24/7 Real Media (NASDAQ:TFSM)
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24/7 Real Media, Inc. (Nasdaq:TFSM)
Second Quarter Highlights:
-- Revenue of $33.9 million, an increase of 73% over the
comparable period in 2004.
-- Pro forma operating income of $0.05 per share compared with
$0.02 per share in Q2 of 2004; GAAP net loss of $0.00 per
share versus a GAAP profit of $0.03 per share in Q2 of 2004,
which included a one-time gain of $0.07 per share.
-- Continued successful roll-out of Decide DNA, our award-winning
Search Engine Marketing platform.
-- Winner of ClickZ.com Marketing Excellence Awards for Best
Advertising Network, Best Ad-Server, and Best Behavioral
Technology/Product.
24/7 Real Media, Inc. (Nasdaq: TFSM), a pioneer in interactive
marketing and technology, today announced financial results for the
second quarter ended June 30, 2005. Revenue for the second quarter of
2005 was $33.9 million, an increase of 73% over the $19.6 million
reported for the second quarter of 2004.
Pro forma operating income(1) for the second quarter of 2005 was
$2.3 million, or $0.05 per share. This compares with pro forma
operating income of $0.7 million, or $0.02 per share, for the second
quarter of 2004.
Net loss computed in accordance with generally accepted accounting
principles (GAAP) for the second quarter of 2005 was a loss of $0.2
million, or $0.00 per share, compared with income of $1.5 million, or
$0.03 per share, for the second quarter of 2004. GAAP net income for
the second quarter of 2004 includes a one-time gain of $2.9 million
from a legal settlement.
"24/7 Real Media enjoyed an outstanding second quarter, continuing
on the success and momentum the company demonstrated in the first
quarter," said David J. Moore, chairman and chief executive officer of
24/7 Real Media. "Our critically acclaimed Search Engine Marketing
franchise, 24/7 Search, continues to gain traction throughout the
largest markets worldwide, and our leading 24/7 Media and 24/7
Technology franchises were recently honored by members of the Internet
advertising community."
"All our businesses are performing very well. We are poised to
continue capitalizing on the positive trends in the market, including
increased spending online and the rapid growth of paid search."
Segment Overview
Revenue in the Media Solutions segment climbed 35% to $16.7
million in the second quarter of 2005 from $12.4 million in the second
quarter of 2004. Gross margins remained stable at 32.1%.
Search Solutions revenue advanced 362% to $11.7 million from $2.5
million in the second quarter of 2004. Gross margins for the segment
increased to 33.8% in the second quarter of 2005. Year-over-year
comparisons for this segment are influenced by the acquisition of
Decide Interactive in the third quarter of 2004.
Technology Solutions revenue climbed 17% to $5.5 million in the
second quarter of 2005 from $4.7 million in the second quarter of
2004. Technology gross margins were 78.6% in the second quarter of
2005.
Guidance
The Company expects third quarter revenue for 2005 to be between
$32 million and $33 million, the mid-point of which represents an
increase of 56% from third quarter 2004 revenue of $20.8 million. The
Company expects diluted pro forma operating income per share in the
third quarter of 2005 to be $0.04 per share.
The Company expects fourth quarter revenue for 2005 to be between
$35 million and $37 million, the mid-point of which represents an
increase of 31% from fourth quarter 2004 revenue of $27.5 million. The
Company expects diluted pro forma operating income per share in the
fourth quarter of 2005 to be between $0.05 and $0.06 per share.
The Company now anticipates full year 2005 revenue to be in the
range of $130 million to $133 million, the mid-point of which
represents an increase of 54% from revenue of $85.3 million in 2004.
The Company now anticipates pro forma per share earnings for the full
year of $0.17 to $0.18.
The Company expects full year 2006 revenue to be in the range of
$165 million to $175 million and anticipates pro forma per share
earnings for the full year of $0.28 to $0.32.
In conjunction with this release, a conference call will be held
at 8:30 a.m. EDT on Thursday, August 4 to discuss these results. The
call will be broadcast live over the Internet at
www.247realmedia.com/about/investor. Please allow extra time to visit
our Web site prior to the call and download the streaming media
software required to listen to the Internet broadcast. The online
replay of the broadcast should be available within two hours following
the live call and will be available for three weeks.
About 24/7 Real Media, Inc.
24/7 Real Media, a pioneer in interactive marketing and
technology, targets and delivers audiences for publishers and
marketers. Our customers generate increased revenue and profits
through media and search services, coupled with one seamless platform
of serving, targeting, tracking and analytics technologies. The
company is headquartered in New York, with offices in other major U.S.
cities, Canada, Europe and Asia. For more information, please visit
www.247realmedia.com. 24/7 Real Media: Delivering Today. Defining
Tomorrow.
24/7 Real Media is a member of the NAI and adheres to the NAI
privacy principles that have been applauded by the FTC. These
principles are designed to help ensure Internet user privacy. For more
information about online data collection associated with ad serving,
including online preference marketing and an opportunity to opt-out of
24/7 Real Media cookies, go to: www.networkadvertising.org.
Caution concerning forward-looking statements:
Certain statements in this news release are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. For instance, words such as "expects,"
"anticipates," "predicts," "guidance" and similar expressions identify
forward-looking statements. Forward-looking statements also include
any other passages that relate to expected future events or trends
that can only be evaluated by events or trends that will occur in the
future. Some of the forward-looking statements in this news release
include, without limitation, statements regarding the expected
financial performance for the third and fourth quarters of 2005 and
for the full years 2005 and 2006. Investors are cautioned not to place
undue reliance upon these forward-looking statements, which speak only
as to the date of this release. Except as required by law, 24/7 Real
Media undertakes no obligation to update any forward-looking or other
statements in this news release, whether as a result of new
information, future events or otherwise. The forward-looking
statements are based on the opinions and estimates of management at
the time the statements were made and are subject to substantial risks
and uncertainties that could cause actual results to differ materially
from those anticipated in the forward-looking statements. These
substantial risks and uncertainties include, among others, the risks
that the company may not successfully complete the integration of
Decide Interactive, which it acquired in 2004; that it may incur
unforeseen expenses or loss of revenue relating to such acquisitions;
geopolitical, exchange rate and other risks associated with
international operations, which currently comprise a significant
portion of the Company's revenue; the potential loss of key employees
and inability to attract qualified new employees due to a very
competitive and tightening job market; risks that the Company's
technology will fail to scale to meet the increasing demands brought
about by increased business levels; risk that the Company's technology
services will be disrupted by terrorist attack or malicious intrusion,
and that the Company's back-up facilities and disaster recovery plans
will not be sufficient when needed; customer concentration risks;
unanticipated loss of clients or delays in anticipated business; the
potential for enhanced competition from companies with substantially
greater resources than those of the Company; potential deterioration
or slower-than-expected growth in the Internet advertising market; the
very short-term nature of the Company's contracts with clients; and
the uncertainties, potential costs, and possible business impacts of
potential new legislation, litigation or regulatory investigation
involving the Company. More information about factors that could cause
actual results to differ materially from those predicted in the
Company's forward-looking statements, as well as additional
information regarding the Company's business and financial results and
condition, is set out in its annual report on Form 10-K for the year
ended December 31, 2004, filed with the Securities and Exchange
Commission, and will be set out in its Quarterly Report on Form 10-Q
for the three months ended June 30, 2005, which the Company expects to
file with the Securities and Exchange Commission on or before August
9, 2005. Investors are strongly encouraged to read the Company's Form
10-K, Forms 10-Q and other filings with the Securities and Exchange
Commission in their entirety.
(1) Pro forma operating income is a non-GAAP financial measure.
24/7 Real Media believes pro forma reporting provides
meaningful insight into the Company's ongoing economic
performance and therefore uses pro forma reporting internally
to assist in evaluating and managing the Company's operations.
A full reconciliation of GAAP net income to pro forma
operating income appears in the financial statement portion of
this release.
-0-
*T
24/7 REAL MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three months ended Six months ended
------------------------- ------------------------
June 30, June 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
(unaudited) (unaudited)
Revenues:
Media $ 16,684 $ 12,358 $ 30,913 $ 22,381
Search 11,710 2,533 21,332 5,549
Technology 5,492 4,706 10,711 9,048
----------- ----------- ----------- -----------
Total
revenues 33,886 19,597 62,956 36,978
----------- ----------- ----------- -----------
Cost of revenues:
Media 11,327 8,823 20,954 15,806
Search 7,747 1,664 14,379 4,122
Technology 1,177 879 2,169 1,701
----------- ----------- ----------- -----------
Total cost
of revenues 20,251 11,366 37,502 21,629
----------- ----------- ----------- -----------
Gross profit 13,635 8,231 25,454 15,349
----------- ----------- ----------- -----------
Operating expenses:
Sales and
marketing 5,731 3,893 11,021 7,209
General and
administrative 4,988 3,019 9,572 6,001
Product
development 1,366 1,095 2,608 2,146
Other expenses:
Amortization
of intangible
assets and
deferred
financing
costs 1,139 1,414 2,279 2,202
Stock-based
compensation 441 298 954 497
Restructuring
costs - 501 973 501
----------- ----------- ----------- -----------
Total
operating
expenses 13,665 10,220 27,407 18,556
----------- ----------- ----------- -----------
Operating
loss (30) (1,989) (1,953) (3,207)
Interest income
(expense), net (54) (96) (142) (278)
Change in fair
value of warrant
liability (110) 881 40 1,809
Recovery of
investment - - 2,100 -
Impairment of
marketable
securities - - (588) -
Gain on sale of
marketable
securities 7 - 7 -
Gain on legal
settlement - 2,896 - 2,896
Other income
(expense), net 6 (69) (40) 111
----------- ----------- ----------- -----------
Loss before income
taxes (181) 1,623 (576) 1,331
Provision for
income taxes (9) (32) (20) (132)
----------- ----------- ----------- -----------
Net loss (190) 1,591 (596) 1,199
Dividends and
conversion
discount on
preferred stock (10) (104) (22) (222)
----------- ----------- ----------- -----------
Net (loss) income
attributable to
common
stockholders $ (200) $ 1,487 $ (618) $ 977
=========== =========== =========== ===========
Basic net income
(loss) per share
attributable to
common
stockholders $ (0.00) $ 0.04 $ (0.01) $ 0.03
=========== =========== =========== ===========
Weighted average
shares used in
basic net income
(loss) per share 44,976,378 34,054,489 44,904,167 29,836,259
=========== =========== =========== ===========
Diluted net income
(loss) per share
attributable to
common
stockholders $ (0.00) $ 0.03 $ (0.01) $ 0.02
=========== =========== =========== ===========
Weighted average
shares used in
diluted net income
(loss) per share 44,976,378 43,886,508 44,904,167 39,845,899
=========== =========== =========== ===========
Pro forma:
Operating income
(a) 2,270 680 3,571 938
Diluted operating
income per share $ 0.05 $ 0.02 $ 0.07 $ 0.02
=========== =========== =========== ===========
Weighted average
shares used in
diluted operating
income per share 49,481,305 43,886,508 49,242,008 39,845,899
=========== =========== =========== ===========
(a) Proforma operating income excludes certain other expenses computed
as follows:
Operating loss $ (30) $ (1,989) $ (1,953) $ (3,207)
Excluding:
Amortization
of intangible
assets and
deferred
financing
costs 1,139 1,414 2,279 2,202
Stock-based
compensation 441 298 954 497
Restructuring
costs - 501 973 501
Depreciation 720 456 1,318 945
----------- ----------- ----------- -----------
Pro forma
operating
income $ 2,270 $ 680 $ 3,571 $ 938
=========== =========== =========== ===========
24/7 REAL MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
June 30, December 31,
2005 2004
------------ --------------
(unaudited)
Cash $ 28,347 $ 27,690
Accounts receivable 29,921 28,224
Total current assets 63,487 62,500
Total assets 122,156 121,398
Accounts payable and accrued liabilities 28,620 28,233
Deferred revenue 2,918 3,222
Total current liabilities 39,038 38,955
Long term debt 6,736 6,431
Total liabilities 46,696 46,130
Total stockholders' equity 75,460 75,268
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