Quarterly Revenues Slipping for DoubleClick
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The Alley-based online ad giant saw revenues of $114.9 million, resulting in a pro forma net loss of $10.5 million, or $0.08 per share. That's a penny better than Wall Street had expected, according to Thomson Financial/First Call estimates.
But it's also 15 percent less than the firm took in just a quarter earlier, when it broke even on an earnings-per-share basis.
That figure doesn't include a restructuring charge of $29 million, in conjunction with its revamping of global media operations into more easily managed units, the Brand Network and Audience Network.
Nevertheless, chief executive Kevin Ryan said he was pleased with the quarter's performance.
"We have leadership positions in each of the business segments in which we operate, world class technology, a robust balance sheet, and a great team," Ryan said. "Ironically, the tough industry environment has resulted in DoubleClick having a better competitive position than ever before. I am excited about our prospects for the future."
But in response to a market that chief financial officer Stephen Collins called "pretty darn tough," DoubleClick said it would post a second-quarter loss of between $0.05 and $0.07 per share, on revenue of $100 million to $105 million.
Analysts, and previous guidance, had forecasted a $0.02 per share loss. Collins said that a portion of this is the result of no discernable seasonal pickup in industry advertising revenues.
"Online marketing is soft right now, along with the whole economy," Collins said. "As the economy turns around, DoubleClick will benefit along with its customers. For the time being though, we need to manage our operations tightly, and not be overly aggressive in our revenue projections."
DoubleClick also revised guidance for the rest of 2001, expecting annual revenue to be between $425 and $450 million, resulting in a full-year pro-forma loss between $0.18 and $0.22 per share.
While DoubleClick is expecting TechSolutions revenue to grow between 5 and 10 percent in 2001, and Data to grow 20 percent during the year, a new strain will be placed on the firm as it decreases its work for AltaVista, in accordance with a previously announced agreement. DoubleClick said that its media business would likely decline 45 to 55 percent in part for that reason.
In better news, DoubleClick said during the most recent quarter that it has continued to lessen its dependence on media revenues -- somewhat. The company saw about 40 percent of its income come from media, down about 5 percent from fourth quarter. The move had been in response to efforts to concentrate on its higher-margin TechSolutions division -- a unit that's also less exposed to the softness in ad pricing.
As expected -- and because of that softness -- DoubleClick's media business continued to feel pressure, producing $46.1 million in revenues for first quarter, down sharply from the $60.4 million it saw in last quarter.
The company's TechSolutions unit suffered as well. While most of DoubleClick's quarterly revenue again came from the division -- which produced $54.9 million in revenue -- it took in less than last quarter's $61.5 million.
That's in spite of adding 177 new clients, including publishers like Getmusic.com, Major League Baseball, and EMAP, and agencies including FCB Worldwide. Ryan said price pressure from troubled competitors' "bargain-basement deals" was one of the factors in the unit's current weakness.
The company's Data division pulled in $18.2 million in first quarter, up from $17.8 million in last quarter. DoubleClick attributed the growth to expansion of its Abacus Direct unit's direct marketing list-sharing business, Abacus Alliance.
DoubleClick also said the proportion of revenues from traditional advertisers continued to grow to more than 59 percent, from about 55 percent last quarter.
Despite the concern going forward, DoubleClick's $831 million in cash -- minus the undetermined amount it will spend to acquire e-mail marketer FloNetwork in April -- should be enough to carry it through the current downturn in online advertising.
"I think it will be clear that we are outperforming the industry in a very tough environment. This was a tough quarter for the industry, and I think the entire year's going to be tough," Ryan said.
Collins also said the company's "drawing the line" on reducing operating expenses -- suggesting no further layoffs or office closings. It's a gutsy promise, but Collins added that the DoubleClick's infrastructure could easily support even a larger company.
"We have taken the steps necessary to stay lean and mean," he said. "As the economy recovers and advertising dollars are allocated more and more to online media, DoubleClick will benefit enormously. We have the resources and staying power to stay on top."