Traffix - TRFX - revenue up 85% including acquisitions (1Q05 earnings results)

| About: Traffix Inc. (TRFX)

Traffix (ticker: TRFX), which manages an array of content sites that generate advertising revenue, reported strong revenue growth (partly driven by acquisitions) in its Q1 results (quarter ended February 28th) yesterday. Details:

Q1 Results
(all percentage changes and comparisons are year on year, unless stated otherwise)

  • Net revenue up 85% to $13.3 million. (Sequential growth was 23%.)
  • Income from operations up 92% to $198,000.
  • Net income was $623,000 and EPS $0.04, versus $353,000 and $0.03.
  • Source of revenue growth: organic plus acquisitions of Send Traffic in June 2004 and Hot Rocket in January 2005.
  • Balance sheet: cash per share declined to $2.42 ($33.3 million) from $2.65, mainly from acquisition of Hot Rocket for $2.8 million.
  • Net tangible book value per share decreased to $2.55 as of end of Q1 from $2.73 from end Q4 2004.
  • Current ratio declined to $4.80 of current assets to $1.00 of current liabilities, compared to $5.26 of current assets to $1.00 of current liabilities as of November 30, 2004.

Quote from the press release:

Mr. Schwartz concluded by stating that "management continues to strive to do everything possible to build our business organically, which has been supplemented with the revenues provided from the two acquisitions we have completed in the past ten months, with both solidly contributing to the growth we were able to report this quarter. We are further delighted that these acquisitions have quickly provided us access to previously unavailable revenue streams and media opportunities. We are confident this will enable us to implement our strategy of combined organic growth and growth through timely and strategic acquisitions."

Here's a description of Traffix' web properties from its own web site: – One of our newest and most exciting properties, EZ-Tracks features thousands of 100% free legal music downloads. Downloading music is one of the biggest and hottest draws on the Internet for young and old alike. Unfortunately, many music download sites charge hefty premiums to download music, or offer access to illegally pirated music. EZ-Tracks not only makes downloading music easy and legal, but fun and affordable, too.

EZ-Tracks music downloads are also used by Traffix and its properties as promotional premiums. Free giveaways are a powerful incentive for consumers to buy and boost traffic and business on our other sites. See our Consumer Services section to learn more. – GroupLotto is an online daily sweepstakes in which users select 6 numbers and play in 10 daily drawings for cash prizes up to $1.5 million. Users can play their numbers up to 10 times per day, and each chance is free. The site is supported by advertising revenue generated by more than 8 million active players. GroupLotto has been operating successfully for over 4 years and has more than 20 million registered players. GroupLotto is a proven lead-generator and traffic builder for Traffix. – One of Traffix's newer content sites, RecipeRewards offers thousands of brand-name recipes available for free. Users can search through this database of popular and practical recipes. Consumers enjoy a convenient source for recipes and cooking tips, and advertisers enjoy access to a very desirable target demographic. – Traffix introduced one of the most powerful interactive games to the Internet -- PrizeAmerica's Free Scratch & Win game with the opportunity to win over $1.5 million in prize money, then try their luck daily to win instant cash prizes. This unique, interactive game concept has quickly attracted a large, loyal following of daily players. – This website is one of the leading on-line dating sites. With over 3 million registered users and a number of cutting-edge features, iMatchup Online Singles and Online Personals stands out as one of the premier destinations for people seeking love, romance, friendship, and companionship. Traffix markets this property on its own media, as well as through third party media. Users pay a membership fee for this service on either a monthly, tri-monthly or yearly basis.

AtlasSites - Traffix has created a unique marketplace where consumers can find the right products and services, and advertisers can find the right customers. – People looking to better themselves through online and continuing education come to AtlasEducationGroup to research online education, career enhancement options and order course catalogs. Advertisers include University of Phoenix, AIU and Kaplan Higher Education. – The AtlasCreditGroup specializes in helping users with their personal finance needs, such as mortgages, credit cards, and refinancings. – The AtlasAutomotiveGroup focuses on users looking to buy or lease both new and used vehicles. The sites directs users to advertisers who offer auto quotes and auto insurance. – There has recently been a surge in the number of Americans starting a business from home, and AtlasIncomeBuilder is the central location for a variety of home-based businesses. The website consists of information, offers and links to companies selling business-opportunity products and related services. – Registrants that complete the series of survey questions on this website are rewarded with a Free DVD. Who doesn’t love getting something for nothing? This engaging lead-generating site provides Traffix with a wealth of high-quality customer data. – Started in 1999, Thanksmuch was started with a simple business premise: to develop and offer promotional programs that are exciting to consumers and lucrative for websites. Thanksmuch is the first business to combine the proven effectiveness of premiums and incentives with the tremendous delivery efficiencies of the Internet. – PrizeCade is a fun place where users can play a variety of online arcade style video games as well as some old favorites like solitaire and mahjongg. Players can post scores and win prizes just for playing games.

TRFX chart below.