LOK quartrly as follows;LookSmart Reports Record Fourth Quarter...

LOK quartrly as follows;

LookSmart Reports Record Fourth Quarter Earnings And Achieves Net Profitability Revenues Up 65%; Net Income of $3.4 Million Excluding Net Gain Related to BT LookSmart Settlement


SAN FRANCISCO, Jan 28, 2003 /PRNewswire-FirstCall via COMTEX/ -- LookSmart
(Nasdaq: LOOK; ASX: LOK), a global leader in search, today announced financial results for the fourth quarter and fiscal year ended December 31, 2002.



Financial Highlights:

Revenue Grows 65%: LookSmart reported fourth quarter 2002 revenue of $31.3 million, a 65 percent increase from the fourth quarter 2001, a 31 percent sequential increase over revenues of $23.8 in the third quarter 2002, and significantly higher than the Company's expectation of $27.0 million.

Company Reaches Net Profitability: Under GAAP, LookSmart's net income for the fourth quarter 2002 was $34.6 million or $0.33 per diluted share, which includes a net gain of $32.6 million for the retirement of the debt related to the BT LookSmart joint venture and $1.4 million of costs incurred for the restructuring of joint venture operations. Without these two items, LookSmart's net income for the fourth quarter 2002 was $3.4 million or $0.03 per diluted share. This is the first quarter of GAAP profitability in the Company's history. This compares to a net loss of ($11.1) million, which includes an asset impairment charge of $4.1 million, or ($0.12) per share for the fourth quarter 2001, and a net loss of
($0.5) million or ($0.00) per share for the third quarter 2002.

Modified EBITDA Increases 119%: LookSmart's Modified EBITDA (earnings before interest, tax, depreciation, amortization and certain other items) was a record $6.0 million or $0.06 per diluted share in the fourth quarter, exceeding the Company's expectations of $0.05 per share. Modified EBITDA increased 119 percent from $2.7 million or $0.03 per share for the comparable year ago quarter, and increased 59 percent from $3.8 million or $0.04 per share for the third quarter 2002. Modified EBITDA for the year was $14.4 million, or $0.14 per diluted share, compared to ($7.1) million or a loss of ($0.08) per share for fiscal 2001.

Listings Revenue Up 126%: Listings revenue of $27.3 million grew 126 percent from the fourth quarter 2001, and increased 45 percent sequentially from the third quarter 2002. Large business listings revenue increased to $23.3 million in the fourth quarter, a 147 percent increase from the comparable year ago quarter and a 46 percent increase over $15.9 million for the third quarter 2002. Small business listings rose to $4.0 million, a 40 percent sequential increase from $2.8 million in the third quarter 2002. Listings revenue now represents 87 percent of LookSmart's total revenue.

Paid Clicks Rise 155%: During the fourth quarter paid clicks grew to 160 million, up 155 percent from the year-ago period and up 33 percent from the prior quarter's 120 million clicks. Average revenue per click, or the average cost-per-click to advertisers, was $0.17, consistent with the prior quarter.

Successful Settlement of BT LookSmart Debt: On December 4, 2002 LookSmart and BT Group (BT, formerly British Telecommunications, plc) agreed to restructure their joint venture, BT LookSmart. LookSmart agreed to pay BT $3.5 million from its unrestricted cash and one million shares of LookSmart common stock in exchange for the complete resolution of the joint venture and the related debt of $40.2 million. In addition, LookSmart returned $1.5 million in restricted cash to BT (the remaining proceeds of the loan), and LookSmart and BT will share equally any restructuring costs. The net impact of this transaction was a gain of $32.6 million.

Continued Strong Cash Balance: Cash and short-term investments were $51.3 million as of December 31, 2002. This is the result of $3.1 million of cash generated during the quarter, less the $3.5 million cash payment made to BT.

"LookSmart's rapid financial growth over the past several quarters is a strong validation of the value of the paid inclusion model for merchants and distribution partners, and of LookSmart's leadership in this sector," said Dianne Dubois LookSmart's chief financial officer. "The successful resolution of the BT LookSmart debt leaves us with a very strong balance sheet, and we are pleased to continue to report significant top line revenue growth, a tight control on expenses, and for the first time in the company's history, a net profit."

Business Highlights:

"This was a strong quarter for LookSmart on all fronts, driven by exceptional new customer acquisition rates, increased spend levels by existing customers, and an overall up tick in the adoption level of paid inclusion among online advertisers," said Jason Kellerman, chief executive officer of LookSmart. "LookSmart continues to make strategic investments in its search and paid inclusion platforms. These investments are already paying off, given our recent financial results, and are positioning us well for future growth."

Listings Growth

LookSmart's listings revenue growth in both the large and small business segments was highlighted by the addition of 131 new large businesses and approximately 7000 new small business listings. A strong holiday season for online merchants also contributed to LookSmart's revenue growth this quarter, as an ever-increasing number of consumers continue to find products and services through search.

In the large business segment, significant new customers for the quarter include Toyota, Hyatt, Nexium and Nautilus Group. These businesses join existing blue-chip customers such as Amazon.com, Banana Republic, Bank of America, eBay, Federal Express, Lands' End, Motorola, Nestle USA, Patagonia, Radio Shack, REI, Staples and Wal-Mart.

In the small business segment, the Company now has more than 33,000 active, paying small business listings, up 26 percent from the prior quarter.

Product Development

Since acquiring the WiseNut technology, LookSmart has made significant improvements to the relevancy of its search results. Since April 2002, the Company has expanded the number of Web documents crawled to more than 2.5 billion documents and has grown the index by 33 percent to approximately 1.1 billion documents. LookSmart also improved the rate at which the WiseNut index is refreshed by more than 40 percent.

In addition, the Company added several important features and functionality to its Japanese search engine (WiseNut Japan). These improvements include: a 50 percent faster refresh rate for the entire index, with daily updates of key documents; 20 percent growth in the number of documents indexed; and algorithm improve