FindWhat.com reported record net income in of $4.8 million, or $0.15 per diluted share in the third quarter, an increase of 72 percent compared to the same period last year. Revenues in the quarter grew to $58.3 million from $17.8 million for the year-ago period.
The company came in toward the high end of what analysts had expected. According to Thomson/First Call, the average of analysts’ estimates was earnings per share of 13 to 15 cents on revenues of $55.5 million to $59.3 million.
Growth in the quarter came from U.S. and European paid listings operations, private label partnerships and the Primary Traffic division, according to CFO Brenda Agius.
Agius said in the fourth quarter, FindWhat would stop showing online gambling advertising to people whose IP addresses indicated they were in the U.S., or people for whom it couldn’t determine a location. Such gambling advertising accounted for $2.3 million in revenues in the third quarter. The company said it felt halting the display of such ads in the U.S. was the prudent thing to do, given the industry and law enforcement climate.
With the loss of those ads, the company expects to bring in between $58 and $65 million in the fourth quarter, and post earnings per share of between $0.14 and $0.17. Analysts had been expecting the company to generate $64.58 million in revenues, and $0.16 earnings per share in the quarter.
The company says its main focus in the third quarter has been integrating its various acquisitions — Espotting, Miva, Comet Systems and B&B Enterprises.
“The integration of Espotting was a major focus for the quarter, and although there is still much to be done to leverage the resources we now have available, we are pleased with the progress we have made so quickly,” she said. “While we were pleased with the efficiency of our global operations in Q3 2004, we want to balance that efficiency with investing in new initiatives and expanding our resources in the near-term, which we anticipate will add revenue in 2005 and beyond.”
Traffic grew in the quarter to 224 million click-throughs from 70,000 active relationships, compared with 219 million click-throughs from 63,000 active relationships last quarter. FindWhat defines active relationships to be those that have had a paying transaction with the company during the quarter.
FindWhat expanded globally during the quarter, completing the acquisition of Espotting to expand its ad network into eight European countries; and launching a private label paid listings service with Mitsui & Co. in Japan.
According to Agius, the Espotting integration exceeded the company’s expectations, adding earnings in its first quarter within FindWhat, rather than 90 days out, as previously expected. The factors contributing to this include lower-than-anticipated global traffic acquisition costs, restructuring of some existing deals, and efficiencies gained by sharing resources within the company, Agius said.
“We’ve been courting Espotting for some time. This is not a new company to us. We had a very well mapped-out plan, and on July 1 when we closed the deal, we immediately started implementing on that plan,” she said.
FindWhat.com has acquired five businesses in the first nine months of 2004: Miva on January 1; Comet Systems on March 22; B&B Enterprises on June 4; and Espotting on July 1. In Q1 2004, Miva and Comet contributed less than $1 million to the Company’s reported consolidated revenue; in Q2 2004, Miva, Comet and B&B contributed less than $4 million; and in Q3 2004, Miva, Comet, and B&B contributed approximately $5 million to the reported consolidated revenue. Espotting contributed approximately $28.3 million to the Company’s consolidated Q3 2004 revenue.
The company didn’t rule out adding to its list of acquisitions, either, though executives said it was focused on integration.
“We’ve actively been having conversations with a number of companies and to the extent that we could put something together that would make sense, we pursue it,” said CEO Craig Pisaris-Henderson.
Shares in FindWhat closed down $0.20, at $19.85, before the news.
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