LookSmart Reports First Quarter 2001 Results

LookSmart Exceeds Estimates With 36 Percent Listings Growth



Apr 26, 2001, 01:00 ET from LookSmart, Ltd.

    SAN FRANCISCO, April 26 /PRNewswire/ --
 LookSmart (Nasdaq:   LOOK; Australia: LOK), the global leader in Web
 directories, today announced financial results for the first quarter ending
 March 31, 2001.
 
     Highlights:
 
     -- Revenue:  LookSmart reported first quarter 2001 revenue of
        $28.4 million versus company guidance of $23.0 to $26.0 million,
        representing 32 percent growth over $21.5 million in the first quarter
        2000.
     -- Listings Growth:  Listings revenues grew 36 percent to $6.4 million.
        The number of Express Submit and Subsite Listings grew nearly
        50 percent to 86,000 URLs.
     -- Cash Operating Losses:  Pro-forma cash operating losses for the first
        quarter 2001 were $5.8 million, excluding non-recurring and
        restructuring costs, versus $12.9 million in the fourth quarter 2000,
        and $9.5 million in the first quarter 2000.  Including non-recurring
        and restructuring charges, cash operating losses were $11.1 million.
        (Cash operating losses exclude the effects of non-cash compensation and
        intangible amortization charges).
     -- Cash Operating EPS:  Cash operating EPS for the first quarter 2001,
        excluding the effects of non-cash compensation and intangible
        amortization charges, were  ($0.12) exceeding First Call consensus
        estimate of ($0.18).
     -- Cash:  Cash used was $8.8 million during the first quarter 2001.
        LookSmart had a balance of $90.0 million in restricted and unrestricted
        cash, and short-term investments at the end of the first quarter 2001.
     -- Customers:  Total advertising and listings customers totaled
        42,690.  New listings customers announced include Barnes and Noble,
        Eddie Bauer, OfficeMax, REI and Spiegel.
 
     Results Reinforce Clear Path to Profitability
     "Given the tough industry climate and internal challenges of
 restructuring, our team has delivered a terrific result -- exceeding our own
 and the Street's expectations," said Evan Thornley, chairman and chief
 executive officer of LookSmart.  "LookSmart's listings business continues to
 show strong customer acceptance and rapid revenue growth.  Our cost management
 efforts are ahead of plan and we are deeply investing in new listings product
 development."
     "As we complete the development cycle on additional listings products over
 the course of this year, we will have a high margin revenue machine that will
 generate large scale growth when we expand distribution volume," said
 Thornley.  "The fact that we have generated 44 percent and 36 percent
 sequential revenue growth in listings in the last two quarters with flat
 distribution volume gives us greater confidence about the long-term growth
 prospects for our business as distribution expands."
     With the focus on listings and targeted search marketing products, in
 combination with strong financial management, LookSmart is focused on
 profitable growth and is reiterating its expectation to reach cash operating
 profitability by the fourth quarter 2001.
 
     Listings Growth Engine
     LookSmart's results reflect the company's continued focus on listings and
 highly targeted search marketing products that are growing at a rapid pace and
 gaining customer acceptance even in the current online advertising industry
 downturn.  The growth of LookSmart's products results from the continuing
 trend from untargeted to targeted advertising, and from CPM (cost per
 thousand) to CPC (cost per click).  LookSmart's products include directory
 listings and search targeted marketing products; online marketing products
 that are targeted around directory search results.  Listings and search
 targeted marketing products now account for 82 percent of listings and
 advertising revenue while untargeted products account for only 18 percent.
     The power in directory listings comes from the ability of businesses to
 reach customers at the very time they are searching for products or services.
 Through listings, marketers can reach highly qualified, potential customers
 when they are ready to act and in an environment where they can transact
 immediately. This precise targeting and interactivity, combined with the
 massive scale of Internet search, creates a powerful direct marketing
 environment versus other online and offline alternatives.
     Listings revenues, including Express Submit and Subsite Listings,
 generated $6.4 million in the first quarter 2001, versus $4.7 million or an
 increase of 36 percent from the fourth quarter 2000, despite an extremely
 challenging environment in online marketing.
 
     New Customer Wins
     LookSmart continues to attract high-quality listings customers due to the
 effectiveness of these marketing products resulting in lower customer
 acquisition costs.  The listings products appeal to a diversified customer
 base of online and offline marketers, both big and small.  Express Submit
 targets small to medium sized businesses, which are mainly offline, while
 Subsite Listings appeal to larger marketers.  Recently announced customers for
 the Subsite Listings product include Barnes and Noble, Eddie Bauer, OfficeMax,
 REI and Spiegel who join a strong existing customer base which includes
 Amazon, eBay, Gap, VerticalNet, Banana Republic, Deal Time, and Old Navy.
     Express Submit products are sold through LookSmart's partnership network
 including Microsoft, AltaVista, Excite, iWon, and through resellers, including
 SmartAge and Traffick.com.  Subsite Listings are distributed through
 Microsoft's MSN, AltaVista, the LookSmart ISP network, and, in this quarter,
 LookSmart expanded the distribution of Subsite Listings to Excite.
 
     Strong Financial Management
     During the first quarter 2001, LookSmart restructured the organization to
 focus on its core listings and search targeted marketing products.
 Specifically, LookSmart reduced employee count by 172 people, reorganized from
 11 to four business groups, reduced distribution costs, and exited non-core
 business activities.  LookSmart will to continue to review and manage expenses
 going forward.  Cash used was $8.8 million during the first quarter 2001,
 versus $14.0 million in the fourth quarter 2000.  LookSmart had a balance of
 $90.0 million in restricted and unrestricted cash, and short-term investments
 at the end of the first quarter 2001.
 
     Financial Results by Business Segment
 
     Listings
     The listings products continue to gain traction and increase as a
 percentage of overall revenues. LookSmart's listings products generated
 $6.4 million in revenue in the first quarter 2001.  This was a 36 percent
 increase over fourth quarter 2000 and a 967 percent increase over first
 quarter 2000.  At the end of the first quarter 2001, listings accounted for
 23 percent of total revenue.
     The number of listings customers reached 42,400 at the end of the first
 quarter 2001, and the percentage of LookSmart directory listings that generate
 revenue grew from 1.7 percent in the fourth quarter of 2000 to 3.4 percent in
 the first quarter 2001, bringing the total number of listings to 86,000 URLs.
 
     Advertising/Syndication
     Advertising/syndication revenue continues to decrease as a percentage of
 total revenue due to the downturn in the online advertising market.  In the
 first quarter 2001, advertising/syndication revenue was $8.9 million, compared
 to $15.8 million in the fourth quarter 2000 and $12.3 million in the first
 quarter 2000.  Advertising/syndication revenue represented 31 percent of total
 revenue in the first quarter 2001 compared to 63 percent for the same period
 of the previous year.
 
     Licensing
     Licensing revenue of $5.1 million in the first quarter 2001 represented
 18 percent of total revenue. Licensing revenues grew 46 percent from the
 fourth quarter 2000 and declined six percent from the first quarter 2000.  As
 expected, licensing revenue was cyclically higher in the first quarter 2001
 due to the accounting treatment of fixed licensing payments from Microsoft
 resulting from LookSmart's continual over-delivery against contractual
 requirements.  For further information, see LookSmart's Annual Report or Form
 10-K filed with the SEC on March 16, 2001.
 
     ECommerce
     ECommerce revenue of $8.0 million in the first quarter 2001 grew
 23 percent from $6.5 million in the fourth quarter 2000 and 105 percent from
 $3.9 million in the first quarter 2000.  While the eCommerce business is both
 growing and profitable, it is not core to LookSmart's strategy of listings and
 search targeted marketing products. As a result, beginning in the second
 quarter 2001, LookSmart is changing its relationship with its main eCommerce
 partner, Guthy Renker Corporation (GRC) to a listings and advertising
 partnership.  In an effort to continue to focus on core competencies and
 create value for marketers from its online distribution, LookSmart will no
 longer handle the inventory of GRC product sales. LookSmart will no longer
 book revenue from GRC product sales but will capture the value of marketing
 those products through listings and advertising revenue. This change will
 result in lower nominal revenues but a slight improvement in EPS.
 
     International
     In the first quarter 2001, BT LookSmart extended its agreement with
 Excite. In addition to providing exclusive directories for 10 million European
 users, BT LookSmart will be the exclusive directory provider for Excite Japan.
     LookSmart Australia also signed a deal with Excite Australia to
 incorporate the LookSmart directory within Excite Search.  Excite@Home in
 Australia will act as an online reseller of LookSmart Express Submit.
 
     Directory Products
     LookSmart continues to develop the highest quality directories on the Web.
 LookSmart currently has 32 Internet directories in 27 countries and
 13 languages, as well as 24 WAP directories in 19 countries and 11 languages.
 LookSmart directories now have more than 2.6 million URLs organized into
 250,000 categories.  Ongoing integration of Zeal content continues and the
 collaboration between LookSmart editors and the Zeal community has driven
 substantial quality improvements in LookSmart's directory structure.
 
     Earnings Conference Call
     LookSmart will hold a conference call to discuss its first quarter results
 at 2:00 p.m. PDT and 5:00 p.m. EDT on April 26, 2001, and 7:00 a.m. Australian
 Eastern Standard Time on April 27, 2001.  Investors can listen to the
 conference call at http://aboutus.looksmart.com .
 
     About LookSmart
     LookSmart helps more than 35,000 businesses harness the power of Internet
 search to generate qualified leads. As the global leader in building,
 distributing and monetizing Web directories, LookSmart databases are searched
 60 million times a day, through five of the top 10 portals, five of the top
 82 percent, or more than four out of five US Internet users, through
 Microsoft's MSN, Excite@Home, AltaVista, iWon, Netscape Netcenter, Inktomi,
 Time Warner, Prodigy, Juno, CNN, Road Runner, Cox Interactive Media, InfoSpace
 and Qwest; BTLookSmart, LookSmart's joint venture with BT, deploys LookSmart
 wireless and Web directory solutions for ISPs, portals and mobile Internet
 businesses across Europe and Asia-Pacific. LookSmart is headquartered in San
 Francisco and can be contacted at 415-348-7000.
 
     Forward-Looking Statements
     Except for the historical information contained herein, this press release
 contains forward-looking statements that involve risks and uncertainties.
 Words such as "will," "anticipates," "expects," "intends," "plans,"
 "believes," "seeks," "estimates," "may," and variations of these words or
 similar expressions are intended to identify forward-looking statements.
 Also, any statements that refer to expected revenues from existing and new
 products, time lines for roll-out of new products, changes in advertising
 yields, future expectations, industry projections or other characterizations
 of future events or circumstances, including assumptions underlying these
 projections, are forward-looking statements.  These statements are not
 guarantees of future performance and are subject to risks and uncertainties.
 Our future results may differ from the results discussed or forecasted due to
 various factors, such as the potential failure of businesses, Web sites and
 Internet users to use our targeted advertising and listings products at
 projected rates; the potential inability to integrate community technology
 into the LookSmart directory on the proposed timelines due to technical,
 product or other issues; the possibility that listings revenues will not
 continue to grow as they have in recent quarters; the potential failure to
 expand successfully in international and wireless markets; the possibility
 that BT customers will not choose to use wireless internet services or the
 LookSmart directory at rates sufficient to recoup our costs; the possible
 failure to continue to expand the LookSmart network and our traffic base at
 projected rates; the possibility of an unexpected increase in costs, expenses
 or other factors contributing to our burn rate; and the possibility that we
 may not reach operating profitability as early as projected, if at all.  In
 addition you should read the risk factors detailed in our Annual Report on
 Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
 filed with the Securities and Exchange Commission.  Please note that we
 undertake no obligation to revise or update publicly any forward-looking
 statements for any reason. "LookSmart" is a trademark of LookSmart, Ltd.,
 and/or its subsidiaries in the U.S. and other countries.  All other trademarks
 mentioned are the property of their respective owners.
 
     Contacts:
      Martha Clark,                      Liz Haggerty,
      Interim Chief Financial Officer    Director of Investor Relations
      415-348-7200                       415-348-7185
      mclark@looksmart.net               liz@looksmart.net
 
 
                                  LOOKSMART, LTD.
              CONSOLIDATED STATEMENTS OF OPERATIONS - PRO FORMA BASIS
                      (In thousands, except per share amounts)
 
                                                         Three Months Ended
                                                              March 31,
                                                        2000            2001
     Revenues:
      Advertising and syndication                     $12,266         $8,870
      Licensing                                         5,367          5,125
      Listings                                             --          6,421
      Ecommerce                                         3,867          7,971
       Total revenues                                  21,500         28,387
 
     Cost of revenues:
      Advertising and syndication                         953          1,318
      Listings                                             --          1,246
      Ecommerce                                         1,888          5,009
       Total cost of revenues                           2,841          7,573
 
     Gross profit                                      18,659         20,814
 
     Operating expenses:
      Sales and marketing                              16,717         14,915
      Product development                               8,609          8,594
      General and administrative                        2,866          3,102
       Total operating expenses                        28,192         26,611
 
      Loss from operations excluding restructuring
       expenses, non recurring charges and
       amortization of goodwill and unearned
       compensation                                   (9,533)        (5,797)
 
      Restructuring expenses and non-recurring
       expenses                                            --          5,319
      Amortization of goodwill and intangibles          1,945          8,411
      Amortization of unearned compensation             1,254          1,115
 
       Loss from operations                          (12,732)       (20,642)
 
     Non-operating (income) expenses                    1,192          3,891
 
       Loss before income taxes and
        minority interest                            (13,924)       (24,533)
 
     Income taxes and minority interest                 (141)             26
 
       Net loss                                     $(13,783)      $(24,559)
 
     Historical net loss per common share:
     Basic and diluted net loss per share             ($0.16)        ($0.27)
 
     Weighted average shares outstanding               86,676         91,213
 
     Pro forma operating loss (excluding
      restructuring expenses, non recurring charges
      and amortization of goodwill and unearned
      compensation)                                   (9,533)        (5,797)
 
     Pro forma operating loss (excluding
      restructuring expenses, non recurring charges
      and amortization of goodwill and unearned
      compensation) per share                         ($0.11)        ($0.06)
 
     Pro forma operating loss (excluding
      amortization of goodwill and unearned
      compensation)                                   (9,533)       (11,116)
 
     Pro forma operating loss (excluding
      amortization of goodwill and unearned
      compensation) per share                         ($0.11)        ($0.12)
 
 
                                  LOOKSMART, LTD.
                 CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP BASIS
                      (In thousands, except per share amounts)
 
                                                         Three Months Ended
                                                             March 31,
                                                       2000            2001
     Revenues:
      Advertising and syndication                     $12,266         $8,870
      Licensing                                         5,367          5,125
      Listings                                             --          6,421
      Ecommerce                                         3,867          7,971
       Total revenues                                  21,500         28,387
 
     Cost of revenues:
      Advertising and syndication                         953          1,318
      Listings                                             --          1,246
      Ecommerce                                         1,888          5,009
       Total cost of revenues                           2,841          7,573
 
     Gross profit                                      18,659         20,814
 
     Operating expenses:
      Sales and marketing (including amortization
       of deferred compensation of 486 and 580 in
       the 3 months ended March 31, 2000 and 2001,
       respectively)                                   17,203         17,334
      Product development (including amortization
       of deferred compensation of 300 and 304 in
       the 3 months ended March 31, 2000 and 2001,
       respectively)                                    8,909          8,898
      General and administrative (including
       amortization of deferred compensation of
       468 and 231 in the 3 months ended
       March 31, 2000 and 2001, respectively)           3,334          3,333
      Amortization of goodwill and intangibles          1,945          2,442
      Restructuring expenses                               --          9,449
       Total operating expenses                        31,391         41,456
 
       Loss from operations                          (12,732)       (20,642)
 
     Non-operating income (expenses)                  (1,192)        (3,891)
 
       Loss before income taxes                      (13,924)       (24,533)
 
     Income taxes & minority interest                   (141)             26
 
       Net loss                                     ($13,783)      $(24,559)
 
     Historical net loss per common share:
 
     Basic and diluted net loss per share             ($0.16)        ($0.27)
     Weighted average shares outstanding               86,676         91,213
 
 
                                   LOOKSMART, LTD
                       CONSOLIDATED CONDENSED BALANCES SHEETS
                                   (in thousands)
 
                                                     31-Mar-00      31-Mar-01
 
 
                            ASSETS
     Cash                                             $75,971        $85,059
     Short Term Investments                            28,038          4,985
     Accounts Receivable, net                           9,019         10,123
     Other Current Assets                               4,675          9,315
     Total Current Assets                             117,703        109,482
 
     Property, Plant and Equipment, net                11,595         12,783
     Goodwill and Intangibles, net                     29,301         23,419
     Other Assets                                       2,920          4,440
 
     Total Assets                                    $161,519       $150,124
 
              LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Accounts Payable and Accrued Liabilities         $16,917        $19,277
     Deferred Revenue - current portion               $16,705         11,580
     Other Current Liabilities                          1,393            721
     Total Current Liabilities                         35,015         31,578
 
     Long Term Liabilities                              6,952         62,709
 
     Total Liabilities                                 41,967         94,287
 
     Total Equity                                     119,552         55,837
 
     Total Liabilities and Stockholders' Equity      $161,519       $150,124
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X62177752
 
 

SOURCE LookSmart, Ltd.
    SAN FRANCISCO, April 26 /PRNewswire/ --
 LookSmart (Nasdaq:   LOOK; Australia: LOK), the global leader in Web
 directories, today announced financial results for the first quarter ending
 March 31, 2001.
 
     Highlights:
 
     -- Revenue:  LookSmart reported first quarter 2001 revenue of
        $28.4 million versus company guidance of $23.0 to $26.0 million,
        representing 32 percent growth over $21.5 million in the first quarter
        2000.
     -- Listings Growth:  Listings revenues grew 36 percent to $6.4 million.
        The number of Express Submit and Subsite Listings grew nearly
        50 percent to 86,000 URLs.
     -- Cash Operating Losses:  Pro-forma cash operating losses for the first
        quarter 2001 were $5.8 million, excluding non-recurring and
        restructuring costs, versus $12.9 million in the fourth quarter 2000,
        and $9.5 million in the first quarter 2000.  Including non-recurring
        and restructuring charges, cash operating losses were $11.1 million.
        (Cash operating losses exclude the effects of non-cash compensation and
        intangible amortization charges).
     -- Cash Operating EPS:  Cash operating EPS for the first quarter 2001,
        excluding the effects of non-cash compensation and intangible
        amortization charges, were  ($0.12) exceeding First Call consensus
        estimate of ($0.18).
     -- Cash:  Cash used was $8.8 million during the first quarter 2001.
        LookSmart had a balance of $90.0 million in restricted and unrestricted
        cash, and short-term investments at the end of the first quarter 2001.
     -- Customers:  Total advertising and listings customers totaled
        42,690.  New listings customers announced include Barnes and Noble,
        Eddie Bauer, OfficeMax, REI and Spiegel.
 
     Results Reinforce Clear Path to Profitability
     "Given the tough industry climate and internal challenges of
 restructuring, our team has delivered a terrific result -- exceeding our own
 and the Street's expectations," said Evan Thornley, chairman and chief
 executive officer of LookSmart.  "LookSmart's listings business continues to
 show strong customer acceptance and rapid revenue growth.  Our cost management
 efforts are ahead of plan and we are deeply investing in new listings product
 development."
     "As we complete the development cycle on additional listings products over
 the course of this year, we will have a high margin revenue machine that will
 generate large scale growth when we expand distribution volume," said
 Thornley.  "The fact that we have generated 44 percent and 36 percent
 sequential revenue growth in listings in the last two quarters with flat
 distribution volume gives us greater confidence about the long-term growth
 prospects for our business as distribution expands."
     With the focus on listings and targeted search marketing products, in
 combination with strong financial management, LookSmart is focused on
 profitable growth and is reiterating its expectation to reach cash operating
 profitability by the fourth quarter 2001.
 
     Listings Growth Engine
     LookSmart's results reflect the company's continued focus on listings and
 highly targeted search marketing products that are growing at a rapid pace and
 gaining customer acceptance even in the current online advertising industry
 downturn.  The growth of LookSmart's products results from the continuing
 trend from untargeted to targeted advertising, and from CPM (cost per
 thousand) to CPC (cost per click).  LookSmart's products include directory
 listings and search targeted marketing products; online marketing products
 that are targeted around directory search results.  Listings and search
 targeted marketing products now account for 82 percent of listings and
 advertising revenue while untargeted products account for only 18 percent.
     The power in directory listings comes from the ability of businesses to
 reach customers at the very time they are searching for products or services.
 Through listings, marketers can reach highly qualified, potential customers
 when they are ready to act and in an environment where they can transact
 immediately. This precise targeting and interactivity, combined with the
 massive scale of Internet search, creates a powerful direct marketing
 environment versus other online and offline alternatives.
     Listings revenues, including Express Submit and Subsite Listings,
 generated $6.4 million in the first quarter 2001, versus $4.7 million or an
 increase of 36 percent from the fourth quarter 2000, despite an extremely
 challenging environment in online marketing.
 
     New Customer Wins
     LookSmart continues to attract high-quality listings customers due to the
 effectiveness of these marketing products resulting in lower customer
 acquisition costs.  The listings products appeal to a diversified customer
 base of online and offline marketers, both big and small.  Express Submit
 targets small to medium sized businesses, which are mainly offline, while
 Subsite Listings appeal to larger marketers.  Recently announced customers for
 the Subsite Listings product include Barnes and Noble, Eddie Bauer, OfficeMax,
 REI and Spiegel who join a strong existing customer base which includes
 Amazon, eBay, Gap, VerticalNet, Banana Republic, Deal Time, and Old Navy.
     Express Submit products are sold through LookSmart's partnership network
 including Microsoft, AltaVista, Excite, iWon, and through resellers, including
 SmartAge and Traffick.com.  Subsite Listings are distributed through
 Microsoft's MSN, AltaVista, the LookSmart ISP network, and, in this quarter,
 LookSmart expanded the distribution of Subsite Listings to Excite.
 
     Strong Financial Management
     During the first quarter 2001, LookSmart restructured the organization to
 focus on its core listings and search targeted marketing products.
 Specifically, LookSmart reduced employee count by 172 people, reorganized from
 11 to four business groups, reduced distribution costs, and exited non-core
 business activities.  LookSmart will to continue to review and manage expenses
 going forward.  Cash used was $8.8 million during the first quarter 2001,
 versus $14.0 million in the fourth quarter 2000.  LookSmart had a balance of
 $90.0 million in restricted and unrestricted cash, and short-term investments
 at the end of the first quarter 2001.
 
     Financial Results by Business Segment
 
     Listings
     The listings products continue to gain traction and increase as a
 percentage of overall revenues. LookSmart's listings products generated
 $6.4 million in revenue in the first quarter 2001.  This was a 36 percent
 increase over fourth quarter 2000 and a 967 percent increase over first
 quarter 2000.  At the end of the first quarter 2001, listings accounted for
 23 percent of total revenue.
     The number of listings customers reached 42,400 at the end of the first
 quarter 2001, and the percentage of LookSmart directory listings that generate
 revenue grew from 1.7 percent in the fourth quarter of 2000 to 3.4 percent in
 the first quarter 2001, bringing the total number of listings to 86,000 URLs.
 
     Advertising/Syndication
     Advertising/syndication revenue continues to decrease as a percentage of
 total revenue due to the downturn in the online advertising market.  In the
 first quarter 2001, advertising/syndication revenue was $8.9 million, compared
 to $15.8 million in the fourth quarter 2000 and $12.3 million in the first
 quarter 2000.  Advertising/syndication revenue represented 31 percent of total
 revenue in the first quarter 2001 compared to 63 percent for the same period
 of the previous year.
 
     Licensing
     Licensing revenue of $5.1 million in the first quarter 2001 represented
 18 percent of total revenue. Licensing revenues grew 46 percent from the
 fourth quarter 2000 and declined six percent from the first quarter 2000.  As
 expected, licensing revenue was cyclically higher in the first quarter 2001
 due to the accounting treatment of fixed licensing payments from Microsoft
 resulting from LookSmart's continual over-delivery against contractual
 requirements.  For further information, see LookSmart's Annual Report or Form
 10-K filed with the SEC on March 16, 2001.
 
     ECommerce
     ECommerce revenue of $8.0 million in the first quarter 2001 grew
 23 percent from $6.5 million in the fourth quarter 2000 and 105 percent from
 $3.9 million in the first quarter 2000.  While the eCommerce business is both
 growing and profitable, it is not core to LookSmart's strategy of listings and
 search targeted marketing products. As a result, beginning in the second
 quarter 2001, LookSmart is changing its relationship with its main eCommerce
 partner, Guthy Renker Corporation (GRC) to a listings and advertising
 partnership.  In an effort to continue to focus on core competencies and
 create value for marketers from its online distribution, LookSmart will no
 longer handle the inventory of GRC product sales. LookSmart will no longer
 book revenue from GRC product sales but will capture the value of marketing
 those products through listings and advertising revenue. This change will
 result in lower nominal revenues but a slight improvement in EPS.
 
     International
     In the first quarter 2001, BT LookSmart extended its agreement with
 Excite. In addition to providing exclusive directories for 10 million European
 users, BT LookSmart will be the exclusive directory provider for Excite Japan.
     LookSmart Australia also signed a deal with Excite Australia to
 incorporate the LookSmart directory within Excite Search.  Excite@Home in
 Australia will act as an online reseller of LookSmart Express Submit.
 
     Directory Products
     LookSmart continues to develop the highest quality directories on the Web.
 LookSmart currently has 32 Internet directories in 27 countries and
 13 languages, as well as 24 WAP directories in 19 countries and 11 languages.
 LookSmart directories now have more than 2.6 million URLs organized into
 250,000 categories.  Ongoing integration of Zeal content continues and the
 collaboration between LookSmart editors and the Zeal community has driven
 substantial quality improvements in LookSmart's directory structure.
 
     Earnings Conference Call
     LookSmart will hold a conference call to discuss its first quarter results
 at 2:00 p.m. PDT and 5:00 p.m. EDT on April 26, 2001, and 7:00 a.m. Australian
 Eastern Standard Time on April 27, 2001.  Investors can listen to the
 conference call at http://aboutus.looksmart.com .
 
     About LookSmart
     LookSmart helps more than 35,000 businesses harness the power of Internet
 search to generate qualified leads. As the global leader in building,
 distributing and monetizing Web directories, LookSmart databases are searched
 60 million times a day, through five of the top 10 portals, five of the top
 82 percent, or more than four out of five US Internet users, through
 Microsoft's MSN, Excite@Home, AltaVista, iWon, Netscape Netcenter, Inktomi,
 Time Warner, Prodigy, Juno, CNN, Road Runner, Cox Interactive Media, InfoSpace
 and Qwest; BTLookSmart, LookSmart's joint venture with BT, deploys LookSmart
 wireless and Web directory solutions for ISPs, portals and mobile Internet
 businesses across Europe and Asia-Pacific. LookSmart is headquartered in San
 Francisco and can be contacted at 415-348-7000.
 
     Forward-Looking Statements
     Except for the historical information contained herein, this press release
 contains forward-looking statements that involve risks and uncertainties.
 Words such as "will," "anticipates," "expects," "intends," "plans,"
 "believes," "seeks," "estimates," "may," and variations of these words or
 similar expressions are intended to identify forward-looking statements.
 Also, any statements that refer to expected revenues from existing and new
 products, time lines for roll-out of new products, changes in advertising
 yields, future expectations, industry projections or other characterizations
 of future events or circumstances, including assumptions underlying these
 projections, are forward-looking statements.  These statements are not
 guarantees of future performance and are subject to risks and uncertainties.
 Our future results may differ from the results discussed or forecasted due to
 various factors, such as the potential failure of businesses, Web sites and
 Internet users to use our targeted advertising and listings products at
 projected rates; the potential inability to integrate community technology
 into the LookSmart directory on the proposed timelines due to technical,
 product or other issues; the possibility that listings revenues will not
 continue to grow as they have in recent quarters; the potential failure to
 expand successfully in international and wireless markets; the possibility
 that BT customers will not choose to use wireless internet services or the
 LookSmart directory at rates sufficient to recoup our costs; the possible
 failure to continue to expand the LookSmart network and our traffic base at
 projected rates; the possibility of an unexpected increase in costs, expenses
 or other factors contributing to our burn rate; and the possibility that we
 may not reach operating profitability as early as projected, if at all.  In
 addition you should read the risk factors detailed in our Annual Report on
 Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
 filed with the Securities and Exchange Commission.  Please note that we
 undertake no obligation to revise or update publicly any forward-looking
 statements for any reason. "LookSmart" is a trademark of LookSmart, Ltd.,
 and/or its subsidiaries in the U.S. and other countries.  All other trademarks
 mentioned are the property of their respective owners.
 
     Contacts:
      Martha Clark,                      Liz Haggerty,
      Interim Chief Financial Officer    Director of Investor Relations
      415-348-7200                       415-348-7185
      mclark@looksmart.net               liz@looksmart.net
 
 
                                  LOOKSMART, LTD.
              CONSOLIDATED STATEMENTS OF OPERATIONS - PRO FORMA BASIS
                      (In thousands, except per share amounts)
 
                                                         Three Months Ended
                                                              March 31,
                                                        2000            2001
     Revenues:
      Advertising and syndication                     $12,266         $8,870
      Licensing                                         5,367          5,125
      Listings                                             --          6,421
      Ecommerce                                         3,867          7,971
       Total revenues                                  21,500         28,387
 
     Cost of revenues:
      Advertising and syndication                         953          1,318
      Listings                                             --          1,246
      Ecommerce                                         1,888          5,009
       Total cost of revenues                           2,841          7,573
 
     Gross profit                                      18,659         20,814
 
     Operating expenses:
      Sales and marketing                              16,717         14,915
      Product development                               8,609          8,594
      General and administrative                        2,866          3,102
       Total operating expenses                        28,192         26,611
 
      Loss from operations excluding restructuring
       expenses, non recurring charges and
       amortization of goodwill and unearned
       compensation                                   (9,533)        (5,797)
 
      Restructuring expenses and non-recurring
       expenses                                            --          5,319
      Amortization of goodwill and intangibles          1,945          8,411
      Amortization of unearned compensation             1,254          1,115
 
       Loss from operations                          (12,732)       (20,642)
 
     Non-operating (income) expenses                    1,192          3,891
 
       Loss before income taxes and
        minority interest                            (13,924)       (24,533)
 
     Income taxes and minority interest                 (141)             26
 
       Net loss                                     $(13,783)      $(24,559)
 
     Historical net loss per common share:
     Basic and diluted net loss per share             ($0.16)        ($0.27)
 
     Weighted average shares outstanding               86,676         91,213
 
     Pro forma operating loss (excluding
      restructuring expenses, non recurring charges
      and amortization of goodwill and unearned
      compensation)                                   (9,533)        (5,797)
 
     Pro forma operating loss (excluding
      restructuring expenses, non recurring charges
      and amortization of goodwill and unearned
      compensation) per share                         ($0.11)        ($0.06)
 
     Pro forma operating loss (excluding
      amortization of goodwill and unearned
      compensation)                                   (9,533)       (11,116)
 
     Pro forma operating loss (excluding
      amortization of goodwill and unearned
      compensation) per share                         ($0.11)        ($0.12)
 
 
                                  LOOKSMART, LTD.
                 CONSOLIDATED STATEMENTS OF OPERATIONS - GAAP BASIS
                      (In thousands, except per share amounts)
 
                                                         Three Months Ended
                                                             March 31,
                                                       2000            2001
     Revenues:
      Advertising and syndication                     $12,266         $8,870
      Licensing                                         5,367          5,125
      Listings                                             --          6,421
      Ecommerce                                         3,867          7,971
       Total revenues                                  21,500         28,387
 
     Cost of revenues:
      Advertising and syndication                         953          1,318
      Listings                                             --          1,246
      Ecommerce                                         1,888          5,009
       Total cost of revenues                           2,841          7,573
 
     Gross profit                                      18,659         20,814
 
     Operating expenses:
      Sales and marketing (including amortization
       of deferred compensation of 486 and 580 in
       the 3 months ended March 31, 2000 and 2001,
       respectively)                                   17,203         17,334
      Product development (including amortization
       of deferred compensation of 300 and 304 in
       the 3 months ended March 31, 2000 and 2001,
       respectively)                                    8,909          8,898
      General and administrative (including
       amortization of deferred compensation of
       468 and 231 in the 3 months ended
       March 31, 2000 and 2001, respectively)           3,334          3,333
      Amortization of goodwill and intangibles          1,945          2,442
      Restructuring expenses                               --          9,449
       Total operating expenses                        31,391         41,456
 
       Loss from operations                          (12,732)       (20,642)
 
     Non-operating income (expenses)                  (1,192)        (3,891)
 
       Loss before income taxes                      (13,924)       (24,533)
 
     Income taxes & minority interest                   (141)             26
 
       Net loss                                     ($13,783)      $(24,559)
 
     Historical net loss per common share:
 
     Basic and diluted net loss per share             ($0.16)        ($0.27)
     Weighted average shares outstanding               86,676         91,213
 
 
                                   LOOKSMART, LTD
                       CONSOLIDATED CONDENSED BALANCES SHEETS
                                   (in thousands)
 
                                                     31-Mar-00      31-Mar-01
 
 
                            ASSETS
     Cash                                             $75,971        $85,059
     Short Term Investments                            28,038          4,985
     Accounts Receivable, net                           9,019         10,123
     Other Current Assets                               4,675          9,315
     Total Current Assets                             117,703        109,482
 
     Property, Plant and Equipment, net                11,595         12,783
     Goodwill and Intangibles, net                     29,301         23,419
     Other Assets                                       2,920          4,440
 
     Total Assets                                    $161,519       $150,124
 
              LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Accounts Payable and Accrued Liabilities         $16,917        $19,277
     Deferred Revenue - current portion               $16,705         11,580
     Other Current Liabilities                          1,393            721
     Total Current Liabilities                         35,015         31,578
 
     Long Term Liabilities                              6,952         62,709
 
     Total Liabilities                                 41,967         94,287
 
     Total Equity                                     119,552         55,837
 
     Total Liabilities and Stockholders' Equity      $161,519       $150,124
 
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 SOURCE  LookSmart, Ltd.