Doubleclick (NASDAQ:DCLK)
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DoubleClick Reports First Quarter 2005 Results
NEW YORK, April 21 /PRNewswire-FirstCall/ -- DoubleClick Inc. (NASDAQ:DCLK),
the leading provider of data and technology solutions for marketers,
advertising agencies and web publishers, today announced financial results for
the first quarter ended March 31, 2005, and gave its business outlook for the
second quarter of 2005.
1Q05 1Q04
Revenue (000's) $76,346 $68,047
GAAP Net Income (Loss) (000's) ($917) $7,693
GAAP EPS ($0.01) $0.05
First Quarter Results
DoubleClick recorded $76.3 million in revenue for the first quarter compared to
$68.0 million in the year-ago period. GAAP net loss for the most recent
quarter was $0.9 million, or $0.01 per share, compared with GAAP net income of
$7.7 million, or $0.05 per share, in the first quarter of 2004. The Company
achieved a gross margin of 69.4% during the quarter against 66.8% in the
year-ago period. EBITDA(1) was $5.3 million for the first quarter of 2005,
versus $14.6 million in 1Q04. Total GAAP operating expenses were $56.7 million
in the quarter, versus $42.9 million in the first quarter of 2004. Total
company headcount was 1,540 as of March 31, 2005, against 1,275 twelve months
prior. The increase in headcount stemmed primarily from the addition of
Performics and SmartPath, which were acquired in June and March of 2004,
respectively, as well from additional hiring in the Ad Management, Abacus, and
Data Management Solutions (DMS) businesses.
First quarter 2005 GAAP net income and EBITDA were negatively impacted by the
accrual of retention payments and professional fees associated with the
Company's ongoing review of its strategic options. 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.
"We saw continued profitability in Ad Management and had strong results from
our Search Engine and Affiliate Marketing business," said Kevin Ryan, Chief
Executive Officer, DoubleClick. "In addition, we recently signed an important
agreement with AOL which, once fully implemented, we expect to be the largest
Ad Management deal in DoubleClick's history."
Balance Sheet and Cash Flow
DoubleClick used $1.7 million in cash flow from operations during the first
quarter, compared to a use of $7.4 million in the year ago period. The
year-over-year improvement in quarterly cash flow from operations resulted
primarily from an absence of lease termination payments and stronger working
capital, which was partially offset by lower net income. The Company had
$537.3 million in cash and marketable securities, and had a net cash(2)
position of $402.3 million, or $3.19 per share, as of March 31, 2005.
TechSolutions
The TechSolutions segment reported first quarter revenue of $51.5 million
versus $45.3 million in 1Q04. TechSolutions gross margin was 74.5%, versus
70.4% in the March quarter of 2004. TechSolutions operating margin was 12.9%,
versus 18.8% in the first quarter of 2004.
The year-over-year quarterly revenue increase stemmed primarily from the
inclusion of the results for Performics and SmartPath, as well as from organic
growth from Email products. This increase was partially offset by a year-
over-year decline in quarterly sales for the Company's Ad Management solutions.
TechSolutions gross margin improved primarily because of reduced costs in Ad
Management, an increase in revenues in Marketing Automation, and the addition
of the relatively high gross margin Search and Affiliate businesses.
TechSolutions operating margin declined primarily due to an increase in
headcount and higher amortization expenses primarily related to the
acquisitions of Performics and SmartPath, and due to costs incurred in
anticipation of DoubleClick's Ad Management agreement with AOL. Operating
expenses in the first quarter of 2004 benefited from the previously mentioned
reversal of a $1.5 million reserve relating to a prior acquisition.
Ad Management
The Company's Ad Management revenue was $31.7 million in 1Q05 versus $33.3
million in the year-ago period. These declines were principally due to pricing
declines outweighing volume increases for DoubleClick's Advertiser and
Publisher solutions. These declines were partially offset by an increase in
revenue for DoubleClick's Rich Media offering.
Earlier this month, America Online and DoubleClick entered into an agreement to
bring state-of-the-art ad serving, inventory management, workflow tools, and
delivery operations to AOL Media Networks. AOL Media Networks, the ad sales,
commerce and search arm of America Online, which also handles the marketing of
the AOL web brands, includes AOL, AOL.com, AOL Instant Messenger, Compuserve,
Netscape, Mapquest, Moviefone, Time Inc. Interactive, CNN, CNNMoney, and icq.
These properties reach upwards of 104 million people.(3) DoubleClick's Ad
Management platform for publishers, which is being piloted on Mapquest now, is
expected to be implemented across all AOL brands later this year.
"Our new agreement with AOL is a tremendous endorsement of our technology and
service, and demonstrates our long-term competitiveness as the industry
standard in online ad management," added Ryan. "AOL already uses multiple
DoubleClick products, and this latest agreement rounds out our growing and
significant relationship with one of the world's largest interactive services
companies."
In addition, DoubleClick has recently reached several other agreements for use
of its Ad Management solutions. These deals include American Idol,
Bannerconnect, Classes USA, Teleflora, Tomorrow Focus AG, and Warner Brothers
Online.
Marketing Automation
The Company's Marketing Automation products had revenue of $13.5 million in the
most recent quarter, against $12.0 million in 1Q04. The increase was due
primarily to the addition of SmartPath and organic growth in Email revenues.
Since the beginning of the year, DoubleClick has signed new Marketing
Automation contracts with several clients including Penton UK, Janoschka Group,
Staples, Hong Kong Trade Development Council, and WhiteFence.
Performics
The Company's Search Engine and Affiliate Marketing products recorded revenue
of $6.3 million in 1Q05, which was a 50.5% increase over 1Q04. DoubleClick
acquired Performics in June of 2004.
Agreements to use the division's solutions have recently been reached with
Biotherm, Capital One Auto Finance, Gloss.com, Household's GM and Union Plus
Cards, Kiels, Singer Direct, and The TJX Companies.
Data
DoubleClick reported Data segment revenue of $24.8 million in 1Q05, compared to
$22.8 million in 1Q04. Overall Data gross margin was 58.8% for the quarter,
against 59.7% in the prior year period. Data's operating margin was 6.2% in
the quarter, versus 11.1% in the comparable year ago timeframe. Data segment
margins declined primarily because a higher percentage of sales were generated
by the lower margin DMS business.
Abacus
Abacus quarterly revenue was $20.7 million versus $20.4 million in the year-ago
period. Increases in revenue from the U.S. Business to Business Alliance were
offset by lower revenues from U.S. and U.K. Business to Consumer cataloguers.
During the quarter, DoubleClick added over 200 net new members across all
wholly owned Abacus Alliances globally, bringing the total to over 2,700.
DMS
DMS generated $4.1 million in revenue for 1Q05 against the year-ago quarter's
$2.4 million. The increase was driven primarily by the completion of existing
customer installations coupled with new client wins.
"We have made a significant investment in our Data Management business, and
this has really begun to pay off in terms of new customer wins and more
business from existing clients," said Brian Rainey, President of Abacus. "As a
result, we have had three consecutive quarters of double-digit year-on-year
revenue growth in DMS."
Second Quarter 2005 Outlook(4)
DoubleClick expects 2Q05 revenue to be between $71 million and $77 million.
The Company expects total Company gross margin to be in low 70s percentage
range. GAAP operating expenses are expected to be between $54 million and $58
million. Items in interest and other, net and taxes are expected to be
approximately $2 million, based on an assumed tax rate of approximately 15%.
The Company anticipates recording GAAP earnings of between ($0.02) and $0.02
per share.
The Company's segment projections for 2Q05 are as follows:
-- TechSolutions revenue is expected to be between $47 million and $52
million, including $29 million to $33 million from Ad Management,
$12 million to $14 million from Marketing Automation, and $6 million to
$7 million from Performics. Overall TechSolutions gross margin is
expected to be in the mid 70s percentage range.
-- Data revenue is expected to be between $24 million and $26 million,
including $20 million to $22 million from Abacus; overall Data gross
margin should be in the high 50s to low 60s percentage range.
Conference Call Today
The DoubleClick Conference Call to discuss this earnings press release is
scheduled for today at 5:00 p.m. Eastern Time. This call will be available
live via Webcast, and on a replay basis afterward on the Company's website
http://www.doubleclick.net/ under Investor Relations or at
http://ir.doubleclick.net/. The Webcast is also being distributed over
Thomson/CCBN's Investor Distribution Network to both institutional and
individual investors. Individual investors can also listen to the call at
http://www.fulldisclosure.com/ or by visiting any of the investor sites in
Thomson/CCBN's Individual Investor Network. Institutional investors can also
access the call via http://www.streetevents.com/.
Additional financial metrics can be found in the "Financial Reports" section of
DoubleClick's Investor Relations website, at http://ir.doubleclick.net/ .
About DoubleClick
DoubleClick is the leading provider of data and technology solutions for
advertising agencies, marketers, and web publishers to plan, execute, and
analyze their marketing programs. DoubleClick's marketing solutions help
clients yield the highest return on their marketing dollar. DoubleClick Inc.
has global headquarters in New York City and maintains 22 offices around the
world.
Note: This press release includes forward-looking statements, including
earnings and revenue projections and plans set forth under the section titled
"Second Quarter 2005 Outlook" above, as well as sentences using the words
"expects," "plans," "should," 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:
intense competition in DoubleClick's industry, uncertainties related to
DoubleClick's decision to review strategic options, lack of growth or decline
in online advertising or marketing, changes in government regulation, 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.
INVESTOR CONTACT: Jason McGruder
Director, Investor Relations
212-381-5182
PRESS CONTACT: Jennifer Miller
VP, Corporate Communications
212-381-5705
(1) EBITDA (or Earnings Before Interest, Tax, Depreciation, and
Amortization) is a non-GAAP financial measure. Please see the
attached schedule for a reconciliation of GAAP net income to EBITDA.
Please see the Form 8-K filed on April 21, 2005 by the Company with
the SEC for a discussion of why the Company believes EBITDA is a
useful financial measure to investors and of how and when management
uses EBITDA.
(2) Net cash may be considered a non-GAAP financial measure and is defined
as gross cash and cash equivalents of $120.0 million, restricted cash
of $13.3 million, and investments in marketable securities of $404.0
million minus zero coupon convertible subordinated notes of $135.0
million. Please see the Form 8-K filed on April 21, 2005 by the
Company with the SEC for a discussion of why the Company believes net
cash is a useful financial measure to investors and of how and when
management uses this measure.
(3) Source: comScore Media Metrix, February 2005.
(4) DoubleClick's guidance for 2Q05 does not reflect the potential impact
of any mergers, acquisitions, divestitures or business combinations
that may be announced after the date hereof, but does include the
impact of retention bonuses and professional fees related to the
Company's ongoing review of strategic options.
DOUBLECLICK INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
2005 2004
(Unaudited, in thousands, except
per share amounts)
Revenue:
Technology $51,512 $45,297
Data 24,834 22,750
Total revenue 76,346 68,047
Cost of revenue 23,380 22,565
Gross profit 52,966 45,482
Operating expenses:
Sales and marketing 29,053 25,650
General and administrative 11,507 8,074
Product development 14,503 8,491
Amortization of intangibles 1,640 637
Total operating expenses 56,703 42,852
Income (loss) from operations (3,737) 2,630
Other income (expense)
Equity in losses of affiliates (88) (186)
Gain on distribution from affiliate - 2,400
Interest and other, net 3,291 3,474
Total other income 3,203 5,688
Income (loss) before income taxes (534) 8,318
Provision for income taxes 383 625
Net income (loss) $(917) $7,693
Basic net income (loss) per share $(0.01) $0.06
Weighted average shares used in basic
net income (loss) per share 125,914 137,099
Diluted net income (loss) per share $(0.01) $0.05
Weighted average shares used in
diluted net income (loss) per share 125,914 151,384
DOUBLECLICK INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2005 2004
(Unaudited, in thousands, except
share amounts)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $120,016 $126,135
Investments in marketable securities 295,515 264,332
Restricted cash 1,635 3,635
Accounts receivable, net of
allowances of $8,670 and
$10,051, respectively 79,746 84,165
Prepaid expenses and other current assets 14,409 12,257
Total current assets 511,321 490,524
Investment in marketable securities 108,509 146,552
Restricted cash 11,668 11,668
Property and equipment, net 80,391 77,821
Goodwill 72,727 72,948
Intangible assets, net 19,513 22,395
Investment in affiliates 5,673 5,772
Other assets 13,645 13,749
Total assets $823,447 $841,429
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 26,614 34,964
Accrued expenses and other current
liabilities 48,431 56,844
Deferred revenue 13,563 13,687
Total current liabilities 88,608 105,495
Convertible subordinated notes - Zero
Coupon, due 2023 135,000 135,000
Other long term liabilities 20,377 20,570
Total liabilities 243,985 261,065
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.001;
5,000,000 shares authorized,
none outstanding - -
Common stock, par value $0.001;
400,000,000 shares authorized,
140,942,901 and 140,564,907 shares
issued, respectively 141 141
Treasury stock, 14,864,925 shares (109,223) (109,223)
Additional paid-in capital 1,296,807 1,294,510
Accumulated deficit (612,930) (612,013)
Other accumulated comprehensive income 4,667 6,949
Total stockholders' equity 579,462 580,364
Total liabilities and
stockholders' equity $823,447 $841,429
DOUBLECLICK INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
2005 2004
(Unaudited, in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(917) $7,693
Adjustments to reconcile net income
(loss) to net cash used in
operating activities
Depreciation and leasehold
amortization 5,598 7,445
Amortization of intangible assets 2,854 1,512
Equity in losses of affiliates 88 186
Gain on distribution from
affiliate - (2,400)
Other non-cash items 1,046 897
Provisions for bad debts and
advertiser discounts 1,164 2,574
Changes in operating assets and
liabilities, net of the effect
of acquisitions:
Accounts receivable 2,900 (5,434)
Prepaid expenses and other assets (2,168) (1,884)
Accounts payable (8,350) 1,210
Lease termination and related payments - (7,625)
Accrued expenses and other liabilities (3,772) (13,007)
Deferred revenue (124) 1,482
Net cash used in operating activities (1,681) (7,351)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments in
marketable securities (29,115) (74,400)
Maturities of investments in
marketable securities 35,208 51,520
Restricted cash 2,000 12,100
Purchases of property and equipment (6,290) (6,069)
Acquisition of businesses, net of
cash acquired (6,575) (22,445)
Proceeds from distribution from affiliate - 2,400
Investment in Abacus Deutschland - (471)
Net cash used in investing activities (4,772) (37,365)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock 1,251 2,443
Purchases of treasury stock - (20,439)
Payments under capital lease obligations - (179)
Net cash provided by (used in)
financing activities 1,251 (18,175)
Effect of exchange rate changes on
cash and cash equivalents (917) 662
Net decrease in cash and cash
equivalents (6,119) (62,229)
Cash and cash equivalents at
beginning of period $126,135 $183,484
Cash and cash equivalents at end of
period $120,016 $121,255
DOUBLECLICK INC.
RECONCILIATION OF EBITDA TO GAAP NET INCOME
For the Three Months
Ended March 31,
2005 2004
GAAP Net Income $(917) 7,693
Plus: tax provision 383 625
Less: interest income, net (2,602) (2,648)
Plus: amortization of intangibles (A) 2,854 1,512
Plus: depreciation and
leasehold amortization 5,598 7,445
EBITDA $5,316 14,627
(A) For the three months ended March 31, 2005 and March 31, 2004, $1.2M
and $0.9M, respectively, of amortization expense of intangible assets
relating to purchased technology was included as a component of cost
of revenue in the Consolidated Statements of Operations.
DATASOURCE: DoubleClick Inc.
CONTACT: Investor: Jason McGruder, Director, Investor Relations,
+1-212-381-5182, or Press: Jennifer Miller, VP, Corporate Communications
+1-212-381-5705, both of DoubleClick Inc.
Web site: http://www.doubleclick.net/
http://ir.doubleclick.net/