Hoover's Achieves Profitability

FOR IMMEDIATE RELEASE

AUSTIN, TX - January 23, 2002 - Hoover's, Inc. (Nasdaq: HOOV), a leading provider of business information, today reported financial results for its fiscal third quarter, ended December 31, 2001. Highlights of the quarter include the following:

• The company achieved profitability on a GAAP net income basis.
• Revenue increased 4% sequentially.
• Gross margins increased 331 basis points sequentially to 68.2% of revenue.
• Positive cash flow from operations totaled $1.4 million, increasing the trailing 12-month total to $5.9 million.
• Liquidity improved by $1.3 million to $31.2 million in cash and marketable securities.

"We have made significant progress and take pride in the results demonstrated this past quarter," said Jeffrey R. Tarr, president and CEO of Hoover's, Inc. "Our efforts to sharpen the company's focus and improve productivity have enabled us to deliver greatly improved financial results despite weakness in the economy."

Net Income

The company delivered GAAP net income profitability for the first time as a public company. Net income for the December quarter totaled $122,000, or $0.01 per share on a fully diluted basis, versus a net loss of $6.1 million, or $(0.39) per share in the year-ago period. Excluding the effects of a non-operating, one-time gain on the sale of equity securities, the company would have reported net income of $41,000 for the December quarter. On a sequential basis, earnings improved $4.7 million, or $0.31 per share, over the September quarter.

Revenue

Revenue totaled $7.9 million for the fiscal third quarter, ended December 31, 2001, up 4% versus the prior quarter.

Subscriptions, the company's primary focus, provide a visible and recurring revenue stream for Hoover's, Inc. Most subscriptions are sold on an annual basis and the revenue is recognized ratably over the life of the contract.

• Revenue from subscriptions increased 37% to $5.3 million, compared to the quarter ended December 31, 2000, and rose 1% over the September quarter.
• Multiseat enterprise accounts increased 68% to 7,781 as compared to 4,625 in the year-ago period, and rose 4% over the September quarter.
• Subscription revenue comprised 67% of the revenue mix in December, compared to 45% in the prior year and 70% in the September quarter.

Growth in subscription revenue partially offset a 57% decline in advertising revenue from the prior year, reflecting the broad decline in the advertising industry. The decrease in advertising revenue resulted in the company's 9% decline in total revenue from the prior year. On a sequential basis advertising and e-commerce revenue was stronger than expected, up 12% in the December quarter.

During the quarter, the company renewed its 10-year licensing relationship with LexisNexis and its five-year licensing relationship with Microsoft. Licensing revenue declined 15% sequentially and 21% from the year-ago period, reflecting lower revenue earned from various licensing partners.

In December, the company released the two-volume Hoover's Handbook of American Business, part of a five-volume set of books in the annual Hoover's Handbook series. This resulted in an increase in publishing revenue of 224% sequentially, and a 1% increase over the prior year, consistent with the seasonal nature of this business.

Gross Profit and Operating Expenses

Gross margins increased for the fifth consecutive quarter, totaling 68.2% of revenue in the December quarter. Margins increased 13 percentage points over the year-ago period, reflecting the five-quarter trend.

The company reduced operating expenses to $5.6 million, a 50% reduction from the year-ago period and a 32% improvement compared to the prior quarter. The significant sequential reduction in expenses reflects the streamlining of the company's business primarily through the implementation of the strategy it announced in September.

"Our business model has a high degree of operating leverage, which has been demonstrated through consistent gross margin improvements," said Hoover's chief financial officer, Lynn Atchison. "Operating expense reductions have been realized throughout the year. In addition, the company is no longer incurring significant, non-cash charges related to goodwill and intangibles."

Liquidity and Cash Flow

The December quarter marked the fourth consecutive quarter of positive cash flow from operating activities. The company generated an additional $1.4 million of positive operating cash flow during the quarter, increasing the four-quarter total to $5.9 million.

From a liquidity perspective, the company ended the quarter with $31.2 million in cash and marketable securities, up $1.3 million over the September 30, 2001, balance. This translates to $1.98 per share on a fully diluted basis.

Share Repurchase Program

During the quarter, the company repurchased 50,521 shares of its common stock, at an average price of $2.76 per share. Since the inception of the share repurchase program authorized in December 2000, the company has repurchased 449,354 shares at an average price of $2.65 per share. An additional 150,000 shares of Treasury Stock pre-dated the currently authorized repurchase program.

Outlook

Looking forward to the fiscal fourth quarter, which ends March 31, 2002, management expects total revenue to be flat to slightly higher, up as much as 2% versus the December quarter. In particular, management expects advertising revenue to be flat to slightly weaker in the March quarter. Given the broad decline in advertising revenue throughout the past year, management feels it is too soon to predict any sequential increases in advertising revenue in calendar year 2002.

From a gross margin and operating expense perspective, management expects the March quarter to remain relatively unchanged, as compared to the December quarter. Margins are generally expected to remain flat at approximately 68% of revenue, and operating expenses are expected to total approximately $5.5 million.

As a result of these revenue and expense estimates, management expects to deliver slightly higher net income dollars next quarter, although fully diluted earnings per share is expected to remain unchanged at $0.01. Having achieved positive net earnings for the first time since the company's initial public offering on July 21, 1999, management will now concentrate on delivering positive operating income over the next several quarters, while working to increase sequential net income.

Management expects to increase the ending cash balance in March, reflecting positive cash flow during the fiscal fourth quarter.

Extending limited guidance into the June quarter, management recognizes a reduction of approximately $0.5 million in revenues related to the expiration of contractual commitments associated with its former NewsStand product. This may contribute to a sequential decline in revenue. Such reduction is expected to be distributed almost equally between advertising and licensing. Only about half of the revenue impact has a cash consequence. Management currently expects that it will partially make up for this decline through growth in subscription revenue and that the company will remain profitable in the June quarter.

Conference Call:

Hoover's, Inc., will host its regularly scheduled conference call and simultaneous Webcast to discuss fiscal third-quarter financial results on Thursday, January 24, 2002, at 10:00 a.m. Central (11:00 a.m. Eastern and 8:00 a.m. Pacific). The company welcomes investors, analysts and members of the press to listen to the call by dialing 1-913-981-5535. International participants should dial 1-913-981-5533. Please ask the operator to connect you to the Hoover's, Inc. fiscal third-quarter conference call. To replay the call through the end of the day Friday, January 25, 2002, please dial 1-888-203-1112 (Confirmation Code 494380). International participants can replay the call by dialing 1-719-457-0820 (Confirmation Code 494380).

To listen to the live Webcast, go to the Hoover's, Inc., Web site: www.hoovers.com. Access "About Hoover's" and click on "Investor Relations."

About Hoover's:

Hoover's, Inc. (Nasdaq: HOOV) provides online business information and tools to help businesspeople get their jobs done. Hoover's information is available through its destination site Hoover's Online (http://www.hoovers.com), through co-branding agreements with other online services, through enterprise information portals and through Hoover's Business Press. Hoover's investors include AOL Time Warner (NYSE: AOL), Media General (NYSE: MEG), and Knowledge Universe, through its Knowledge Net Holdings and Nextera Enterprises (Nasdaq: NXRA) units. Hoover's, Inc., is headquartered in Austin, Texas, and has offices in New York City and San Francisco.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

This press release contains forward-looking statements relating to future events or results that involve risks and uncertainties, including statements regarding the company's expected revenues, expenses, gross margins, net income and other results of operations for future quarters, the size of the company's market and the success of the company's strategy. Among the important factors which could cause actual results of Hoover's, Inc. to differ materially from those contained herein include the development and success of new features and tools on Hoover's Online, expected benefits of strategic relationships, both the short and long term industry outlook for the growth of online business services, advertising and e-commerce, market demand and acceptance of new and enhanced services, retention of existing subscribers and customers, the company's ability to attract new subscribers and customers, in particular, but not exclusively multiseat enterprise accounts, the company's ability to lead in its market segments, the company's ability to generate revenue growth and achieve and sustain profitability, its ability to achieve and sustain positive cash flow on a continued basis, competition, economic conditions specific to the Internet, as well as general economic and market conditions, and other factors detailed in the Hoover's, Inc. reports and documents filed from time to time with the Securities and Exchange Commission, including its prospectus and recent Form 10-K and 10-Q filings.

Summary Financial Results

Condensed Consolidated Statement of Operations - Unaudited (in thousands, except per share data)

	Three Months Ended				Nine Months Ended
	December 31				December 31
	2001			2000	2001	2000
REVENUE
Subscriptions	5,309			3,886	15,693	10,378
Advertising and E-Commerce	1,501			3,508	4,550	9,605
Licensing	717			911	2,483	2,323
Publishing, net	360			355	828	734
Net Revenues	7,887			8,660	23,554	23,040
Cost of Revenues	2,511			3,883	8,127	10,146
Gross Profit	5,376			4,777	15,427	12,894
Gross Margin - % of Revenue	68.2%			55.2%	65.5%	56.0%
OPERATING EXPENSES
Sales and Marketing	2,406			5,464	6,939	14,720
General and Administrative	2,708			3,456	10,230	10,086
Product Development	368			687	1,842	1,963
Depreciation, Amortization and Impairment	12			1,297	6,238	2,153
Non-Cash Compensation	66			229	507	546
Total Operating Expenses	5,560			11,133	25,756	29,468
Operating Income/(Loss)	(184)			(6,356)	(10,329)	(16,574)
NON-OPERATING EXPENSES
Interest Income/(Expense), net	225			551	889	2,034
Gain/(Loss) on Investments	81			(300)	(2,428)	(995)
Total Non-Operating Expenses	306			251	(1,539)	1,039
Net Income/(Loss)	122			(6,105)	(11,868)	(15,535)
Weighted Average Shares Outstanding
Basic	15,256			15,497	15,345	14,358
Diluted	15,730			15,497	15,345	14,358
Net Income/(Loss) per Share
Basic	$ 0.01			$ (0.39)	$ (0.77)	$ (1.08)
Diluted	$ 0.01			$ (0.39)	$ (0.77)	$ (1.08)

Condensed Consolidated Balance Sheet (in thousands)

	December 31, 2001	March 31, 2001
	(Unaudited)
ASSETS
Current Assets
Cash and Marketable Securities	31,165	30,533
Accounts Receivable, net	2,879	4,352
Inventory, net	200	120
Other Current Assets	572	472
Total Current Assets	34,816	35,477
Fixed Assets	4,580	6,760
Goodwill and Intangibles	77	6,315
Other Non-Current Assets	148	2,610
TOTAL ASSETS	39,621	51,162
LIABILITIES
Current Liabilities
Accounts Payable and Commissions	816	1,834
Accrued Expenses	4,009	3,422
Notes Payable	--	1,015
Unearned Revenue	7,182	5,235
Total Current Liabilities	12,007	11,506
Other Liabilities	7	31
Total Liabilities	12,014	11,537
Shareholders? Equity
Common Stock	158	158
Paid- Capital	95,939	95,535
Unearned Stock Compensation	(119)	(331)
Cumulative Translation Adjustment	(57)	(25)
Treasury Stock, at cost	(1,340)	(606)
Retained Earnings (deficit)	(66,974)	(55,106)
Total Shareholders' Equity	27,607	39,625
TOTAL LIABILITIES & EQUITY	39,621	51,162

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