U.S. search company beat Q1 revenue guidance and earnings came in at high end of expectations.
InfoSpace Inc.’s first-quarter profit surged as the Internet search company’s newly acquired TaxACT tax preparation business added substantially to its top line.
Bellevue, Wash.-based InfoSpace bought the web-based TaxACT business for $287.5 million in cash just before tax season, closing the deal on Jan. 31. Only months before then, TaxACT rival H&R Block Inc. was blocked from acquiring the privately held company by the U.S. government over antitrust concerns.
Shares jumped 14% to $12.49 after hours, as InfoSpace beat its first-quarter revenue guidance and reached the high end of its earnings estimates. The stock, which rose initially over the TaxACT acquisition, had slid since mid-March and was roughly flat for the year at Wednesday’s close.
“The acquisition of TaxACT in January represents a significant milestone for our company, and substantially diversifies our overall business operations,” Chief Executive Bill Ruckelshaus said.”We are pleased with the performance in both our search and tax preparation businesses and feel positive about our combined company growth and profitability outlook.”
InfoSpace posted earnings of $11.4 million, or 28 cents a share, up from $1.3 million, or 4 cents a share, a year earlier. Revenue more than doubled to $115.7 million.
The company in February predicted earnings of 24 cents to 29 cents a share on revenue of $109 million to $114 million.
Search revenue in the quarter improved 46% to $75.3 million, while tax preparation revenue from TaxACT was $40.4 million. The company also released preliminary 2011 tax season figures, saying digital do-it-yourself e-filings rose 8% from the year-ago period to 5 million as of April 18.
Gross margin rose to 48.5% from 36.7%. The company forecast second-quarter adjusted earnings of 40 cents to 44 cents a share on revenue of $92.5 million to $96.5 million.