AQuantive Strong in Q4, Led by Agency Unit

AQuantive reported strong organic growth for the fourth quarter and full-year 2005, boosted by cross-selling across its three operating units.

Net income for the quarter was up $11.6 million, or $.15 per share, compared with $7.1 million in the year-ago period. Revenues were $87.5 million, up 44 percent. Full-year operating income was $61 million, a 130 percent increase over 2004, on revenue of $308.4 million.

“We believe we are in the midst of a major shift from analog to digital in the media and advertising world,” said CEO and President Brian McAndrews, who added brand marketers represent an “increasing minority” of digital media spending, relative to direct marketers.

Additionally, McAndrews said more than 30 customer wins during the quarter were the result of cross-selling among its divisions.

The company’s digital marketing services segment, which houses Avenue A / Razorfish, brought in revenues of $53.9 million in Q4. It was by far the biggest earner of its three units. But due to the high costs associated with running ad and Web development agencies, its operating income of $11.4 million was comparable to that of the Atlas technology unit, which had revenues of only $25.7 million for the quarter.

aQuantive’s DRIVEpm and MediaBrokers “performance media” unit meanwhile turned in the lowest revenues and operating income of the bunch, though executives hinted they expect it to grow faster than either of its siblings in 2006.

Additionally, McAndrews said the company is actively pursuing international expansion, including through acquisitions. The Atlas Suite is now in use in over a dozen countries, he said. In December 2005, aQuantive bought U.K.-based interactive agency DNA.

The company’s video on demand plans have yet to materialize in the form of revenue. The Atlas On Demand unit, set up last year to pursue ad management in VOD through integration with cable companies, will likely not provide material contribution to the company in 2006, executives said.

The company’s 2006 guidance includes revenues of $82 to $85 million for Q1 and $375 to $395 million for the full year.

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