Ask Jeeves Doubles Profits on Higher Ad Revenue

Ask Jeeves more than doubled its profits in the first quarter of 2005, posting net income of $18.1 million, or $0.26 per share, on revenues of $94.9 million. This compares with $13.4 million in net income on revenues of $39.2 million for the comparable year-ago quarter.

Part of the jump in revenues can be attributed to last May’s acquisition of Interactive Search Holdings, parent of the Excite and iWon portals and MaxOnline network. Without giving specifics, the company attributes much of its growth in revenues, earnings and queries to a cross-channel ad campaign promoting the brand.

“Due to the positive results of our first-quarter ad campaign, we plan to spend an additional $2.5 million on marketing in the second quarter,” said Steve Sordello, CFO of Ask Jeeves. “We are projecting continued strong financial growth while investing more in key areas such as marketing and the user experience for even greater growth in 2006.”

Significant user experience improvements were tested over the past two quarters, and implemented in April. Most notable is a 31-percent reduction of paid ads “above the fold.” This brings up more natural search results from Jeeves’ Teoma technology, which the company has found to lead to stronger user retention and increased frequency of use. The company feels long-term gains in site visits will offset any impact on revenue-per-query resulting from the move.

The majority of Jeeves’ revenue, $62 million, came from Ask.com sites, which comprised 65 percent of the total revenue. The remaining $32.9 million came from its network and syndication business. Search revenues rose 16 percent to make up 88 percent of total revenue, largely due to increased search volume. The media side, which includes the iWon and Excite portals and MaxOnline network, saw a seasonal drop in revenues of 19 percent.

Nearly three-quarters of all revenue, 74 percent, came from paid listings supplied by Google, a relationship that will continue through 2007, even after Jeeves is acquired by IAC/Interactive Corp. That transaction is currently expected to close late in the second quarter or early in the third quarter. Ask Jeeves itself acquired RSS feed aggregator Bloglines in February.

For the second quarter of 2005, Ask Jeeves anticipates revenues of $94 million, and GAAP net income of $0.21 per share. For the full year, Ask Jeeves currently anticipates revenues of approximately $380 to $395 million and GAAP net income in the range of $0.90 to $1.05 per share.

Shares of Ask Jeeves closed down $0.36 at $27.42 before the news.

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