DoubleClick Achieves Pro Forma Break-Even Despite Tough
Advertising Environment; Q4 Revenues Up 41% Year on Year; Full Year 2000 Revenues Up 96%
Business/Technology Editors
NEW YORK--(BUSINESS WIRE)--Jan. 11, 2001--DoubleClick Inc. (Nasdaq
CLK), the leading global Internet advertising solutions company, today announced financial results for the fourth quarter and full year ended December 31, 2000, and provided a business outlook for 2001. Despite a challenging environment the company reported a strong quarter, with significant growth in the TechSolutions division. DoubleClick reported revenue of $132.3 million for the fourth quarter of 2000, an increase of 41% over the same period last year. Full year revenues were $506 million, an increase of 96% over 1999.
Proforma Gross profit for the fourth quarter of 2000 was $73.4 million, a 41% increase over gross profit of $52.1 million in the fourth quarter of 1999. Exclusive of certain non-cash and non-recurring items, net income was $216,000 for the fourth quarter, with pro forma EPS of $0.00, bringing full year pro forma loss per share to $0.11, versus $0.10 in 1999.
The Company ended the fourth quarter with $873 million in cash and marketable securities. The balance sheet remains strong, with a quick ratio of 3.5, working capital of $563 million, and a long-term debt to equity ratio of 1%.
"I am very proud of how well our organization executed in a tough industry environment," said Kevin Ryan, CEO of DoubleClick. "Our combination of great people, a full set of ad-serving solutions, world class technology, and a strong customer service ethic, all add up to a very effective business model. Our strong balance sheet and relentless focus on productivity position us very well going into 2001."
Overall, DoubleClick`s clients include 25 of the top 50 websites in the US. More than 50% of Fortune 100 companies advertise across the DoubleClick Networks, up 10% from the third quarter of 2000. -0-
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$000s 4Q00 3Q00 4Q99
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Revenue $132,299 $135,169 $93,690
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Pro Forma Net
Income (loss) (A) $216 $3,744 ($1,781)
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Pro Forma EPS (A) $0.00 $0.03 ($0.02)
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(A) Pro forma net income, net loss and EPS are shown before
amortization of intangibles, non-cash compensation and certain
non-recurring items of $104,967, $14,468, and $40,366 for the
three months ended December 31, 2000, September 30, 2000, and
December 31, 1999, respectively.
-- TechSolutions(1)
The global TechSolutions division reported record revenue of $61.5 million in the fourth quarter, an increase of 114% over the same period last year. TechSolutions revenues exceeded Media Revenues for the first time, highlighting the growing importance of this business to DoubleClick overall. The Company served 185 billion ads globally across the DART (Dynamic Advertising Reporting and Targeting) platform during the fourth quarter of 2000, up from 77 billion ads in the same period last year, for an annual increase of 140%.
The TechSolutions division added a record 252 new clients this quarter including 37 wins from competitive ad-serving solutions. Website publishers such as Fodor`s and NBCi have signed recent agreements to use DART for Publishers, while Advertisers such as Fingerhut, BBDO Canada, and DLJ Direct have become DART for Advertiser clients. DART for Advertisers, which allows advertisers to measure their results and to optimize their campaigns, had its strongest quarter ever, with several traditional advertisers making first time investments in their on-line marketing infrastructure. AdServer, DoubleClick`s software ad-serving solution, also had a strong quarter, based on strong performance in international markets. Twenty-two new AdServer customers were signed worldwide, including 13 in Asia Pacific, 7 of which were in Japan.
TechSolutions had a particularly strong quarter for sales in Asia, gaining 34 new clients overall, including contracts in Japan, China, Hong Kong, Korea, Singapore, India, and Australia. 2000 revenues for Asia were five times higher than revenues in 1999.
David Rosenblatt, President of Technology, Data and Research, explained, "Asia has reached an inflection point in its market development, similar to what we saw in the U.S. about three years ago, and in Europe one year ago. We have the products, people and infrastructure on the ground there to be very successful."
TechSolutions also continued to build momentum in the e-mail business. The number of DARTmail customers doubled to 65 during the quarter. Since its launch in the third quarter of 2000, DARTmail has quickly scaled to deliver over 90 million e-mails per month on behalf of customers such as the Wall Street Journal Online, Payless Shoe Source, and About Inc.
DoubleClick`s ad-serving technology is being used to deliver a wide variety of ads, such as rich media, to many different types of devices. For example, the Company currently serves ads to vending machines, over interactive TV, to i-mode phones in Japan, and in voice Internet applications.
(1) Segment revenues in Technology, Data Services and Media are stated
before inter-segment eliminations of $7,372, $6,608, and $2,893
for the three months ended December 31, 2000, September 30, 2000,
and December 31, 1999, respectively.
-- Data Services
The Data Services division reported quarterly revenue of $17.8 million, up 5% over the fourth quarter of 1999. The core business of Abacus Direct continues to grow, and DoubleClick is the leader in catalogue modeling. There are now 1,836 members contributing to the Abacus Alliance for direct-mail marketing.
The Abacus Click Stream Alliance has grown to over 1000 contributing members, billions of monthly impressions, and over 100 million profiles. In addition, DoubleClick has built an e-mail alliance of over 200 members.
In Research, DoubleClick plans on closing its acquisition of @plan, a leading provider of online market research planning systems, during the first quarter. @plan will be the central platform for DoubleClick`s research business. Through the research business, the Company will be able to offer third-party media-planning tools that optimize advertising and e-commerce decisions. This will allow DoubleClick to help traditional advertisers plan and measure the success of their internet advertising campaigns.
-- Media
The DoubleClick Networks generated global media revenue for the fourth quarter of $60.4 million, an increase of 19% over the same period last year. The proportion of revenues from traditional advertisers continued to grow, from about 50% in the third quarter, to over 55% in the fourth quarter. Over 1800 customers advertised on the DoubleClick Networks in the fourth quarter, and 88% of advertisers in the third quarter also bought advertising in the fourth quarter.
Barry Salzman, President of Global Media noted: "We are growing market share and attracting traditional advertisers in a difficult market, but, just as importantly, developing new products such as email, one of the fastest growing online marketing tools."
New clients including GoTo and Spiegel have joined the US Media Networks, while traditional advertisers including GM, Motorola, Verizon, SBC, and Sprint have chosen to reach their audience by advertising on these Networks.
Since its inception in early 2000, the Sonar Network has already signed 640 publishers. The Sonar Network is offering advertisers sophisticated targeting products such as Intelligent Interest Segments. Sonar advertisers for the fourth quarter included GM, OfficeMax, The Princeton Review, and OnMoney.
Savvy companies are working with DoubleClick`s sweepstakes team to create online sweepstakes to drive traffic and increase customer acquisition, while MediaMatch offers companies a market for exchanging available inventory, and is growing rapidly. During the fourth quarter, MediaMatch signed contracts with clients including AandE.com, HistoryChannel.com, and Biography.com.
The Media division has also been active in enhancing its email offerings, specifically the List Services and eMail Newsletter Network. The e-mail network now represents over 120 leading e-mail publications, including Zagat.com, National Review Online, and BackWire and the List Services business has 18 million names under management.
Business Outlook
CFO Stephen Collins noted: "Today, by some estimates, 2% of media spending goes to the Internet while 9% of people`s media time is spent on the internet. We believe these figures will inevitably converge, as they have in virtually every other type of media over time. At the end of the day, this is the most fundamental argument as to why Internet advertising will be a fast growing, large segment of worldwide media spend for years to come."
First Quarter 2001 Guidance
DoubleClick projects a pro forma per share loss of between -$0.09 and -$0.07, based on revenues of approximately $110MM to $115MM, or year-to-year growth of up to 4%. This includes a $2.5 million investment in accelerating success in the email business.
By segment, revenues are expected to grow as follows:
-- Data up 14% to 18% to between $16.5MM and $17.5MM.
-- TechSolutions up 35% to 40% to between $54MM and $57MM.
-- Media down 30% to 35% to between $43MM and $46MM
Gross margins are expected to be in the range of 52% to 55%. By segment:
-- 29% and 31% for Media
-- 65% to 67% for Tech Solutions
-- 64% to 67% for Data.
Total company operating expenses are expected to be between 69% and 73% of revenues, down in absolute dollars. Headcount growth is not expected in the first half of 2001. Yield on cash and marketable securities is projected to be 6.2% to 6.4%. The cash balance will be affected by the mix of cash and stock used to close the @Plan acquisition, which has not been announced. Finally, there is expected to be a tax provision of approximately $1MM for state, local and foreign taxes.
Full Year 2001 Guidance
DoubleClick projects year on year revenue growth of 6% to 12%. This broad range is consistent with limited visibility for the Media business. By segment:
-- Data is projected to have a 20% or better growth rate.
-- TechSolutions growth rate is projected between 30% and 35%.
-- Media is projected to be down between 25% and 30% mostly due
to the absence of AltaVista plus the impact from the weak
economic and advertising environment.
Full year pro-forma earnings per share are projected to be between $0.07 and $0.09 including a $5 million investment in the accelerating success in the email busy. Gross margin is projected to be between 52% and 56% range as business mix shifts to Tech and Data.
Overall, operating expenses are projected to be between 58% and 62% of revenues for the full year driven by productivity improvements. Interest income is projected to be between $28MM and $32MM, depending on interest rates and the use of cash in M&A activity. CAPEX is projected between $70MM to $90MM, with depreciation of approximately $60MM for 2001. The full year tax provision is projected to be between $4MM and $5MM.
Collins concluded by noting: "We have a strong balance sheet and will continue to increase share and expand our portfolio of products and services in 2001. This will position us to take maximum advantage of more favorable economic conditions in the future to drive revenue growth, cash flow and profits. We are a leader in a great business, in no small part because we have a great team of customer-focused people. Internet advertising is here to stay, and DoubleClick will head the way."
Note: This press release includes forward-looking statements, including earnings and revenue projections and future plans. The results or events predicted in these statements may vary materially from actual future events or results. Other factors that could cause actual results or events to vary from expectations are contained in documents filed by the Company with the Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q. Also, it is our company policy to provide such forward-looking information at least once per quarter, but we may choose to not update that information until the next quarter even if circumstances change.
The DoubleClick Conference Call to discuss this earnings press release is scheduled for: Thursday, January 11, 2000 at 5:00pm EST. A follow-up conference call at 7:00pm EST will address financial questions in greater detail. These calls will be available live via webcast, and on a replay basis afterward, on the Company`s website at: http://ir.doubleclick.net/ireye/ir_site.zhtml?ticker=DCLK&sc…
A complete listing of DoubleClick`s metrics as well as answers to frequently asked questions can be found on the Company`s website at www.doubleclick.net, under Investor Relations Analyst Metrics; or at http://media.corporate-ir.net/media_files/NSD/DCLK/3Q00_Anal…
About DoubleClick
DoubleClick Inc. (http://www.doubleclick.net) is a leading provider of comprehensive global Internet advertising solutions. Combining technology, media and data expertise, DoubleClick centralizes planning, execution, control, tracking and reporting for online media campaigns. DoubleClick Inc. has its global headquarters in New York City and maintains over 40 offices around the world.
DOUBLECLICK INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, in thousands except per share amounts)
Quarter ended Year ended
December 31 December 31
2000 1999 2000 1999
(Unaudited) (Unaudited)
Revenue:
Media $ 60,384 $ 50,914 $ 253,827 $ 125,499
Technology 61,470 28,695 203,391 74,695
Data 17,817 16,974 72,355 65,961
Intersegment elimination (7,372) (2,893) (23,962) (7,861)
Total revenue 132,299 93,690 505,611 258,294
Cost of revenue 58,851 41,582 228,083 107,156
Gross profit 73,448 52,108 277,528 151,138
Operating expenses:
Sales and marketing 53,101 35,316 201,839 102,884
General and administrative 18,939 11,912 82,590 33,878
Product development 11,759 8,484 44,789 28,009
Total operating expenses 83,799 55,712 329,218 164,771
Loss from operations (10,351) (3,604) (51,690) (13,633)
Other income (expense):
Equity in losses of
affiliates (311) (210) (1,051) (783)
Interest and other, net 10,696 3,136 40,581 12,264
Total other income 10,385 2,926 39,530 11,481
Income (loss) before
income taxes 34 (678) (12,160) (2,152)
Provision for income taxes (12) (1,103) (1,497) (8,587)
Income (loss) before
minority interest 22 (1,781) (13,657) (10,739)
Minority interest in
results of consolidated
subsidiaries 194 - 647 -
Pro forma net income (loss) $ 216 $ (1,781) $ (13,010)$ (10,739)
Pro forma net income (loss)
per share - basic $ 0.00 $ (0.02) $ (0.11) $ (0.10)
Weighted average shares used
in pro forma net income
(loss) per share - basic 123,386 111,325 121,278 109,756
Pro forma net income (loss)
per share - diluted $ 0.00 $ (0.02) $ (0.11) $ (0.10)
Weighted average shares
used in pro forma
net income (loss)
per share - diluted 131,346 111,325 121,278 109,756
The above pro forma consolidated statements of operations exclude the
effects of the following:
- Amortization of intangibles, non-cash compensation and direct
transaction, integration and facility relocation charges.
- Write-off of an advance made to a Web Publisher recognized during
the quarter ended December 31, 2000.
- Restructuring charge recognized during the quarter ended December
31, 2000 relating to the reduction in workforce.
- Goodwill impairment charge recognized during the quarter ended
December 31, 2000.
- Other income recognized during the quarter ended December 31, 2000
relating to the NetCreations break-up fee.
- Goodwill amortization, included in equity in losses of affiliates
for the quarter and year ended December 31, 2000, related to our
ValueClick equity investment.
- Recognition of a non-cash gain during the quarter ended December
31, 2000 and September 30, 2000 relating to ValueClick`s sale of
ValueClick Japan stock.
- An impairment charge relating to our warrant to purchase
additional shares of ValueClick during the quarter ended September
30, 2000.
- Other income recognized during the quarter ended September 30,
2000 in connection with the restructuring of our Services
Agreement with AltaVista.
- Recognition of a non-cash gain during the quarter ended September
30, 2000 relating to ValueClick Japan`s initial public offering.
- Non-cash gain recognized during the quarter ended March 31, 2000
relating to ValueClick`s initial public offering.
DOUBLECLICK INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, in thousands except per share amounts)
Quarter Ended Year Ended
December 31 December 31
2000 1999 2000 1999
(Unaudited) (Unaudited)
Revenue:
Media $ 60,384 $ 50,914 $ 253,827 $ 125,499
Technology 61,470 28,695 203,391 74,695
Data 17,817 16,974 72,355 65,961
Intersegment
elimination (7,372) (2,893) (23,962) (7,861)
Total revenue 132,299 93,690 505,611 258,294
Cost of revenue 58,851 41,582 228,083 107,156
Write-off of prepaid
site compensation 18,487 - 18,487 -
Total cost of revenue 77,338 41,582 246,570 107,156
Gross profit 54,961 52,108 259,041 151,138
Operating expenses:
Sales and marketing 53,101 35,316 201,839 102,884
General and
administrative 18,939 11,912 82,590 33,878
Product development 11,759 8,484 44,789 28,009
Amortization of
intangibles 8,548 609 41,153 1,302
Non-cash
compensation 8,247 672 26,027 2,175
Goodwill impairment 49,371 - 49,371 -
Restructuring charge 2,389 - 2,389 -
Direct transaction,
integration and
facility relocation
charges - 39,085 - 41,605
Total operating
expenses 152,354 96,078 448,158 209,853
Loss from operations (97,393) (43,970) (189,117) (58,715)
Other income (expense):
Equity in losses
of affiliates (2,404) (210) (6,789) (783)
Goodwill impairment
on equity
investment (24,052) - (24,052) -
Gain on equity
transactions of
affiliates, net - - 11,026 -
Interest and other,
net 18,916 3,136 53,801 12,264
Total other income
(expense) (7,540) 2,926 33,986 11,481
Loss before income
taxes (104,933) (41,044) (155,131) (47,234)
Provision for income
taxes (12) (1,103) (1,497) (8,587)
Loss before minority
interest (104,945) (42,147) (156,628) (55,821)
Minority interest in
results of
consolidated
subsidiaries 194 - 647 -
Net loss $ (104,751) $ (42,147) $(155,981) $ (55,821)
Basic and diluted net
loss per share $ (0.85) $ (0.38) $ (1.29) $ (0.51)
Weighted average
shares used in basic
and diluted net loss
per share 123,386 111,325 121,278 109,756
DOUBLECLICK INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
December 31, December 31,
2000 1999
ASSETS
Cash and cash equivalents
and investments in
marketable securities $ 873,376 $ 444,803
Accounts receivable, net 120,029 89,177
Prepaid expenses and other assets 46,714 38,972
Property and equipment, net 168,192 61,980
Investment in affiliates 37,457 -
Intangible assets 52,775 94,475
Total assets $ 1,298,543 $ 729,407
LIABILTIES AND STOCKHOLDERS` EQUITY
Accounts payable and
accrued expenses $ 173,190 $ 82,614
Deferred revenue and other
current liabilities 37,440 29,783
Convertible subordinated notes
and other long-term obligations 265,608 255,348
Total liabilities 476,238 367,745
Minority interest in
consolidated subsidiaries 5,247 -
Stockholders` equity 817,058 361,662
Total liabilities, minority
interest and
stockholders` equity $ 1,298,543 $ 729,407
DOUBLECLICK INC.
CONSOLIDATED CONDENSED CASH FLOWS DATA
(In thousands)
Quarter ended Year ended
December 31 December 31
2000 2000
OPERATING ACTIVITIES
Net loss $ (104,751) $ (155,981)
Adjustments to reconcile
net loss to net cash
provided by operating activities:
Depreciation and amortization 19,110 74,735
Goodwill impairment 73,423 73,423
Non-cash compensation 8,247 26,027
Other non-cash items 34,035 64,202
Change in working capital (20,055) (40,777)
Cash provided by
operating activities 10,009 41,629
INVESTING ACTIVITIES
Purchases of property
and equipment (18,590) (121,294)
Acquisition of businesses
and intangible assets (7,639) (28,804)
Investments in affiliates
and other (4,827) (21,320)
Cash used in
investing activities (31,056) (171,418)
FINANCING ACTIVITIES
Proceeds from the issuance
of common stock, net 2,121 505,039
Proceeds from the
issuance of stock options 550 50,193
Other (802) 4,364
Cash provided by
financing activities 1,869 559,596
Effect of exchange rate
changes on cash (1,057) (1,234)
Net (decrease) increase in *cash (20,235) 428,573
*Cash at beginning of period $ 893,611 $ 444,803
*Cash at end of period $ 873,376 $ 873,376
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* Includes cash, cash equivalents, and
marketable securities