DoubleClick Beats the Street, But Stock Dips

DoubleClick Inc.’s second-quarter revenues of $17.3 million soundly beat Wall Street expectations, Reuters reported, leaving the ad network with extra funds to invest in its businesses after meeting its earnings goals, according to the company’s chief financial officer.

DoubleClick CFO Jeff Epstein was quoted by Reuters as saying that he was “comfortable” with analysts’ projections that DoubleClick can roughly double its revenues to $60 million during 1998 from $30 million in 1997.

“When we overachieve on the revenue side we invest in our company,” Epstein said. The company’s workforce grew to 311 at the end of June from 248 at the start of the quarter, he said.

He said rapid revenue growth allowed the company to significantly boost hiring in sales and marketing as well as product development. He said future revenue growth should allow DoubleClick to expand its workforce to about 600 employees within 12- to 18-months.

Second-quarter revenues were 25% above analysts’ forecasts of $13.7 million.

The company had a net loss of $4.7 million for the second quarter–in line with Wall Street expectations–versus a loss of $1.23 million for the same period in 1997. Analysts don’t expect the company to show a profit before the end of 1999. Nonetheless, the company’s stock took a pounding, closing down about $4.25 at $48.875.

Meanwhile, DoubleClick said it was in talks with Compaq Inc. on strengthening the contract between DoubleClick and AltaVista, the company’s largest customer. Compaq became the new owner of AltaVista when it acquired Digital Equipment Corp. in June.

While the talks are on-going, the existing contract between AltaVista and DoubleClick is in effect until December 1999. Either Compaq or AltaVista, however, can terminate the contract with 90 days’ notice.

“Revenues from advertisements delivered on or through the AltaVista Web site represent about 49 percent of DoubleClick’s revenues,” said Kevin O’Connor, chief executive of DoubleClick.

“We believe it is important for us to build a relationship directly with Compaq and to strengthen our agreement so that we can invest in building the AltaVista business for the long term,” he said.

“We are in the very early stages of these discussions,” Epstein told Reuters. “It could be weeks or months before there’s a new agreement.” He said it is possible nothing may change, leaving the contract in force through the end of 1999.

The number of Internet ads served over its network of Web sites grew to 81 million customer views in June from 60 million in April. The number of Web site companies that provide space to its advertising network grew to 325 from 220 publishers in April. The number of actual Web sites grew to 2,900 from 1,750 in the first quarter.

Meanwhile the number of advertisers on its network by the end of June grew to 1,800 from 1,400 in the prior period.

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