Annual Revenues Climb 81 Percent to Top $15 Million
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Total Year Policy Sales Increase 111 Percent to Top 37,000
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Fourth Quarter Net Loss Reduced to $2.4 Million; Smallest Loss in 5 Quarters
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Full Year Policy Conversion Rates Increase 27 Percent over 1999
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Shares Repurchased in the Fourth Quarter Total 1,461,000
DARIEN, Ill., Jan. 23 /PRNewswire/ -- Quotesmith.com, Inc., (Nasdaq: QUOT)
today announced financial results for the fourth quarter and year ended
December 31, 2000. "Quotesmith.com had a solid year of new customer growth,
revenue growth, improved marketing efficiency, and technological-content
improvements which have set the foundation for us to become the #1 insurance
brand on the Internet," said Robert Bland, Quotesmith.com chairman and CEO.
Year 2000 Results
Quotesmith.com reported record revenues for the year of $15.2 million, an
increase of 81 percent over 1999 revenue of $8.4 million. This revenue growth
resulted primarily from a 68 percent increase in advertising expense in 2000
to $24.2 million from $14.4 million in 1999.
The company reported a net loss of $18.6 million, or $0.98 per share for
the year ended December 31, 2000, compared with a net loss of $13.8 million,
or $0.88 per share for the same period in 1999. The increase in net loss
resulted primarily from an increase in advertising expense in 2000 as compared
to 1999.
Quotesmith.com ended the year with a strong balance sheet consisting of
$28.3 million in cash and short term investments, or $1.59 per share, and no
debt.
The company announced today that it has repurchased a total of 1,461,000
of its shares at an average price of $0.75 per share during the fourth
quarter. The company had 17,765,711 shares outstanding as of December 31,
2000. As previously announced, the company's Board has authorized the
repurchase of up to 3.5 million shares.
Quotesmith.com is committed to diversifying its revenue base by creating
new and renewal revenue streams from the sale of multiple lines of insurance.
As a percentage of total policies sold, sales of non-term life insurance
policies rose to 11 percent of total policies sold in 2000 as compared to
4 percent of total policies sold in 1999.
As previously announced, Quotesmith.com executed a strategy in 2000 of
deploying steadily declining direct response marketing expenses which were
$10.1 million in the first quarter, $5.9 million in the second quarter,
$5.1 million in the third quarter and $3.0 million in the fourth quarter.
"The policy sales we achieved in 2000 validate the appeal of the
Quotesmith.com insurance price comparison service to an ever-widening audience
of self-directed insurance shoppers. As we begin our 18th year in business,
we have never been in a better position to define and lead in the online
insurance sector. We empower insurance shoppers with the broadest selection
of insurance quotes available from any single source on or off the Internet.
With a clear vision and a solid operating game plan for 2001, we intend to
launch several new revenue-producing products, further reduce our per policy
acquisition and operating costs, and continue to build what we believe will
become a profitable, recurring revenue business that is technologically unique
and prohibitively costly to duplicate," said Mr. Bland.
Fourth Quarter Results
Revenues for the fourth quarter ended December 31, 2000 were $2.6 million,
a 30 percent decrease compared to revenues of $3.8 million reported for the
third quarter of 2000 and a 12 percent decrease as compared to revenues of
$3.0 million in the fourth quarter of 1999.
Net loss for the fourth quarter decreased 31 percent to $2.4 million, or
$0.13 per share, compared with a net loss $3.5 million, or $0.18 per share,
reported for the third quarter of 2000. The fourth quarter 2000 loss dropped
64 percent from the $6.8 million, or $0.35 per share, loss reported for the
fourth quarter of 1999.
Policies Sold Increase 111 Percent for Year 2000
Increased insurance shopper activity resulted in a record 37,520 newly
paid policies, up 111 percent from 17,786 policies sold in 1999. For the
fourth quarter, Quotesmith.com sold 6,986 new policies, representing a
quarterly decrease of 22 percent from the 8,998 policies sold in the third
quarter of 2000 and an increase of 4 percent from the 6,733 policies sold in
the fourth quarter of 1999.
Total quotes for the year 2000 amounted to 4.1 million, a 67 percent
increase over the 2.5 million quotes processed in 1999. Completed quotes do
not include automobile insurance or disability insurance quotes which are
currently provided by third parties after a visitor has left the
Quotesmith.com Web site.
Average daily completed quotes processed for the fourth quarter of 2000
were 8,718, a 16 percent decrease over the 10,425 average daily quotes
recorded during the third quarter of 2000 and a 25 percent decrease over the
11,563 average daily quotes recorded during the fourth quarter of 1999. This
decrease is attributable to decreases in marketing expenses through the four
consecutive quarters of 2000.
Marketing Progress Report: Solid Progress on Reducing Policy Acquisition
Costs and Raising Conversion Ratios
The average new policy acquisition cost (total selling and marketing costs
divided by the number of new policy sales) decreased 20 percent to $645 in
2000 from $809 in 1999. For the fourth quarter of 2000, progress on reducing
policy acquisition costs continued and was even more pronounced as the cost
per policy plummeted 62 percent to $435 from $1,133 in the fourth quarter of
1999 and 23 percent from $567 in the third quarter of 2000.
Quotesmith.com also reported a 27 percent improvement in its ability to
close policy sales by selling nine policies for every thousand quotes
processed in 2000 as compared to closing seven policies per one thousand
quotes in 1999.
"Our sales of term life policies were helped by the nationwide rollout of
insurance Regulation XXX in the first quarter of last year, a quarter in which
we spent 42 percent of our total 2000 advertising budget in order to take
advantage of the robust external term life selling environment that existed
then. We also made a number of successful and proactive refinements in our
direct response marketing campaigns and we made significant progress in
simplifying our order-processing systems which helped us close more sales in
2000," remarked Will Hemsworth, senior vice president of marketing for
Quotesmith.com. "In 2001 we intend to further improve our order-handling
procedures in order to ensure the quickest and smoothest insurance purchase
process possible."
Health Insurance Policy Sales Gain Traction
For the year ended December 31, 2000, sales of new health insurance
policies surged 439 percent to 4,029 from 747 reported for 1999. New sales of
health insurance policies (including dental and Medicare supplement policies)
in the fourth quarter of 2000 amounted to 1,095, a 6 percent increase as
compared to 1,029 for the third quarter of 2000 and a 123 percent increase
from the 490 sales reported in the fourth quarter of 1999.
Continued Innovation for Sustained Leadership
The company's planned entry into the personal auto, long-term care,
international medical insurance brokerage markets and agency automation
markets has four distinct benefits for the company:
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These initiatives should increase the per visitor Web site revenue
yield.
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These initiatives should result in the capture of multiple-year
revenue streams.
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These initiatives, all of which represent significant content
expansions not matched by any single competitor, should further serve
to distance and differentiate Quotesmith.com from all of its
competitors.
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These initiatives are designed to attract additional insurance
shoppers to www.quotesmith.com .
New Products and Services to Launch Soon
Quotesmith.com has a number of new product and service launches expected
in the first quarter of 2001.
- Personal Auto - As previously announced, Quotesmith.com intends to
enter the auto insurance brokerage business via the launch of a brand
new, multi-company comparative auto insurance quotation and order
processing engine. Commenting on the status of the Personal Auto
project, company CEO Robert Bland remarked, "Our launch of Personal
Auto will be the most significant new product introduction in years.
Our new Personal Auto product, which is still well within budget but
late to launch, is now expected to be introduced in early March. The
rollout and commercial availability of this new service will be
conducted on a state-by-state basis, beginning with the highest
population states first. By May 1 the company's goal is to be
providing instant quotes and online purchase capabilities in those
states which cover 50% of the U.S. population. We are investing in
and creating the fastest, most information-pleasing auto insurance
information destination that we can in the belief that this purchase
experience will be so profound that people will never imagine going
back to the old way." The company currently has signed agency
contracts with over 40 automobile insurance companies, which include
both direct-writing and independent agency companies. Quotesmith.com
has an aggressive agenda and a bold public commitment to revolutionize
the way people shop for and buy their auto insurance. The goal is to
provide auto insurance shoppers of all ages and profiles with a true
panorama of comparative information on a scale not seen before -- and
to generate new and renewal commission income streams from the sale of
auto insurance policies. "We have an adequate capital base and a
staff of dedicated professionals intent upon offering the largest
selection of auto insurance quotes available from any single source,"
added Mr. Bland.
- LTCompare(R) -- Shopping for long-term care insurance is about to
get a lot easier. LTCompare is a revolutionary new Web-based
long-term care insurance price comparison and purchasing service that
promises to replace hours of research and lead to maximum savings for
beleaguered long-term care insurance buyers and their families.
LTCompare will provide instant quotes from numerous household-name
insurers including one-click downloads of brochures, comparative
buying guides and regulatory information. Considered by many to be
the most expensive line of personal insurance and one of the hardest
for shoppers to research, LTCompare will add a big-ticket commission
product to the Quotesmith.com portfolio.
- QuotesmithPro(R) -- As a part of its previously announced "arms
merchant" strategy to leverage its existing technology and create new
revenue streams, Quotesmith.com will soon launch QuotesmithPro as a
Web-based subscription service designed for use by insurance agents,
brokers, consultants and financial planners. QuotesmithPro will help
insurance professionals transition from the drudgery of having to deal
with multiple-company Web sites and outdated desktop systems by
providing an easy, fast and single-source information platform from
which customer-ready proposals can be produced in seconds.
Subscription pricing for this new service has not yet been set.
Additional lines scheduled for release in 2001 also include homeowner's
insurance and international medical insurance.
Executing Expanded Content Strategy for Information-Hungry Insurance
Shoppers
During the year Quotesmith.com continued to attract additional insurers
and offer, by a very wide margin, the broadest comparative insurance content
experience available on the Internet. For customers, this huge selection
translates into maximum savings on every insurance purchase and an entirely
new way to buy insurance. The company now offers: instant term life
insurance quotes from 103 insurers; instant individual and family health
insurance quotes from 123 insurers (including a broad range of traditional,
PPO, HMO and Blue Cross and Blue Shield plans for individuals and families);
instant dental quotes from 38 insurers; instant small group medical quotes
from 33 insurers; instant short term medical quotes from 11 insurers; and
instant Medicare supplement quotes from 72 insurers.
Recent Accolades for Quotesmith.com
On December 26, 2000, FinanCenter.com awarded Quotesmith.com a #1 ranking
(99.3 score out of 100) based upon an extensive, multi-site comparison of term
life premiums. On September 29, 2000, Money magazine named Quotesmith.com
"One of the Top 50 Financial Websites." On September 18, 2000, Quotesmith.com
was named "Best of the Net" by About.com's Guide to Personal Life Insurance.
On August 9, 2000 Quotesmith.com was named "Best of the Web for Term Life
Insurance" by FinanCenter.com. On August 3, 2000 Quotesmith.com was chosen as
"One of the 100 Best Web Sites for Small Business" by Entrepreneur magazine.
2001 Outlook
The company currently has targeted 2001 marketing expenditures consistent
with levels experienced in the fourth quarter of 2000 and expects to deploy
its marketing budget in 2001 in more consistently level patterns than in 2000.
The company does not intend to increase its quarterly marketing expenditures
until the technical portions of its planned expansion into auto and other
lines of insurance are fully implemented. Based on these projected levels of
marketing expenditures, the company anticipates 2001 annual revenues of
approximately $11 million with a net loss range of $8 to $9 million. The
company is currently projecting year-end cash and investment balances of
approximately $18 million.
Quotesmith.com believes that its current capital structure, including cash
and short term investments of $28.3 million, is adequate to reach
profitability without the necessity of additional debt or equity financing.
The company does not provide confirmation or update of its targets except
through public announcements.
About Quotesmith.com
Quotesmith.com owns and operates the industry's largest and most
comprehensive insurance price comparison service. The Quotesmith.com
Insurance Commerce Platform allows insurance shoppers to instantly view the
best prices being offered by more than 300 leading companies, achieve maximum
savings and have the freedom to buy from the company of their choice.
Quotesmith.com also provides personalized customer service assistance and
policy placement services for its customers. Quotesmith.com generates
revenues from the receipt of commissions and fees paid by insurance companies.
Shares of Quotesmith.com trade on the Nasdaq National Market under the symbol
"QUOT."
Conference Call
Quotesmith.com's conference call to discuss fourth quarter financial
results will be held on January 24, 2001 at 11:00 a.m. Eastern Standard Time.
The conference call will be broadcast live over the Internet at
http://www.vcall.com . To listen to the live call, please go to the Web site
at least fifteen minutes early to register, download and install any necessary
audio software. The call can also be accessed by telephone in the U.S. at
800-305-1078 and outside the U.S. at 703-871-3026.
The call will be rebroadcast at 888-266-2086 or, for international
callers, at 703-925-2435. The pass code for the rebroadcast is 4889070.
Cautions about Forward-Looking Statements
This press release includes "forward-looking" statements about future
financial results, future products and other events and circumstances that
have not yet occurred. For example, statements with words like "expect,"
"anticipate" or "believe," and statements in the future tense, are
forward-looking statements. Investors should be aware that actual results may
differ materially from our expressed expectations because of risks and
uncertainties about the future. We will not update the information in this
press release if any forward-looking statement or prediction later turns out
to be inaccurate. Risks and uncertainties that may affect future results and
performance include, but are not limited to, the following: The continued
listing of our stock on the Nasdaq National Market is contingent upon there
being a minimum bid of $1.00 per share for ten consecutive days prior to March
13, 2001. Our revenues are volatile and highly dependent upon our ability to
generate qualified insurance shoppers to our Web site through successful
advertising expenditures. We face intense competition for qualified
employees. We face competitive pressures in all facets of our business,
particularly insurance brokerage, which can have a negative impact on our
revenue, gross margins and market position. Products and services offered to
consumers by insurance companies and competing insurance brokers may
increasingly overlap with products and services offered by Quotesmith.com and
could have a significant negative impact on our future financial results.
Significant problems or delays in the development of our new products and
services would result in lost revenue and customers. We currently rely on a
single third-party vendor to handle most aspects of the planned launch of our
new comparative auto insurance quotation and order handling system. If we do
not continue to successfully refine and update the business models for our
Internet-based products and services, and operationally support these
businesses, the businesses will not achieve sustainable financial viability or
broad customer acceptance. The market pressure to launch new Internet-based
products and services quickly may lead to lower product quality. If we cannot
fully and successfully implement our new services in a timely fashion, we may
be unable to launch these services as successful businesses. If our insurance
quotation systems and related services do not achieve and maintain acceptance
by customers, they will not generate long-term revenue growth or
profitability. In order to expand our customer base, we must continue to
improve the efficiency and effectiveness of our customer service and order
processing operations. The long-term viability of our Internet-based
insurance services will depend on our ability to increase our customer base as
quickly as possible, get greater participation by online partners, and expand
the depth and breadth of our offerings in order to differentiate ourselves
from other Internet-based insurance information providers. Our insurance
brokerage business is subject to fluctuations and operational risks that could
result in revenue declines. The viability of distributing insurance online
will require widespread consumer and insurance company adoption, which may
still be years away. Despite our efforts to adequately staff and equip our
customer service and technical support operations, we cannot always respond
promptly to customer requests for assistance; this can adversely affect
customer relationships and our financial performance. We face risks relating
to customer privacy and security and increasing regulation, which could hinder
the growth of our business -- particularly our Internet-based business. We
face existing and potential government regulation in many of our businesses,
which can increase our costs and hinder the growth of our businesses. The
stock market has experienced price volatility that has particularly affected
technology companies, including the stock of Quotesmith.com. Business
conditions in international markets, other risks inherent in international
operations, and changes in our business model, may negatively impact our
financial performance. More details about these issues are included in our
1999 Form 10K and other recent SEC filings.
Some insurance companies appear at Quotesmith.com for purely informational
purposes only and pay no compensation to Quotesmith.com and some insurers pay
commissions or fees to Quotesmith.com based upon premium volume or traffic
activity produced by Quotesmith.com. Quote availability by state or any other
factor is subject to change without notice.
Quotesmith.com, LTCompare and QuotesmithPro are service marks of
Quotesmith.com, Inc. All other names are trademarks of their respective
owners.