Avenue A, Inc. Announces Q2 Financial Performance
CONTACTS:
Michael Vernon
Avenue A, Inc.
(206) 816-8599
Debra Berliner Barda/Hunter Blankenbaker
G.S. Schwartz & Co., Inc.
(212)725-4500
dbb@schwartz.com/hunter@schwartz.com
Results in Line with Previously Announced Guidance; Gross Margins Strong; Atlas DMT on Target for Launch of Technology Platform
(Conference Call and Webcast at 11 a.m. EDT Today)
SEATTLE – July 27, 2001 – Avenue A, Inc. (Nasdaq: AVEA), a digital marketing and technology company, today announced financial results for the second quarter and six months of 2001 that were in line with previously announced financial guidance.
For the second quarter ended June 30, 2001, Avenue A, Inc. reported revenues of $20.6 million, compared to revenues of $52.4 million for the second quarter of 2000. Pro forma net loss for the second quarter of 2001, which excludes the amortization of intangible assets and deferred stock compensation, was $7.4 million or $.13 per share. This also excludes non-recurring charges of $4.7 million related to staff reductions and write-downs of assets and investments. This compared to a pro forma net loss of $1.7 million, or $0.03 per share for the comparable 2000 quarter.
Revenues for the first six months of 2001 were $44.7 million, versus revenues of $99.2 million for the comparable six months of 2000. Pro forma net loss for the first six months of 2001, which excludes the amortization of intangible assets and deferred stock compensation, was $15.1 million or $.26 per share. This is before the non-recurring restructuring charges of $6.2 million related to staff reductions and write-downs of assets and investments. This compared to a pro forma net loss of $4.3 million, or $0.09 per share for the comparable 2000 first half.
The Company announced that gross margins increased strongly to 28%, versus 19.8% in Q2 of 2000 and 23.5% in Q1 of this year.
Brian McAndrews, President and Chief Executive Officer of Avenue A, Inc., stated, “We are pleased to be experiencing greater stability in our client base and more visibility into our revenue streams. Nonetheless, the current economic climate has had an adverse impact on the advertising industry, and the digital marketing sector remains soft. Consequently, we announced a significant staff reduction at the end of May to continue driving our operating expenses down.”
Mr. McAndrews further stated, “During this period of cost reductions, however, we continued to make progress on key company initiatives. In our agency business, we continued to strengthen our client base, reducing dotcom-generated revenue to 24% of total revenues. In our Atlas DMT technology division, we made further investments in our proprietary technology, including the ongoing development of our Atlas Digital Marketing Suite. That remains on schedule for completion and rollout at the end of Q3. This represents the culmination of a strategic plan which provides us with the customer offerings to lead the digital marketing industry by capitalizing on its two main segments – service and technology.”
The Company noted that it ended the second quarter with $119.5 million in cash and short-term investments.
Avenue A Scores New Business
The Company continued to focus its business on larger, more stable clients. During the second quarter, Avenue A signed the following companies, among others, as new clients:
Novartis
Club Med
Kimberly Clark
Second Quarter 2001 Conference Call/Webcast Today
Avenue A, Inc. will host a conference call to discuss these financial results at 11:00 a.m. Eastern/8:00 a.m. Pacific. The webcast and replay will be available from the Investor Relations section of the Company’s website at www.avenuea.com, under “Calendar of Events.” Interested parties should visit the website approximately 15 minutes prior to download and install any necessary software.
About Avenue A, Inc.
Avenue A, Inc., a digital marketing services and technology company, was founded in 1997 to help marketers acquire, retain and grow customers across all digital media. Through its two operating units - Avenue A, provider of digital marketing services, and the new Atlas DMT unit, provider of digital marketing management solutions - Avenue A, Inc. is able to touch and bring value to any interaction in the digital marketplace. The corporation is based in Seattle and operates offices in New York and Chicago. Avenue A, Inc. also offers digital marketing services through Avenue A/NYC LLC, a wholly owned subsidiary based in New York. Avenue A, Inc. and Avenue A/NYC adhere to the NAI privacy principles that have been applauded by the FTC. These principles are designed to ensure Internet user privacy. Please visit www.avenueainc.com to learn more.
About Atlas DMT
Atlas DMT is a provider of digital marketing management systems and an operating unit of Avenue A, Inc. Atlas DMT offers a system of services and technologies that help advertising agencies and other marketing professionals deliver efficient, profitable digital marketing programs.
The Atlas Digital Marketing Suite is an integrated, end-to-end solution for planning, executing, and analyzing digital marketing campaigns. Atlas Power Tools are additional tools and services that enhance the marketing power of the Atlas Suite. And the Atlas Institute provides research and education on the most effective digital marketing practices.
The Atlas DMT team is made up of technologists, database marketing experts, and other digital marketing professionals who have years of front-line experience making digital marketing work.
About Avenue A
Avenue A is a digital marketing agency and operating unit of Avenue A, Inc. It offers a one-stop solution that seeks to drive breakthrough results for its clients` web and e-mail marketing initiatives by using innovative technology and rigorous analytical methods that turn campaign data into actionable insights. Avenue A`s integrated suite of services includes web advertising, affiliate programs, search engine optimization, strategic portal relationships, e-mail prospecting, e-mail list management, customer targeting, profiling and advanced analytical services. Avenue A focuses on achieving the best possible results and the highest possible return on investment for its clients` digital marketing efforts. Clients include Microsoft, Household Finance and Best Buy.
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as `aims, anticipates, believes, estimates, expects, intends, plans, predicts, projects, continues or targets` or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. The forward-looking statements in this release include, among others, statements about the stability of our client base and expected release date of the Atlas Digital Marketing Suite. Forward-looking statements are based on the opinions and estimates of the management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect Avenue A`s actual results include, among others, fluctuating or declining demand for our advertising services among our existing client base, the potential erosion in service pricing, failure to attract sufficient new business to Atlas DMT to materially and positively impact financial results, delays in releasing the Atlas Digital Marketing Suite due to unforeseen problems with software development, the potential failure to attract new clients, to maintain current, desired client relationships or to achieve effective advertising campaigns for existing clients, potential deterioration or slower-than-expected development of the Internet advertising market, the potential need for additional funds to finance operations, the need to generate significant additional revenue to achieve profitability, quarterly and seasonal fluctuations in operating results, timing variations on the part of advertisers to implement advertising campaigns, costs related to any possible future acquisitions of technologies or businesses, the short term nature of Avenue A`s contracts with clients which are cancelable on 90 days` or less notice, and the uncertainties, potential costs, and possible business impacts of unfavorable rulings in the previously-announced class action lawsuits. More information about factors that potentially could affect Avenue A`s financial results is included in Avenue A`s Form 10-Q for the quarter ended March 31, 2001 filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, Avenue A undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.
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