Hoover's EBITDA Improves 31% Over Prior Quarter

FOR IMMEDIATE RELEASE

Enterprise Accounts Up 144% From Prior Year And 29% Over Prior Quarter
Company Takes One-Time Charge Of $15.4 Million For Goodwill And Intangible Write-Down
Hoover's To Strengthen Management Team With New CEO

AUSTIN, Texas - May 3, 2001 - Hoover's, Inc. (Nasdaq: HOOV), a leading provider of online business information, tools, and content integration and syndication technology, today reported net revenue of $7.7 million for its fourth fiscal quarter and net revenue of $30.8 million for the fiscal year ended March 31, 2001, up 17% and 62%, respectively, over the quarter and year ended March 31, 2000.

Hoover's reported an EBITDA loss (loss before interest, depreciation, amortization of non-cash charges, and excluding losses from write-down of investments and one-time charges for office shutdown) for the quarter ended March 31, 2001, of $2.8 million, or $0.18 per share. The EBITDA loss of $2.8 million was 31% better than the EBITDA loss of $4.1 million, or $0.26 per share, for the quarter ended December 31, 2000.

Included in EBITDA losses for the quarter ended March 31, 2001, was an expense of $855,000 for bad debts, which resulted in higher reserves. Without this increased reserve, EBITDA losses would have been $2.0 million or $0.13 per share. This reserve was increased to compensate for a number of bad debts associated with the current economic conditions, including, for example, the recent bankruptcy of Winstar, a major e-commerce partner of Hoover's.

Hoover's ended the quarter with $30.5 million in cash. Cash used in operations declined 55% to $1.7 million, compared to $3.8 million for the quarter ended December 31, 2000.

During the fourth quarter, the company recorded a one-time non-cash charge of $15.4 million to write down goodwill and intangibles associated with its acquisition of Powerize. The acquisition was announced during July of 2000 when overall valuations and stock prices were much higher. Since the acquisition, due primarily to changes in the outlook for advertising, the company determined that the value of key assets acquired was impaired. Goodwill and other identifiable intangibles have been reduced accordingly. Additionally, the company took one-time charges totaling $2.0 million associated with estimated non-cash losses from investments, and $344,000 cash expenses associated with shutting down its offices in the Washington, D.C. area, which were added as part of the Powerize acquisition.

Including the one-time charges and the unusually high reserves, Hoover's net loss was $21.6 million, or $1.39 per share for the quarter and $37.1 million, or $2.53 per share, for the year.

"With these one-time charges and the bad debt write-off reserve, we have cleaned up a lot of the legacy associated with the present economic downturn, particularly in the online industry. With this behind us, we remain solidly on target for EBITDA profitability in the June quarter, in accordance with our prior guidance," said Hoover's Chairman and CEO Patrick Spain. "Despite a very difficult advertising environment, we controlled costs and expenses and continued to increase enterprise subscription sales, decreasing our operating losses from the prior quarter on substantially lower revenues. The number of enterprise-wide annual accounts increased by a record level of 1,348, and this part of our business continues to grow at a very rapid rate."

Hoover's also announced the appointment of a new chief executive officer effective May 22, 2001. "With the company clearly on track for profitability, we wanted to fortify our already strong management team by bringing in Jeffrey Tarr as our new president and CEO. Jeff will report to the board and be responsible for the vision, leadership and management with complete responsibility for the profit and loss performance of the company. Jeff was formerly CEO of All.com, Inc., a provider of Web-based information technology support solutions in Austin, TX. He has also worked for U S WEST (now Qwest Communications International) and Bain & Company. He has an undergraduate degree from Princeton and an MBA from Stanford. I will continue as full-time executive chairman, focusing my attention on long-term vision and strategy, new products and opportunities for international expansion. I will also continue to search for appropriate non-dilutive acquisitions and will continue my active role as a speaker at industry gatherings. Jeff and I, along with the rest of our management team, will work together to continue developing Hoover's as the premier online information resource for businesspeople," Spain added.

Key Metrics

• Paid subscribers grew 39%, to 285,000, from approximately 206,000, as of March 31, 2000, and grew 2%, from 280,000, as of the previous quarter. All of this growth came from enterprise accounts. During the quarter ended March 31, 2001, the number of seats from enterprise accounts grew. However, this was offset by a reduction in the number of individual subscriptions, as a result of the price of individual subscriptions being doubled. The price increase was in tandem with the addition of several new features. While this cut the number of individual subscribers, it substantially increased the total revenue generated by those subscribers and made enterprise accounts more attractive by narrowing the price gap between individual and enterprise subscriptions.
• The number of annual contracts for enterprise accounts increased 144%, to 5,973, from 2,447, as of March 31, 2000, and increased 29% from the previous quarter.
• Web-based revenue - including advertising, e-commerce and subscriptions - was $2.61 per user, up from $1.71 a year ago, and revenue per thousand pages viewed was $56, the same as one year ago, but was down 18% from the prior quarter because of lower advertising revenues.
• Page views for the quarter ended March 31, 2001, totaled 117 million, up 23% over the 95 million page views for the quarter ended March 31, 2000, and up 8% over the quarter ended December 31, 2000.
• Unique users decreased 19%, to 2.5 million in the quarter ended March 31, 2001, compared with 3.1 million in the quarter ended March 31, 2000, and decreased 8% from the quarter ended December 31, 2000, largely, the company believes, because of decreased spending to attract potential new users from portal search sites. Due to the softening advertising market, during the quarter Hoover's focused on highly qualified leads for enterprise subscriptions rather than across-the-board growth in traffic.
• Page views per unique user rose to 46 in the quarter ended March 31, 2001, from 31 a year ago, and from 39 in the prior quarter.

Revenues for the fourth quarter ended March 31, 2001, were $7.7 million, a 17% increase over revenues of $6.6 million for the fourth quarter ended March 31, 2000, and an 11% decrease compared to revenues of $8.7 million for the third quarter ended December 31, 2000. Gross margins were 56% for the fourth quarter ended March 31, 2001, as compared to 64% for the quarter ended March 31, 2000, and compared to 55% for the third quarter ended December 31, 2000. The decline in total revenues was caused primarily by the falloff in advertising experienced between the December quarter and the March quarter. While there is normally a seasonal falloff in advertising during this period, this year it has been exacerbated by the economic downturn in the U.S. economy.

Subscription revenues of $4.7 million for the quarter ended March 31, 2001, were 76% higher than the $2.7 million for the quarter ended March 31, 2000, and represented an increase of 20% over the prior quarter, ended December 31, 2000. Subscription revenues represented 60% of net revenues, compared to 40% of net revenues for the quarter ended March 31, 2000.

Combined advertising and e-commerce revenues of $1.9 million for the quarter ended March 31, 2001, were 27% lower than the $2.6 million in revenues for the quarter ended March 31, 2000, and were 45% lower than the prior quarter, ended December 31, 2000. Advertising and e-commerce represented 25% of net revenues, compared to 40% of net revenues in the year-ago period.

"We have been able to grow enterprise accounts at an accelerating rate while at the same time increasing subscription rates and the revenue generated by them in the face of tough economic conditions. However, we continue to see softness in the online advertising market," said Spain. "With our cash position of $30.5 million, or $1.98 per share outstanding, net of treasury shares, and our operations focused on achieving positive cash flow, we are in a good financial position to weather current economic conditions and take advantage of future opportunities to enhance our competitive position."

Licensing/syndication revenues of $733,000 for the quarter ended March 31, 2001, were 11% higher than $662,000 for the quarter ended March 31, 2000, and 20% lower than the quarter ended December 31, 2000. This revenue stream represented 9% of net revenues for the quarter ended March 31, 2001, compared to 10% of net revenues in the year-ago period.

Total expenses of $24.3 million for the fourth quarter reflect the large write-downs of goodwill and intangibles. In addition, general and administrative expenses of $4.3 million reflect $855,000 of bad debt expense, recorded as a result of recent bankruptcy announcements of Winstar, as well as other slow-paying accounts.

"We continue to focus close attention on controlling our ongoing expenses," said Lynn Atchison, CFO of Hoover's. "Reductions have been made to our cost structure going forward, however, these were offset during the March quarter by an increase in bad debt expense and large one-time professional fees." From a high of 386 employees last October, Hoover's has reduced full-time headcount to 287 as of March 31, 2001, accomplished primarily through attrition and the closure of the company's offices in Virginia and Maryland. In addition, the company has taken steps to further consolidate and reduce overhead.

Highlights

Hoover's Online

Hoover's Online (HOL) is the company's global premier online information resource for businesspeople that provides company, industry and other business information and tools. It generates revenues from subscriptions, advertising and e-commerce.

• Hoover's entered into a cross-licensing agreement with Bell & Howell's (NYSE: BHW) Information and Learning unit to license content of current and archived articles from more than 4,600 daily newspapers, industry journals and news wires to be made available to Hoover's Online enterprise subscribers, while the extensive Hoover's Online database will be available to Bell & Howell's ProQuest and XanEdu subscribers.
• Hoover's entered into a strategic agreement with the FORTUNE Group whereby Hoover's will license certain types of its proprietary company information to FORTUNE.com, and the FORTUNE Group publications and Web sites will provide content for Hoover's Online, including several of the annual FORTUNE lists, such as the FORTUNE 500, America's Most Admired Companies and 100 Best Companies to Work For, as well as articles from FORTUNE, FORTUNE Small Business (FSB) and eCompany Now. In addition, the companies will participate in a variety of cooperative promotional programs - including advertising, promotions and sponsorships within Hoover's and FORTUNE's online and print properties.
• Building on an eight-year relationship, Hoover's recently announced an expanded agreement with America Online, the world's leading interactive services company. Under the new agreement, Hoover's reliable, high-quality content from Hoover's Online will be integrated into the Personal Finance Channels across several additional America Online services, including AOL.com, Netscape and CompuServe. AOL, through its merger with Time Warner in January, also became a 17% owner of Hoover's.
• The company integrated information from Dun & Bradstreet (D&B) within Hoover's Online, making it possible for Hoover's Online users to easily look up information on more than 12 million U.S. companies.
• During the March quarter, Hoover's expanded its initiatives in the growing wireless area. As part of an agreement with 2Roam, wireless device users can now search for and retrieve information via Hoover's Wireless. Users can search by company name or ticker symbol to find company descriptions, locations, financials, top officers, competitors, stock quotes and news from Hoover's Online. This week the Company announced that the Hoover's Wireless service now offers delivery of the full Hoover's Company Profiles for subscribers.
• Key accounts renewing for the quarter ended March 31, 2001, include Cushman & Wakefield, J.P. Morgan Chase & Co., and Sprint (NYSE: FON, PCS). This is evidence of the company's success at meeting the needs of its corporate customers.

Hoover's Online Europe

Hoover's Online Europe (HEU) has leveraged the company's information database and technology platform to build a presence in the European marketplace at modest additional cost. HEU's business model is identical to HOL's in that it generates revenues from subscriptions, advertising and e-commerce.

• During the quarter, Hoover's launched business research sites in native languages in France, Germany, Italy and Spain, to complement its existing U.K. site. The company is seeing strong growth in the European market, with traffic growing 59% for all European sites from January through March, 2001.
• The company announced an alliance with Financial Times Information Limited, publisher of FT.com, the online operation of the Financial Times newspaper owned by Pearson plc (NYSE: PSO). As part of the agreement, FT.com news stories will include links to Hoover's Company Information, including company descriptions, contact information, key officers and competitors, as well as sales and employee figures. This alliance will deliver practical benefits to businesspeople everywhere by providing easier access to both FT.com's wide-ranging, authoritative and timely business news, and to Hoover's trusted company information on public and private enterprises worldwide.
• The company expanded its international company coverage through an agreement with Mergent (formerly part of Moody's Investors Service), one of the leading providers of global business and financial information on publicly traded companies. As part of the agreement, Hoover's has integrated into its Web sites Mergent's company information on nearly 9,000 non-U.S. publicly traded companies. Hoover's users can now access Mergent content, including company descriptions, contact information and officer and subsidiary lists, as well as three years of financials. Mergent information is being added to both the free and subscription areas of Hoover's Web sites. This agreement allows Hoover's to quickly expand its coverage to more than 90 percent of the non-U.S. global market capitalization, meeting customer demand for more information on companies around the world.
• HEU entered into a strategic agreement with GlobalNetFinancial.com, an international financial portal providing online financial news, content and transaction execution services.
• HEU entered into an agreement with Yahoo! U.K. and Ireland to make Hoover's business information available through that site.
• The total number of enterprise accounts outside the U.S. rose from 80 one year ago, to 195 as of March 31, 2001. The company also generated its first advertising sales in Europe in the quarter ended March 31, 2001.

Hoover's Media Technologies

The company's HMT unit 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.

• HMT launched the Hoover's Intelligence Monitor (HIM), the company's newest subscription product that includes greater personalization features, an additional 1,900 newspapers and periodicals licensed from Bell & Howell Information and Learning, and the addition of 3,000 high-quality Web sites indexed by specialty search engine Moreover, Inc. With these new content additions, the service now comes bundled with content from 7,700 sources. The HIM product is now efficiently powered by 10K Wizard Technology. The first sale of the product, which is priced at approximately $3,600 per year for the first seat, came within one week of these changes.
• The company announced agreements with both International Business Machines Corporation (IBM) [NYSE: IBM] and its subsidiary Lotus Development Corp., to develop a series of Hoover's Portal Windows, also known as portlets, for inclusion within the IBM WebSphere Portal Server and Lotus K-Station software. Hoover's Portal Windows are navigational windows into Hoover's Online. As part of the agreement, Hoover's has converted its Portal Windows into portlets for IBM and Lotus customers. These portlets will deliver direct access to Hoover's highly relevant business content.

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 quarter, the company repurchased 173,500 shares at an average price of $2.63 per share. The company plans to continue making stock purchases under its repurchase program, as market conditions warrant.

Outlook

The company expects to continue feeling the effect of the ongoing weakness in the advertising marketplace, but expects to offset that flat revenue stream with continuing rapid growth in enterprise subscriptions.

The company expects first quarter fiscal 2002 revenues to be 5% to 7% higher than the March quarter, and EBITDA to be slightly positive. EBITDA estimates exclude interest, deprecation, and any charges for stock-based compensation expense, amortization of goodwill and intangibles or other extraordinary one-time charges that may arise.

Hoover's estimates revenues for the full year 2002 at approximately $37 million to $39 million, or 20% to 26% year-over-year growth. The company expects its revenue mix over the year to be as follows: subscriptions (60%-65%), advertising and e-commerce (20%-25%), licensing (10-12%) and other (2-4%).

Hoover's expects its gross margin to be in the range of 64% - 69%.

The company forecasts positive and improving EBITDA over the course of the fiscal year, with $1.5 - $2.0 million estimated for the entire year.

Assuming no change in accounting standards that would stop the amortization of goodwill, the company expects to reach net income break-even in the third quarter. Assuming no extraordinary events, Hoover's expects to maintain cash balances in the range of $29.0 to $31.0 million during the year.

Conference Call

Hoover's, Inc. will be hosting a conference call and simultaneous Web cast to discuss the year end and fourth-quarter financial results at 11:00 am ET on Friday, May 4, 2001. The company welcomes investors, analysts and members of the press to listen to the call. To participate, please call: (Domestic) 800-289-0494 Confirmation 708899; (International) 913-981-5520 Confirmation 708899, and ask to be connected to the Hoover's conference call. To listen to the live Web cast 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 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 London, New York City, 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 and the financial position of the Company including the carrying value of the remaining goodwill and other intangibles from our acquisition of Powerize.com, and other assets. 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, the Company's European websites or from Hoover's Media Technologies, prospects for growth in subscriptions, licensing, 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, our ability to achieve profitability and positive cash flow in the quarter ending June 30, 2001, and on a continued basis, the effectiveness of the Company's new CEO, 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
Condensed Consolidated Statements of Operations - Unaudited

(in thousands, except per share data)

	Three Months Ended		Fiscal Year Ended
	March 31		March 31
	2001	2000	2001	2000
Revenue
Subscription Revenue	$4,655	$2,652	$15,033	$8,798
Advertising and E-Commerce	1,921	2, 648	11,527	6,688
Licensing	733	662	3,055	2,027
CD-ROM and Print, net	423	623	1,157	1,507
Net Revenues	7,732	6,585	30,772	19,020
Cost of Revenues	3,427	2,397	13,572	8,743
Gross Profit	4,305	4,188	17,200	10,277
Expenses
Product Development	350	273	2,313	1,084
Sales and Marketing	3,059	3,727	17,779	12,273
General and Administrative	4,322	2,557	14,408	7,035
Amortization Expense	16,683	-	18,836	-
Non-Cash Compensation	(474)	279	72	1,702
Office Shut Down Costs	344	-	344	-
Total Expenses	24,284	6,836	53,752	22,094
Operating Loss	(19,979)	(2,648)	(36,552)	(11,817)
Interest Income	429	812	2,555	2,308
Interest Expense	(30)	(2)	(122)	(19)
Loss on Strategic Investments	(2,000)	-	(2,995)	-
Net Loss	(21,580)	(1,838)	(37,114)	(9,528)
Basic and Diluted Net Loss per Share	($1.39)	($.15)	($2.53)	($.88)
Weighted Average Basic and Diluted Shares Outstanding	15,546,391	12,436,482	14,651,360	10,840,753
EBITDA (Loss Before Interest, Depreciation, Goodwill and Intangible Amortization, Non-Cash Compensation and one-time charges for loss on investments, and shut down costs)	($2,836)	($2,140)	($14,886)	($9,085)
EBITDA loss per share	($.18)	($.17)	($1.02)	($.84)

Condensed Consolidated Balance Sheet (in thousands)

	March 31, 2001	March 31, 2000
Assets
Current Assets
Cash and Marketable Securities	$30,533	$42,881
Short-Term Investments	-	14,043
Accounts Receivable	4,352	3,581
Inventory - Finished Goods	120	58
Other Current Assets	472	243
Total Current Assets	35,477	60,806
Fixed Assets	6,760	2,384
Goodwill and Intangible Assets	6,315	-
Other Non-Current Assets	2,610	1,325
Total Assets	$51,162	$64,515
Liabilities
Current Liabilities
Accounts Payable and Commissions	$1,834	$592
Accrued Expenses	3,421	2,656
Notes Payable	1,015	-
Unearned Revenue	5,235	3,258
Current Portion . Other Liabilities	-	25
Total Current Liabilities	11,505	6,531
Other Liabilities	31	38
Total Liabilities	11,536	6,569
Common Stock	158	127
Paid-In Capital	95,535	77,491
Unearned Stock Compensation	(331)	(1,530)
Cumulative Translation Adjustment	(25)	-
Treasury Stock (at cost)	(606)	(150)
Retained Earnings (deficit)	(55,105)	(17,992)
Shareholders' Equity	39,626	57,946
Total Liabilities & Equity	$51,162	$64,515

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