AQuantive Surprises Analysts With Big Q2

Interactive marketing services and technology firm aQuantive blew past analysts’ estimates, reporting net income of $7.5 million, or $0.11 per share, for the second quarter of 2004. Executives attributed the increase to more aggressive online spending by existing clients.

Analysts had expected a modest $0.06 per share in earnings, according to Thomson/First Call. The results drove aQuantive stock up in after-hours trading.

The results represent a 216 percent jump over the year-ago period, when aQuantive reported net income of $4.2 million, or $0.06 a share. Revenues for the second quarter of 2004 came in at $27.8 million, an increase of 83 percent over the comparable figure from 2003.

“Our business is healthier than it has ever been,” said Brian McAndrews, president and CEO of aQuantive. “The industry is also healthy.”

The company saw improvements across all segments of its business. The digital marketing services area, which consists of interactive agencies Avenue A and I-Frontier, saw second quarter revenue of $12.8 million, compared to second quarter 2003 net revenue of $7.0. (In 2004, the company changed the way it recognized revenue, making this year’s revenue figures comparable to last year’s net revenue numbers.)

AQuantive closed its acquisition of SBI.Razorfish, the newest addition to the digital marketing services business, in the third quarter. The purchase is expected to add $41 to $43 million to financial results in the second half of the year, company executives said.

Digital marketing technologies — Atlas DMT, Atlas OnePoint and Atlas NetConversions — brought in revenues of $14.4 million in the second quarter, compared to $8.2 million in the year-ago quarter.

The company’s digital performance media unit, DrivePM, had revenues of $665,000 in the quarter, resulting in an operating loss of $374,000.

On the company’s conference call with investors, executives shared interesting tidbits about what they’re seeing in the marketplace. Growth in search spending is beginning to slow, as marketers begin to reach certain thresholds, executives said. The company sees lots of potential in rich media, however, especially as broadband penetration grows. McAndrews said the company would have a rich media product that could serve “out of frame” units, such as page takeovers, by the end of the year.

For the third quarter, aQuantive gave guidance of $44 to $46 million, and net income of $0.03 and $0.05. The company expects total revenues for 2004 to come in at between $148 and $155 million, resulting in net income of $0.24 to $0.28 per share.

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