Hoover's, Inc. Reports Record Profits

FOR IMMEDIATE RELEASE

Subscription Revenues Grow 22% In Fiscal Second Quarter

AUSTIN, TEXAS - October 29, 2002 - Hoover's, Inc. (NASDAQ: HOOV) today announced its fourth consecutive quarter of increasing net income. Earnings totaled $456,000, or $0.03 per share, for the fiscal second quarter ended September 30, 2002, compared to a loss of $4.6 million, or ($0.30) per share, in the same period last year.

Strength in the company's core subscription business contributed to total revenues of $7.9 million this quarter, up 5% compared to the same quarter last year. Better-than-expected subscription revenue growth of 22% pushed subscriptions to 81% of total revenue, up from 70% a year ago.

The company's other revenues, including advertising, licensing and print publishing, totaled $1.5 million for the second quarter, compared to $2.3 million in the same quarter a year ago. The decline primarily resulted from the absence of the former NewsStand service, which impacted licensing, and lower advertising revenue.

"This quarter marks the successful completion of the turnaround plan we announced last September. During the past 12 months we generated earnings of $0.08 per share, up from a loss of $2.56 per share in the prior 12-month period," said Jeffrey R. Tarr, Hoover's chairman and CEO. "Looking forward, we intend to build on the strong double-digit growth in our subscription business to transform Hoover's from a profitable company into a profitable growth company."

The improved revenue mix and the company's ongoing efforts to reduce expenses and increase efficiency resulted in gross margins of 73%, compared to 65% in the same quarter of last year. Operating expenses totaled $5.5 million this quarter, $2.6 million less than a year ago.

Hoover's ended the second quarter with cash and short-term investments of $35.8 million. Cash flow from operations totaled $1.5 million this quarter, increasing the six-month total to $3.0 million. On a trailing 12-month basis, operating cash flow rose to a new high of $6.3 million.

Outlook

On October 16, 2002, the company raised its forecast for the full year, due to better-than-expected results this quarter. The company expects total revenue to increase 4% to 7% over the prior year, and subscription revenue to grow 24% to 27%.

Net income for the fiscal year ending March 31, 2003, is expected to be $0.10 to $0.13 per share, up from the company's previous estimates of $0.07 to $0.09. The company intends to increase its investment in sales, marketing and product development in the second half of the fiscal year, in order to support the company's long-term growth objectives.

For the December quarter, the company expects subscription revenue growth of 29% to 32% over the prior year. Total revenue growth is expected to be 7% to 10%, compared to a year ago. Earnings for the December quarter are expected to be approximately $0.03 per share.

Conference Call

Management will host its regularly scheduled conference call and simultaneous Webcast on Wednesday, October 30, 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 1-973-582-2788. Please ask the operator to connect you to the Hoover's earnings teleconference. To listen to the live Webcast, please go to the investor relations section of Hoover's Online at http://investors.hoovers.com.

To replay the call through Friday, November 8, 2002, please dial 1-973-341-3080. The confirmation code for the replay is 3919351.

About Hoover's, Inc. - The Business Information Authority(tm)

Hoover's, Inc. (NASDAQ: HOOV) is a leading provider of business information. Hoover's publishes authoritative inn on public and private companies worldwide, and provides industry and market intelligence that helps sales, marketing and business development professionals and senior-level executives get the global intelligence they need to grow their businesses. This information, along with advanced searching tools, is available through Hoover's Online (www.hoovers.com), the company's premier online service. 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.

"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, both the short- and long-term industry outlook for the growth of online business services, continued generation of unique visitors, continued generation of sales leads from unique visitors, continued conversion of such sales leads into paid subscriptions, retention of existing subscribers and advertisers, the company's ability to attract new subscribers and advertisers, its ability to achieve and sustain positive cash flow or net profits on a continued basis, competition, economic conditions specific to the Internet, as well as general economic and market conditions, and other factors detailed in 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.

Condensed Consolidated Statement of Operations -Unaudited

(in thousands, except per share data)  

	For the Three Months Ended September 30,		Increase/(Decrease)
	2002	2001	$	%
REVENUE
Subscriptions	$6,409	$5,272	1,137	21.6
Advertising and e-commerce	974	1,338	(364)	(27.2)
Licensing	434	841	(407)	(48.4)
Print publishing, net	104	111	(7)	(6.3)
Net revenues	7,921	7,562	359	4.7
Cost of revenues	2,127	2,658	(531)	(20.0)
Gross profit	5,794	4,904	890	18.1
Gross margin - % of revenue	73.1%	64.9%
OPERATING EXPENSES
Product development	473	1,171	(698)	(59.6)
Sales and marketing	2,477	2,336	14	6.0
General and administrative	2,531	4,291	(1,760)	(41.0)
Other	49	378	(329)	(87.0)
Total operating expenses	5,530	8,176	(2,646)	(32.4)
Operating income/(loss)	264	(3,272)	3,536	-
NON-OPERATING INCOME (EXPENSES)
Interest income, net	192	280	(88)	(31.4)
Loss on strategic investments	-	(1,571)	1,571	-
Total non-operating income/(expenses)	192	(1,291)	1,483	--
Net income/(loss)	$456	$(4,563)	$5,019	-
Weighted average shares outstanding
Basic	15,349,765	15,374,306
Diluted	16,319,161	15,374,306
Net income/(loss) per share
Basic	$ 0.03	$(0.30)	$0.33	-
Diluted	$0.03	$(0.30)	$0.33	-

	For the Six Months Ended September 30,		Increase/(Decrease)
	2002	2001	$	%
REVENUE
Subscriptions	$12,402	$10,384	2,018	19.4
Advertising and e-commerce	1,988	3,049	(1,061)	(34.8)
Licensing	880	1,766	(886)	(50.2)
Print publishing, net	460	468	(8)	(1.7)
Net revenues	15,730	15,667	63	0.4
Cost of revenues	4,498	5,616	(1,118)	(19.9)
Gross profit	11,232	10,051	1,181	11.8
Gross margin - % of revenue	71.4%	64.2%
OPERATING EXPENSES
Product development	950	1,474	(524)	(35.5)
Sales and marketing	4,746	4,533	213	4.7
General and administrative	5,069	7,522	(2,453)	(32.6)
Other	98	6,667	(6,569)	(98.5)
Total operating expenses	10,863	20,196	(9,333)	(46.2)
Operating income/(loss)	369	(10,145)	10,514	-
NON-OPERATING INCOME (EXPENSES)
Interest income, net	425	664	(239)	(36.0)
Loss on strategic investments	-	(2,509)	2,509	-?
Total non-operating income/(expenses)	425	(1,845)	2,270	-
Net income/(loss)	$794	$(11,990)	$12,784	-
Weighted average shares outstanding
Basic	15,316,416	15,389,134
Diluted	16,248,854	15,389,134
Net income/(loss) per share
Basic	$0.05	$(0.78)	$ 0.83	-
Diluted	$0.05	$(0.78)	$0.83	-

Condensed Consolidated Balance Sheet

(in thousands)    

	September 30, 2002(Unaudited)	March 31, 2002(Audited)
ASSETS
Current assets
Cash and short-term investments	$35,811	$32,791
Accounts receivable, net	1,781	2,726
Inventory, net	159	156
Otcurrent assets	773	471
Total current assets	38,524	36,144
Fixed assets, net	3,210	4,142
Intangible assets, net	41	65
Other non-current assets	17	17
TOTAL ASSETS	$41,792	$40,368
LIABILITIES
Current liabilities
Accounts payable and commissions	$629	$1,042
Accrued expenses	2,898	3,440
Deferred revenue	8,963	7,853
Total current liabilities	12,490	12,335
Total liabilities	12,490	12,335
Shareholders' equity
Common stock	160	159
Paid-in capital	96,435	96,037
Unearned stock compensation	(33)	(107)
Accumulated other comprehensive income	2	-
Retained earnings (deficit)	(65,922)	(66,716)
Treasury stock, at cost	(1,340)	(1,340)
Total shareholders' equity	29,302	28,033
TOTAL LIABILITIES & EQUITY	$41,792	$40,368

Consolidated Statements of Cash Flows - Unaudited

(In Thousands)

	For the Six Months Ended September 30,
	2002	2001
Operating activities
Net income / (loss)	$794	$(11,990)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	1,334	1,671
Amortization and impairment of goodwill and intangibles	24	6,956
Amortization of unearned stock compensation	74	441
Provision for doubtful accounts	434	515
Loss on strategic investments	?	2,509
Changes in operating assets and liabilities:
Accounts receivable	511	850
Inventories	(3)	(35)
Prepaid expenses and other current assets	(302)	(473)
Accounts payable and commissions	(413)	(873)
Accrued expenses	(542)	537
Deferred revenue	1,110	1,687
Net cash provided by operating activities	3,021	1,795
Investing activities
Purchases of fixed assets, net	(402)	(878)
Purchases of short term investments	(48)	?
Net cash used in investing activities	(450)	(878)
Financing activities
Purchase of treasury stock	-	(595)
Payments on bank and other term loans	-	(1,015)
Payments on capital leases	-	(16)
Net proceeds from capital stock transactions	399	90
Net cash provided by (used in) financing activities	399	(1,536)
Increase/(decrease) in cash and cash equivalents	2,970	(619)
Cash and cash equivalents -- beginning of period	17,558	30,533
Cash and cash equivalents -- end of period	20,528	29,914
Increase in short-term investments	50	-
Short-term investments -- beginning of period	15,233	-
Short-term investments -- end of period	15,283	-
Cash, cash equivalents and short-term investments at end of period	$35,811	$29,914

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