24/7 Real Media Reports Record First Quarter 2004; Raises Guidance for Full Year 2004.Business Editors/High-Tech Writers NEW YORK--(BUSINESS WIRE)--May 6, 2004 24/7 Real Media, Inc. (Nasdaq:TFSM) First Quarter 2004 Highlights -- Revenue increased 47% from same quarter last year and grew 32% sequentially; -- Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $0.01 per share, up from a pro forma operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of ($0.07) per share in the year earlier quarter; -- GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). loss of ($0.02) per share, compared to a GAAP loss of ($0.18) per share in the year earlier quarter; -- $38.1 million raised in a secondary offering; -- Acquisition of Real Media Korea Korea (kôrē`ə, kə–), Korean Hanguk or Choson, region and historic country (85,049 sq mi/220,277 sq km), E Asia. completed; and -- Multi-year sales and technology agreements signed with Lycos (Lycos, Inc., Waltham, MA, www.lycos.com) One of the major Web search and content sites on the Web. In 2000, Lycos and Terra Networks, S.A., the leading provider of content and Internet access to the Spanish and Portuguese markets, merged to become Terra Lycos. U.S. 24/7 Real Media, Inc. (Nasdaq:TFSM), a pioneer in interactive marketing and technology, today announced that revenue for the first quarter, ended March 31, climbed 47.0% to $17.4 million from the $11.8 million reported in the same period in 2003 and rose 31.9% sequentially from the $13.2 million reported in the fourth quarter of 2003. Performance in the quarter exceeded the Company's previously issued guidance for revenue of $15.5 million to $16.5 million. Pro forma operating income for the first quarter of 2004 was $257,000, or $0.01 per share, up from a pro forma operating loss of $847,000, or ($0.07) per share, for the same period a year ago. On a GAAP basis, net loss for the first quarter of 2004 was $0.4 million, or ($0.02) per share, compared to net loss of $2.3 million, or ($0.18) per share, for the first quarter of 2003. A reconciliation of pro forma operating income/loss and GAAP results is included in the financial exhibits accompanying this release. David J David J. Haskins (b. April 24, 1957, in Northampton, England) is a British alternative rock musician. He was the bassist for the seminal gothic rock band Bauhaus. Life and work . Moore Moore, city (1990 pop. 40,761), Cleveland co., central Okla., a suburb of Oklahoma City; inc. 1887. Its manufactures include lightning- and surge-protection equipment, packaging for foods, and auto parts. , chairman and chief executive officer of 24/7 Real Media, said: "The Company enjoyed a very successful first quarter in all respects, substantially growing revenues and improving profitability. The completion of the acquisition of Real Media Korea, the signing of the Lycos business development partnership and the raising of capital have positioned the Company favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. for the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. ." In February February: see month. 2004, the Company signed two multi-year agreements with Lycos U.S., under which Lycos has purchased 24/7 Real Media's entire Open AdSystem(TM) technology suite and outsourced all its ad sales to the Company. In early January January: see month. 2004, the Company completed its acquisition of Real Media Korea, giving 24/7 Real Media a leadership position in the South Korean Korean, language of uncertain ancestry. It is thought by some scholars to be akin to Japanese, by others to be a member of the Altaic subfamily of the Ural-Altaic family of languages (see Uralic and Altaic languages), and by still others to be unrelated to any known market and a strong foothold foot·hold n. 1. A place providing support for the foot in climbing or standing. 2. A firm or secure position that provides a base for further advancement. foothold Noun 1. in Asia for future expansion opportunities. To further these and other strategic goals, 24/7 Real Media completed a public offering of its common stock during the first quarter, raising $38.1 million that it will use for potential acquisitions as well as for general corporate purposes. Approximately $4.3 million of the proceeds were not received until the second quarter, when the over-allotment option was exercised. With the addition of those funds received during the first quarter the Company recorded $52.8 million in cash and cash equivalents and $58.5 million in total stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. on the March 31, 2004 consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. . First Quarter 2004 - Segment Overview Integrated Media Solutions revenue, which includes revenue from the 24/7 Web Alliance, 24/7 Search and other media services, climbed 56.3% to $13.0 million in the first quarter 2004 from $8.3 million in the same quarter in 2003. Gross margin for Integrated Media Solutions narrowed to 27.6% from 32.2% in the prior quarter, primarily due to margin compression in the bid management part of the 24/7 Search business. In this segment, 24/7 Web Alliance operations grew 107.5% to $9.7 million from $4.7 million in the same quarter of 2003 and sequentially grew 61.5% from $6.0 million. The number of advertisement impressions delivered grew to 9.6 billion from 6.1 billion in the same period of 2003. The Company continued to establish new relationships with branded publishers during the first quarter and saw strength in both the number and diversity of advertisers on the 24/7 Web Alliance. The Company also announced the deployment of its upgraded Open AdSystem technology platform, including its Insight ACT(TM) and Insight XE(TM) analytics products, across the 24/7 Web Alliance. The introduction of this integrated technology will enable 24/7 Real Media to fully deliver audience-based ad packages by June June: see month. of this year. 24/7 Search generated $3.0 million of revenue in the period versus $3.1 million in the same quarter of 2003 and $2.7 million in the fourth quarter of 2003. 24/7 Search revenues, and year over year comparisons, continue to reflect adjustments in the paid inclusion and bid-for-placement strategies of the Company's largest distribution partner. 2003 first quarter results included $1.7 million of revenues generated from the Inktomi (Inktomi Corporation, Foster City, CA, www.inktomi.com) A company that specializes in high-performance software for Internet service providers (ISPs), carriers and large Web sites. partnership, which expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. in May 2003. The Company announced in March 2004 its renewed relationship with Overture overture, instrumental musical composition written as an introduction to an opera, ballet, oratorio, musical, or play. The earliest Italian opera overtures were simply pieces of orchestral music and were called sinfonie. and Inktomi, following the acquisition of those companies by Yahoo!. Technology Solutions revenue climbed 24.7% to $4.3 million in the period from $3.5 million in the same quarter of 2003 and gained 10.6% sequentially from the $3.9 million reported in the fourth quarter of 2003. Revenue from our hosted products, including Open AdStream(R) Central, Open Advertiser ad·ver·tise v. ad·ver·tised, ad·ver·tis·ing, ad·ver·tis·es v.tr. 1. To make public announcement of, especially to proclaim the qualities or advantages of (a product or business) so as to increase (TM) and Insight XE, which we distribute from our centrally hosted servers, continued to grow. The Company's hosted solutions delivered 19.7 billion paid impressions and page views in the period, up 85.5% from the first quarter of 2003, and 32.6% sequentially from the fourth quarter of 2003. Technology Solutions gross margin was 81.1% in the period compared to 78.4% in the fourth quarter. During the first quarter, 24/7 Real Media added a number of Open AdStream customers, including Stockgroup Information Systems, Comcast Spotlight Comcast Spotlight is the advertising sales division of Comcast Cable. With its headquarters located in New York City and offices all over the country, Comcast Spotlight employs over 3,500 people across the United States. and Feedroom in the U.S. and A. Manzoni Man·zo·ni , Alessandro 1785-1873. Italian writer best known for his romantic novel The Betrothed (1825-1827), considered one of the greatest works of modern Italian fiction. Noun 1. & C., jom_com, Start Me Up, Trinity Mirror Trinity Mirror plc is a large United Kingdom newspaper and magazine publisher. It is Britain's biggest newspaper group, publishing 240 regional papers as well as the Daily Mirror, Sunday Mirror, People, Sunday Mail and Daily Record. and Particulier a Particulier in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . The
Company also signed several clients, including current Open AdStream
customers Forbes Forbes , B(ertie) C(harles) 1880-1954.American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes .com and Investors.com, to its Insight XE Web analytics solution. Guidance The Company expects revenue in the second quarter of between $20 million and $21 million, which at the mid-point represents an increase of 69% over second quarter 2003 revenue of $12.2 million. The Company expects second quarter diluted pro forma operating income per share to be between $0.01 per share and $0.02 per share. The Company is also raising its 2004 revenue guidance to a range of $81 million to $85 million, an increase at the mid-point of 69% over full year 2003 revenue of $49.2 million. In conjunction with this release, a conference call will be held to discuss these results at 5:00 pm EST EST electroshock therapy. EST abbr. electroshock therapy today. The call will be broadcast live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.247realmedia A streaming media technology for the Internet from RealNetworks. Using the Real Time Streaming Protocol (RTSP), it is designed to handle any type of media, including audio, video, MIDI, text, animation and presentations. .com. Please allow extra time prior to the call to visit the site and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. the streaming media See streaming audio, streaming video and digital media hub. software required to listen to the Internet broadcast. The online archive of the broadcast will be available within two hours of the live call. 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 New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , with offices in other major U.S. cities, Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , Europe and Asia. For more information, please visit www.247realmedia.com. 24/7 Real Media: Delivering Today. Defining Tomorrow. Caution concerning forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This news release includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on management's current expectations and are naturally subject to uncertainty and changes in circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Actual results may vary materially from the expectations contained herein due to changes in economic, business, competitive and/or regulatory factors. More detailed information about those factors is set forth in our filings with the Securities and Exchange Commission. In addition, the following factors, among others, could cause actual results to differ materially from those described herein: enhanced competition, the potential for impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of relationships with employees or major customers, loss of faith in Internet advertising Delivering ads to Internet users via Web sites, e-mail, ad-supported software and Internet-enabled cellphones. Also called an "ad network," Internet advertising organizations act as a middleman between the advertiser and the Web sites and software publishers that display the ads. , international risks, and other economic, business, competitive and/or regulatory factors affecting the businesses of 24/7 Real Media. All information in this release is as of May 6, 2004. The Company is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
24/7 REAL MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three months
ended
-----------------
March 31,
2004 2003
-------- --------
(unaudited)
Revenues:
Integrated media solutions $13,039 $8,343
Technology solutions 4,342 3,481
-------- --------
Total revenues 17,381 11,824
-------- --------
Cost of revenues:
Integrated media solutions 9,441 5,510
Technology solutions 822 1,165
-------- --------
Total cost of revenues 10,263 6,675
-------- --------
Gross profit 7,118 5,149
-------- --------
Operating expenses:
Sales and marketing 3,316 3,144
General and administrative 2,982 2,922
Product development 1,051 588
Other expenses:
Amortization of intangible assets 788 647
Stock-based compensation 199 47
-------- --------
Total operating expenses 8,336 7,348
-------- --------
Operating loss (1,218) (2,199)
Interest expense, net (182) (91)
Change in fair value of warrant liability 928 -
Other income, net 180 -
-------- --------
Loss before provision for income taxes (292) (2,290)
Provision for income taxes (100) (7)
-------- --------
Net loss (392) (2,297)
Dividends on preferred stock (118) (129)
-------- --------
Net loss attributable to common stockholders $(510) $(2,426)
======== ========
24/7 REAL MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three months ended
-----------------------
March 31,
2004 2003
----------- -----------
(unaudited)
Loss per common share - basic and diluted
Net loss $(0.02) $(0.18)
Preferred stock dividends (0.00) (0.01)
----------- -----------
Net loss attributable to common stockholders $(0.02) $(0.19)
=========== ===========
Shares used in computing basic per share 25,618,029 12,894,663
=========== ===========
Pro forma:
Operating income (loss) (a) 257 (847)
Diluted operating income (loss) per share (a) $0.01 $(0.07)
=========== ===========
Shares used in computing diluted operating
income per share 36,725,253 12,894,663
=========== ===========
24/7 REAL MEDIA, INC.
RECONCILIATION OF PRO FORMA OPERATING INCOME TO OPERATING INCOME
(Note 1)
(Unaudited, in thousands)
Three months
ended
-----------------
March 31,
2004 2003
-------- --------
Operating loss $(1,218) $(2,199)
Excluding:
Amortization of intangible assets and deferred
financing costs 788 647
Stock-based compensation 199 47
Depreciation 488 658
-------- --------
Pro forma operating income $257 $(847)
======== ========
Note (1):
Pro forma operating income included in this press release is a
non-GAAP financial measure which represents operating income excluding
amortization of intangible assets and deferred financing costs,
stock-based compensation and depreciation. Pro forma operating income,
as defined above, may not be similar to pro forma operating income or
other similar financial measures used by other companies and is not a
measurement under generally accepted accounting principles.
We believe that pro forma operating income provides useful information
to investors about the Company's performance because it eliminates the
effects of period to period changes in costs associated with non-cash
items, including amortization, stock-based compensation, and
depreciation and does not take into account other income and expenses
that are not directly attributable to the underlying performance of
the Company's business operations. Management uses pro forma operating
income and other financial measures in evaluating the overall
performance of the Company's business operations.
Though management finds pro forma operating income useful for
evaluating aspects of the Company's business, its reliance on this
measure is limited because excluded items may have a material effect
on the Company's earnings and earnings per share calculated in
accordance with GAAP. Therefore, management always uses pro forma
operating income in conjunction with GAAP earnings and earnings per
share measures. The Company believes that pro forma operating income
provides investors with an additional tool for evaluating the
Company's core performance, which management uses in its own
evaluation of performance, and a base line for assessing the future
earnings potential of the Company. While the GAAP results are more
complete, the Company prefers to allow investors to have this
supplemental metric since, with a reconciliation to GAAP, it may
provide greater insight into the Company's financial results.
24/7 REAL MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited, in thousands)
March 31, Dec. 31,
2004 2003
---------- ---------
Cash $52,829 $21,645
Accounts receivable 16,977 11,603
Total current assets 71,535 34,917
Total assets 103,051 46,180
Accounts payable and accrued liabilities 25,474 16,301
Deferred revenue 2,617 2,544
Total current liabilities 28,144 18,896
Loan payable 13,473 13,320
Total liabilities 44,527 36,143
Total stockholders' equity 58,524 10,037
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