DoubleClick Reports 4Q and Full-Year 2002 Results
Full year GAAP and pro forma earnings improved significantly versus 2001 Generates $43.9 million of cash from operations in 2002
New York, NY, 1/21/2003 - DoubleClick Inc. (Nasdaq: DCLK), the leading provider of data and technology tools for advertisers, direct marketers and web publishers, today announced financial results for the fourth quarter and full year ending December 31, 2002 and provided a business outlook for 2003.
DoubleClick reported revenues for the fourth quarter of $66.3 million and a GAAP net loss of ($54.0) million with GAAP EPS of ($0.40). Pro forma net income for the fourth quarter was $7.4 million with pro forma EPS of $0.05, which exceeded pro forma EPS guidance. The difference between GAAP net loss and pro forma net income was the result of a $65.8 million restructuring charge primarily relating to real-estate, gains of $7.9 million from the sale of a portion of the company`s holdings in DoubleClick Japan and minority interest positions, and other non-cash and non-recurring items.
Full year 2002 revenues were $300.2 million, down 26% versus 2001, which included the results of the divested media, email list and research businesses. GAAP net loss was ($117.9) million for 2002, improving $147.9 million over full year 2001, and GAAP EPS was ($0.87). Exclusive of certain non-cash and non-recurring items, DoubleClick reported its first full year of pro forma profitability with pro forma net income of $17.9 million for the full year 2002 and pro forma EPS of $0.13 for 2002 versus ($0.24) in full year 2001.
Total company headcount was 1,111 at the end of 2002, down 23.4% from 1,450 at the end of 2001. Total company pro forma operating expenses of $187.7 million declined 34.5% year over year. The Company ended the quarter with $750.0 million in cash and marketable securities and a net cash position of $588.2 million, or $4.32 per share.(A) Sale of the company`s holdings in DoubleClick Japan and minority interest positions during the quarter generated $38.0 million dollars in cash.
"Our 2002 results show the culmination of our strategy to diversify our revenues into new markets, reduce our exposure to less profitable businesses, and improve profitability. We have been able to carry out these goals while successfully operating in a difficult market environment," said Kevin Ryan, CEO of DoubleClick.
TechSolutions (1)
The global TechSolutions division reported fourth quarter revenues of $43.6 million, and annual revenues of $187.2 million, a decline of 9.6% versus full year 2001. Impressions delivered across DoubleClick`s global DART and DARTmail platforms were 144.4 billion in the fourth quarter of 2002. Total TechSolutions gross margins increased 180 basis points to 64.1% versus the third quarter of 2002.
In the ad management business, rich media use has increased 43% since the first quarter of 2002 when DoubleClick launched the Rich Media Certification program that enhances rich media usability. Rich media is an Internet advertising term for a Web page ad that uses advanced technology such as streaming video, downloaded programs that interact instantly with the user, and ads that change when the user`s mouse passes over it. According to recent data, 25% of all ads delivered by DoubleClick for its customers are rich media ads, while the industry standard remains at 7.5%.2 To further take advantage of this growing trend, DoubleClick has formed a strategic alliance with Macromedia to develop an enhanced rich media workflow management solution.
DARTmail revenues reported within TechSolutions were $10.2 million for the quarter, and annual revenues were $39.4 million, an increase of 90.6% from the prior year. In December of 2002, Forrester Research named DoubleClick the leading email technology provider in terms of strategic vision.3 The report noted that DoubleClick`s DARTmail product is beginning to automate the arduous data and content exchange required to support individualized communications.
Forrester`s assessment was based, in part, on DoubleClick`s successful acquisition of Protagona, a campaign management enterprise software company, in November 2002. Marketers increasingly expect email service vendors to provide advice and tools that enable multi-channel marketing. The Protagona Ensemble product is a complete desktop solution to plan, execute and analyze campaigns across various marketing channels. In 2003, DoubleClick plans to integrate the Ensemble campaign management tool with DoubleClick`s DARTmail and UnityMail products to create an integrated suite of solutions to better meet customer needs.
David Rosenblatt, President of DoubleClick said, "In 2001 we proved we could execute financially with disciplined expense reduction. In 2002 we proved we could execute strategically with the divestitures of businesses, while filling out our suite of marketing and data solutions. In 2003 we plan to execute operationally to fulfill our vision of being the premier provider of technology and data tools for marketers."
Data
The Data division reported quarterly revenue of $20.4 million and annual revenues of $83.3 million up 2.5% year-over-year. Core catalog alliance revenues grew 9% year-over-year. Other increases in annual revenues were derived from Abacus` United Kingdom operations offset by the divestiture of the Company`s research business. Gross margins remained consistent year-over-year at 72.1%.
During 2002, Abacus` business-to-consumer division added 130 catalog clients to its alliance cooperative, its client base now makes up 74% of the top 50 US consumer catalogs. Abacus` business-to-business division saw a significant year-over-year increase in revenues driven by new client acquisition and increased volume by current clients.
International expansion of the Abacus alliance model was also a strategic focus in 2002. On June 27, 2002, DoubleClick purchased the other half of the Abacus UK business after it reached profitability in its fourth year. Since 1998, its database has grown to 300 million transactions of 26 million individuals, and has also seen a 29% increase in the last year to 279 catalog members. Other international markets for the Abacus alliance model are in the initial stages of development.
For the first time, the Abacus Fall 2002 Trend Report included data from Abacus` ChannelView tool. The report showed that currently 39% of sales from catalog campaigns were conducted online. Early in 2002, Abacus launched ChannelView, a technology analysis tool which allows individual clients to see the results of their direct mail campaigns across multiple order channels including catalog, call centers, websites and retail stores. ChannelView allows its 29 clients to capture a growing trend towards a multi-channel reality.
Media
DoubleClick divested its media businesses in four separate transactions throughout 2002. Media revenues reported in the full year 2002 were $32.7 million, versus $129.3 million in the year ago period. Going forward, DoubleClick will no longer have a Media segment.
First Quarter 2003 Outlook
DoubleClick is expecting first quarter revenues to be between $55 million and $60 million, and projects that pro forma per share earnings will be between ($0.02) and $0.01.
Segment projections for Q1 2003 are as follows:
--Data revenues are estimated to be between $17 million and $19 million with gross margins in the mid to high 60s percentage range.
--TechSolutions revenues are estimated to be between $38 million and $41 million with gross margins in the low 60s percentage range.
--Email technology within the TechSolutions division is expected to generate revenues between $9 million and $10 million, with new initiatives accounting for about $1 million of revenues.
--Total company gross margins are expected to be in the low 60s percentage range. Total company pro forma operating expenses are expected to be between $39 million and $41 million. Interest and other, including taxes are expected to add roughly $3 million in income.
Full Year 2003 Outlook
DoubleClick projects 2003 revenues to be between $250 million and $300 million, and projects that pro forma per share earnings will be between $0.05 and $0.15, a flat earnings per share estimate versus full year 2002 based upon continued tight financial controls combined with the investment allocation to new growth areas and products.
Segment projections for FY 2003 are as follows:
--Data is expected to represent approximately 35% of total revenues.
--The other 65% of revenues are expected to come from the TechSolutions business.
--Within the TechSolutions division: email is expected to generate approximately 17% of total revenue, ad management is expected to represent 45% of total revenues, while 3% of total revenues are expected to come from new initiatives including Site Advance, our analytics technology, and Ensemble, our campaign management product.
--Total company gross margins are projected to be in the high 60s percentage range. Overall, pro forma operating expenses are projected to be between $165 million and 170 million. Capital expenditures are expected to increase incrementally to between $20 million and $24 million, with depreciation of approximately $42 million for 2003. Interest and other, including taxes are projected to be between $4 million and $8 million in income, depending on interest rates and the use of cash in M&A activity.
"In the last two years of transition we have right-sized and focused our efforts on core businesses," Bruce Dalziel, CFO of DoubleClick Inc. noted. "Financially, our net cash position is better than it has been since Q1 of 2001, with net cash per share increasing for the fourth quarter in a row. We also delivered on our promise of the first full year of pro forma profitability with a $0.13 EPS. We are in a strong position to execute going forward."
The DoubleClick Conference Call to discuss this earnings press release is scheduled for today at 5:00pm EST. 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
1 Segment revenues in TechSolutions, Data and Media are stated before inter-segment eliminations of $193K, $414k and $2,441k for the three months ended Dec 31, 2002, Sept 30, 2002 and Dec 31, 2001, respectively. For the full years ended 2002 and 2001, segment revenues are stated before intersegment eliminations of $2,966 and $12,017, respectively.
2 Source: DoubleClick AdServing Trend Report December 2002 available at www.doubleclick.com/us/knowledge and NetRatings AdRelevance "Rich Media Continues Fast Growth" by David Martin and Marc Ryan October 2002 available at www.adrelevance.com.
3 Source: Forrester The Best Email Service Providers, December 2002 available at www.forrester.com
About DoubleClick Inc.
DoubleClick is the leading provider of tools 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 19 offices around the world.
Note: This press release includes forward-looking statements, including earnings and revenue projections and future plans set forth under the sections titled "2003 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: customer performance challenges, intense competition in our industry, failure to manage the integration of acquired companies, lack of growth or decline in online advertising or marketing, changes in government regulation, failure to successfully manage our 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 our most recent reports on Form 10-K and Form 10-Q. In addition, any forward-looking statements represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we may choose not to do so, even if our estimates change.
INVESTOR CONTACT:
Brenda Fields
Director, Investor Relations
212-381-5759
PRESS CONTACT:
Jennifer Blum
VP, Public Relations
212-381-5705
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