24/7 Real Media, Inc. (Nasdaq:TFSM) Second Quarter Highlights: --
Revenue of $33.9 million, an increase of 73% over the comparable
period in 2004. -- Pro forma operating income of $0.05 per share
compared with $0.02 per share in Q2 of 2004; GAAP net loss of $0.00
per share versus a GAAP profit of $0.03 per share in Q2 of 2004,
which included a one-time gain of $0.07 per share. -- Continued
successful roll-out of Decide DNA, our award-winning Search Engine
Marketing platform. -- Winner of ClickZ.com Marketing Excellence
Awards for Best Advertising Network, Best Ad-Server, and Best
Behavioral Technology/Product. 24/7 Real Media, Inc. (Nasdaq:
TFSM), a pioneer in interactive marketing and technology, today
announced financial results for the second quarter ended June 30,
2005. Revenue for the second quarter of 2005 was $33.9 million, an
increase of 73% over the $19.6 million reported for the second
quarter of 2004. Pro forma operating income(1) for the second
quarter of 2005 was $2.3 million, or $0.05 per share. This compares
with pro forma operating income of $0.7 million, or $0.02 per
share, for the second quarter of 2004. Net loss computed in
accordance with generally accepted accounting principles (GAAP) for
the second quarter of 2005 was a loss of $0.2 million, or $0.00 per
share, compared with income of $1.5 million, or $0.03 per share,
for the second quarter of 2004. GAAP net income for the second
quarter of 2004 includes a one-time gain of $2.9 million from a
legal settlement. "24/7 Real Media enjoyed an outstanding second
quarter, continuing on the success and momentum the company
demonstrated in the first quarter," said David J. Moore, chairman
and chief executive officer of 24/7 Real Media. "Our critically
acclaimed Search Engine Marketing franchise, 24/7 Search, continues
to gain traction throughout the largest markets worldwide, and our
leading 24/7 Media and 24/7 Technology franchises were recently
honored by members of the Internet advertising community." "All our
businesses are performing very well. We are poised to continue
capitalizing on the positive trends in the market, including
increased spending online and the rapid growth of paid search."
Segment Overview Revenue in the Media Solutions segment climbed 35%
to $16.7 million in the second quarter of 2005 from $12.4 million
in the second quarter of 2004. Gross margins remained stable at
32.1%. Search Solutions revenue advanced 362% to $11.7 million from
$2.5 million in the second quarter of 2004. Gross margins for the
segment increased to 33.8% in the second 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 17% to $5.5 million in the
second quarter of 2005 from $4.7 million in the second quarter of
2004. Technology gross margins were 78.6% in the second quarter of
2005. Guidance The Company expects third quarter revenue for 2005
to be between $32 million and $33 million, the mid-point of which
represents an increase of 56% from third quarter 2004 revenue of
$20.8 million. The Company expects diluted pro forma operating
income per share in the third quarter of 2005 to be $0.04 per
share. The Company expects fourth quarter revenue for 2005 to be
between $35 million and $37 million, the mid-point of which
represents an increase of 31% from fourth quarter 2004 revenue of
$27.5 million. The Company expects diluted pro forma operating
income per share in the fourth quarter of 2005 to be between $0.05
and $0.06 per share. The Company now anticipates full year 2005
revenue to be in the range of $130 million to $133 million, the
mid-point of which represents an increase of 54% from revenue of
$85.3 million in 2004. The Company now anticipates pro forma per
share earnings for the full year of $0.17 to $0.18. The Company
expects full year 2006 revenue to be in the range of $165 million
to $175 million and anticipates pro forma per share earnings for
the full year of $0.28 to $0.32. In conjunction with this release,
a conference call will be held at 8:30 a.m. EDT on Thursday, August
4 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. 24/7 Real Media is
a member of the NAI and adheres to the NAI privacy principles that
have been applauded by the FTC. These principles are designed to
help ensure Internet user privacy. For more information about
online data collection associated with ad serving, including online
preference marketing and an opportunity to opt-out of 24/7 Real
Media cookies, go to: www.networkadvertising.org. 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 third and fourth quarters of 2005 and for the
full years 2005 and 2006. 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 Decide Interactive,
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 a significant portion 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 June 30,
2005, which the Company expects to file with the Securities and
Exchange Commission on or before August 9, 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 Six
months ended ------------------------- ------------------------
June 30, June 30, 2005 2004 2005 2004 ----------- -----------
----------- ----------- (unaudited) (unaudited) Revenues: Media $
16,684 $ 12,358 $ 30,913 $ 22,381 Search 11,710 2,533 21,332 5,549
Technology 5,492 4,706 10,711 9,048 ----------- -----------
----------- ----------- Total revenues 33,886 19,597 62,956 36,978
----------- ----------- ----------- ----------- Cost of revenues:
Media 11,327 8,823 20,954 15,806 Search 7,747 1,664 14,379 4,122
Technology 1,177 879 2,169 1,701 ----------- -----------
----------- ----------- Total cost of revenues 20,251 11,366 37,502
21,629 ----------- ----------- ----------- ----------- Gross profit
13,635 8,231 25,454 15,349 ----------- ----------- -----------
----------- Operating expenses: Sales and marketing 5,731 3,893
11,021 7,209 General and administrative 4,988 3,019 9,572 6,001
Product development 1,366 1,095 2,608 2,146 Other expenses:
Amortization of intangible assets and deferred financing costs
1,139 1,414 2,279 2,202 Stock-based compensation 441 298 954 497
Restructuring costs - 501 973 501 ----------- -----------
----------- ----------- Total operating expenses 13,665 10,220
27,407 18,556 ----------- ----------- ----------- -----------
Operating loss (30) (1,989) (1,953) (3,207) Interest income
(expense), net (54) (96) (142) (278) Change in fair value of
warrant liability (110) 881 40 1,809 Recovery of investment - -
2,100 - Impairment of marketable securities - - (588) - Gain on
sale of marketable securities 7 - 7 - Gain on legal settlement -
2,896 - 2,896 Other income (expense), net 6 (69) (40) 111
----------- ----------- ----------- ----------- Loss before income
taxes (181) 1,623 (576) 1,331 Provision for income taxes (9) (32)
(20) (132) ----------- ----------- ----------- ----------- Net loss
(190) 1,591 (596) 1,199 Dividends and conversion discount on
preferred stock (10) (104) (22) (222) ----------- -----------
----------- ----------- Net (loss) income attributable to common
stockholders $ (200) $ 1,487 $ (618) $ 977 =========== ===========
=========== =========== Basic net income (loss) per share
attributable to common stockholders $ (0.00) $ 0.04 $ (0.01) $ 0.03
=========== =========== =========== =========== Weighted average
shares used in basic net income (loss) per share 44,976,378
34,054,489 44,904,167 29,836,259 =========== ===========
=========== =========== Diluted net income (loss) per share
attributable to common stockholders $ (0.00) $ 0.03 $ (0.01) $ 0.02
=========== =========== =========== =========== Weighted average
shares used in diluted net income (loss) per share 44,976,378
43,886,508 44,904,167 39,845,899 =========== ===========
=========== =========== Pro forma: Operating income (a) 2,270 680
3,571 938 Diluted operating income per share $ 0.05 $ 0.02 $ 0.07 $
0.02 =========== =========== =========== =========== Weighted
average shares used in diluted operating income per share
49,481,305 43,886,508 49,242,008 39,845,899 =========== ===========
=========== =========== (a) Proforma operating income excludes
certain other expenses computed as follows: Operating loss $ (30) $
(1,989) $ (1,953) $ (3,207) Excluding: Amortization of intangible
assets and deferred financing costs 1,139 1,414 2,279 2,202
Stock-based compensation 441 298 954 497 Restructuring costs - 501
973 501 Depreciation 720 456 1,318 945 ----------- -----------
----------- ----------- Pro forma operating income $ 2,270 $ 680 $
3,571 $ 938 =========== =========== =========== =========== 24/7
REAL MEDIA, INC. CONDENSED CONSOLIDATED BALANCE SHEET (in
thousands) June 30, December 31, 2005 2004 ------------
-------------- (unaudited) Cash $ 28,347 $ 27,690 Accounts
receivable 29,921 28,224 Total current assets 63,487 62,500 Total
assets 122,156 121,398 Accounts payable and accrued liabilities
28,620 28,233 Deferred revenue 2,918 3,222 Total current
liabilities 39,038 38,955 Long term debt 6,736 6,431 Total
liabilities 46,696 46,130 Total stockholders' equity 75,460 75,268
*T
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