Hoover's, Inc., Increases Earnings In Fourth Quarter

FOR IMMEDIATE RELEASE

AUSTIN, TEXAS - April 30, 2002 - After achieving initial profitability in the December quarter, Hoover's, Inc. (Nasdaq: HOOV) reported today that net income increased in its fiscal fourth quarter, ended March 31, 2002. Fourth quarter net income totaled $257,000, compared to a $21.6 million loss in the fourth quarter of last year.

Net income improved 111% in the quarter, compared to $122,000 reported for the quarter ended December 31, 2001. Fully diluted earnings per share totaled $0.02 this quarter, versus a loss of $1.39 per share in the fourth quarter of the previous fiscal year and net income of $0.01 per share in the prior quarter.

This quarter's performance was driven by the company's successful execution of its strategy to profitably grow by focusing on its core subscription business. Record sales this quarter resulted in subscription revenue growth of 20% over the fourth quarter of fiscal year 2001 and 5% over the previous quarter.

Subscriptions represent a predictable and recurring revenue stream, with positive cash flow resulting from up-front cash collections. This collection method resulted in operating cash flow totaling $1.9 million for the quarter.

Growth in both subscriptions and print publishing increased fourth-quarter revenue to $8.0 million, up 4% compared to last fiscal year and up 2% compared with the prior quarter.

"We achieved our goals despite challenges in the overall economy," said chairman and CEO Jeffrey R. Tarr. "By focusing on our subscription business we have delivered profitable growth while evolving our revenue mix. Increased subscription revenue has resulted in improved margins, increased cash flow and greater visibility into both revenue and earnings."

Fourth Quarter Highlights

• Enterprise subscriptions increased to more than 8,000 multiseat accounts, up 35% compared to a year ago and up 4% compared to the prior quarter.
• Subscription revenue increased to 70% of total revenue in the quarter, up from 60% a year ago and up from 67% in the prior quarter.
• Gross profit increased $1.3 million, up 30% versus the March 2001 quarter and up 4% from the prior quarter. As a percent of revenue, gross margins improved to 69.6% of revenue, up from 55.7% in the fourth quarter of last year and up from 68.2% in the prior quarter.
• Net income increased to $257,000, compared to a net loss of $21.6 million in the fourth quarter last year and net income of $122,000 in the prior quarter.
• Operating cash flow totaled $1.9 million in the fourth quarter.
• Traffic increased to 2.8 million unique users in the March 2002 quarter, up 13% compared to the same quarter last year and up 15% compared to the prior quarter.
• The company enhanced its enterprise subscription service with the launch of Advanced People Search, a powerful new tool for searching the Hoover's database of more than 160,000 corporate executives.

Fiscal Year Overview

For the fiscal year ended March 31, 2002, subscription revenue, the company's primary line of business, increased 42% year-over-year, or $6.2 million. This performance more than offset a $5.6 million decline in advertising and e-commerce for the year. As a result, total revenue increased $809,000 or 3%, to $31.6 million in fiscal year 2002.

"Fiscal 2002 was a year of transition for Hoover's," said Tarr. "We weathered a substantial decline in online advertising, developed and began executing a strategy designed to grow our subscription business, and we finished the year with two quarters of profitability."

Operating expense reductions were realized throughout fiscal year 2002, resulting in a $22.5 million reduction versus the prior year. The company significantly reduced operating expenses by eliminating non-core lines of business, closing several remote offices and reducing staff.

Total cash flow from operations was $5.1 million for fiscal year 2002, up from negative cash flow of $15.0 million last year. This was the fifth consecutive quarter of positive operating cash flow. The company ended the fiscal year with $32.8 million in cash and short-term investments, equating to more than $2.00 per share in cash and short-term investments on a fully diluted basis.

During the course of fiscal year 2002, management retired essentially all outstanding debt and repurchased stock under the share repurchase program authorized in December 2000. Since the inception of the program, the company has repurchased 449,354 shares of stock at a total cost of $1.2 million.

Outlook

"We are very excited about our plan for sustaining long-term profitable growth. We set new strategic goals for the company mid-year, and delivered on our promises over the second half," said Tarr. "We plan to stay the course in fiscal 2003, with a focus on growing the company's core subscription business while improving the bottom line."

The company expects to grow subscription revenue 20% to 24% through a combination of new sales and marketing initiatives and product enhancements. A number of these activities are designed to improve conversion of loyal customers of the company's free, advertising-supported Web site to its paid subscription services. Other initiatives are focused on improving acquisition of new accounts, growth within existing accounts and retention.

As discussed in several quarterly earnings releases, management made the decision to discontinue its former NewsStand service. That service, acquired through the Powerize acquisition in August 2000, was based on a Lotus Notes delivery platform and was overly dependent on a single customer. In line with prior guidance, the absence of NewsStand will negatively impact licensing and advertising revenues by approximately $500,000 in the June quarter, or approximately $2.0 million for the fiscal year 2003.

The growth in subscription-based revenue is expected to more than offset the anticipated revenue declines in other areas for the year. As a result, total revenue is expected to increase approximately 2% to 4% next year.

The company expects gross margins to remain at approximately 70% for the year. On a quarterly basis, margins will be reduced by anticipated lower revenues in the June quarter, and are expected to improve over the remainder of the year, progressing beyond the current level in the second half of next year.

"As we grow this business over the long term, our high degree of operating leverage should permit us to increase profits at a faster rate than we increase total revenue," said Lynn Atchison, Hoover's chief financial officer.

For the June quarter, the company expects to grow subscription revenue 4% to 6% sequentially. Total revenue is expected to be between $7.3 million and $7.5 million next quarter, due to the absence of NewsStand, the outlook for advertising and the seasonal nature of the company's book business.

The company expects to remain profitable in the June quarter with earnings per share of $0.01 or less. The company anticipates modest sequential growth in the September quarter, prior to delivering accelerated growth in the second half of the fiscal year. Second half results are expected to benefit from seasonal strength in advertising and the company's print publishing business. For the year, the company expects fiscal 2003 net income to be $0.05 to $0.07 per share on a fully diluted basis.

"Having demonstrated the capacity to deliver positive and expanding earnings in each of the last two quarters, we are confident in our ability to remain profitable in the first half of next year and to deliver even stronger second half results," said Tarr.

Conference Call

Management will host its regularly scheduled conference call and simultaneous Webcast to discuss fiscal fourth-quarter financial results on Wednesday, May 1, 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 1-973-628-9554. Please ask the operator to connect you to the Hoover's, Inc. earnings teleconference. To replay the call through the end of the business day Friday, May 10, 2002, please dial 1-973-341-3080 (Confirmation Code 3225487).

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

About Hoover's, Inc.

Hoover's, Inc. (Nasdaq: HOOV) is a leading provider of business information. Hoover's publishes authoritative information on public and private companies worldwide, and provides industry and market intelligence. This information, along with advanced searching tools, is available through Hoover's Online (www.hoovers.com), the company's premier online service that helps sales, marketing, recruiting and business development professionals and senior-level executives get the global intelligence they need to grow their businesses. Hoover's business information is also available through corporate intranets and distribution agreements with licensees, as well as via print and CD-ROM products from Hoover's Business Press. Hoover's investors include AOL Time Warner (NYSE: AOL), Media General (NYSE: MEG), and Knowledge Universe. Hoover's 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, retention of existing subscribers and customers, the company's ability to attract new subscribers and customers, 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 recent Form 10-K and Form 10-Q filings.

Hoover's, Inc.
Condensed Consolidated Statement of Operations - Unaudited

(in thousands, except per share data)

	For the Three Months Ended March 31		Increase /(Decrease)
	2002	2001	$	%
REVENUE
Subscriptions	$5,579	$4,655	924	19.8
Advertising and E-Commerce	1,335	1,922	(587)	(30.5)
Licensing	626	732	(106)	(14.5)
Print Publishing, net	487	423	64	15.1
Net Revenues	8,027	7,732	295	3.8
Cost of Revenues	2,438	3,426	(988)	(28.8)
Gross Profit	5,589	4,306	1,283	29.8
Gross Margin - % of Revenue	69.6%	55.7%
OPERATING EXPENSES
Sales and Marketing	2,288	3,059	(771)	(25.2)
General and Administrative	2,893	8,110	(5,217)	(64.3)
Product Development	237	350	(113)	(32.3)
Other	49	12,765	(12,716)	(99.6)
Total Operating Expenses	5,467	24,284	(18,817)	(77.5)
Operating Income/(Loss)	122	(19,978)	20,100	--
NON-OPERATING EXPENSES
Interest Income/(Expense), net	192	399	(207)	(51.9)
Other	(57)	(2,000)	1,943	97.2
Total Non-Operating Expenses	135	(1,601)	1,736
Net Income/(Loss)	$257	$(21,579)	$21,836	--
Weighted Average Shares Outstanding
Basic	15,253	15,546
Diluted	16,075	15,546
Net Income/(Loss) per Share
Basic	$? 0.02	$ (1.39)	$ 1.50	--
Diluted	$? 0.02	$ (1.39)	$ 1.50	--

Condensed Consolidated Statement of Operations

(in thousands, except per share data)

	For the Year Ended March, 31		Increase/ (Decrease)
	2002 (Unaudited)	2001 ( Audited)	$	%
REVENUE
Subscriptions	$21,272	$15,033	6,239	41.5
Advertising and E-Commerce	5,885	11,527	(5,642)	(48.9)
Licensing	3,109	3,055	54	1.8
Print Publishing, net	1,315	1,157	158	13.7
Net Revenues	31,581	30,772	809	2.6
Cost of Revenues	10,565	13,572	(3,007)	(22.2)
Gross Profit	21,016	17,200	3,816	22.2
Gross Margin - % of Revenue	66.5%	55.9%
OPERATING EXPENSES
Sales and Marketing	9,227	17,779	(8,552)	(48.1)
General and Administrative	13,123	18,196	(5,073)	(27.9)
Product Development	2,079	2,313	(234)	(10.1)
Other	6,794	15,464	(8,670)	(56.1)
Total Operating Expenses	31,223	53,752	(22,529)	(41.9)
Operating Loss	(10,207)	(36,552)	26,345	72.1
NON-OPERATING EXPENSES
Interest Income/(Expense), Net	1,081	2,433	(1,352)	(55.6)
Other	(2,485)	(2,995)	510	17.0
Total Non-Operating Expenses	(1,404)	(562)?	(842)	(150.0)
Net Loss	$(11,611)	$(37,114)
Weighted Average Shares Outstanding
Basic	15,318	14,651
Diluted	15,318	14,651
Net Income/(Loss) per Share
Basic	$? (0.76)	$? (2.53)	$ 1.77	70.0
Diluted	$? (0.76)	$? (2.53)	$ 1.77	70.0

Condensed Consolidated Balance Sheet
(in thousands)

	March 31, 2002(Unaudited)	March 31, 2001(Audited)
ASSETS
Current Assets
Cash and Short-Term Investments	$32,791	$30,533
Accounts Receivable, net	2,726		4,352
Inventory, net	156	120
Other Current Assets	471	472
Total Current Assets	36,144	35,477
Fixed Assets	4,142	6,760
Goodwill and Intangibles	65	6,315
Other Non-Current Assets	17	2,610
TOTAL ASSETS	$40,368	$51,162
LIABILITIES
Accounts Payable and Commissions	F? $1,042	$1,834
Accrued Expenses	3,440	3,422
Notes Payable	--	1,015
Unearned Revenue	7,853	5,235
Total Current Liabilities	12,335	11,506
Other Liabilities	--	31
Total Liabilities	12,335	11,537
Shareholders? Equity		158
Paid-In Capital	96,037	95,535
Unearned Stock Compensation	(107)	(331)
Cumulative Translation Adjustment	0	(25)
Treasury Stock, at cost	(1,340)	(606)
Retained Earnings (deficit)	(66,716)	(55,106)
Total Shareholders? Equity	28,033	39,625
TOTAL LIABILITIES & EQUITY	$40,368	$51,162

Consolidated Statements of Cash Flows

(In Thousands)

	For the Year Ended
	March 31, 2002(Unaudited)	March 31, 2001(Audited)
Operating activities
Net loss	$(11,1611)	$(37,114)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	3,285	2,414
Amortization	444	4,142
Amortization of unearned stock compensation	224	72
Non-Cash compensation	320	160
Impairment of goodwill and intangible assets (including Software Development)	6,538	15,392
Bad debt expense	938	1,189
Gain on sale of investments	(81)	--
Loss on foreign investment	57	--
Loss on strategic investments	2,509	2,995
Changes in operating assets and liabilities:
Accounts receivable	688	(1,187)
Inventories	(36)	(62)
Prepaid expenses and Other	4	659
Accounts payable and commissions	(791)	(4,425)
(468)
Deferred revenue	2,616	1,268
Net cash provided by (used in) operating activities	5,121	(14,965)
Investing activities
Purchases of property, plant and equipment, net	(1,398)	(6,059)
Purchase of Powerize.com, net of cash acquired	--	(2,190)
Investments in strategic companies	--	(4,944)
Purchase of short term investments	(15,233)	--
Proceeds from sale of marketable securities	131	14,043
Net cash provided by (used in) in investing activities	(16,500)	850
Financing activities
Purchase of treasury stock	(734)	(456)
Payments on bank and other term loans	(1,015)	(3,291)
Payments on capital leases	(31)	(32)
Net proceeds from capital stock transactions	184	5,546
Net cash provided by (used in) financing activities	(1,596)	1,767
(Decrease) Increase in cash and cash equivalents	(12,975)	(12,348)
Cash and cash equivalents -- beginning of year	30,533	42,881
Cash and cash equivalents -- end of year	17,558	30,533
Net change in short term investments	15,233	--
Cash, cash equivalents and short term investments at end of period	$32,791	$30,533

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