Engage Reports Net Loss of $695M for Second Quarter

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Engage Inc. yesterday reported a net loss of $695.5 million, or $3.53 per share, for its fiscal second quarter, a substantially greater amount than the $51.2 million it lost in the same quarter a year ago. However, the company said its second-quarter revenue was $28.1 million, exceeding its revised expectations.

"Much of the progress that we made during the second quarter is not evident on our income statement and balance sheet," said Tony Nuzzo, Engage's president/CEO. "Although the recent corporate restructuring is beginning to have positive effects internally, we believe it will take a few more quarters before the results are apparent."

The ad serving network said Jan. 4 that it would restructure its business and eliminate nearly 50 percent of its work force, or about 560 positions. It said in mid-February that based on preliminary results, its restructuring was beginning to pay off and it expected to exceed its previously reported revenue figure of $25 million for its fiscal second quarter, which ended Jan. 31. Those cuts should be completed by April 30, the company said.

Engage said that for the second quarter its software and services revenue fell to $8.3 million, from $13.4 million in the first quarter. Software revenue accounted for 30 percent of Engage's business in the second quarter. Its software client list grew to 580 companies in the quarter, up from 445 in the first quarter.

Its media revenue fell to $19.8 million in the second quarter, from $27.6 million the previous quarter. It added 150 new media clients in the second quarter, reporting 1,200 clients, up from 1,050 the previous quarter. Media represented 70 percent of the company's business in the second quarter. The company said ad impressions dropped slightly in the second quarter, to 28.3 billion from 28.6 billion in the first quarter.

Nuzzo said he expects Engage to break even in the first quarter of fiscal 2002.

"By the fourth quarter [of fiscal 2001] we expect our business to be almost normalized," Nuzzo said.

The company said it expects revenue for third quarter 2001 to be between $24 million and $26 million. The media segment is expected to contribute about 52 percent of its revenue, and software is expected to contribute 48 percent.

In its fiscal 2001 fourth quarter, Engage forecasts revenue of $25 million to $28 million, with nearly 53 percent from its media business and 47 percent from software ad services.

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