DoubleClick Beats Street Estimates but Sees Continued Difficulties
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Online ad industry bellwether DoubleClick topped Wall Street second-quarter earnings estimates by a penny, improving slightly on its first-quarter performance despite slipping revenue.
The Alley-based firm reported revenue of $101.9 million for the quarter, a decrease of 20 percent over the same period last year, and about $13 million less than the previous quarter.
But DoubleClick's pro forma net loss for second quarter was $9.5 million, or $0.07, a penny better than consensus analyst expectations, according to Thompson Financial/First Call estimates. It's also one cent better than the previous quarter, when the company posted a $10.5 million loss.
Yet despite the bottom-line improvement, it's still a far cry from DoubleClick's year-ago performance. In second quarter 2000, the company posted an $0.03 per-share loss, or $3.8 million. In the following quarter, the company reported a $0.03 per-share profit, or $3.7 million.
Nevertheless, executives said they're pleased with the overall result.
"We have been able to execute on our strategic goals across our business segments, develop and release next-generation technology, maintain a robust balance sheet and effectively manage costs," said DoubleClick chief executive Kevin Ryan. "Our outstanding team has remained focused and improved upon our leadership positions in the segments in which we operate."
DoubleClick's technology business, in the form of its TechSolutions division, brought in the majority of the quarter's revenue, about $51.8 million.
DoubleClick's Data division, which includes the Abacus database alliance and the Diameter online research unit, brought in $19.3 million, about a million more than it did in the previous quarter.
Meanwhile, in ad sales, the DoubleClick Networks generated revenue of $33.8 million, a decrease of 51 percent versus the same period last year, and 19 percent lower than last quarter.
That's in spite of a restructuring of the Media division, which saw a reduction of 40 percent of the unit's workforce since last year, and a reorganization into two units focused on well-known "branded" sites and lesser-known "value" publishers.
But Ryan described the quarter as an overall win for DoubleClick's competitive positioning. For one, he described the pending acquisition of MessageMedia -- which made e-mail a major source of income for the company. Last year, DoubleClick brought in about $1 million in e-mail marketing revenue, a figure that Ryan said would increase a hundredfold by next year.
Ryan also described the company's expansion into the Australasian region, including its acquisition of the technology of regional player Sabela Media, previously owned by a slimming-down 24/7 Media. He also suggested that new headcount reductions would be coming during the next quarter, likely in conjunction with the FloNetwork acquisitions.
"We continue to take aggressive action in second quarter to achieve ... success," Ryan said during a conference call with analysts. "We aren't standing still."
And a leadership position is helpful, especially since company officers said they expect the advertising slowdown to linger until mid-2002 -- and to continue to shake out weaker competitors.
"We will continue to be impacted ... but we've innovated and expanded our product line as well as anyone in the Internet space," Ryan added. "We will continue to execute well as anyone in the industry, and we believe in our leadership role in the industry, which is only in its beginning stages."
Next quarter, DoubleClick predicted revenue of $96 million to $102 million, with technology bringing in the lion's share of between $49 million to $51 million. Data and Media are expected to bring in $24 million to $26 million, and $26 million to $28 million, respectively.
For the third quarter, DoubleClick said it anticipated a pro forma midpoint per share loss of $0.06 per share. For the combined second half of 2001, DoubleClick reiterated its earlier guidance of a loss of $0.09 per share.
DoubleClick said it would be able to wait out the months of slim pickings, having exited the quarter with $814 million in cash and marketable securities, versus long-term debt of $256 million.