Company Raises Guidance and Expects First Full Year GAAP Profitability in 2003
NEW YORK, April 15 -- DoubleClick Inc. (Nasdaq: DCLK), the leading provider of data and technology tools for direct marketers, web publishers and advertisers today announced financial results for the first quarter ending March 31, 2003, and updated its business outlook for full year 2003.
DoubleClick reported revenues for the first quarter of $60.1 million, slightly above company guidance. Revenue declined 28.2% year-over-year largely due to the divestitures of the company`s Media, DoubleClick Japan and Research businesses in 2002. Total GAAP operating expenses were $38.6 million, a decline of 32.6% versus $57.3 million in the first quarter of 2002, primarily resulting from divestitures and successful cost cutting initiatives. Pro forma operating expenses were $36.6 million, a decline of 30.7% versus the year ago period(A).
Bottom line performance improved significantly year-over-year to a GAAP net income of $1.4 million with a GAAP EPS of $0.01. Pro forma net income(A) for the first quarter was $3.5 million with pro forma EPS of $0.03, which exceeded company pro forma EPS guidance. The difference between GAAP net income and pro forma net income was the result of the amortization of intangible assets. Total company headcount was 1,088 at the end of first quarter 2003, down 2% from 1,111 at the end of fourth quarter 2002.
The company generated $4.9 million of cash flow from operations during the first quarter of 2003. The company ended the quarter with $745 million in cash and marketable securities and a net cash position of $585 million, or $4.28 per share.(B)
"Our results this quarter highlight the operational stability and financial flexibility gained through unwavering focus on right-sizing our business. In 2003 we are focused on meeting our customers` needs by developing products and integrating those into our suite of solutions, while driving growth and profits," said Kevin Ryan, CEO of DoubleClick.
The global TechSolutions division reported first quarter revenues of $41.5 million. Total TechSolutions gross margins were 61.3%, a slight decline versus the fourth quarter of 2002 primarily due to seasonality and the costs associated with the acquisition of Protagona plc in November of 2002. DoubleClick`s global DART and DARTmail platforms delivered 138 billion impressions in the first quarter of 2003.
INSIGHT 2003, DoubleClick`s fourth annual customer conference, which was held in March, showcased the company`s unique suite of solutions. Clients such as Barnes & Noble, PentaCom on behalf of Chrysler, Lending Tree and Ross-Simons all presented case studies demonstrating how DoubleClick products make their marketing work better. During the conference, DoubleClick released several research studies including the Cross Media Reach and Frequency Study, which was done in conjunction with Nielsen//NetRatings and IMS. The study found that redirecting offline advertising spending to online advertising for three brands, American Airlines, Subaru and Kraft, significantly increased the effectiveness of the overall marketing campaign.
MediaVisor, DoubleClick`s media planning tool, enables customers to use traditional measures of advertising effectiveness like gross rating points, reach and frequency. Combining these traits with the seamless integration into our deployment and analytical tool, DART for Advertisers, has driven the success of the product since its launch one year ago to processing more than $85 million dollars worth of booked media advertising.
Further integration of DoubleClick`s technology solutions is a strategic focus in 2003, and DARTmail is integral to this process. DARTmail revenues reported within TechSolutions were $9.5 million for the quarter. DARTmail`s robust premier service offers a full range of deployment, strategic, creative and analytics solutions. An advanced analytics module, taken from DoubleClick`s SiteAdvance solution, is also sold as an integrated component of DARTmail. SiteAdvance is DoubleClick`s web site analytics product. The integration of DARTmail and SiteAdvance in November of 2002 has helped accelerate sales with a significant number of new SiteAdvance customers, such as Buy.com, also signing a DARTmail contract in the first quarter 2003.
In 2003, DARTmail is expected to be integrated with Ensemble, a leading campaign management tool. Since acquiring Protagona plc in November 2002, DoubleClick signed seven new Ensemble customers including, Terra Lycos SA and Orbitz, showing accelerated sales execution under new management.
"We have an installed base of marketing clients who are looking for ways to build on profits while effectively using multiple channels to market to its customers or prospects," said David Rosenblatt, President of DoubleClick. "DoubleClick`s mission is to provide our clients with must-have integrated marketing technology and data services. In 2003, we plan to continue to integrate our current solutions, build upon our product platform and continue improving upon our sales execution."
The Data division reported quarterly revenue of $18.5 million, while gross margins were 68.4%. The Abacus core business-to-consumer alliance continued its strong revenue growth of the past year primarily due to growth in Abacus` prospecting business and market share gains. Prospecting is the practice of buying a list of new names from the database, and it accounts for more than 75% of total Abacus revenue. In difficult marketing environments, catalog mailers sometimes cut back on buying prospecting lists and focus on mailing their own customer files to save money, but eventually most resume prospecting. In the first quarter of 2003, Abacus prospecting revenues grew 22.5% year-over-year, fueled in part by the acquisition of the 50% of the Abacus UK business it did not own.
Another significant secular change the data marketing business has been experiencing is channel shift. A similar channel shift was seen in the early 1980`s due to the proliferation of credit cards. Order payments evolved from checks sent through the US Post Office to credit card orders over the phone. A similar channel shift is now occurring due to widespread Internet use: on average more than 30% of orders are being transacted through web sites.(2) DoubleClick`s second annual Multi-Channel Holiday Shopping Study found that 50% of multi-channel shoppers input catalog codes online while purchasing. It also found that another 33% input email promotional codes, highlighting a growing trend towards multi-channel consumers and the need for marketers to have integrated multi-channel marketing solutions in place.