Internet Capital Group Announces Second Quarter Financial Results

WAYNE, Pa.--(Business Wire)--
Internet Capital Group, Inc. (Nasdaq:ICGE) today reported its
results for the second quarter ended June 30, 2008.

Recent Highlights:

-- Aggregate core company revenue growth of 31% from the
comparable 2007 period, with strong growth at ICG Commerce,
Channel Intelligence, WhiteFence and Freeborders

-- Announcement of pending sale of Creditex to
IntercontinentalExchange

-- Adoption of a $20 million share repurchase program

"We are pleased with the continued progress we made during the
quarter, as evidenced by the strong revenue growth achieved by many of
our core companies as well as the pending sale of Creditex," said
Walter Buckley, ICG's Chairman and Chief Executive Officer. "Despite
the current challenges of the economic environment, most of our
on-demand companies continue to demonstrate consistent growth, and we
are enthusiastic about their long-term potential to deliver
significant value. Underscoring this confidence and our commitment to
enhancing stockholder value, our Board authorized a $20 million share
repurchase program."

ICG Financial Results

ICG consolidated the results of three companies, ICG Commerce,
Investor Force and Vcommerce, for the three and six months ended June
30, 2008, versus the results of two partner companies, ICG Commerce
and Investor Force for the three and six months ended June 30, 2007.
Vcommerce's results are consolidated starting May 1, 2008, as ICG's
ownership interest increased to more than 50%.

ICG reported consolidated revenue of $17.6 million for the second
quarter of 2008, versus $12.5 million for the comparable 2007 period.
ICG reported consolidated revenue of $33.6 million for the six months
ended June 30, 2008, versus $24.3 million for the comparable 2007
period. ICG reported a net loss of $(12.3) million, or $(0.32) per
diluted share, for the second quarter of 2008, versus a net loss of
$(4.0) million, or $(0.11) per diluted share, for the comparable 2007
period. ICG reported a net loss of $(18.8) million, or $(0.49) per
diluted share, for the six months ended June 30, 2008, versus $(23.6)
million, or $(0.63) per diluted share, for the prior year period.

Results for the second quarter of 2008 include $0.6 million of net
charges, primarily related to unrealized losses on ICG's Blackboard
hedges versus $4.0 million of net gains, primarily related to the gain
on the sale of Marketron in the prior year's quarter. Results for the
first half of 2008 include $5.1 million in net gains, primarily
related to gains on sales of partner companies versus $5.9 million in
net charges, primarily related to charges on ICG's repurchase of all
of its remaining convertible notes in the first half of 2007.

As of June 30, 2008, ICG's corporate cash balance was $28.8
million, and the value of its holdings in Blackboard (Nasdaq: BBBB)
was $82.2 million, net of $1.4 million in hedge positions. The value
of its holdings in GoIndustry (LSE.AIM: GOI) at June 30, 2008 was
$26.7 million.

ICG Core Partner Company Information

Set forth below is aggregate information relating to the following
eight core companies: Channel Intelligence, Freeborders, ICG Commerce,
Investor Force, Metastorm, StarCite, Vcommerce and WhiteFence. This
aggregate information represents the sum total of the individual GAAP
results of each of these companies. In the second quarter of 2008,
aggregate revenue of the eight core companies grew 31% year-over-year,
to $64.5 million from $49.4 million in the second quarter of 2007.
Aggregate EBITDA (loss) for the core companies was $(10.2) million in
the second quarter of 2008, versus $(6.5) million in the second
quarter of 2007. In the first half of 2008, aggregate revenue of ICG's
eight core companies grew 30% year-over-year, to $124.9 million from
$96.3 million in the first half of 2007. Aggregate EBITDA (loss) for
the core companies was $(20.8) million in the first half of 2008,
versus $(13.1) million in the first half of 2007. Please refer to the
supplemental financial data at the end of this release for a
reconciliation of the aggregate revenue and aggregate EBITDA
information with the GAAP results.

"We are encouraged by the revenue growth we are seeing at a number
of our companies, as well as the increased liquidity we will receive
upon the Creditex sale to IntercontinentalExchange." said R. Kirk
Morgan, ICG's Chief Financial Officer. "While we will fall short of
the revenue growth rate we expected on an organic basis, we continue
to expect aggregate revenue growth of at least 25% for our core
companies for the year on a GAAP basis."

ICG will host a webcast at 10:00 a.m. ET today to discuss its
financial results. As part of the live webcast for this call, ICG will
post a slide presentation to accompany the prepared remarks. To access
the webcast, go to
http://www.internetcapital.com/investorinfo-preswebcast.htm and click
on the link for the second quarter conference call webcast. Please log
on to the website approximately ten minutes prior to the call to
register and download and install any necessary audio software. The
conference call is also accessible through listen-only mode at
877-407-8035. The international dial-in number is 201-689-8035.

For those unable to participate in the conference call, a replay
will be available from July 31, 2008 at 11:00 a.m. ET until August 7,
2008 at 11:59 p.m. ET. To access the replay, dial 877-660-6853
(domestic) or 201-612-7415 (international) and enter the account code
286, followed by the conference ID number 291297. The replay and slide
presentation also can be accessed on the Internet Capital Group web
site at http://www.internetcapital.com/investorinfo-preswebcast.htm.

About Internet Capital Group

Internet Capital Group (www.internetcapital.com) acquires and
builds Internet software and services companies that drive business
productivity and reduce transaction costs between firms. Founded in
1996, ICG devotes its expertise and capital to maximizing the success
of these platform companies, which are delivering software and service
applications to customers worldwide.

Safe Harbor Statement under Private Securities Litigation Reform
Act of 1995

The statements contained in this press release that are not
historical facts are forward-looking statements that involve certain
risks and uncertainties including but not limited to risks associated
with the uncertainty of future performance of our partner companies,
acquisitions or dispositions of interests in partner companies, the
effect of economic conditions generally, capital spending by
customers, the development of the e-commerce and information
technology markets, and uncertainties detailed in the Company's
filings with the Securities and Exchange Commission. These and other
factors may cause actual results to differ materially from those
projected.

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Internet Capital Group, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
2008 2007 2008 2007
--------- -------- -------------------

Revenue $ 17,581 $12,520 $ 33,603 $ 24,302

Operating Expenses
Cost of revenue 11,575 10,381 22,946 19,406
Selling, general and
administrative 9,768 7,756 18,430 16,871
Research and development 2,771 1,562 4,236 3,130
Impairment related and other 112 54 187 106
--------- -------- --------- ---------
Total operating expenses 24,226 19,753 45,799 39,513
--------- -------- --------- ---------
(6,645) (7,233) (12,196) (15,211)

Other income (loss), net (426) 3,678 5,421 (8,191)
Interest income 404 1,148 1,233 2,626
Interest expense (64) (22) (77) (268)
--------- -------- --------- ---------
Income (loss) before income
taxes, minority interest and
equity loss (6,731) (2,429) (5,619) (21,044)

Income tax benefit (expense) (239) 494 (293) 2,642
Minority interest (584) (19) (1,114) 369
Equity loss (4,741) (1,806) (11,822) (5,322)
--------- -------- --------- ---------
Income (loss) from continuing
operations (12,295) (3,760) (18,848) (23,355)
Income (loss) on discontinued
operations - (220) - (220)
--------- -------- --------- ---------
Net income (loss) $(12,295) $(3,980) $(18,848) $(23,575)
========= ======== ========= =========

Basic and diluted net income
(loss) per share:
Income (loss) from continuing
operations $ (0.32) $ (0.10) $ (0.49) $ (0.62)
Income (loss) on discontinued
operations - (0.01) - (0.01)
--------- -------- --------- ---------
$ (0.32) $ (0.11) $ (0.49) $ (0.63)
========= ======== ========= =========

Shares used in computation of
basic and diluted income
(loss) per share 38,383 37,846 38,302 37,825
========= ======== ========= =========

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Internet Capital Group, Inc.
Condensed Consolidated Balance Sheets
(In thousands)

June 30, December 31,
2008 2007
------------ ------------

ASSETS
Cash and cash equivalents $ 43,087 $ 82,036
Other current assets 16,962 14,652
------------ ------------
Total current assets 60,049 96,688
Marketable securities 83,611 88,029
Fixed assets, net 2,193 1,723
Ownership interests in partner companies 133,230 127,888
Goodwill 34,935 17,084
Other assets, net 1,393 1,019
------------ ------------
Total assets $ 315,411 $ 332,431
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 20,558 $ 17,939
Minority interest and other non-current
liabilities 11,046 9,834
------------ ------------
Total liabilities 31,604 27,773
Stockholders' equity 283,807 304,658
------------ ------------
Total liabilities and stockholders'
equity $ 315,411 $ 332,431
============ ============

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Internet Capital Group
----------------------------------------------------------------------
2008 Core Partner Company Information

Reconciliation of Aggregate Core
Company Information to GAAP Results
-------------------------------

Three Months Ended
-------------------------------
Mar 31, Jun 30, Sep 30,
2007 2007 2007
-------------------------------
Revenue

Aggregate Core Company Revenue $ 46,953 $ 49,363 $ 58,248
Non-consolidated partner companies (35,171) (36,843) (43,689)
--------- --------- ---------
Consolidated Revenue $ 11,782 $ 12,520 $ 14,559
========= ========= =========

Net Income (Loss)

Aggregate Core Company EBITDA
(loss) $ (6,540) $ (6,526) $ (5,409)
Interest, Taxes,
Depreciation/Amortization (2,380) (2,414) (2,830)
--------- --------- ---------
Aggregate Core Company Net Income
(Loss) (8,920) (8,940) (8,239)
Amount attributable to equity
companies / other stockholders
/ disc. ops (4,234) (4,785) (4,922)
--------- --------- ---------
ICG's share of net income (loss)
of Aggregate Core Partner
Companies (4,686) (4,155) (3,317)
Other holdings equity method
companies (768) 223 (311)
Disposed equity method companies 493 361 -
Corporate general and
administrative (4,317) (3,566) (3,511)
Corporate stock-based compensation (1,716) (1,739) (1,616)
Corporate interest, net 1,114 1,036 1,359
Other income(loss)/ restructuring/
impairments (11,863) 3,586 1,547
Income taxes 2,148 494 794
Income (loss) on discontinued
operations - (220) 1,024
--------- --------- ---------
Consolidated net income (loss) $(19,595) $ (3,980) $ (4,031)
========= ========= =========

-------------------------------

-------------------------------
Three Months Ended
-------------------------------
Mar 31, Jun 30, Sep 30,
2007 2007 2007
----------------------------------------------------------------------

Aggregate Core Company
Information: (1)
Aggregate Revenue $ 46,953 $ 49,363 $ 58,248
Aggregate EBITDA
(loss) $ (6,540) $ (6,526) $ (5,409)
Aggregate Net Loss $ (8,920) $ (8,940) $ (8,239)

Components of
Aggregate Core
Company Information

Consolidated Core
Companies
(Ownership %): (2)
Revenue $ 13,822 $ 14,632 $ 16,713
----------------------
ICG Commerce
Holdings, Inc.
(65%)
Investor Force Expenses other
Holdings, Inc. than interest,
(80%) taxes,
depreciation
and
amortization (16,976) (17,813) (19,380)
--------- --------- ---------
Vcommerce Inc. EBITDA (loss)
(53%) $ (3,154) $ (3,181) $ (2,667)
----------------------
Interest 89 49 30
Taxes - - -
Depreciation/
Amortization (466) (494) (485)
--------- --------- ---------
Net loss $ (3,531) $ (3,626) $ (3,122)
--------- --------- ---------

Equity Method Core
Companies
(Ownership %): (2)
Revenue $ 33,131 $ 34,731 $ 41,535
----------------------
Channel
Intelligence,
Inc. (46%)
Freeborders, Inc. Expenses other
(32%) than interest,
taxes,
depreciation
and
amortization (36,517) (38,076) (44,277)
--------- --------- ---------
Metastorm (32%) EBITDA (loss) $ (3,386) $ (3,345) $ (2,742)
StarCite, Inc. Interest
(34%) 142 237 (18)
WhiteFence (35%) Taxes (31) (18) -
----------------------
Depreciation/
Amortization (2,114) (2,188) (2,357)
--------- --------- ---------
Net loss $ (5,389) $ (5,314) $ (5,117)
--------- --------- ---------

Three Months Ended
------------------------------
Dec 31, Mar 31, Jun 30,
2007 2008 2008
------------------------------
Revenue

Aggregate Core Company Revenue $ 60,772 $ 60,426 $ 64,501
Non-consolidated partner companies (46,710) (44,404) (46,920)
---------- --------- ---------
Consolidated Revenue $ 14,062 $ 16,022 $ 17,581
========== ========= =========

Net Income (Loss)

Aggregate Core Company EBITDA
(loss) $ (9,668) $(10,619) $(10,160)
Interest, Taxes,
Depreciation/Amortization (5,321) (4,385) (4,905)
---------- --------- ---------
Aggregate Core Company Net Income
(Loss) (14,989) (15,004) (15,065)
Amount attributable to equity
companies / other stockholders /
disc. ops (8,484) (8,374) (8,379)
---------- --------- ---------
ICG's share of net income (loss) of
Aggregate Core Partner Companies (6,505) $ (6,630) $ (6,686)
Other holdings equity method
companies - (1,102) 168
Disposed equity method companies - - -
Corporate general and
administrative (3,592) (3,814) (4,149)
Corporate stock-based compensation (1,623) (1,618) (1,568)
Corporate interest, net 1,150 758 347
Other income(loss)/ restructuring/
impairments 6,492 5,853 (407)
Income taxes 865 - -
Income (loss) on discontinued
operations 191 - -
---------- --------- ---------
Consolidated net income (loss) $ (3,022) $ (6,553) $(12,295)
========== ========= =========

------------------------------

------------------------------
Three Months Ended
------------------------------
Dec 31, Mar 31, Jun 30,
2007 2008 2008
----------------------------------------------------------------------

Aggregate Core Company
Information: (1)
Aggregate Revenue $ 60,772 $ 60,426 $ 64,501
Aggregate EBITDA
(loss) $ (9,668) $(10,619) $(10,160)
Aggregate Net Loss $(14,989) $(15,004) $(15,065)

Components of Aggregate
Core Company
Information

Consolidated Core
Companies (Ownership
%): (2)
Revenue $ 17,410 $ 17,752 $ 18,235
-----------------------
ICG Commerce
Holdings, Inc.
(65%)
Investor Force Expenses other
Holdings, Inc. than interest,
(80%) taxes,
depreciation
and
amortization (17,746) (19,516) (19,322)
---------- --------- ---------
Vcommerce Inc. EBITDA (loss)
(53%) $ (336) $ (1,764) $ (1,087)
-----------------------
Interest 24 (100) (126)
Taxes (318) (28) (239)
Depreciation/
Amortization (442) (377) (417)
---------- --------- ---------
Net loss $ (1,072) $ (2,269) $ (1,869)
---------- --------- ---------

Equity Method Core
Companies (Ownership
%): (2)
Revenue $ 43,362 $ 42,674 $ 46,266
-----------------------
Channel
Intelligence, Inc.
(46%)
Freeborders, Inc. Expenses other
(32%) than interest,
taxes,
depreciation
and
amortization (52,694) (51,529) (55,339)
---------- --------- ---------
Metastorm (32%) EBITDA (loss) $ (9,332) $ (8,855) $ (9,073)
StarCite, Inc. Interest
(34%) (1) (122) (146)
WhiteFence (35%) Taxes (183) (68) (119)
-----------------------
Depreciation/
Amortization (4,401) (3,690) (3,858)
---------- --------- ---------
Net loss $(13,917) $(12,735) $(13,196)
---------- --------- ---------

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(1) The rationale for management's use of non-GAAP measures is
included in the "Description of Terms" supplement to this
release.

(2) ICG's ownership in our eight core companies ranged from 32% to 80%
and averaged 47% at June 30, 2008.

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INTERNET CAPITAL GROUP, INC.

June 30, 2008

Description of Terms

Consolidated Statements of Operations

Effect of Various Accounting Methods on our Results of Operations

The various interests that the Company acquires in its partner
companies are accounted for under three methods: the consolidation
method, the equity method and the cost method. The applicable
accounting method is generally determined based on the Company's
voting interest in a partner company.

Consolidation. Partner companies in which the Company directly or
indirectly owns more than 50% of the outstanding voting securities and
for which other stockholders do not possess the right to affect
significant management decisions are accounted for under the
consolidation method of accounting. Under this method, a partner
company's balance sheet and results of operations are reflected within
the Company's Consolidated Financial Statements. All significant
intercompany accounts and transactions are eliminated. Participation
of other partner company stockholders in the net assets and in the
earnings or losses of a consolidated partner company is reflected in
the caption "Minority interest" in the Company's Consolidated Balance
Sheets and Statements of Operations. Minority interest adjusts the
Company's consolidated results of operations to reflect only the
Company's share of the earnings or losses of the consolidated partner
company. The results of operations and cash flows of a consolidated
partner company are included through the latest interim period in
which the Company owned a greater than 50% direct or indirect voting
interest for the entire interim period or otherwise exercised control
over the partner company. Upon dilution of control below 50%, the
accounting method is adjusted to the equity or cost method of
accounting, as appropriate, for subsequent periods.

During the three months ended June 30, 2008, the Company accounted
for three of its partner companies under this method: ICG Commerce,
Investor Force and Vcommerce (starting May 1, 2008). During the three
months ended June 30, 2007, the Company accounted for two of its
partner companies under this method: ICG Commerce and Investor Force.

Equity Method. Partner companies that are not consolidated, but
over which the Company exercises significant influence, are accounted
for under the equity method of accounting. Whether or not the Company
exercises significant influence with respect to a partner company
depends on an evaluation of several factors, including, among others,
representation on the partner company's board of directors and the
Company's ownership level, which is generally between a 20% and 50%
interest in the voting securities of the partner company, including
voting rights associated with the Company's holdings in common stock,
preferred stock and other convertible instruments in the partner
company. Under the equity method of accounting, a partner company's
accounts are not reflected within the Company's Consolidated Balance
Sheets and Statements of Operations; however, the Company's share of
the earnings or losses of the partner company is reflected in the
caption "Equity loss" in the Consolidated Statements of Operations.
The carrying value of equity method partner companies is reflected in
"Ownership interests in partner companies" in the Company's
Consolidated Balance Sheets.

When the Company's interest in an equity method partner company is
reduced to zero, no further losses are recorded in the Company's
Consolidated Financial Statements unless the Company guaranteed
obligations of the partner company or has committed additional
funding. When the partner company subsequently reports income, the
Company will not record its share of such income until it equals the
amount of its share of losses not previously recognized.

During the three months ended June 30, 2008, the Company accounted
for seven of its partner companies under this method.

Cost Method. Partner companies not accounted for under the
consolidation or the equity method of accounting are accounted for
under the cost method of accounting. Under this method, the Company's
share of the earnings or losses of such companies is not included in
the Consolidated Balance Sheets or Consolidated Statements of
Operations. However, cost method partner company impairment charges
are recognized in the Consolidated Statements of Operations. If
circumstances suggest that the value of the partner company has
subsequently recovered, such recovery is not recorded.

When a cost method partner company qualifies for use of the equity
method, the Company's interest is adjusted retroactively for its share
of the past results of its operations. Therefore, prior losses could
significantly decrease the Company's carrying value at that time.

The Company records its ownership interest in equity securities of
partner companies accounted for under the cost method at cost, unless
these securities have readily determinable fair values based on quoted
market prices, in which case these interests are valued at fair value
and classified as marketable securities or some other classification
in accordance with Statement of Financial Accounting Standards
("SFAS") No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."

During the three months ended June 30, 2008, the Company accounted
for eight of its partner companies under this method.

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Certain items impacting the consolidated financial statements: ($
millions)

Q2 FYTD
------------- --------------
Gains (losses): 2008 2007 2008 2007
------ ------ ------ -------

Other gains (losses):
Loss on convertible note repurchases $-- $-- $-- $(10.8)
Unrealized gain/(loss) on mark-to-
market of hedges (3.4) (6.0) 2.3 (7.1)
Sales of partner companies 3.0 8.6 3.1 8.6
Other, net -- 1.1 -- 1.1
------ ------ ------ -------
Other Income (Loss) $(0.4) $3.7 $5.4 $(8.2)
------ ------ ------ -------

Income tax benefit (expense) $(0.2) $0.5 $(0.3) $2.6
------ ------ ------ -------

ICG's share of Partner Company charges,
net $-- $-- $-- $(0.1)
------ ------ ------ -------

Discontinued Operations $-- $(0.2) $-- $(0.2)
------ ------ ------ -------
$(0.6) $4.0 $5.1 $(5.9)
====== ====== ====== =======

Stock-based compensation $(1.7) $(1.9) $(3.5) $(3.8)
====== ====== ====== =======

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Aggregate Core Company Information

In an effort to illustrate macro trends within its core companies,
ICG provides an aggregation of revenue and net loss figures reflecting
100% of the aggregate revenue and aggregate EBITDA for these
companies. ICG calculates aggregate EBITDA for these purposes as
earnings (losses) before interest, tax, depreciation and amortization
and refers to it as "aggregate EBITDA." ICG refers to the aggregate
revenue of its core partner companies as "aggregate revenue." ICG does
not own its core companies in their entirety and, therefore, this
information should be considered in this context. Aggregate revenue
and aggregate EBITDA, in this context, represent certain of the
financial measures used by ICG's management to evaluate the
performance for core companies. ICG's management believes these
non-GAAP financial measures provide useful information to investors,
potential investors, securities analysts and others so each group can
evaluate core companies' current and future prospects in a similar
manner as ICG's management, and review results on a comparable basis
for all periods presented.

Beginning with our results for the quarter ended March 31, 2008,
for all periods presented, we are reporting aggregate revenue and
aggregate EBITDA for our core companies based on the sum total of the
individual GAAP results of our core companies. For results for periods
ended prior to March 31, 2008, this aggregate information was compiled
based on individual partner company GAAP results that ICG adjusted to
reflect the effect of acquisitions as if such acquisitions had
occurred at the beginning of the earliest period presented, rather
than on the date they actually occurred. Under GAAP, revenue
associated with an acquisition is reported from the consummation date
of the acquisition with no adjustment to the comparable prior period.
In connection with our compilation of aggregate revenue, aggregate
EBITDA and aggregate net loss, we have elected to use GAAP results,
rather than adjusted GAAP results, for our core partner companies
because this method is consistent with the manner in which such
companies evaluate their performance and present their financials. Use
of GAAP results without acquisition-related pro forma adjustments will
generally result in an increase in the revenue growth rate of a core
company that consummates an acquisition during the applicable period.

ICG's Share of Net Loss of Core, Other Holdings and Disposed
Partner Companies

Represents ICG's share of the net loss of core, other holdings and
disposed partner companies accounted for under the consolidated and
equity method of accounting.

Corporate Expenses and Interest Income (Expense), net

Corporate general and administrative expenses consist of payroll
and related expenses for executive, operational, acquisitions, finance
and administrative personnel, professional fees and other general
corporate expenses for Internet Capital Group.

Corporate general and administrative expenses increased during the
three months ended June 30, 2008 versus the three months ended June
30, 2007 primarily due to a sponsorship. ICG's estimates that its
corporate operating expenses for the twelve months ended December 31,
2008 will be approximately $14.6 million.

Internet Capital Group, Inc.
Investor inquiries:
Karen Greene
Investor Relations
610-727-6900
IR@internetcapital.com

Copyright Business Wire 2008