounting principles, does not represent funds available for discretionary use and is not intended to represent cash flow from operations as measured under generally accepted accounting principles. Adjusted EBITDA should not be considered as an alternative to net loss or net cash used in operating activities. VitalStream’s calculation of Adjusted EBITDA may not be comparable to the computation of similarly titled measures of other companies.
VitalStream’s management uses Adjusted EBITDA as a measure of its operating performance. In addition, VitalStream believes that Adjusted EBITDA may be useful to existing and potential creditors of VitalStream, and to analysts and investors that follow VitalStream’s performance, because it is one measure of the income generated that is available to service any outstanding debt.
VitalStream, Inc., a wholly owned subsidiary of VitalStream Holdings, Inc., is a global provider of integrated content delivery services that endeavors to enable businesses to broadcast digital media and communications to worldwide audiences via the Internet. The company provides complete solutions, including video and audio streaming, advertising placement, delivery, reporting and analysis, live event broadcasting, media asset management, integrated web hosting and consulting services, designed to seamlessly integrate with leading streaming media technologies. VitalStream engineered its content delivery network certified for quality delivery in the United States, Europe and Asia.
To learn more, please visit: www.vitalstream.com.