EX-99 2 dkm657a.txt EXHIBIT 99 - PRESS RELEASE Inforte Corp. Announces Second Quarter Results Net Revenue at $9.8 Million; Earnings at Four Cents CHICAGO, July 26, 2005 /PRNewswire-FirstCall/ -- Customer Intelligence consultancy Inforte Corp. (Nasdaq: INFT - News) announced today that revenue and diluted earnings per share (EPS) were at the high end of guidance for the quarter ending June 30, 2005. Second quarter revenue was $10.9 million. Net revenue was $9.8 million, which was well above the high end of the guidance range of $8.5 to $9.5 million, representing a sequential increase of 13 percent from the first quarter. Diluted earnings per share (EPS) were $0.04 matching the high end of the guidance range of $0.00 to $0.04, and compared to $0.02 last year. Dave Sutton, Inforte's chief executive officer and president, commented, "Our performance this quarter was much improved; we are now starting to see the results from the foundation that we have built over the last couple of quarters. In the last three months we have also announced the acquisition of GTS Consulting, Inc. and the creation of Provansis LLC, establishing our managed analytics capabilities. We believe these investments will be key growth drivers for our business in the future." Actual earnings results for the quarter ending June 30, 2005, and financial highlights, are as follows: o Net income for the quarter was $454,000, a net margin of 4.6 percent o Operating income was $562,000, an operating margin of 5.7 percent o Results include $238,000 of non-cash compensation, excluding this, operating margin would have been 8.2 percent and this compares to last year at 0.4 percent. This is the best operating margin performance since the fourth quarter of 2000 o Gross margin was 45.7 percent and compares to 40.4 percent in the second quarter of 2004 o Cash flow from operations was $467,000 and free cash flow was $442,000 o Utilization was 73 percent compared to 58 percent last quarter o Quarterly revenue per consultant and revenue per employee were $223,000 and $178,000 annualized respectively both improved from last quarter o As of June 30, 2005, we had 212 employees in total, 170 were billable o As of June 30, 2005, cash and marketable securities were $33 million, this is $2.82 per share based on 11,724,082 actual shares outstanding at the end of the quarter Guidance is as follows: o Inforte's net revenue guidance for 3Q05 is a range of $9 million to $10 million, an increase to the previously communicated guidance range of $8.5 to $9.5 million o EPS guidance for 3Q05 is a range of $0.01 to $0.05, also an increase to the previously communicated guidance range of $0.00 to $0.04 o Net revenue guidance for 4Q05 is a range of $9 million to $10 million; 4Q05 EPS guidance is a range of $0.01 to $0.05 o EPS guidance for future quarters includes non-cash compensation expense o Full year net revenue guidance is a range of $36.4 million to $38.4 million; Pro Forma EPS guidance for the full year excluding expenses incurred in the first quarter from the option exchange offer is a range of $0.06 to $0.14 Nick Heyes, Inforte's chief financial officer, commented, "All of our key metrics for this quarter were much improved and we are now starting to more effectively leverage our business model to meet our profitability goals. The third quarter is a seasonally weak quarter for us and there is also uncertainty driven by the integration of GTS Consulting. However notwithstanding this and the current macro economic uncertainties, we are pleased to be able to raise our earnings and revenue guidance for the upcoming quarter." This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ from forward-looking results for a number of reasons, including but not limited to, Inforte's ability to: (i) effectively forecast demand and profitably match resources with demand during a period of tight client budgets and lower spending levels, and when worldwide economic and geopolitical uncertainty is high; (ii) attract and retain clients and satisfy our clients' expectations; (iii) recruit and retain qualified professionals; (iv) accurately estimate the time and resources necessary for the delivery of our services; (v) build and maintain marketing relationships with leading software vendors while occasionally competing with their professional services organizations; (vi) compete with emerging alternative economic models for delivery, such as offshore development; (vii) integrate acquired businesses; and (viii) identify and successfully offer the solutions that clients demand; as well as other factors discussed from time to time in our SEC filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. All forward-looking statements included in this document are made as of the date hereof, based on information available to Inforte on the date thereof, and Inforte assumes no obligation to update any forward-looking statements. About Inforte Corp. Inforte Corp. increases the competitive strength of its Global 1000 clients by providing them with insight, intelligence and an infrastructure to close the fact-gap and enable more timely and profitable decision-making. Inforte consultants combine real-world industry, functional and analytical expertise with innovative go-to-market strategies and technology solutions, ensuring that our clients can drive transformational, measurable results in their customer interactions. Inforte is headquartered in Chicago and has offices in Atlanta; Dallas; Delhi, India; Hamburg, Germany; London; Los Angeles; New York; San Francisco; Walldorf, Germany; and Washington, D.C. For more information, contact Inforte at 800.340.0200 or visit www.inforte.com. CONTACT: kelly.richards@inforte.com, or ir@inforte.com. Visit http://www.inforte.com/investor/ to access the July 26, 2005, Investor Conference Call web cast, which begins at 8:30 a.m. Eastern. CONSOLIDATED STATEMENTS OF OPERATIONS (000's, except per share data)

THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------- ------------------------ 2004 2005 2004 2005 ---------- ---------- ---------- ---------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues: Revenue before reimbursements (net revenue) $ 11,982 $ 9,794 $ 22,644 $ 18,449 Reimbursements 1,798 1,099 3,211 1,990 -------- -------- ---------- --------- Total Revenues 13,780 10,893 25,855 20,439 Operating expenses: Project personnel and related expenses 7,177 5,321 12,757 11,080 Reimbursed expenses 1,798 1,099 3,211 1,990 Sales and marketing 1,393 691 2,579 1,304 Recruiting, retention and training 370 262 734 461 Management and administrative 2,988 2,958 5,895 6,594 -------- -------- ---------- --------- Total operating expenses 13,726 10,331 25,176 21,429 Operating income (loss) 54 562 679 (990) Interest income, net and other 272 196 505 457 -------- -------- ---------- --------- Income (loss) before income tax 326 758 1,184 (533) Income tax expense (benefit) 130 304 473 (217) -------- -------- ---------- --------- Net income (loss) $ 196 $ 454 $ 711 $ (316) ======== ======== ========== ========= Earnings (loss) per share: -Basic $ 0.02 $ 0.04 $ 0.06 $ (0.03) -Diluted $ 0.02 $ 0.04 $ 0.06 $ (0.03) Weighted average common shares outstanding: -Basic 11,029 11,234 11,009 11,184 -Diluted 11,385 11,711 11,356 11,184 Expenses as a percentage of net revenue Project personnel and related expenses 59.9% 54.3% 56.3% 60.1% Sales and marketing 11.6% 7.1% 11.4% 7.1% Recruiting, retention, and training 3.1% 2.7% 3.2% 2.5% Management and administrative 24.9% 30.2% 26.0% 35.7% Income tax rate 39.9% 40.1% 40.0% 40.7% Margins Gross income 40.1% 45.7% 43.7% 39.9% Operating income (loss) 0.4% 5.7% 3.0% -5.4% Pretax income (loss) 2.7% 7.7% 5.2% -2.9% Net income (loss) 1.6% 4.6% 3.1% -1.7% Year-over-year change Net revenue -18% -19% Gross income (loss) -7% -25% Operating income (loss) 945% -246% Pretax income (loss) 132% -145% Net income (loss) 132% -144% Diluted EPS 100% -150%

NON-GAAP SUPPLEMENTAL INFORMATION (UNAUDITED) (1) STATEMENTS OF OPERATIONS (000's, except per share data) SIX MONTHS ENDED JUNE 30, ------------------------- 2004 2005 ---------- ---------- (Unaudited) (Unaudited) Operating income (loss) 679 (990) Tender offer related charges - 1,316 Interest income, net and other 505 457 -------- -------- Income before income tax 1,184 783 Income tax expense 473 304 -------- -------- Net income $ 711 $ 479 ======== ======== Earnings per share: -Basic $ 0.06 $ 0.04 -Diluted $ 0.06 $ 0.04 Weighted average common shares outstanding: -Basic 11,009 11,184 -Diluted 11,356 11,459 Expenses as a percentage of net revenue Project personnel and related expenses 56.3% 58.5% Sales and marketing 11.4% 6.4% Recruiting, retention, and training 3.2% 2.5% Management and administrative 26.0% 30.9% Margins Gross income 43.7% 41.5% Operating income 3.0% 1.8% Pretax income 5.2% 4.2% Net income 3.1% 2.6% Year-over-year change Net revenue -19% Gross income -23% Operating income -52% Pretax income -34% Net income -33% Diluted EPS -33% (1) The Non-GAAP supplemental information shows results excluding the impact of one-time charges related to the tender offer to convert certain stock options into cash and restricted stock and a one-time cash distribution to stockholders that occurred in the first quarter of 2005. The total expense of $1,316 included: (i)$848 for charges related to the exchange of stock options for cash; (ii) $378 for common stock grants to employees who had chosen not to exercise options prior to the one-time cash distribution; and (iii) $90 for professional services. The non-GAAP results are provided in order to enhance the user's overall understanding of the company's current and future financial performance by excluding certain items that management believes are not indicative of its core operating results and by providing results that provide a more consistent basis for comparison between quarters. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States of America. INFORTE CORP. CONSOLIDATED BALANCE SHEETS (000's)

JUN 30, SEPT 30, DEC 31, MAR 31, JUN 30, 2004 2004 2004 2005 2005 -------- -------- -------- -------- -------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 17,767 $ 18,889 $ 20,817 $ 22,041 $ 9,471 Short-term marketable securities 22,273 25,457 24,657 24,036 20,022 Accounts receivable 8,893 7,469 7,491 6,760 7,875 Allowance for doubtful accounts (500) (500) (450) (450) (450) --------- -------- -------- -------- -------- Accounts receivable, net 8,393 6,969 7,041 6,310 7,425 Prepaid expenses and other current assets 1,144 985 875 1,163 1,212 Interest receivable on investment securities 314 389 383 399 261 Deferred income taxes 656 622 2,662 2,424 1,053 Income taxes recoverable 460 501 1,025 1,042 1,013 --------- -------- -------- -------- -------- Total current assets 51,007 53,812 57,460 57,415 40,457 Computers, purchased software and property 2,682 3,113 3,218 2,642 2,602 Less accumulated depreciation and amortization 1,690 1,907 2,125 1,623 1,754 --------- -------- -------- -------- -------- Computers, purchased software and property, net 992 1,206 1,093 1,019 848 Long-term marketable securities 18,441 14,136 12,106 6,086 3,543 Intangible assets 78 38 - - - Goodwill 5,434 11,737 11,726 11,726 11,726 Deferred income taxes 309 295 207 366 1,495 Investment in affiliate - - - - 2,000 --------- -------- -------- -------- -------- Total assets $ 76,261 $ 81,224 $ 82,592 $ 76,612 $ 60,069 ========= ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,341 $ 995 $ 756 $ 710 $ 413 Income taxes payable - - 1,309 148 260 Accrued expenses 3,315 2,738 2,364 2,274 2,890 Accrued loss on disposal of leased property 419 346 2,278 1,826 1,492 Current portion of deferred acquisition payment - 3,150 3,150 3,150 3,150 Dividends declared - - - 17,375 - Deferred revenue 2,778 2,209 1,667 1,085 1,166 --------- -------- -------- -------- -------- Total current liabilities 7,853 9,438 11,524 26,568 9,371 Non current liabilities: Non-current portion of deferred acquisition payment - 3,150 3,150 - - Stockholders' equity: Common stock, $0.001 par value authorized- 50,000,000 shares; issued and outstanding (net of treasury stock)- 11,724,082 as of Jun. 30, 2005, excluding option grants 11 11 11 11 12 Additional paid-in capital 80,206 80,384 80,652 74,015 74,170 Cost of common stock in treasury (2,720,823 shares as of Jun. 30, 2005) (24,997) (24,997) (24,997) (24,997) (24,997) Stock-based compensation 161 180 181 585 823 Retained earnings 12,737 12,742 11,462 - 454 Accumulated other comprehensive income 290 316 609 430 236 --------- -------- -------- -------- -------- Total stockholders' equity 68,408 68,636 67,918 50,044 50,698 --------- -------- -------- -------- -------- Total liabilities and stockholders' equity $ 76,261 $ 81,224 $ 82,592 $ 76,612 $ 60,069 ========= ======== ======== ======== ======== Total cash and marketable securities $ 58,481 $ 58,482 $ 57,580 $ 52,163 $ 33,036

INFORTE CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (000's)

THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------ ------------------------ 2004 2005 2004 2005 --------- -------- --------- -------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Cash flows from operating activities Net income (loss) $ 196 $ 454 $ 711 $ (316) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 426 302 781 686 Non-cash compensation 101 238 161 642 Deferred income taxes (5) 242 26 321 Changes in operating assets and liabilities Accounts receivable (260) (1,115) (1,888) (384) Prepaid expenses and other current assets 218 139 (321) (166) Accounts payable (213) (297) (261) (343) Income taxes (59) 141 (1,101) (1,037) Accrued expenses and other 99 282 (1,173) (260) Deferred revenue 121 81 13 (501) --------- -------- --------- -------- Net cash provided by (used in) operating activities 624 467 (3,052) (1,358) Cash flows from investing activities Acquisition of Compendit, net of cash (556) - (5,676) (3,150) Note receivable from affiliate - (50) - (50) Investment in affiliate - (2,000) - (2,000) Decrease in marketable securities (821) 6,375 2,334 12,734 Purchases of property and equipment (157) (25) (410) (162) --------- --------- --------- --------- Net cash provided by (used in) investing activities (1,534) 4,300 (3,752) 7,372 Cash flows from financing activities Proceeds from stock option and purchase plans 93 156 415 202 Dividends - (17,375) - (17,375) --------- -------- --------- --------- Net cash provided by (used in) financing activities 93 (17,219) 415 (17,173) --------- -------- --------- --------- Effect of changes in exchange rates on cash (46) (118) 85 (187) Increase (decrease) in cash and cash equivalents (863) (12,570) (6,304) (11,346) Cash and cash equivalents, beg. of period 18,630 22,041 24,071 20,817 --------- -------- --------- -------- Cash and cash equivalents, end of period $ 17,767 $ 9,471 $ 17,767 $ 9,471 ========= ======== ========= ========