NetZero Dial Up and High Speed Internet UNITED ONLINE REPORTS FOURTH-QUARTER AND FISCAL 2005 RESULTS AND DECLARES QUARTERLY CASH DIVIDEND

INTERNETSERVICEDEALS.COM — United Online is profitable and growing. Who should care? Anyone looking for a dial up ISP and is comparing brands that compete with NetZero and Juno. United Online’s top brand names NetZero and Juno will be around for a long time, and will continue to expand their product offerings. Total revenues for 2005 were a record $525.1 million, up 17% versus $448.6 million for 2004. Total number of employees at Dec 31, 2005 were 900. Total number of active subscriptions 17.6 million. United Online’s service segments are internet access, accelerated dial-up services, Voice-over-Internet Protocol (VoIP) calling plans, premium email, personal web hosting and domain services, photo-sharing services (PhotoSite) and social networking (Classmates). You will find deals for each of these service types on our website.

WOODLAND HILLS, California. (PRIMEZONE) — United Online, Inc. (Nasdaq:UNTD), a leading provider of consumer Internet subscription services, today reported results for its fourth quarter and fiscal year ended December 31, 2005. The company also announced that its Board of Directors has declared a quarterly cash dividend of $0.20. The dividend is payable on February 28, 2006 to shareholders of record as of the close of business on February 14, 2006.

Summary of December 2005 Quarter Results:

• Total revenues for the quarter were $130.2 million, up 9% versus $119.6 million for the year-ago quarter.
• Operating income for the quarter was $22.1 million, or 17.0% of revenues, up 16% versus operating income of $19.0 million, or 15.9% of revenues, in the year-ago quarter.
• Adjusted operating income before depreciation and amortization ("OIBDA")(1) for the quarter was a record $34.6 million, or 26.6% of revenues, an increase of 15% versus adjusted OIBDA of $30.0 million, or 25.1% of revenues, in the year-ago quarter.
• Pay accounts(2) decreased by 31,000 during the quarter to 5.0 million; subscriptions(3) increased by 1,000 to 6.4 million; active accounts(2) totaled 17.6 million at December 31, 2005.
• Net income for the quarter was $12.4 million, or $0.19 per share, versus $80.2 million, or $1.27 per share, for the year-ago quarter. The year-ago quarter results include a tax benefit of $68.6 million, or $1.09 per share, related to the recognition of a portion of the company’s deferred tax assets. Excluding the benefit, net income for the year-ago quarter was $11.6 million, or $0.18 per share.
• Adjusted net income(4) for the quarter was a record $18.6 million, an increase of 12% versus $16.6 million for the year-ago quarter. On a per share basis, adjusted net income for the quarter was $0.28 per share, an increase of 8% versus $0.26 per share for the year-ago quarter. Adjusted net income is calculated in a manner consistent with the analyst consensus estimate as reported by First Call.
• Cash flows from operations were $22.8 million for the quarter, versus $31.7 million for the year-ago quarter.
• Free cash flow(5) for the quarter was $17.6 million, versus $30.6 million for the year-ago quarter.

Summary of Fiscal 2005 Results:

• Total revenues for 2005 were a record $525.1 million, up 17% versus $448.6 million for 2004.
• Operating income for 2005 was a record $86.6 million, or 16.5% of revenues, up 9% versus operating income of $79.5 million, or 17.7% of revenues, in 2004.
• Adjusted OIBDA for 2005 was a record $133.8 million, or 25.5% of revenues, an increase of 18% versus adjusted OIBDA of $113.6 million, or 25.3% of revenues, in 2004.
• Net income for 2005 was $47.1 million, or $0.74 per share, versus $117.5 million, or $1.81 per share, for 2004. Net income for 2004 included a tax benefit of $68.6 million, or $1.06 per share. Excluding these benefits, net income for 2004 was $48.9 million, or $0.75 per share.
• Adjusted net income for 2005 was $71.1 million, an increase of 9% versus $65.4 million for 2004. On a per share basis, adjusted net income for 2005 was $1.09 per share, an increase of 8% versus $1.01 per share for 2004. Adjusted net income is calculated in a manner consistent with the analyst consensus estimate as reported by First Call.
• Cash flows from operations were $137.0 million for 2005, an increase of 11% versus $124.0 million for 2004.
• Free cash flow for 2005 was $115.4 million, versus $117.9 million for 2004.

"We are pleased to report our fourth consecutive year of record revenues, operating income and adjusted OIBDA," said Mark R. Goldston, chairman, CEO and president of United Online. "Our access business continued to generate significant cash flows and profitability while the growth we experienced in 2005 was driven by our diversification into non-access businesses, particularly our Classmates social networking unit. During the fourth quarter we launched our VoIP initiative under the NetZero Voice brand name, which grew to 14,000 subscriptions and 44,000 active accounts at December 31, 2005. Going forward, we intend to continue to invest in our diversification strategy while maintaining our overall corporate focus on disciplined financial results."

"United Online grew its social networking and other web service pay accounts by 25% during 2005 and completed the year with these non-access businesses representing 43% of our total pay account base," said Charles S. Hilliard, executive vice president and CFO of United Online. "Beyond growing our non-access businesses in 2005, we also demonstrated our ability to manage the profitability and cash flow contribution of our access business, which declined by a net 125,000 pay accounts during the fourth quarter."

Additional Highlights:

• Billable services margin(6) was 78.1% for the December 2005 quarter, versus 78.7% for the year-ago quarter.
• Cash balances at December 31, 2005 were $244.4 million, including cash, cash equivalents and short-term investments. During the quarter, the company repaid $4.1 million of its senior term loan facility, bringing the balance of the facility to $54.2 million at December 31, 2005. On January 3, 2006, the company retired the remaining $54.2 million balance on its senior term loan facility.

Business Outlook:

The following forward-looking information includes certain projections made by management as of the date of this release. United Online does not intend to revise or update this information and may not provide this type of information in the future. Due to a variety of factors, actual results may differ significantly from those projected. Factors include, without limitation, the factors referenced later in this announcement under the caption "Cautionary Information Regarding Forward-Looking Statements." These and other factors are discussed in more detail in the company’s filings with the Securities and Exchange Commission. Stock-based compensation includes the estimated impact of expensing stock options under Financial Accounting Standards Board Statement No. 123R, "Share-Based Payment", which the company adopted effective January 1, 2006.

About United Online

United Online, Inc. (Nasdaq:UNTD) is a leading provider of consumer Internet subscription services through a number of brands, including NetZero, NetZero Voice, Juno and Classmates. The company’s services include Internet access, accelerated dial-up services, Voice-over-Internet Protocol (VoIP) calling plans, premium email, personal Web hosting and domain services, photo-sharing services and social networking. At December 31, 2005, United Online had 900 employees worldwide. United Online is headquartered in Woodland Hills, CA, with offices in New York City, NY; Renton, WA; San Francisco, CA; Orem, UT; Munich, Germany; and Hyderabad, India. For more information about United Online, Inc., please visit www.untd.com.

Note: Several tables, footnotes, and disclaimers were omitted from the above press release due to size constraints. To view the full report please visit untd.com.

SOURCE: United Online