Revenue Jumps 24% from Same Quarter a Year Ago, 78% Bottom Line Improvement on GAAP basis
NEW YORK--Nov. 13, 2003--Third Quarter 2003 Highlights:
-- Positive EBITDA of $145,000;
-- Revenue rose 24% from the same quarter a year ago;
-- Gross margin widened to 52%;
-- Gross profit climbed 39%; and
-- Operating expenses declined 30% from year ago period.
24/7 Real Media, Inc. (Nasdaq: TFSM), the only gateway to the total spectrum of interactive marketing and technology solutions for online marketers and publishers, today announced that it achieved positive EBITDA for the third quarter, ended September 30, 2003, and reported impressive revenue growth and significantly reduced operating losses compared to the third quarter last year.
24/7 Real Media recorded $145,000 in EBITDA on revenue of $12.0 million. Revenue jumped 24% from the $9.7 million reported in the third quarter a year ago. Gross profit for the quarter climbed 39% to $6.3 million from $4.5 million in the same quarter of 2002, as gross margins widened to 52.4% from 46.7%. On a GAAP basis, the Company reported that the operating loss decreased 78% to $1.4 million during the third quarter from $6.5 million during the same quarter a year ago. The Company entered the fourth quarter with $23.8 million in cash.
"Achieving positive EBITDA is one of the most significant developments in the Company`s five-year history," said David J. Moore, chairman and CEO, "Our relentless efforts to cut costs and refocus our business have resulted in vastly lower operating expenses and higher revenue, thereby accentuating the Company`s significant operating leverage."
GAAP operating expenses declined 30% from the year-earlier period, despite the higher revenue. SG&A; expenses fell 12% to $5.9 million, or 49% of revenue, from $6.7 million, or 69% of revenue in the third quarter of 2002.
Pro forma net loss decreased 85% to $0.5 million, or $0.01 per share, in the third quarter, from $3.0 million, or $0.06 per share, in the third quarter of 2002, in line with management`s previous guidance.
As further described in the accompanying condensed consolidated income statement, and the note thereto, pro forma net loss excludes amortization of intangibles, stock-based compensation, loss on sale of non-core assets, and other expenses from net loss determined in accordance with GAAP. EBITDA excludes amortization of intangibles, stock-based compensation, loss on sale of non-core assets, depreciation, interest, taxes and other expenses from net loss determined in accordance with GAAP. The Company believes that financial measures that may be considered non-GAAP, including pro forma net loss and EBITDA, are helpful when presented in conjunction with the comparable GAAP measure of net loss.
Nine Months Ended September 30, 2003
For the nine months ended September 30, 2003, revenue rose 16% to $36.0 million from $31.0 million in the first nine months of 2002.
Gross profit climbed 25% to $17.5 million for the period from $14.0 million in the first nine months of 2002, as gross margin widened to 48.5% from 45.2% in the prior year period. The pro forma net loss fell to $2.9 million, or $0.04 per share, during this period from a loss of $9.8 million, or $0.19 per share, in the same period a year ago. GAAP net loss declined 57% from the prior year.
The Company had an EBITDA loss for the first nine months of 2003 of $0.9 million, a 87% improvement from the EBITDA loss of $6.8 million in the first nine months of 2002.
Segment Overview
Integrated Media Solutions revenue, which includes revenue from the 24/7 Web Alliance, 24/7 Search (formerly 24/7 Website Results), and other services, rose 25% in the third quarter to $8.0 million from $6.4 million in the same period in 2002, and rose 31% excluding divested businesses. Gross margin in this segment widened to 40.1% in the third quarter from 32.1% in the same quarter of 2002.
Within this segment, 24/7 Web Alliance revenue advanced 21% in the quarter to $5.3 million from $4.4 million in the third quarter of last year, and rose 30% excluding divested businesses. The number of paid impressions grew to 5.9 billion in the third quarter from 3.0 billion in the same period of 2002. The Company continues to establish new relationships with blue chip advertisers, particularly in the technology, pharmaceutical and automotive industries.
Revenue from 24/7 Search, the Company`s paid inclusion service, was $2.2 million in the third quarter of 2003, an increase of 10% from the $2.0 million in the third quarter of 2002.
Technology Solutions revenue advanced 22% to $4.1 million from $3.3 million in the same quarter last year, primarily driven by growth in revenue from the Company`s Open AdStream(R) Central advertising delivery and management service and a trend towards larger contracts. Technology Solutions gross margins widened to 76.5% in the third quarter of 2003 from 74.6% in the same quarter of 2002.
The Company`s advance in Technology Solutions revenue reflects additional new client wins from competing ad serving solutions. During the third quarter, the Company added a number of new Open AdSystem(TM) customers, including Cygnus Interactive, Express-Expansion, W3 Data`s WhitePages.com, Builders Homesite, HealthForum, Space.com and Transcontinental. The Company`s Insight XE(TM) Web analytics solution, formerly Open Insight, signed FOXNews, YellowPages.com and UAL Loyalty Services as well as its first European clients.
Business Outlook
In the sector`s traditionally seasonally robust fourth quarter, the Company anticipates revenue in the range of $13 million to $15 million, representing an increase of approximately 13% to 30% from the fourth quarter of 2002. The Company anticipates positive EBITDA and a pro forma loss per share of between one cent and zero, compared to a pro forma loss per share of $0.02 in the fourth quarter of 2002. For 2004, the Company forecasts a revenue increase of 20%-to-25% from full year 2003 and a full year operating profit.
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