Ad-supported ISP NetZero today posted revenues of $16.5 million for the quarter ending in September, down from the previous quarter’s revenues but still enough to beat Wall Street per-share earnings estimates.
The company’s pro forma net losses were $23.8 million, compared with a year-ago loss of $13.7 million, and a pro forma net loss of $26.0 million in the previous quarter.
Revenues grew 113 percent from the $7.7 million reported in the year-ago period. In the previous quarter, the company saw revenues of $18.7 million.
The company said it added about 800,000 registered users in the September 2000 quarter, bringing its total registered user base to 5.7 million — representing more than a 185 percent increase during the past year.
More importantly to advertisers, however, its active user base grew to 2.3 million, up 300,000 from last quarter. NetZero counts as an “active user” anyone who has used the service at least once in a month.
Much of that gain, however, likely came about as a result of NetZero’s acquiring the user bases of failed free ISPs FreeInternet.com (AKA FreeI) and iFreedom.com. FreeI claimed about 3.2 million users — about which 40 percent to 50 percent are active. iFreedom had about 365,000 registered users; statistics were not available for its actual user base.
The company said it delivered 7.1 billion impressions during the quarter. This represents a daily average of 77 million impressions, compared with 39 million daily impressions in the year-ago quarter and 72 million daily impressions in the June 2000 quarter.
Based on these figures, average actual CPM rates — that is, after discounts off the rate card — appear to be about $2.38. NetZero chairman and chief executive officer Mark Goldston said CPMs had fallen about 19 percent since last quarter, thanks to a harsh online ad market.
“During this past quarter, NetZero faced the same pricing challenges experienced by others in the online advertising industry,” Goldston said. “The past several quarters have been marked by increased, and often irrational, competition for both users and advertising dollars.
“In light of this environment, we have reported results that reflect the financial discipline of our management team and the underlying strength of our business model,” he added.
The company ended the quarter with about $220 million in cash and short-term investments, giving it enough fuel to burn through almost two more years of losses, based on its net (non-pro forma) net loss.
“NetZero has stayed the course by maintaining a disciplined approach to growing and developing its business, and we are well positioned to capitalize on the tremendous opportunities that we believe lay ahead as this market begins to mature,” Goldston said.
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