24/7 Real Media Reports Strong Q1 Results; Company Exceeds First Quarter Revenue and Pro Forma Earnings Guidance; Raises Guidanc
May 04 2005 - 4:16PM
Business Wire
24/7 Real Media, Inc. (Nasdaq: TFSM): First Quarter Highlights: --
Revenue of $29.1 million, an increase of 67% over the comparable
period in 2004. -- Pro forma operating income of $0.03 per share
compared with $0.01 per share in Q1 of 2004; GAAP net loss $0.01
per share versus a loss of $0.02 per share in Q1 of 2004. -- Global
roll-out of award-winning Search Engine Marketing platform. --
Opening of Tokyo branch office. -- Inaugural Quarterly Behavioral
Targeting Research Report published. 24/7 Real Media, Inc. (Nasdaq:
TFSM), a pioneer in interactive marketing and technology, today
announced financial results for the first quarter ended March 31,
2005. Revenue for the first quarter of 2005 was $29.1 million, a
sequential gain of 6% from the $27.5 million reported during the
fourth quarter of 2004, and an increase of 67% over the $17.4
million reported for the first quarter of 2004. Pro forma operating
income(1) for the first quarter of 2005 was $1.3 million, or $0.03
per share. This compares with pro forma operating income of $0.3
million, or $0.01 per share, for the first quarter of 2004. Net
loss computed in accordance with generally accepted accounting
principles (GAAP) for the first quarter of 2005 was a loss of $0.4
million, or $0.01 per share, compared with a loss of $0.5 million,
or $0.02 per share, for the first quarter of 2004. "The Company
enjoyed an outstanding first quarter, substantially growing
revenues and improving operating performance during what is
traditionally a seasonally weak period," stated David J. Moore,
chairman and chief executive officer of 24/7 Real Media. "We
continued making progress on key initiatives, including the global
roll-out of our critically acclaimed Search Engine Marketing
franchise, the opening of our Tokyo office, and the inaugural
publishing of our Quarterly Behavioral Targeting Research Report."
"All our businesses are performing very well. For the balance of
2005, we are poised to continue capitalizing on the positive trends
in the market, including increased spending online and the rapid
growth of paid search," Mr. Moore concluded. Segment Overview
Revenue in the Media Solutions segment climbed 42% to $14.2 million
in the first quarter of 2005 from $10.0 million in the first
quarter of 2004. Gross margins were 32.3%, in-line with the
long-term guidance of approximately 30%. Search Solutions revenue
advanced 219% to $9.6 million from $3.0 million in the first
quarter of 2004. Gross margins for the segment were 31.1% in the
first quarter of 2005. Year-over-year comparisons for this segment
are influenced by the acquisition of Decide Interactive in the
third quarter of 2004. Technology Solutions revenue climbed 20% to
$5.2 million in the first quarter of 2005 from $4.3 million in the
first quarter of 2004. Technology revenue benefited from a greater
volume of impressions, a level higher than what would be expected
given the seasonal trends typical of the first quarter. Technology
gross margins remained stable at 81.0%. Guidance The Company
expects second quarter revenue for 2005 to be between $30 million
and $31 million, the mid-point of which represents an increase of
56% from second quarter 2004 revenue of $19.6 million. The Company
expects diluted pro forma operating income per share in the second
quarter of 2005 to be between $0.03 and $0.04 per share. The
Company now anticipates full year 2005 revenue to be in the range
of $118 million to $123 million, the mid-point of which represents
an increase of 41% from revenue of $85.3 million in 2004. The
Company anticipates pro forma per share earnings for the full year
of $0.14 to $0.17. In conjunction with this release, a conference
call will be held at 8:30 a.m. EDT on Thursday, May 5 to discuss
these results. The call will be broadcast live over the Internet at
www.247realmedia.com/about/investor. Please allow extra time to
visit our Web site prior to the call and download the streaming
media software required to listen to the Internet broadcast. The
online replay of the broadcast should be available within two hours
following the live call and will be available for three weeks.
About 24/7 Real Media, Inc.: 24/7 Real Media, a pioneer in
interactive marketing and technology, targets and delivers
audiences for publishers and marketers. Our customers generate
increased revenue and profits through media and search services,
coupled with one seamless platform of serving, targeting, tracking
and analytics technologies. The company is headquartered in New
York, with offices in other major U.S. cities, Canada, Europe and
Asia. For more information, please visit www.247realmedia.com. 24/7
Real Media: Delivering Today. Defining Tomorrow. Caution concerning
forward-looking statements: Certain statements in this news release
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. For instance, words such
as "expects," "anticipates," "predicts," "guidance" and similar
expressions identify forward-looking statements. Forward-looking
statements also include any other passages that relate to expected
future events or trends that can only be evaluated by events or
trends that will occur in the future. Some of the forward-looking
statements in this news release include, without limitation,
statements regarding the expected financial performance for the
second quarter of 2005 and for the full year 2005. Investors are
cautioned not to place undue reliance upon these forward-looking
statements, which speak only as to the date of this release. Except
as required by law, 24/7 Real Media undertakes no obligation to
update any forward-looking or other statements in this news
release, whether as a result of new information, future events or
otherwise. The forward-looking statements are based on the opinions
and estimates of management at the time the statements were made
and are subject to substantial risks and uncertainties that could
cause actual results to differ materially from those anticipated in
the forward-looking statements. These substantial risks and
uncertainties include, among others, the risks that the company may
not successfully complete the integration of Real Media Korea and
Decide Interactive, both of which it acquired in 2004; that it may
incur unforeseen expenses or loss of revenue relating to such
acquisitions; geopolitical, exchange rate and other risks
associated with international operations, which currently comprise
the majority of the Company's revenue; the potential loss of key
employees and inability to attract qualified new employees due to a
very competitive and tightening job market; risks that the
Company's technology will fail to scale to meet the increasing
demands brought about by increased business levels; risk that the
Company's technology services will be disrupted by terrorist attack
or malicious intrusion, and that the Company's back-up facilities
and disaster recovery plans will not be sufficient when needed;
customer concentration risks; unanticipated loss of clients or
delays in anticipated business; the potential for enhanced
competition from companies with substantially greater resources
than those of the Company; potential deterioration or
slower-than-expected growth in the Internet advertising market; the
very short-term nature of the company's contracts with clients; and
the uncertainties, potential costs, and possible business impacts
of potential new legislation, litigation or regulatory
investigation involving the company. More information about factors
that could cause actual results to differ materially from those
predicted in the Company's forward-looking statements, as well as
additional information regarding the Company's business and
financial results and condition, is set out in its annual report on
Form 10-K for the year ended December 31, 2004, filed with the
Securities and Exchange Commission, and will be set out in its
Quarterly Report on Form 10-Q for the three months ended March 31,
2005, which the Company expects to file with the Securities and
Exchange Commission on or before May 16, 2005. Investors are
strongly encouraged to read the Company's Form 10-K, Forms 10-Q and
other filings with the Securities and Exchange Commission in their
entirety. (1) Pro forma operating income is a non-GAAP financial
measure. 24/7 Real Media believes pro forma reporting provides
meaningful insight into the Company's ongoing economic performance
and therefore uses pro forma reporting internally to assist in
evaluating and managing the Company's operations. A full
reconciliation of GAAP net income to pro forma operating income
appears in the financial statement portion of this release. -0- *T
24/7 REAL MEDIA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except share and per share data) Three months ended
----------------------- March 31, 2005 2004 ----------- -----------
(unaudited) (unaudited) Revenues: Media $14,229 $10,023 Search
9,622 3,016 Technology 5,219 4,342 ----------- ----------- Total
revenues 29,070 17,381 ----------- ----------- Cost of revenues:
Media 9,627 6,983 Search 6,632 2,458 Technology 992 822 -----------
----------- Total cost of revenues 17,251 10,263 -----------
----------- Gross profit 11,819 7,118 ----------- -----------
Operating expenses: Sales and marketing 5,290 3,316 General and
administrative 4,584 2,982 Product development 1,242 1,051 Other
expenses: Amortization of intangible assets and deferred financing
costs 1,140 788 Stock-based compensation 513 199 Restructuring
costs 973 - ----------- ----------- Total operating expenses 13,742
8,336 ----------- ----------- Operating loss (1,923) (1,218)
Interest income (expense), net (88) (182) Change in fair value of
warrant liability 150 928 Recovery of investment 2,100 - Impairment
of investment (588) - Other income (expense), net (46) 180
----------- ----------- Loss before income taxes (395) (292)
Provision for income taxes (11) (100) ----------- ----------- Net
loss (406) (392) Dividends on preferred stock (12) (118)
----------- ----------- Net loss attributable to common
stockholders $(418) $(510) =========== =========== Basic and
diluted net loss attributable to common stockholders per share
$(0.01) $(0.02) =========== =========== Weighted average shares
used in basic and diluted calculation 44,831,154 25,618,029
=========== =========== Pro forma: Operating income (a) 1,301 257
Diluted operating income per share $0.03 $0.01 ===========
=========== Weighted average shares used in diluted calculation
49,960,553 36,725,253 =========== =========== (a)Proforma operating
income excludes certain other expenses computed as follows:
Operating loss $(1,923) $(1,218) Excluding: Amortization of
intangible assets and deferred financing costs 1,140 788
Stock-based compensation 513 199 Restructuring costs 973 -
Depreciation 598 488 ----------- ----------- Pro forma operating
income $1,301 $257 =========== =========== 24/7 REAL MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (in thousands) March 31,
December 31, 2005 2004 --------- ------------ (unaudited) Cash
$30,047 $27,690 Accounts receivable 27,595 28,224 Total current
assets 63,682 62,500 Total assets 123,024 121,398 Accounts payable
and accrued liabilities 29,712 28,233 Deferred revenue 3,040 3,222
Total current liabilities 40,252 38,955 Long term debt 6,584 6,431
Total liabilities 47,545 46,130 Total stockholders' equity 75,479
75,268 *T
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