Despite Ad Slowdown, FreeShop Says Earnings May Beat Street

Seattle-based online promotional marketer Thursday released positive earnings guidance indicating it hopes to beat analysts’ expectations, despite a slowdown in revenue from dot-coms.

FreeShop said it expected to post an operating loss per share of approximately $0.23. Street consensus put losses per share at $0.24.

The company, which aggregates special offers on its Web site and in opt-in e-mails, did miss analysts’ revenues expectations — announcing revenues of about $5.6 million, as compared to estimates above $6 million.

FreeShop attributed the strong quarter to changes in its network-affiliate business model, of which it released few details and deferred questions until its full quarterly results announcement Oct. 16.

Despite the secrecy surrounding its new model, officers didn’t hesitate reluctant to praise it for a strong quarter.

“We are incredibly excited with our stellar results for September, and even more excited about the rapid growth we are seeing in our new offer network strategy,” said FreeShop chairman and chief executive Tim Choate.

Officials also added that the new model increased order volume, reporting more than 1.6 million orders taken in September, a company record that offset poor income from some of its units.

“While we saw weakness in our e-mail marketing business in the third quarter, that weakness was largely replaced by overwhelming strength in our core lead generation business, which grew significantly during the quarter,” Choate said.

The company said it continues to expect to turn a profit in the second half of next year.

“With an accelerating cost-per-action approach at our core, and an incredibly scalable and profitable new model in our offer network, we feel we have a very exciting future,” said chief financial officer John Wade.

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