Company reports double-digit revenue growth
New York, NY, April 15, 2004 -- DoubleClick Inc. (NASDAQ: DCLK), the leading provider of data and technology solutions for direct marketers, web publishers and advertisers, today announced financial results for the first quarter ended March 31, 2004, and updated its business outlook for 2004.
“We saw significant year-over-year increases in revenue, gross margins, operating margins, net income, and EBITDA ,” said Kevin Ryan, Chief Executive Officer, DoubleClick. “We had growth across all of our product groups, and we expect record profitability in 2004.”
First Quarter Results
DoubleClick reported revenues for the first quarter of $68.0 million versus $60.1 million in the year ago period. GAAP net income for the most recent quarter was $7.7 million or $0.05 per share, compared with $0.9 million or $0.01 per share in the first quarter of 2003. The Company achieved gross margins of 66.8% during the quarter compared to 63.5% year-over-year. EBITDA was $14.6 million for the first quarter of 2004 compared to $11.5 million in the year ago period. First quarter 2004 GAAP net income and EBITDA benefited from a distribution from MaxWorldwide, Inc. of approximately $2.4 million in connection with its plan of liquidation and dissolution and the reversal of a $1.5 million reserve relating to a prior acquisition.
The Company ended the quarter with $625.4 million in cash and marketable securities, and had a net cash  position of $490.2 million, or $3.60 per share. This reflects the net $22.4 million used for the acquisition of SmartPath, Inc.
DoubleClick used $20.4 million in connection with the open market repurchase of approximately 1.9 million shares of the Company’s common stock during the quarter.
“Since November of last year, we have repurchased almost $22 million in stock out of the $100 million initially authorized,” added Ryan. “The core business is generating cash, and we have enough funds left for potential M&A; activity. Meanwhile, existing shareholders benefit by owning a larger share of a growing company.”
The TechSolutions segment reported first quarter revenues of $45.3 million versus $41.5 million in 1Q03. The Company’s ad management revenues were $33.3 million in 1Q04 versus $31.1 million in the year ago period.
The remaining TechSolutions revenues came from the Company’s marketing automation products, which had revenues of $12.0 million for 1Q04, against $10.4 million in the year ago period. Overall TechSolutions gross margins were 70.4 %, an increase from 61.3% in the first quarter of 2003. Overall TechSolutions operating margins were 18.8 %, an increase from 6.8 % in the first quarter of 2003.
The year-over-year improvements in revenue, gross margins, and operating margins stem primarily from new client wins, existing customers using more DoubleClick products, and the increase in overall system transaction volume by both new and existing clients. Operating margins also benefited from the previously mentioned $1.5 million reserve reversal.
DoubleClick has signed over 40 new contracts globally with customers to use its ad management solutions since the beginning of the year. Recent wins include Sports Illustrated, Mass Transit Interactive, UOL-Universo Online-Brazil, Initiative Media Australia, Adnovia, and ESPN STAR Sports. The Company also signed an exclusive contract with GSD&M; for the use of its online ad management, rich media, and media planning solutions.
New marketing automation agreements have recently been reached with over 60 customers, including Unilever, Tribune Interactive and Classifieds, Buy.com, Lycos, J. Jill Group, Ross-Simons, and eBay Hong Kong.
On March 19, 2004, DoubleClick acquired SmartPath, Inc., a privately-held Marketing Resource Management (MRM) software company. Beginning with the second quarter of 2004, results for the TechSolutions segment and the marketing automation product group will include MRM sales. SmartPath® adds marketing planning and operational management solutions to the Company’s existing offerings while expanding DoubleClick’s platform and services capabilities in traditional marketing channels such as print and television. The Company is already selling this MRM solution through its global sales force as a standalone product, and plans to integrate it with its campaign management product later this year. The Company will also assess opportunities to integrate MRM solutions with other Company offerings in the future. SmartPath has 35 customers, including Novartis, GlaxoSmithKline, Wyeth, Kohler, the National Geographic Society, and Victoria`s Secret, as well as agencies like Leo Burnett and Carmichael Lynch.
DoubleClick Data revenues were $22.8 million in 1Q04, up 22.8 % from $18.5 million in 1Q03. Abacus quarterly revenues were up 9.9 % year-over-year to $20.4 million, while the remaining Data revenues came from DoubleClick’s Data Management business, which was acquired on June 30, 2003. Overall Data gross margins were 59.7% for the quarter, against 68.4% for 1Q03. Data operating margins were 11.1%, against 24.1% in the first quarter of 2003.
The year-over-year increase in Abacus revenues was driven primarily by continued growth in the Company’s U.S. business-to-business Alliance and U.K. business-to-consumer Alliance. Gross and operating margins were lower in the first quarter of 2004 primarily because of the Data Management business, as well as new Abacus Alliances and Data products.
During the quarter, DoubleClick added 33 Abacus B2C Alliance members globally and 18 B2B Alliance members. In addition, the Vermont Country Store signed an agreement to use DoubleClick’s Data Management solution and has agreements to use email, web site analytics, and Abacus Alliance data.
"DoubleClick’s integrated marketing platform continues to resonate with existing and potential customers, especially the larger, more established firms that we are strategically targeting,” said David Rosenblatt, President of DoubleClick. “Our recent Data Management deals have all been with existing Abacus and marketing automation customers. Our Data Management and Email client base have been the early adopters of our marketing automation solutions suite. Our rich media wins have come almost entirely from ad management customers. With the addition of SmartPath, we expect to increase the number of clients using multiple DoubleClick products as clients continue to see the value of using one technology vendor for their marketing needs.”