Interactive Marketing Firms Report Earnings

LookSmart Results Suffer from MSN Loss

LookSmart posted a modest loss of a penny per share as revenues from continuing operations fell by nearly $5 million from last quarter and by $13.5 million from last year to $19.1 million. The plummeting numbers are a result of the company losing MSN in October, along with the two-thirds of LookSmart’s $156 million in revenues Microsoft brought in.

Still, the company exceeded the scaled-back expectations it set when Microsoft stopped using the company’s paid search offerings. It had estimated that 2004 revenues would come in at no more than $50 million, but the company is currently looking to produce as much as $80 million in revenues from its continuing operations this year, showing that its “discount paid listing company” strategy may find success.

“We achieved strong growth in our core paid listings business for the third quarter in a row and ended the quarter with a better than expected cash position of approximately $67 million,” said CEO Damian Smith. “We are raising our annual revenue guidance, narrowing our forecasted loss for the year and have a clear operating focus now that we have completed our cost reductions.”

LookSmart reported revenue of $21.3 million for the second quarter, beating its prior guidance of $18.0 million to $20.0 million. This includes $1.7 million of revenue from MSN and $2.2 million of revenue from discontinued international operations.

Revenue from LookSmart’s core business, not counting Microsoft or discontinued international operations, increased to $17.4 million, which is ahead of its prior guidance of $15.0 to $17.0 million. This is up 7 percent sequentially from the first quarter 2004 and up 74 percent year over year.

FindWhat.com Announces Record Q2 Results

FindWhat.com on Monday reported financial results for the second quarter which modestly beat Wall Street estimates, continuing its impressive streak of 19 consecutive quarters of increased revenue and 13 consecutive quarters of pre-tax profit growth.

The company earned $3.6 million in the second quarter, or 15 cents a share, up from $2.7 million, or 12 cents a share, a year ago. Revenue rose 59 percent from a year ago to $27.8 million. Second-quarter adjusted earnings rose 63 percent year over year to $7.6 million.

FindWhat.com has acquired three businesses in the first six months of 2004: Miva in January; Comet Systems in March; and B&B Enterprises in June. In addition, FindWhat.com closed its merger with Espotting Media on July 1, 2004.

“In December 2003, we were a company of 161 team members with one core offering in the United States. Today, just seven months later, we offer multiple products and services throughout the world, with a team of approximately 440 individuals,” said Chairman and CEO Craig Pisaris-Henderson. “We continue to deliver outstanding financial performance and execute on our plans while dramatically expanding our resources, diversifying our sources of revenue, and increasing the opportunities before us.”

FindWhat.com currently expects full year 2004 revenue between $167.5 and $179.5 million, EBITDA between $33.4 and $35.4 million and Adjusted EPS between $1.05 and $1.13.

Ask Jeeves Doubles Revenues, Lowers Guidance

Ask Jeeves on Wednesday reported 136-percent revenue growth for the second quarter, including the financial results for Interactive Search Holdings, which it acquired in May.

At the same time, the company revised its guidance down for the full year, anticipating revenues of $260 million and pro forma income of $1.03 per share for 2004, compared with analyst’s expectations of $1.04 a share on revenue of $260 million.

Revenues for the quarter were $60.3 million, compared with $25.6 million for the comparable year-ago quarter. As expected, the majority of its revenues — $45.5 million, or 75 percent, to be exact — come from search. Another 2 percent comes from licensing. The biggest changes were in media and syndication, largely the result of the ISH acquisition.

The media and syndication number jumps from $3.1 million a year ago to $13.6 million, making up 23 percent of Ask Jeeves business. The company noted that if it had owned ISH the whole quarter, revenues would have been approximately $76 million, with each company contributing approximately half.

“We executed well this past quarter. We improved the user experiences across our sites, doubled our market share with the closing of the Interactive Search Holdings acquisition and continued to see strong demand for search and media advertising,” said Steve Berkowitz, CEO of Ask Jeeves.

MarketWatch.com Sees Ad Revenues Soar

Reporting its second quarter earnings this week, MarketWatch.com said it turned a profit of $1.4 million, or $0.05 a share, on net revenues of $20.2 million. In the year-ago period, MarketWatch.com brought in $11.1 million, losing $127,000 or $0.01 a share.

Advertising revenues totaled $8.0 million, increasing 48 percent from the same period in 2003. MarketWatch.com attributed the rise to interest in its premium branding placements such as introductory messages, rich media and targeted advertising.

“Because our visitors are spending more time on our site, reading more of what we have to offer and are comprised of a highly sought-after demographic, advertisers are choosing MarketWatch to help them recognize their long-term marketing goals,” said Larry Kramer, chairman and CEO of MarketWatch.com.

The company also benefited from licensing fees, including its acquisition of syndication firm Pinnacor, and subscription revenues — which increased to $476,000, 33 percent higher than the same period last year. The company is currently ramping up its editorial operations in preparation for the launch of its news service for Thomson Financial. That deal brought the company a $3.1 million nonrefundable payment in the quarter.

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