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Quotesmith.com Reports Second Quarter 2000 Financial Results

Quotesmith.com, Inc. (ticker: QUOT, exchange: NASDAQ) News Release - 7/18/2000


Quotesmith.com Reports Second Quarter Financial Results

Online insurance broker posts narrowed net loss, highest ever revenues and policy sales

  • Revenues increased 27% over Q1 2000 to a record $4.9 million
  • Net loss narrowed to $3.6 million from Q1 2000 net loss of $9.1 million
  • Policies sold increased 29% over Q1 2000 to a record 12,148
  • Completed quotes totaled 977,000, a 28% decrease from Q1 2000
  • Marketing costs decreased 42% from Q1 2000 to $5.9 million
  • DARIEN, Ill., July 18 /PRNewswire/ -- Quotesmith.com, Inc., (Nasdaq: QUOT), the buyer-driven insurance exchange which provides instant quotes from more than 300 leading insurance companies, today announced financial results for the second quarter ended June 30, 2000.

    Financial Results

    Revenues for the second quarter ended June 30, 2000 were a record $4.9 million, a 27% increase over revenues of $3.9 million reported for the first quarter of 2000 and a 210% increase over revenues of $1.6 million reported for the same period last year. Net loss for the second quarter decreased to $3.6 million, or $0.19 per share, compared with a net loss $9.1 million, or $0.47 per share reported for the first quarter of 2000 and a loss of $1.7 million, or $0.12 per share, in the second quarter of 1999. On a year-to-date basis, the Company achieved record revenues of $8.8 million for the first six months of 2000, up 188% as compared to $3.1 million for the same period in 1999. Net loss for the first six months of 2000 totaled $12.7 million, or $.66 per share, vs. $3.1 million, or $.23 per share, for the first six months of 1999.

    Quotesmith.com ended the quarter with $35.8 million, or $1.86 per share, in cash and short-term investments.

    Robust New Customer Growth

    For the second quarter, Quotesmith.com reported a record 12,148 policies sold, representing a sequential quarterly increase of 29% from the 9,388 policies sold in the first quarter of 2000 and an increase of 284% from the 3,165 policies sold in the second quarter of 1999. Paid policies for the first six months of 2000 amounted to a record 21,536, up 259% from the 6,000 paid policies reported in the like period of 1999.

    Quotesmith.com chairman and CEO, Robert Bland, commented, "We had a solid quarter in all of our key areas. These financial results demonstrate that our unique propositions - get instant quotes from 300 insurance companies, view the lowest premiums, buy from the company of your choice - are resonating with insurance shoppers in a very positive way. Our plan is to continue to maintain a heads-down focus on delivering a faster, easier way to buy insurance for our customers by continuing to give them access to the widest and most informative market overview available from any single source. We believe that insurance, more than any other industry, is ideally suited for Internet distribution. We intend to continue to gun for growth, profitability, technical superiority, scalability and efficiency with every resource we've got."

    Progress with Operating Cost Leverage

    Operating costs per paid policy declined 37% to $151 in the second quarter vs. $241 in the first quarter of 2000. On a year-to-date basis, operational cost per paid policy plunged 47% to $190 for the first six months of 2000 as compared to $357 for the first six months of 1999. Declining operating costs per paid policy are due to several factors including the measurement of related expenses against a rising policy count, the shifting of specified customer service functions to certain insurance companies and increased automation.

    Health Insurance Policy Sales Momentum

    Sales of health insurance in the second quarter, including dental and Medicare supplement policies, surged 42% on a sequential quarterly basis to 1,119 policies vs. 786 for the first quarter of 2000. For the six months ended June 30, 2000, health insurance policy sales reached 1,905, up 1,844% from 98 reported in the like six- month period of last year. Commenting on the rapid rise of health insurance policy sales, Bland added, "We are very excited to see that health insurance sales have become our fastest-growing business. Our unique ability to provide instant quotes for 89 individual and family health insurers, 11 short term medical insurers, 39 dental insurers, 30 small group health insurers and 70 Medicare supplement insurers represents a significant core strength and competitive advantage because this information simply isn't available from any other single source. Going forward, we intend to aggressively expand our health insurance product line."

    Commissions and fees derived from the sale of individual term life policies comprised 92% of total revenue during the second quarter of 2000, which is higher than recent quarters due to an influx of paid term life business resulting from the implementation of Regulation XXX earlier in the year. Commissions and fees from auto and health insurance accounted for the balance of the non-term life revenue.

    Second Half Outlook

    Quotesmith.com intends to further reduce marketing expenditures until its planned expansion into auto and certain additional lines of the insurance business are fully implemented. This planned reduction in marketing expenses will slow the short-term revenue growth rate and should reduce the amount of capital drain as compared to previously projected amounts. Quotesmith.com believes that it will achieve revenues of approximately $17 million in 2000 vs. $8.4 million for 1999. Quotesmith.com projects a net loss in 2000 of approximately $23 million.

    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 generates revenues from the receipt of commissions and fees paid by insurance companies. Quotesmith.com also provides personalized customer service assistance and policy placement services for its customers. Shares of Quotesmith.com trade on the Nasdaq Exchange under the symbol "QUOT."

    Cautions about Forward-Looking Statements

    This announcement may contain forward-looking statements that involve risks, assumptions and uncertainties pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. This announcement also contains forward-looking statements about events and circumstances that have not yet occurred and may not occur. Expressions of future goals and similar expressions including, without limitation, "may," "will," "believes," "should," "could," "hope," "expects," "expected," "does not currently expect," "anticipates," "predicts," "potential" and "forecast," reflecting something other than historical fact, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Investors should be aware that actual results may differ materially from the results predicted and reported results should not be considered an indication of future performance. Reported Web site activity and/or quotes are not necessarily indicative of any present or future revenue. The Company will not necessarily update the information in this press release if any forward- looking statement later turns out to be inaccurate. Potential risks and uncertainties include, among others, Quotesmith.com's limited e-commerce operating history, anticipated losses, unpredictability of future revenues, potential fluctuations in quarterly operating results, seasonality, consumer trends, competition, risks of system interruption, the evolving nature of its business model, the increasingly competitive online commerce environment, dependence on continuing growth of online commerce and risks associated with capacity constraints and the management of growth. More information about potential factors that could affect the company's financial results is included in the company's Annual Report on Form 10-K for the year ended December 31, 1999, which is on file with the United States Securities and Exchange Commission. 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 is a service mark of Quotesmith.com, Inc. All other names are trademarks of their respective owners. Copyright 2000. All rights reserved. Quotesmith.com, Inc.

    QUOTESMITH.COM, INC.
    STATEMENT OF OPERATIONS
    (In thousands, except per share data)
    (Unaudited)

      2000 1999   2000 1999
    Revenues:  
    Commissions and fees
    $4,903 $1,569   $8,773 $3,019
    Other
      10   18 2231
    Total revenues 4,913 1,587   8,795 3,050
     
    Expenses:  
    Selling & Marketing
    5,923 1,451   16,061 2,132
    Operations
    1,832 1,183   4,095 2,690
    General & admin.
    1,308 664   2,534 1,385
    Total expenses 9,063 3,298   22,690 6,207
    Operating loss
    (4,150) (1,711)   (13,895) (3,157)
     
    Interest income 564 25   1,184 41
     
    Net loss $(3,586) $(1,686)   $(12,711) $(3,116)
     
    Net loss per common
    share, basic and
    diluted
    $(0.19) $(0.12)   $(0.66) $(0.23)
     
    Weighted average common
    shares and equivalents
    outstanding, basic and
    diluted
    19,228 13,515   19,227 13,270
     
    SELECTED BALANCE SHEET DATA
    (In thousands)
     
      (Unaudited)
    June 30,
    2000
       
    December 31,
    1999
     
    Cash and investments $35,764   $49,661  
    Commissions receivable 2,017   1,695  
    Other assets 642   2,934  
    Total current assets 38,423   54,290  
    Total assets $40,346   $55,178  
     
    Total current liabilities $3,593   $5,982  
    Total liabilities 3,745   5,982  
    Total stockholders' equity 36,601   49,196  
    Total liabilities &
     stockholders' equity
    $40,346   $55,178  
     
    OTHER STATISTICAL DATA
    (Unaudited)
     
      Quarter Ended
    June 30,
      Six Months Ended
    June 30,
      2000 1999   2000 1999
    Completed Quotes  
    Term life
    525,218 216,814   1,181,608 458,003
    Health and Other
    451,771 149,345   1,155,743 243,940
    Total completed quotes
    976,989 366,159   2,337,351 701,943
     
    Applications received  
    Term life
    8,262 6,004   21,649 12,257
    Health and Other
    1,713 141   3,845 268
    Total applications received
    9,975 6,145   25,494 12,525
     
    Policies paid  
    Term life
    11,029 3,067   19,631 5,902
    Health and Other
    1,119 98   1,905 98
    Total policies paid
    12,148 3,165   21,536 6,000
     
    Average first year  
    revenue per Term life policy
    $402 $472   $396 $475
    Operating cost per policy
    151 373   190 357*
     
    • Excludes the effect of the stock compensation charge of $549,000. SOURCE Quotesmith.com

    CONTACT: David Vickers, CFO of Quotesmith.com, 630-515-0170, ext. 210,

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