Hoover's Announces Third-Quarter Financial Results

FOR IMMEDIATE RELEASE

Subscription Revenue And Number Of Enterprise Accounts Surge

EBITDA Losses Decline By $1.2 Million From Prior Quarter

AUSTIN, Texas - January 29, 2001 - Hoover's, Inc. (Nasdaq: HOOV), which operates the businessperson's premier online resource Hoover's Online (http://www.hoovers.com), as well as five additional sites in France, Germany, Italy, Spain and the U.K., through its London-based subsidiary, Hoover's Online Europe Limited, today reported record net revenue of $8.7 million for its third fiscal quarter, ended December 31, 2000, up 59% from $5.5 million for the quarter ended December 31, 1999. Hoover's also operates Hoover's Media Technologies (HMT), a content aggregator and application services developer.

Hoover's reported an EBITDA loss (operating loss before interest, depreciation and amortization of non-cash charges and a charge to write down an investment) for the quarter ended December 31, 2000, of $4.1 million, or $0.26 per share, compared to an EBITDA loss of $2.6 million, or $0.21 per share, for the same period ended December 31, 1999. The EBITDA loss of $0.26 per share was 28% better than the EBITDA loss of $5.3 million, or $0.36 per share, for the quarter ended September 30, 2000. The net loss was $6.1 million, or $0.39 per share, compared to $2.6 million, or $0.21 per share, in the year-ago quarter, and $7.0 million, or $0.47 per share, in the prior quarter.

"We are pleased with our progress in the recent quarter," said Hoover's CEO Patrick Spain. "All revenue lines increased sequentially over the quarter ended September 30, 2000, despite an industry slowdown in online advertising activity. We continue to enhance our tools and content to help businesspeople do their jobs. As a result, the number of enterprise-wide Business Subscription accounts more than doubled from year-ago levels, and increased 25% over the prior quarter. We continue to believe that despite a very difficult advertising environment for the next several quarters, the company will reach EBITDA profitability in the upcoming June quarter, in accordance with our prior projections."

Key Metrics

• The number of paid subscribers grew 69%, to 280,000, from approximately 165,500, as of December 31, 1999, and grew 6% over the quarter ended September 30, 2000. All of this growth came from enterprise accounts.
• The number of enterprise accounts increased 114%, to 4,625, from 2,163, as of December 31, 1999, and increased 25% (a record increase of 919 accounts) from the previous quarter.
• Annual subscriptions booked for the quarter ended December 31, 2000, increased 118%, to $3.8 million, from $1.7 million in the previous year, and 8% over the $3.5 million booked during the quarter ended September 30, 2000. Revenue from annual accounts is recognized over the subscription period, and therefore the ending balance of deferred revenue continues to increase as sales increase.
• Web-based revenue - including advertising, e-commerce and subscriptions -was $2.64 per user, up from $1.98 a year ago, and revenue per thousand pages viewed was $68, down slightly from $71 a year ago, but up 10% from the prior quarter.
• Page views for the quarter ended December 31, 2000, totaled 108 million, up 61% over the 67 million page views for the quarter ended December 31, 1999, and up 4% over the quarter ended September 30, 2000.
• Unique users increased 17%, to 2.8 million in the quarter ended December 31, 2000, compared with 2.4 million in the quarter ended December 31, 1999, and down 13% from the quarter ended September 30, 2000. Historically, traffic is seasonally lower on Hoover's Online from Thanksgiving through the first week of the new year.
• Page views per unique user rose to 39 in the quarter ended December 31, 2000, from 28 a year ago, and from 33 in the prior quarter. This is a particularly impressive achievement in light of the recent Nielsen report that overall Web usage, as measured in page views and time spent per user, dropped 18% from October to December 2000.

Subscription revenues of $3.9 million for the quarter ended December 31, 2000, were 67% higher than the $2.3 million for the quarter ended December 31, 1999, and represented an increase of 13% over the prior quarter, ended September 30, 2000. Subscription revenues represented 45% of net revenues, compared to 43% of net revenues for the quarter ended December 31, 1999.

During the quarter Hoover's charged higher prices for all new monthly and annual individual subscribers. Subsequent to December 31, 2000, Hoover's implemented the price increase for all individual subscribers. Initial indications are that while this will somewhat lower the number of individual subscribers, it will significantly increase revenue from this source and, more important, make enterprise-wide Business Subscriptions a more attractive option for companies.

Combined advertising and e-commerce revenues of $3.5 million for the quarter ended December 31, 2000, were 44% higher than the $2.4 million in revenues for the quarter ended December 31, 1999, and were 15% higher than the prior quarter, ended September 30, 2000. Advertising and e-commerce represented 41% of net revenues, compared to 45% of net revenues in the year-ago period.

"We expect the current softness in online advertising to continue into 2001, and to worsen before it gets better," said Spain. "With our cash position of $34 million, or $2.19 per share, we are in a good financial position to weather this challenging market and take advantage of future market opportunities." Spain added, "While we still believe in the long-term prospects for online advertising for Hoover's Online, we have shifted resources and internal focus to the sale of enterprise-wide Business Subscriptions."

Licensing/syndication revenues of $911,000 for the quarter ended December 31, 2000, were 162% higher than $347,000 for the quarter ended December 31, 1999. This revenue stream represented 11% of net revenues for the quarter ended December 31, 2000, and increased 3%, compared to the prior quarter.

This quarter the company continued to reduce its costs and expenses, both as a percentage of revenues and, in some cases, in absolute numbers. Between October and December 31, 2000, overall headcount fell from 386 to 338, as a result of attrition and the elimination of certain redundant positions in connection with the integration of Hoover's Media Technologies. It has since then further fallen to 317. Monthly losses, calculated on an EBITDA basis, have been reduced by almost 50% between the end of October and December 31, 2000. The December quarter reflects three months of activity for Hoover's Media Technologies (HMT), formed from Hoover's acquisition of Powerize.com on August 1, 2000.

"We continue to control expenses without compromising our strategies," said Lynn Atchison, CFO of Hoover's. "General and administrative expenses declined significantly over the quarter ended September 30, 2000. With revenue growth and expense management, the consolidated loss, on an EBITDA basis, decreased $1.2 million sequentially, even after consideration of an additional month of investment into this new division."

Hoover's Online

Hoover's continues to enhance its service to meet the needs of businesspeople. The company added more than 800 new companies to the proprietary Hoover's company database in the quarter ended December 2000, with 37% of those being European-headquartered companies. Hoover's added biographies of business leaders to the database during the period and developed an entirely new template for delivering industry information, which launched as Industry Snapshots in January 2001. The biographical database now contains more than 24,000 names.

Hoover's partnered with TRIP.com and wcities.com to offer Hoover's Online users more online travel tools and services, designed to meet the needs of business travelers. Major enhancements include a more tightly integrated travel booking engine and City Guides on the best places to do business in more than 100 cities worldwide.

Hoover's Online also announced an agreement with eCountries, the first country-based business-to-business publishing and online marketplace focused on the global economy, to provide users with up-to-the-minute global news analysis from eCountries.

Hoover's Online generates revenues from subscriptions, advertising and e-commerce. Losses from the Hoover's Online destination site are at the lowest level since Hoover's went public in July of 1999, and are approximately 40% lower than last quarter.

Hoover's Media Technologies

The HMT subsidiary develops and markets information products that apply cutting-edge technologies to Hoover's own content, as well as that of third parties, in compelling online applications. During the quarter HMT introduced Hoover's Intelligence Monitor (HIM), which allows clients to monitor coverage of companies, people, products and issues from thousands of newswires, premium publications, Web sites, databases and document collections.

Last week HMT announced a partnership with TVEyes Inc., a provider of real-time television alerts and broadcast monitoring. This partnership will enable subscribers to monitor 32 U.S. and Canadian broadcast channels and cable networks for information about the companies, people, products, trends and issues that are important to them.

HMT renewed and extended its relationships with customers such as Bloomberg and CNBC.com.

Net losses, calculated on an EBITDA basis, from this product continue, but have been reduced by 10% over the prior quarter. When excluding the effects of three months of operations, compared to two months included during the September quarter, the reduction in losses approximates 40%.

Hoover's Online Europe

During the quarter Hoover's continued to execute its European expansion strategy. Late last week the company launched business research sites in native languages in France, Germany, Italy and Spain, to complement its U.K. site. Hoover's now covers more than 4,600 non-U.S. companies, more than 2,200 of which are in Europe.

Enterprise sales in the U.K. are being supported by a strategic relationship with Market Location, a database management, telesales and telemarketing specialist. The total number of enterprise accounts outside the U.S. rose from 27 in the first quarter, to 80 in the quarter ended December 31, 2000. Hoover's Online Europe also announced a relationship with SAP A.G. in Germany, which will promote Hoover's on its MYSAP site.

As a way to further implement cost controls, the European unit moved the London headquarters into permanent and less costly facilities.

Today Hoover's Online Europe announced a strategic agreement with GlobalNetFinancial.com, an international financial portal providing online financial news, content and transaction execution services. As part of the deal, Hoover's and GlobalNet will work together to provide each other portions of their respective high-quality business content and services for worldwide distribution. More such strategic agreements are planned.

Other Initiatives

E-Commerce

Hoover's is on track with initiatives to provide quality third-party research and data to its customers on Hoover's Online. During the quarter Hoover's generated 50% more e-commerce sales on the site, compared to the prior year quarter. The company has added The Wall Street Transcript and Loans Direct Inc. to its list of e-commerce partners in response to the continuing effort to provide additional third-party research products for its customers.

Wireless

The company continues to make progress in a key growth initiative -- making its information available to wireless users. Hoover's customers can now access its information on public and private enterprises worldwide from Hoover's Online, through the Omnisky and MyPalm Portal services, under Financial News and Finance, respectively. Users can search by company name or ticker symbol to find company descriptions, locations, basic financials, top officers, competitors, stock quotes and news from Hoover's Online. In addition to company information, wireless users can also access Hoover's IPO Central for information on the latest filings or pricings, plus top IPO news. In the near future, Hoover's 280,000 subscribers will be able to use their wireless Internet connections and mobile phones to receive delivery of premium, in-depth Hoover's Company Information.

Stock Buyback

On December 22, 2000, Hoover's announced plans to buy back up to 10% of the outstanding shares of its common stock, based on the price and general market conditions. Hoover's Board believed the stock was trading at a price that undervalued the company. During the month of December, Hoover's average stock price was just under $2.00 per share, which was lower than the company's cash balance per share.

The decision to repurchase shares reflects management's trust in the strength of Hoover's and the fact that the company has sufficient capital to meet its operating needs until reaching EBITDA profitability in the June 2001 quarter.

Conference Call

Hoover's, Inc. will be hosting a conference call and simultaneous Webcast to discuss the third-quarter financial results for fiscal year 2001 at 5:30 pm ET on Monday, January 29, 2001. The company welcomes investors, analysts and members of the press to listen to the call. To participate, please call: (Domestic) 1-800-289-0494, Confirmation #509154; (International) 1-913-981-5520, Confirmation #509154, and ask to be connected to the Hoover's conference call. To listen to the live Webcast of the call, go to the Hoover's Online Web site: www.hoovers.com. Access "About Hoover's" and click on "Investor Relations."

About Hoover's, Inc.

Hoover's, Inc. (Nasdaq: HOOV) provides online business information, tools, and content integration and syndication technology to help businesspeople get their jobs done. Hoover's information is available through its destination sites Hoover's Online (http://www.hoovers.com) and the company's other sites in France, Germany, Italy, Spain and the U.K., through syndication and co-branding agreements with more than 30 other online services, and through customized applications developed for enterprise information portals, corporate intranets and business-to-business vertical and content sites. Hoover's investors include AOL Time Warner (NYSE: AOL), Media General (AMEX: MEG.A), NBC -- a unit of General Electric (NYSE: GE), and Knowledge Universe, through its Knowledge Net Holdings and Nextera Enterprises (Nasdaq: NXRA) units. Hoover's is headquartered in Austin, TX, and has offices in Linthicum, MD; London; New York City; Reston, VA; and San Francisco.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking statements relating to future events or results that involve risks and uncertainties, including statements regarding the expected benefits of strategic relationships and future services. Among the important factors which could cause actual results of Hoover's to differ materially from those in the forward-looking statements are the success of new features and tools on Hoover's Online or from Hoover's Media Technologies, prospects for growth in advertising and e-commerce revenue, effectiveness of strategic relationships, market demand and acceptance of new and enhanced services, the retention of subscribers and customers, ability to attract new subscribers and customers, the attractiveness of our audience to advertisers, competition, economic conditions specific to the Internet, as well as general economic and market conditions and other factors detailed in Hoover's reports and documents filed from time to time with the Securities and Exchange Commission, including its prospectus and recent 10-K and 10-Q filings.

Summary Financial Results Statements of Operations - Unaudited

(in thousands, except share and per share data)

	Three Months Ended		Nine Months Ended
	December 31, 2000	December 31, 1999	December 31, 2000	December 31, 1999
Revenue
Advertising and E-Commerce	$3,508	$2,435	$9,605	$4,040
Subscriptions	3,886	2,321	10,378	6,146
Licensing / Syndication	911	348	2,323	1,365
CD-ROM and Print, net	355	358	734	884
Net Revenue	8,660	5,462	23,040	12,435
Cost of Revenues	3,883	2,281	10,146	5,979
Gross Profit	4,777	3,181	12,894	6,456
Expenses
Product Development	687	18	1,963	1,074
Sales and Marketing	5,464	4,231	14,720	8,627
General and Administrative	3,456	1,837	10,086	4,501
Amortization of Goodwill and Intangibles	1,297	-	2,153
Non-Cash Compensation	229	464	546	1,423
Total Expenses	11,133	6,550	29,468	15,625
Operating Loss	(6,356)	(3,369)	(16,574)	(9,169)
Interest Expense	51	3	92	17
Interest Income	(602)	(800)	(2,126)	(1,496)
Unrealized Loss on Investments	300	0	995	0
Net Loss	(6,105)	(2,572)	(15,535)	(7,690)
Basic and diluted net loss per share	($.39)	($.21)	($1.08)	($.74)
Weighted average basic and diluted shares outstanding	15,487,099	12,250,444	14,355,154	10,347,550
EBITDA (Operating Loss Before Interest, Depreciation, Goodwill and other Intangible Amortization, Non-Cash Compensation and one-time charge for Unrealized Loss)	($4,086)	($2,591)	($12,050)	($6,945)
EBITDA loss per share	($.26)	($.21)	($.84)	($.67)

Condensed Balance Sheet (in thousands)

	December 31, 2000	March 31, 2000
	(unaudited)
Assets
Current Assets
Cash and Marketable Securities	$34,331	$42,881
Short-Term Investments	0	14,043
Accounts Receivable	8,744	3,581
Inventory– Finished Goods	162	58
Other Current Assets	718	243
Total Current Assets	43,955	60,806
Fixed Assets	6,281	2,384
Intangible Assets	23,823	-
Other non-current Assets	4,153	1,325
Total Assets	$78,212	$64,515
Liabilities
Current Liabilities
Accounts Payable and Commissions	$3,457	$592
Accrued Expenses	6,282	2,656
Notes Payable	1,814
Current Portion — Other Liabilities	-	25
Total Current Liabilities	11,553	3,273
Other Liabilities
Other Liabilities	41	39
Unearned Revenue	4,757	3,258
Stockholders' Equity
Common Stock	156	127
Paid-In Capital	96,156	77,490
Unearned Stock Compensation	(653)	(1,530)
Unearned Stock Compensation-HMT	(74)
Cumulative Translation Adjustment	9	-
Treasury Stock (at cost)	(150)	(150)
Retained Deficit	(33,583)	(17,991)
Shareholders' Equity	61,861	57,945
Total Liabilities & Equity	$78,212	$64,515

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