Earnings: Digital Impact, Aptimus

Digital Impact Nears Breakeven

Online direct marketer Digital Impact said its net loss for the second quarter narrowed 75 percent from a year ago, as it neared breakeven on the strength of client retention and lower costs.

The company’s revenues were flat, growing just 3 percent to $10.9 million compared to the same period a year ago. Net loss, however, dropped sharply to $239,000 from $1.2 million. The narrower net loss came thanks to a 13 percent year-over-year decline in operating costs.

Digital Impact said its client retention rate was 90 percent. The company attributed its flat growth to the overall stagnation of the e-mail marketing industry in the face of the spam problem.

“We are attacking this problem through legislative initiatives, technology improvements, and ISP relationships,” William Park, Digital Impact’s chief executive, said in a statement
“We believe that the enactment of spam legislation coupled with the initiation of the national Do Not Call list could be a catalyst for future growth, as marketers shift their budgets to targeted permission-based e-mail.”

Park is more optimistic than some. Kevin Ryan, DoubleClick’s chief executive, said earlier in the week that he did not believe the enactment of the Do Not Call registry would have much of an impact on e-mail marketing, although it might lead to a shift sometime in 2004 or beyond.

For now, Digital Impact expects growth to remain sluggish, with revenues remaining at the same in the third quarter and a net loss of up to 2 cents a share. For the full year, the company projects to break even.

Aptimus Cuts Losses

Online direct response network Aptimus said it lowered its net loss in the second quarter thanks to higher revenues and lower costs.

The company took in $938,000, up 20 percent in the same period last year. Net loss was $437,000, or 10 cent per share, a 71 percent improvement compared to the second quarter of 2002. Aptimus said its results do not include $40,000 of leads that were generated by a client but delayed in recognition until July. The company slashed quarterly operating expenses 40 percent compared to the year before.

Like Digital Impact, Aptimus theorized that the Do Not Call registry could lead to a significant shift of marketing to online initiatives.

The company ended the quarter with $667,000 in cash and cash equivalents. Recently, it opened a $500,000 credit line with Commerca Bank. In March, the company moved to the OTC after it failed to meet NASDAQ’s listing requirements.