DoubleClick Losses Narrow on Strong E-Mail, Abacus Performance

Marketing technology and services provider DoubleClick reported a net loss yesterday of $62 million, or 46 cents per share for the third quarter. This represents a 40 percent improvement over the same period last year during which DoubleClick experienced a $103 million net loss.

“We are reporting revenues at the top end of our guidance,” said DoubleClick CEO Kevin Ryan.

Total revenue for the third quarter was $74.6 million.

Ryan said the New York company is on track to deliver on its promise to be profitable on a pro forma basis for 2002 and is experiencing “by far the best annual performance in DoubleClick history.” Also, this is the first quarter in which more than half of DoubleClick’s revenue came from e-mail or offline businesses, and less than half comes from its ad management or Internet related business, Ryan said.

DoubleClick’s Abacus division brought in $26.8 million in revenue for the third quarter, up 50 percent from the last quarter and up 11 percent over the same period a year ago, the company reported.

“The third quarter is the strongest quarter for Abacus. It is a seasonal business,” Ryan said. “[Moreover] this is during a period that the overall list rental business is off 15 [percent] to 20 percent year over year. Abacus has really increased its success in the traditional U.S. catalog market by doing better and better modeling and by executing better on the sales side.”

Abacus’ two largest growth areas are the business-to-business alliance and Abacus UK, Ryan said. Combined, they make up 12.5 percent of Abacus’ sales, Ryan said. DoubleClick recently acquired the 50 percent of the UK division that it didn’t already own. The UK co-op database represents 25 million households and 260 catalogs, according to DoubleClick.

Based on its success in the UK, the Abacus division also will look at other international markets in 2003, Ryan said.

Meanwhile, DoubleClick’s e-mail solution, DARTmail, accounted for $9.7 million in revenue for the third quarter of 2002, according to the company. This represents a 46 percent increase over the same period last year, mainly because its marketer client base has grown by 100 percent, Ryan said.

“There are basically two sectors in e-mail: e-mail for marketers who are communicating with existing customers [and] publishers who are sending out advertising supported newsletters. When we entered business, most of our business was publisher driven,” he said, though he added that he expects to see e-mail revenue to grow in 2003 mostly from the publisher segment.

The company reported that media contributed $3 million in revenue during the third quarter. The low number is a result of DoubleClick divesting its North American and European media businesses.

DoubleClick’s projections for the fourth quarter include: $41.5 million to $44.5 million in revenue for the TechSolutions division; $18.5 million to $19.5 million in revenue for Abacus; and $2.5 million to $2.7 million in revenue for the Media division.

Despite the pinch in technology spending, Ryan said he is seeing “incredible interest in database management and marketing automation software. A lot of purchases this year were delayed, but will be switched into next year.”

Marketers are getting more sophisticated with e-mail marketing and have segmented their audiences, he said, adding that dropping response rates will require marketers to segment and target their offers even further.

“Those demands for better and better technology will only benefit our business,” he said.

DoubleClick ended the quarter with $719 million in cash and marketable securities and a net cash position of $556 million, or $4.09 a share, the company reported.

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