InfoSpace Announces Strong Third Quarter 2008 Results

InfoSpace, Inc. (NASDAQ:INSP) today announced financial results for the three months ended September 30, 2008.

Revenues for the third quarter of 2008 were $39.5 million, reflecting a $5.6 million or 17% increase over the third quarter of 2007.

"Our strong operating results in the third quarter were driven by growth in both our owned and operated and distribution businesses,” said Jim Voelker, chairman and chief executive officer of InfoSpace, Inc. "Based on the success we’ve seen in driving traffic to our sites in both the second and third quarters, we will continue to invest in marketing programs for our flagship search site Dogpile.com. We are pleased with our progress and performance this year and are confident in our ability to continue this success despite the challenges in the macroeconomic environment.”

Loss from continuing operations was $9.9 million in the third quarter of 2008, included in this amount is a charge of $11.0 million for unrealized losses on investments. This is compared to a loss from continuing operations of $6.6 million in the third quarter of 2007.

Adjusted EBITDA from continuing operations was $6.6 million in the third quarter of 2008, compared to Adjusted EBITDA from continuing operations of $3.1 million in the third quarter of 2007.

Net loss for the third quarter of 2008 was $9.9 million or $0.29 per share versus a net loss of $12.3 million or $0.37 per share in the third quarter of 2007. Net loss in the third quarter of 2008 includes an impairment charge of $9.0 million on the Company’s investments in auction rate securities and an impairment charge of $2.1 million on an equity investment.

Cash, cash equivalents, and marketable securities as of September 30, 2008 totaled $210.4 million, which includes holdings of $18.2 million in auction rate securities.

Third Quarter Highlights and Recent Developments

InfoSpace:

• Unveiled a new Dogpile downloadable social networking widget with Petfinder.com;
• Signed five new search distribution partners;
• Launched Web portal that supports new third-party content and includes its unique metasearch technology with Windstream Communications and Verizon;
• Deployed DNS Error Assist product with two new partners; and
• Strengthened its management team with new Vice President, Corporate Development and Chief Strategy Officer, Stuart West. Mr. West will oversee InfoSpace’s corporate strategy and M&A activities.

Fourth Quarter Outlook

For the fourth quarter of 2008, the Company expects revenue to be between $34 million and $36 million. Additionally, the Company expects net loss to be between $2.0 million and $1.0 million, or $0.06 and $0.03 per share and Adjusted EBITDA from continuing operations to be between $2.0 million and $3.0 million.

A conference call will be held today at 2 p.m. Pacific/ 5 p.m. Eastern. The live Webcast can be accessed in the Investor Relations section of the InfoSpace corporate Web site, at http://www.infospaceinc.com. A replay of the call will be available approximately one hour after the call through November 12, 2008 at 9:00 p.m. Pacific/ 12:00 a.m. Eastern.

Non-GAAP Financial Measures

InfoSpace’s Adjusted EBITDA from continuing operations is calculated by adjusting GAAP net loss to exclude the effects of discontinued operations, income taxes, depreciation, stock-based compensation expense, gain (loss) on investments, net, and other income, net (including such items as interest income, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed in the accompanying table to the preliminary condensed consolidated financial statements.

InfoSpace’s management believes that this non-GAAP financial measure provides meaningful supplemental information regarding our performance by excluding certain expenses and gains that are not indicative of our core business operating results. InfoSpace believes that management and investors benefit from referring to this non-GAAP financial measure in assessing InfoSpace’s performance. Adjusted EBITDA should be evaluated in light of the Company's financial results prepared in accordance with GAAP. A table reconciling the Company's Adjusted EBITDA to net loss in accordance with GAAP accompanies the preliminary condensed consolidated financial statements in this release.

About InfoSpace, Inc.

InfoSpace, Inc., a leading developer of metasearch products, is focused on bringing the best of the Web to Internet users. InfoSpace’s proprietary metasearch technology combines the top results from several of the largest online search engines, providing fast and comprehensive search results on InfoSpace sites including Dogpile (www.dogpile.com) and WebFetch (www.webfetch.com). For the second consecutive year, JD Power and Associates ranked Dogpile highest in customer satisfaction among search engines. InfoSpace’s metasearch technology is also available on more than 100 partner sites, including content, community and connectivity sites. More information can be found at www.infospaceinc.com.

This release contains forward-looking statements relating to InfoSpace, Inc.'s operating results that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "believe," "expect," "intend," "anticipate," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward looking. Forward-looking statements include, without limitation: statements regarding our expectation that we will continue to invest in a new marketing program for our flagship search site Dogpile.com; our belief that we will achieve future success despite the challenges in the macroeconomic environment; our expectation that we will place a strong emphasis on our downloadable applications strategy; our belief that we are positioned well for future growth and profitability; and our expectations regarding our financial performance and results of operations for the fourth quarter of 2008. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Factors that could affect InfoSpace's actual results include: general economic, industry and market sector conditions; the progress and costs of the development of our products and services; the timing and extent of market acceptance of those products and services; our dependence on companies to distribute our products and services; the ability to successfully integrate acquired businesses; the successful execution of the Company’s strategic initiatives, marketing strategies, and restructuring plans; and the condition of our cash investments. A more detailed description of certain factors that could affect actual results include, but are not limited to, those discussed in InfoSpace's most recent Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q as filed from time to time, in the section entitled "Risk Factors." Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. InfoSpace undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

(1) Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") from continuing operations is a non-GAAP financial measure and is reconciled to net loss, which the Company's management believes to be the most comparable generally accepted accounting principles ("GAAP") measure. Adjusted EBITDA from continuing operations results are calculated by adjusting GAAP net loss to exclude the effects of discontinued operations, income taxes, depreciation, stock-based compensation expense, gain (loss) on investments, net, and other income, net (including such items as interest income, litigation settlements and contingencies, foreign currency gains or losses, and gains or losses from the disposal of assets), as detailed above. The Company uses this non-GAAP financial measure for internal management purposes, when publicly providing guidance on possible future results, and as a means to evaluate period-to-period comparisons. The Company's management believes that this non-GAAP financial measure is a common measure used by investors and analysts to evaluate its performance. This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the results of operations and trends affecting the Company's business. This non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, or superior to, net loss in accordance with GAAP.

(2) As presented in the preliminary unaudited Condensed Consolidated Statements of Operations.

(3) Other income, net, primarily consists of interest income, gains or losses from the disposal of assets, and foreign currency transaction gains or losses.