DOUBLECLICK REPORTS THIRD QUARTER 2003 FINANCIAL RESULTS
Company has third consecutive GAAP profitable quarter
New York, NY, October 16, 2003 -- 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 third quarter ended September 30, 2003, updated its guidance for the full year 2003, and gave a preliminary business outlook for full year 2004.
DoubleClick reported revenues for the third quarter of $74.8 million versus $74.6 million in the year ago period. GAAP net income for the most recent quarter was $6.3 million, or $0.04 per share compared with $5.8 million or $0.04 in the second quarter of 2003 and a loss of $62.0 million or $0.46 per share in the third quarter of 2002. GAAP net income before interest, taxes, depreciation, and amortization, or EBITDA, was $23.8 million for the third quarter of 2003 versus $16.4 million in the second quarter of 2003.[1] Total GAAP operating expenses were $45.7 million, versus $117.9 million in the third quarter of 2002. Total company headcount at the end of the most recent quarter was 1,214 versus 1,147 at the end of the third quarter of 2002.
Third quarter 2003 GAAP earnings were negatively impacted by $8.3 million in charges related to the acceleration of amortization of the leasehold improvements and furniture and fixtures at the Company`s New York and San Francisco offices due to the change in useful life of these assets. Third quarter 2003 GAAP earnings and EBITDA benefited from a net restructuring credit of $2.2 million related to the reversal of a portion of the Company`s real estate reserve for its New York and San Francisco offices and the receipt of $1.4 million by the Company in connection with an insurance claim. Last year`s third-quarter GAAP results included $46.2 million in charges related to the impairment of goodwill for the Company`s email business and other intangible assets, a $23.8 million restructuring charge related to the Company`s real estate, a $14.1 million charge relating to the impairment of some of the Company`s minority investments, a $7.4 million gain related to the sale of the Company`s North American Media business and a $11.9 million gain on the early extinguishment of debt.
The Company used $43.4 million in cash flow from operations during the third quarter of 2003. This figure included payments by the Company of $56.5 million in connection with the termination of leases on the Company`s New York and San Francisco offices. The Company ended the quarter with $662 million in cash and marketable securities, and had a net cash position of $526 million, or $3.83 per share.[2] The Company used $158.0 million in connection with the redemption of its 4.75% convertible notes during the quarter.
"DoubleClick`s business has begun to benefit from the turnaround in marketing spending, with TechSolutions transaction volumes for the third quarter reaching their highest levels since the first quarter of 2001. In addition, our Data Segment had its best quarterly revenue to date," said Kevin Ryan, Chief Executive Officer, DoubleClick. "During the quarter, we made tremendous strides in integrating our recently acquired Data Management division. Our rich media authoring and delivery product, DART Motif, is scheduled to add multi-event ad tracking and analysis functionality in the near future. Motif is a joint development between DoubleClick and Macromedia, and market response to this product has been very favorable."
Data
DoubleClick Data revenue grew 16.7% to an all-time high of $31.3 million in 3Q03 versus $26.8 million in 3Q02. Abacus revenue was up 7.3% year over year to $28.8 million, while the remaining $2.5 million in revenues came from DoubleClick`s new Data Management business. Gross margins were 72.1%, a slight decrease from the year ago period. The third quarter has traditionally been the highest revenue period for the Company`s Data business as cataloguers prepare for the holiday season.
During the quarter, DoubleClick`s Data Management business implemented a new data processing platform, and several large Data Management clients began the process of migrating away from outsourced processing services to this new platform. DoubleClick is combining its data and technology solutions in order to reduce the effort and cost clients expend while planning, executing, tracking and refining multi-channel marketing campaigns.
"We have seen a great deal of interest on the part of existing DoubleClick customers in our Data Management offerings, as well as interest from Data Management clients in other DoubleClick products, including the Abacus Alliances, DARTmail, Ensemble, and SiteAdvance," said David Rosenblatt, President of DoubleClick. " Bringing these products together in one platform will allow clients to more easily utilize sophisticated and specific targeting in their marketing campaigns."
TechSolutions
The global TechSolutions division reported third quarter revenues of $43.5 million versus $45.1 million in 3Q02. Total TechSolutions gross margins were 61.9%, a decrease from 62.3% in the third quarter of 2002. DoubleClick`s global DART and DARTmail platforms delivered approximately 174 billion impressions in the third quarter of 2003. The Company`s Ad Management products had revenues of $31.0 million in 3Q03, versus $35.4 million in the year ago period. Both DoubleClick`s DART for Advertisers and DART for Publishers products saw sequential and year-over-year volume increase in the third quarter of 2003, stemming from existing customers increasing their activity and from the enrollment of new clients.
During the third quarter of 2003, AT&T Wireless, Fox Sports, CondéNet, and Internet Broadcast Systems all signed deals to use DoubleClick`s ad management solutions. With the recent signing of OMD Digital, DoubleClick now claims all ten of Advertising Age`s top-ten agency brands as DART for Advertisers and MediaVisor clients. DART Motif, the new rich media product from DoubleClick in conjunction with Macromedia, has gained quick acceptance. More than two dozen clients have chosen DART Motif, including Viacom`s CBS and MTV Networks sites, Cox Newspapers, and Ogilvy Interactive UK. DART Motif is also being tested by DoubleClick`s largest agency customers and by almost all of Nielsen/NetRating`s top-ten rated web sites. DART Motif is scheduled to have full tracking and analysis functionality in the fourth quarter of 2003.
DoubleClick`s email management and delivery platform and related strategic services reported revenues of $9.6 million for 3Q03, down slightly against $9.7 million in the year ago period. New client wins included EMC, Luxury Cruise Lines, Viking River Cruises, as well as a greatly expanded relationship with one of world`s largest financial services companies. This week DoubleClick introduced DARTmail 4.0, the most significant upgrade to its email product since its introduction in 2001. In September, DoubleClick released its first Quarterly ISP and Policy Update Report and held an Anti-Spam Summit in New York. During this event, representatives of over 200 marketers, the Federal Trade Commission, and the major ISPs discussed strategies for combating unwanted and unsolicited email. In addition to the Summit, DoubleClick is actively involved in fighting spam with industry bodies such as the Direct Marketing Association.
DoubleClick`s multi-channel Marketing Automation and Analytics products are Ensemble and SiteAdvance. Revenues for these products were $2.9 million in the third quarter of 2003, up almost 80% from 2Q03. The Company completed customer installations of the Ensemble product for several clients during the third quarter, including Terra Lycos, and remains on schedule with its planned December release of the DARTmail-enabled version 6.5. Moreover, Epsilon, a leading relationship marketing company, agreed to offer Ensemble to its customers. SiteAdvance continued to gain momentum, and new customer wins include J Crew, Viking River Cruises, and Verio, as well as a major airline.
"Consumer behavior is driving the need for our clients and prospects to seek tools for marketing over multiple channels as well as to analyze the results of these campaigns," noted Rosenblatt. "As a result, we have had sustained success in selling bundled solutions to our customers. For example, 24% of DoubleClick TechSolutions clients used more than one product, up from 21% sequentially and 16% in the third quarter of 2002."
Fourth Quarter 2003 Outlook
DoubleClick is expecting fourth quarter revenues to be between $69 million and $71 million. GAAP earnings for the fourth quarter are projected to be between $0.00 and $0.03 per share.
Segment projections for the fourth quarter of 2003 are as follows:
-- Data revenues are estimated to be between $24 million and $25.5 million, with gross margins in the mid 60s percentage range, including $3 million from Data Management.
-- TechSolutions revenues are estimated to be between $44 million and $46 million, with gross margins in the mid 60s percentage range.
-- Within TechSolutions, Email technology and related strategic services are expected to generate revenues between $10 million and $11 million and Automation and Analytics are expected to account for about $1.5 million of revenues.
Total company gross margins are expected to be in the mid 60s percentage range. Total company GAAP operating expenses are expected to be between $45 million and $48 million. Gross margin and operating cost estimates include the impact of a $5.3 million charge for leasehold improvements and accelerated leasehold amortizations associated with the planned exit of the Company`s New York office. Items in interest and other, net and taxes are expected to be roughly $2.5 million.
Preliminary 2004 Outlook
The Company expects GAAP earnings for the full year 2004 to be in the mid $30 million range, assuming a modest increase in total revenue.
"With the improving business climate as well as the successful actions we have taken to reduce our cost structure, we expect very strong net income growth in 2004" said Bruce Dalziel, Chief Financial Officer, DoubleClick. "Even more importantly, we will continue to invest in new product lines, which will position us for accelerated revenue growth."
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 22 offices around the world.
Note [1]: This press release includes forward-looking statements, including earnings and revenue projections and future plans set forth under the sections titled "Fourth Quarter 2003 Outlook" and "Preliminary 2004 Outlook" above. 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.
[2] Net cash is defined as gross cash and cash equivalents of $126.7 million, restricted cash of $27.7 million, and investments in marketable securities of $507.6 million minus zero coupon convertible subordinated notes of $135.0 million and capital lease obligations of $1.0 million. Please see the Form 8-K filed today by the Company with the SEC for a discussion of why the Company believes net cash is a useful financial measure to investors and how it is used by management.
Contact:
Jennifer Blum
Vice President of Corporate Communications
DoubleClick Inc. (Nasdaq: DCLK)
450 W.33rd St. 16th floor
New York, NY 10001
www.doubleclick.net
direct #: 212.381.5705; fax: 212.287.9755
blum@doubleclick.net
Back...
