DOUBLECLICK REPORTS RECORD GAAP PROFITABILITY
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 [1],” 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 [2] position of $490.2 million, or $3.60 per share. This reflects the net $22.4 million used for the acquisition of SmartPath, Inc.
Stock Repurchase
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.”
TechSolutions
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.
Data
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.”
Second Quarter 2004 Outlook
DoubleClick is expecting second quarter revenues to be between $70 million and $74 million. GAAP earnings for the second quarter are projected to be between $0.02 and $0.05 per share.
Total Company gross margins are expected to be in the high 60s to low 70s percentage range. GAAP operating expenses are expected to be between $45 million and $47 million. Items in interest and other, net and taxes are expected to be roughly $2 million, based an assumed tax rate of approximately 15%.
Segment projections for the second quarter of 2004 are as follows:
-- TechSolutions revenues are estimated to be between $45 million and $50 million, including $32 to $35 million from ad management, with overall TechSolutions gross margins in the low 70s percentage range.
-- Data revenues are estimated to be between $24 million and $26 million, including approximately $3 million from Data Management, with overall Data gross margins in the mid 60s percentage range.
Updated 2004 Outlook
DoubleClick is adjusting its 2004 outlook because of the recent acquisition of SmartPath, Inc. DoubleClick began recognizing revenue from this acquisition on April 1, 2004. The Company expects it to lead to both higher revenue and expenses for its TechSolutions segment as follows:
-- DoubleClick expects SmartPath to add $4 million in revenue for the remainder of 2004, and therefore the Company is raising its overall 2004 revenue outlook to $294 to $314 million.
-- The Company expects the acquisition to lower GAAP net income by approximately $5 million, primarily because of amortization charges and integration costs.
-- DoubleClick expects the acquisition to be accretive in 2005 and beyond.
-- The Company now expects 2004 GAAP net income to be $33 to $40 million, or between $0.23 and $0.28 per share.
“We are off to a great start in 2004,” said Bruce Dalziel, Chief Financial Officer, DoubleClick. “We on track to more than double our earnings in 2004 while achieving robust revenue growth across all of our product groups.”
Conference Call Today
The DoubleClick Conference Call to discuss this earnings press release is scheduled for today at 5:00 p.m. EDT. This call will be available live via Webcast, and on a replay basis afterward on the Company’s website www.doubleclick.net under Investor Relations or at http://ir.doubleclick.net. Institutional investors can also access the call via www.streetevents.com.
About DoubleClick
DoubleClick (www.doubleclick.net) is the leading provider of data and technology for advertisers, direct marketers, and web publishers to plan, execute, and analyze their marketing programs. DoubleClick`s online advertising, email marketing and database marketing solutions help clients yield the highest return on their marketing dollar. In addition, the Company`s marketing analytics tools help clients measure performance within and across channels. DoubleClick Inc. has global headquarters in New York City and maintains 20 offices around the world.
Note: This press release includes forward-looking statements, including earnings and revenue projections and plans set forth under the sections titled “Second Quarter 2004 Outlook” and “Updated 2004 Outlook” above, as well as sentences using the words “expects,” “plans,” or “believes” and all other statements that are not purely historical. The results or events predicted in these statements may vary materially from actual future events or results. Factors that could cause actual events or results to differ from anticipated events or results include: lack of growth or decline in online advertising or marketing, changes in government regulation, intense competition in DoubleClick’s industry, failure to manage the integration of acquired companies, failure to successfully manage the Company’s international operations and other risks that are contained in documents which the Company files from time to time with the Securities and Exchange Commission, including the Company’s most recent reports on Form 10-K and Form 10-Q. In addition, any forward-looking statements represent the Company’s estimates only as of today and should not be relied upon as representing the Company’s estimates as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, it may choose not to do so, even if the Company’s estimates change.
Jennifer Blum
Vice President of Corporate Communications
DoubleClick Inc. (Nasdaq: DCLK)
111 Eighth Avenue
10th floor
New York, NY 10011
direct #: 212.381.5705; fax: 212.287.9755
jblum@doubleclick.net
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