LookSmart Breaks Even, Surprises Analysts

  |  October 28, 2004   |  Comments

Company is further developing proprietary content, to avoid another debacle like the one it experienced with MSN.

LookSmart did better than expected in the third quarter, effectively breaking even on a per-share basis by posting net income of $15,000. Analysts had expected the company to post a $0.02 per share loss.

The unexpected results were due, at least in part, to certain one-time events, including a gain of $1 million from discontinued international operations. Still, at least some of the improvement came from better-than-expected revenue growth. The company brought in $17.5 million for the third quarter, after having said it expected $16 to $17 million. That's an 82 percent increase over the third quarter of 2003, when LookSmart brought in just $9.6 million.

LookSmart has been through dramatic changes over the past year. Last October, it got word its biggest distribution partner, MSN, would drop it in January. Since then, the company has slimmed down its work force, and introduced a paid listings product. In this most recent quarter, it acquired Furl.net to increase distribution of its listings and named a new CEO, David Hills, formerly of 24/7 Real Media.

"This company has undergone a remarkable transformation over the last 10 months," said Hills on the company's conference call with investors. "We continue to look for large opportunities to grow profitably."

Looking ahead to Q4, LookSmart boosted its expectations. The company predicts it will bring in between $18 and $20 million, which is expected to result in a net loss of less than $1 million for the quarter. Traffic acquisition costs, or the amounts LookSmart pays its partner publishers, are expected to come in between 51 and 53 percent. This quarter, TAC came in at only 47 percent. The company said that was partly due to circumstances that won't recur.

The company is pinning its future hopes on three trends: higher prices in bigger search players' marketplaces; development of proprietary content on which to display listings; and the ability to compete for distribution partners via private-label search portals, such as the deal it struck with the University of California at Berkeley.

"We're moving aggressively to offer highly differentiated products to distribution partners," said Hills. "We don't want to compete on revenue share alone."

One of the company's proprietary content areas will be family-safe search, which the company is exploring with its Net Nanny service. Additionally, the company plans to unveil a re-design of the recently-acquired Furl.net later this week, which will allow users to search across all public archives of URLs users have saved.

"We have hundreds of thousands of high quality archives created by Furl users," said Hills. "The more people use Furl, the better the content gets."

Hills said the company has already integrated Furl.net with another property, FindArticles, to add greater functionality and cross-pollinate the traffic.

Hills said executives were looking into a variety of areas for future growth opportunities. He pointed out local search, mentioning the company's deal with Bell South. The company is also examining whether to get into contextual advertising, but Hills said that's yet undecided.

ClickZ Live New York What's New for 2015?
You spoke, we listened! ClickZ Live New York (Mar 30-Apr 1) is back with a brand new streamlined agenda. Don't miss the latest digital marketing tips, tricks and tools that will make you re-think your strategy and revolutionize your marketing campaigns. Super Saver Rates are available now. Register today!

ABOUT THE AUTHOR

Pamela Parker

Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

UPCOMING TRAINING

Featured White Papers

Google My Business Listings Demystified

Google My Business Listings Demystified
To help brands control how they appear online, Google has developed a new offering: Google My Business Locations. This whitepaper helps marketers understand how to use this powerful new tool.

5 Ways to Personalize Beyond the Subject Line

5 Ways to Personalize Beyond the Subject Line
82 percent of shoppers say they would buy more items from a brand if the emails they sent were more personalized. This white paper offer five tactics that will personalize your email beyond the subject line and drive real business growth.

WEBINARS

    Information currently unavailable

Jobs

    • Lead Generation Specialist
      Lead Generation Specialist (The Oxford Club) - BaltimoreThe Oxford Club is seeking a talented writer/marketer to join our growing email lead-generation...
    • Health Marketing Editor
      Health Marketing Editor (Agora Inc.) - BaltimoreCome flex your intellectual muscle as part of Agora, Inc’s (http://agora-inc.com/) legal team...
    • Technical Business Analyst
      Technical Business Analyst (OmniVista Health) - BaltimoreOmniVista Health is looking to add a Technical Business Analyst to our expanding team...