Quokka Sports, Inc. a leading provider of sports entertainment for the digital worldÔ, today announced record third quarter financial results for the three months ended September 30, 2000.
Revenues for the quarter ended September 30, 2000 were $16.0 million, up 433% from $3.0 million reported for the third quarter in 1999 and an increase of 27% over revenues of $12.6 million in the second quarter of 2000. Revenues for the September quarter exceeded the Company’s revenues for all of fiscal year 1999.
The net loss for the 2000 third quarter, excluding interest charges, depreciation, and amortization of intangibles was $19.8 million, or $ (0.43) per share, compared to a net loss of $15.0 million or $ (0.35) per share for the third quarter in 1999. Including one time interest charges, depreciation and amortization of intangibles, net loss for the quarter ended September 30, 2000 was $55.7 million or a loss of $ (1.21) per share.
Major audience metrics for the Quokka Sports Network experienced strong sequential growth over the prior quarter. Average unique visitors per month in the third quarter of 2000 were 3.4 million, up 113% from 1.6 million average unique visitors per month in the second quarter of 2000 and up 750% from the third quarter of 1999, according to company estimates. The total connected time per unique visitor per month reached 44 minutes for the September quarter, which would maintain the Quokka Sports Network in the top tier of sticky networks on the Internet.
Total connected time for the Quokka Sports Network in the September quarter was 7.4 million hours, up 155% from 2.9 million hours in the June 2000 quarter and up 517% over the third quarter of 1999. Revenue per connected hour was $2.16 and costs per connected hour were $2.80 for the third quarter of 2000. The revenue and costs per connected hour reflect the tremendous growth in audience reach due to Olympic traffic and the extended connected time per visitor during the quarter.
‘Third Quarter was a true milestone in the history of Quokka Sports. The largest event in the company’s history, our production of the Sydney Olympic Games, exceeded all of our expectations for success. Operationally, this quarter was terrific as we achieved record revenue from sponsors as we expand our sports entertainment coverage and effectively managed expenses,’ said Alvaro Saralegui, Quokka Sports’ President and CEO.
Saralegui continued, ‘This year we have done a terrific job executing on our business model and as we move towards the end of the year, we are focused on completing the next step in our network expansion- extending further into mainstream sports with our acquisition of Total Sports. With our accomplishments this year we are well positioned to achieve our goals for 2001. Our leadership in digital entertainment gives us great confidence in our business model as we continue to grow the market for digital sports entertainment.’
Sequential Revenue Growth achieved through Record Revenues During the third quarter, sponsorship and advertising accounted for the majority of the quarter’s revenue growth as the Company’s sponsorship base grew from 18 to 24 sponsors. The majority of the quarter’s revenues were from Sydney Olympic gold medal sponsors and included General Electric, General Motors, Axient, Ameritrade, e-Synch, Anheuser-Bush, IBM and Visa International.
Revenues were recognized from global content distribution agreements with Excite@Home, Intel, Terra Networks and Microsoft. Consumer revenues were generated through sales of specialty merchandise and auctions. Combined, content syndication and consumer revenues contributed 21% of the September quarter’s revenues.
Sydney 2000 Olympic Games and NBCOlympics.com
In September, Quokka Sports, as part of its joint venture with NBC, produced the online Internet coverage for NBC’s ‘Complete Olympics.’ NBCOlympics.com enhanced and expanded NBC’s network and cable coverage of the Sydney Games through digital coverage that included premium content, broadband experiences, chats with athletes, analysis and live event coverage through it’s Action Tracker product. Unlike any other Olympic Internet destination, NBCOlympics.com attracted 5.6 million unique visitors and the average connected time per visitor was 50 minutes during the Games, according to company estimates.
‘NBCOlympics.com delivered the most compelling and exciting online Olympic coverage seen by the U.S. audience. The success of our traffic and visit lengths per visitor allowed us to deliver over one billion impressions for our gold medal sponsors. In addition, the site achieved the highest recognition from leading sports and Internet companies evaluating online Olympic coverage. With Salt Lake 2002 only 16 months away, we are looking forward to capitalizing on our success as we begin production of the winter Olympic experience,’ said Tom Newell, general manager of NBC/Quokka Ventures.
Acquisition Strategy Continues with Golf.com and Total Sports:
This year, Quokka Sports has strategically expanded the Quokka Sports Network through acquisitions of leading sports media companies. In early October, the Company completed its acquisition of 71% of golf.com, a privately-held golf media property. NBC retains the other 29% interest in that partnership. In July, the Company announced its plans to acquire Total Sports, a privately held mainstream U.S. sports media company and expects that transaction to close in November. In March, the Company acquired MountainZone, a leading mountain sports Internet property and completed the integration of that business in the September quarter. Through these acquisitions, the Company expects to expand its network audience reach, attract new sponsors, and improve production and technology efficiencies.
$77.4 Million Private Placement Raised to Fund the Company’s Operations In September, the Company completed a private placement of $77.4 million, before transaction fees and expenses, of 7% convertible subordinated promissory notes and warrants.
The Company expects to use the capital raised from the private placement for working capital, debt refinancing and other general corporate purposes. GE Capital, a subsidiary of General Electric Company (NYSE: GE) led the round of financing of financial and strategic partners. At the end of September, the Company’s cash and cash equivalents totaled $74.7 million.
Management Conference Call and Outlook:
In conjunction with this earnings release, Management’s conference call will be webcast at 2:00 p.m. Pacific Standard Time on the investor relations page of the Company’s web site, located at www.quokka.com. Management will discuss the results of the third quarter 2000 and outlook for fourth quarter 2000 and fiscal year 2001. As of October 31, 2000, the Company’s outlook for the fourth quarter ending December 31, 2000 estimate revenues will be within a range of $11-12 million and a range of $.24 -$.26 loss per share, excluding interest, taxation, depreciation and amortization and based on approximately 57.7 million shares estimated to be outstanding. For the fiscal year ending December 31, 2001, the Company estimates revenues will be in a range of $75-80 million and loss per share for the year will be in a range of $.30-$.38, excluding interest, taxation depreciation and amortization, based on approximately 65.7 million shares estimated to be outstanding.
Quokka Sports Inc.