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New York, New York - (Website Hosting Directory) - February 22, 2007 - Answers Corporation, creator of search engine, Answers.com, has reported unaudited financial results for its full year and fourth quarter ending December 31, 2006.

Bob Rosenschein, Chairman and Chief Executive Officer explained, "2006 was an outstanding year for Answers.com. Not only was revenue up over 240%, but we significantly reduced our non-GAAP net loss sequentially every quarter and expect to be non-GAAP profitable in Q1 2007."

Other 2006 achievements include:
- Acquired WikiAnswers (formerly FAQ Farm)
- Average daily queries in Q4 2006 were 83% higher than Q4 the previous year
- RPMs in Q4 2006 were 66% higher than Q4 2005
- Added several new premier publishers
- Integrated Brainboost technology
- Began direct ad sales effort
- Launched AnswerTips

Mr. Rosenschein added, "2005 was the year we put Answers.com on the map, and in 2006 we proved its scalable business model from a financial perspective. We look forward with great anticipation to a very successful 2007."

Q4 2006 Financial Results
- Revenues were $2,506 thousand for Q4 2006, an increase of 35% compared to $1,858 thousand for Q3 2006.
- GAAP operating loss for Q4 2006 was $1,084 thousand, an improvement of $212 thousand or 16%, compared to the $1,296 thousand reported in Q3 2006.
- Non-GAAP operating loss in Q4 2006 was $311 thousand, an improvement of $302 thousand or 49%, compared to the $613 thousand reported in Q3 2006.
- GAAP net loss in Q4 2006 was $989 thousand, an improvement of $202 thousand or 17%, compared to the $1,191 thousand reported in Q3 2006. GAAP net loss per share in Q4 2006 was $0.13, compared to $0.15 in Q3 2006.
- Non-GAAP net loss in Q4 2006 was $216 thousand, an improvement of $292 thousand or 57% compared to the $508 thousand reported in Q3 2006. Non-GAAP net loss per share in Q4 2006 was $0.03, compared to $0.07 in Q3 2006. Full Year 2006 Financial Results
- Revenues were $7,029 thousand in 2006, a 242% increase compared to $2,053 thousand in 2005. - GAAP operating loss in 2006 was $8,880 thousand, a 36% increase compared to $6,517 thousand in 2005. - Non-GAAP operating loss in 2006 was $2,634 thousand, a decrease of 42% compared to $4,577 thousand in 2005.
- GAAP net loss in 2006 was $8,617 thousand, a 43% increase compared to $6,014 thousand in 2005. GAAP net loss per share in 2006 was $1.12, compared to $0.88 in 2005.
- Non-GAAP net loss in 2006 was $2,144 thousand, a decrease of 47% compared to $4,074 thousand in 2005. Non-GAAP net loss per share in 2006 was $0.28, compared to $0.60 in 2005.
- As of December 31, 2006, Answers had cash, cash equivalents and investment securities of approximately $9.1 million.
- Answers employed 66 employees as of December 31, 2006, up from 65 on September 30, 2006, and 48 as of December 31, 2005.

Management uses different financial measures, both GAAP and non-GAAP, in analyzing the Company's financial performance, making operating decisions and for planning. Management views the use of non-GAAP financial measures useful in analyzing current financial performance and prospects for the future. While management uses non-GAAP financial measures as a tool to facilitate its understanding of certain aspects of the Company's financial performance, it strongly believes that these measures can not replace, and are not superior to, the Company's financial information prepared in accordance with GAAP. Hence, management is of the opinion that the non-GAAP financial measures should only be viewed as a supplement to the GAAP financial information. It is in this light that management believes that disclosing non-GAAP financial measures to its investors provides them with useful supplemental data that, while not a substitute for GAAP financial measures, allows for greater transparency in the review of the Company's financial performance. The manner in which management uses the non-GAAP financial measures to conduct and evaluate the Company's business, the economic substance behind management's decision to use such measures and the reasons why management believes that these non-GAAP financial measures provides useful information to investors, are set forth below:

Acquisition-related Expenses Management uses non-GAAP financial measures which disregard amortization of intangible assets and other specified costs resulting from acquisitions, in order to enable more accurate comparisons of the Company's financial results to its historical operations, and the financial results of other companies in its industry. Specifically, the Company excludes (A) amortization of acquired technology resulting from the acquisition of Brainboost Technology, LLC; (B) compensation costs resulting from certain portions of the stock component of the Brainboost purchase price that were deemed compensation expense; (C) penalty payments to the sellers of Brainboost Technology, LLC that were made because the shares of Company common stock such sellers received in connection with the Brainboost acquisition were not registered prior to April 1, 2006 (On December 1, 2005, the Company acquired Brainboost Technology, LLC, creators of the Brainboost Answer Engine, for $4 million in cash and 439,000 shares of restricted common stock, including certain price protection rights); and (D) amortization of intangible assets resulting from the acquisition of WikiAnswers (formerly FAQ Farm) and other related assets for $2 million cash in November 2006.

While the Company excludes the aforesaid expenses from its non-GAAP measures it does not exclude revenues derived as a result of such acquisitions in its non-GAAP measures. The amount of revenue that resulted from the acquisition of WikiAnswers (formerly FAQ Farm) and other related assets, in 2006, was $62 thousand. The amount of revenue that resulted from the acquisition of technology from Brainboost (i.e. Brainboost Answer Engine), in 2006, is not quantifiable due to the nature of its integration.

Management uses non-GAAP financial measures that exclude expenses associated with non-cash stock-based compensation as a means to assess operational results and compare current results to prior periods. Furthermore, it is management's practice to prepare and maintain the Company's budgets and forecasts for future periods on a basis consistent with this non-GAAP financial measure. Management believes that because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, and the subjective assumptions involved in those determinations, excluding stock-based compensation enhances the ability of management and investors to compare financial results over multiple periods with those of other companies. It is management's view that by allowing the readers of the Company's financial statements to review both the GAAP expenses in the period presented, as well as the non-GAAP expenses, the Company is facilitating enhanced understanding of historic and future financial results.

As of December 31, 2006, the Company had approximately $425 thousand of deferred revenues, relating to subscriptions to its GuruNet services, which had no defined term and which were sold in 2003. The Company never recognized revenue from those subscriptions because the obligation to continue the service had no defined termination date. On February 2, 2007, in accordance with our rights under the agreements we previously entered into with such subscribers, we terminated the GuruNet service. Thus, the Company will recognize the $425 thousand as revenue in Q1 2007. Because this is a one-time, non-cash event and is not reflective of our core business and core operating results, the Company will not include such amount in its non-GAAP Operating income (loss) and non-GAAP net income amounts in the first quarter of 2007.

Each of the non-GAAP financial measures described above should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of each of the foregoing non-GAAP financial measures as an analytical tool. The Company's non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and will be reflected in the Company's financial results for the foreseeable future. In addition, other companies, including other companies in the Company's industry, may calculate non-financial measures differently than the Company, thus limiting their usefulness as a comparative tool. More specifically, an inherent limitation is that non-GAAP financial measures do not reflect the periodic costs of certain intangible assets used in generating revenues in the Company's business. Further, because the Company's non-GAAP financial measures do not include stock-based compensation, they do not reflect the cost of granting employees equity awards, a key factor in management's ability to hire and retain employees. Management compensates for these limitations by providing specific information in the reconciliation to the GAAP amounts excluded from the non-GAAP financial measures. In addition, as noted above, management evaluates each non-GAAP financial measure together with the most directly comparable GAAP financial measure.

Answers Corporation, through answers.com, supplies answers covering 3.8 million topics to curious Internet users. Answers.com offers clear, authoritative content drawn from over 100 high-quality titles, as well as writing by its own editorial team. Founded in 1999 by CEO Bob Rosenschein, Answers Corporation also partners with, among others, Firefox, Opera, The New York Public Library and A9.com. For investment information, visit ir.answers.com.

To learn more, please visit: www.answers.com.

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