DoubleClick Posts Higher Q3 Earnings, Lowers 2004 Outlook

DoubleClick posted record revenue for Abacus and its overall data division, but lowered projected 2004 revenue to $290 to $295 million, from an earlier $290 to $305 million estimate.

The company reported a respectable increase in third quarter revenue: $81.0 million, versus $74.8 million during the same period last year.

Operations generated $22.1 million in Q3. The gain was primarily attributed to increased revenues in the Data division. Revenues for that division were $33.1 million in the quarter, compared to $31.3 million during the same period last year. Abacus saw slightly higher margins and lower operating expenses, and added 47 new members. In addition, over 20 new deals were signed for other Data products during the quarter.

“We are very pleased that the Data segment achieved record revenues, gross profits, and operating profits in the quarter,” said President David Rosenblatt. “The measures we recently took to reorganize that segment paid off.”

The TechSolutions division showed overall growth, reporting Q3 revenue of $47.8 million, versus $43.5 million during the period in 2003. The increase is mainly attributed to the SmartPath and Performics acquisitions, coupled with an increase in email revenues. Affiliate and search marketing unit Performics was especially robust, with $5.1 million in revenues this quarter, $1.1 million over guidance.

“Our email revenue continued to grow year-over-year in the quarter and the business remained profitable,” said CEO Kevin Ryan.

“There are areas that require additional attention and this is one of them,” was his comment regarding the Ad Management division. Revenue dropped $29.8 million from $31.0 million in the year-ago period. The fall was principally attributed to price declines, which the company believes could continue into 2005. Ryan promised investors new product launches and upgrades will soon be introduced in the area. New clients include, Universal McCann Asia Pacific/Cathay Central, and Wieden + Kennedy. DoubleClick’s rich media product was also certified for America Online and MSN.

“I am pleased to report that we have made good progress in our core businesses,” said Ryan. “The Data segment reported record revenues and Abacus operating margins were at an all-time high, while gross and operating margins continued to expand in Ad Management. Our new Performics division performed ahead of our expectations. We believe that recent initiatives taken to enhance our core businesses have laid the foundations for improved performance.”

DoubleClick further reported $523.9 million in cash and marketable securities, and a net cash position of $388.9 million, or $3.10 per share, as of September 30. This reflects $9.5 million for the sale of the company’s 15 percent interest in AdLINK, and $38.8 million used in connection with the repurchase of approximately 6.4 million shares of common stock this quarter.

A negative was $8.3 million in accelerated depreciation charges associated with relocating New York headquarters, and termination of a San Francisco lease. A restructuring credit and insurance claim brought in $3.6 million.

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