24/7 Real Media Reports Record Results for Fourth Quarter and Full Year 2005; Company Exceeds Fourth Quarter and Full Year Guidance; Raises Guidance for Full Year 2006 and Introduces First Quarter 2006 Guidance.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 -- 24/7 Real Media, Inc. (Nasdaq: TFSM): Fourth Quarter Highlights: --Revenue of $41.7 million, an increase of 52% over the comparable period in 2004. --Pro forma forma, adj/n minor elements between the members of a botanical species. 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 $0.08 per share compared with $0.03 per share in Q4 of 2004; GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income of $0.03 per share versus a GAAP net loss of $0.06 per share in Q4 of 2004. --Successful operational launch of K.K. 24-7 Search, a joint venture with Dentsu Dentsu Incorporated (株式会社電通 Kabushiki-gaisha Dentsū Inc., to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the growing Search Engine Marketing sector in Japan. --Expansion of leading German operations with the opening of new Hamburg New Hamburg may refer to: Places:
24/7 Real Media, Inc. (Nasdaq: TFSM), a pioneer in interactive marketing and technology, today announced financial results for the fourth quarter and full year ended December December: see month. 31, 2005. Revenue for the fourth quarter of 2005 was $41.7 million, an increase of 52% from the $27.5 million reported for the fourth quarter of 2004, and a sequential increase of 19% from the $35.1 million reported during the third quarter of 2005. 24/7 Real Media continued to expand its global reach in 2005 with the opening of offices in Tokyo Tokyo (tō`kēō), city (1990 pop. 8,163,573), capital of Japan and of Tokyo prefecture, E central Honshu, at the head of Tokyo Bay. , Rome Rome, city, Italy Rome, Ital. Roma, city (1991 pop. 2,775,250), capital of Italy and see of the pope, whose residence, Vatican City, is a sovereign state within the city of Rome. and Hamburg Hamburg, city, Germany Hamburg (häm`b  rkh), officially Freie und Hansestadt Hamburg (Free and Hanseatic City of Hamburg), city (1994 pop. , and non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. operations contributed 57% of the Company's revenue in the fourth quarter. Operating strength in each of its geographies and business segments contributed to the robust sequential and year-over-year growth for the Company. 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(1) for the fourth quarter of 2005 was $4.0 million, or $0.08 per share. This compares with pro forma operating income of $1.5 million, or $0.03 per share, for the fourth quarter of 2004. Under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), net income for the fourth quarter of 2005 was $1.4 million, or $0.03 per share, compared with a net loss of $2.8 million, or $0.06 per share, for the fourth quarter of 2004. For the year ended December 31, 2005, revenue was $139.8 million, an increase of 64% from the $85.3 million reported for the year ended December 31, 2004. Pro forma operating income for 2005 was $9.9 million, or $0.20 per share, an increase of more than 300% over the pro forma operating income of $2.4 million, or $0.06 per share, in the prior year. GAAP net income for 2005 was $0.0 million, or $0.00 per share, compared with a GAAP net loss of $3.5 million, or $0.10 per share, in 2004. "2005 was a breakthrough year for 24/7 Real Media," said 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. "We executed on a number of key strategic objectives during the year, in particular the launch of our Japanese Japanese (jăp'ənēz`), language of uncertain origin that is spoken by more than 125 million people, most of whom live in Japan. There are also many speakers of Japanese in the Ryukyu Islands, Korea, Taiwan, parts of the United States, and operations with Dentsu Inc., the largest advertising agency in Asia. Rigorous cost control, operational leverage and outstanding execution in each of our business lines allowed the Company to consistently outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. expectations, and we are enjoying a healthy pace of business that has continued into the first part of 2006." "Entering 2006, we will continue to capitalize on increased spending online and the rapid growth of the paid search market. Global advertisers are starting to shift significant portions of their budget to 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. due to the unparalleled transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. and accountability of the medium. As the most internationally-diversified company in the Internet advertising arena, 24/7 Real Media is ideally positioned for sustained, strong growth over the upcoming years." Segment Overview Revenue in the Media Solutions segment climbed 23% to $18.9 million in the fourth quarter of 2005 from $15.4 million in the fourth quarter of 2004. Segment gross margins for the quarter were 30.7%. Search Solutions revenue advanced 141% to $16.4 million from $6.8 million in the fourth quarter of 2004. Gross margins for the segment were 26.2% in the fourth quarter of 2005. Technology Solutions revenue climbed 23% to $6.5 million in the fourth quarter of 2005 from $5.3 million in the fourth quarter of 2004. Technology gross margins were 83.2% in the fourth quarter of 2005. Guidance The Company expects first quarter revenue for 2006 to be between $40 million and $41 million, the mid-point of which represents an increase of 39% from first quarter 2005 revenue of $29.1 million. The Company expects 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 operating income per share in the first quarter of 2006 to be $0.06 per share. The Company is raising guidance for full year 2006 revenue to a range of $185 million to $195 million and anticipates pro forma operating income per share for the full year of $0.32 to $0.35. The Company is not providing GAAP net income per share guidance for the first quarter of 2006 or the full year 2006 at this time, as certain items that would be included in those figures are dependent on future events and accounting determinations.(2) Revenue guidance includes the projected financial performance of K.K. 24-7 Search, the partnership with Dentsu in which 24/7 Real Media holds a majority interest and reports on a consolidated basis. Pro forma operating income guidance is provided net of Dentsu's 49% minority interest in the projected pro forma operating income or loss generated by K.K. 24-7 Search. In conjunction with this release, a conference call will be held at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy on Thursday Thursday: see week. , March 2 to discuss these results. 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/about/investor. Please allow extra time to visit our Web site prior to the call 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 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 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 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). 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 See Network Associates. and adheres to the NAI privacy principles that have been applauded by the FTC FTC See Federal Trade Commission (FTC). . These principles are designed to help ensure Internet user Internet user n → internauta m/f Internet user Internet n → internaute m/f 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 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. : Certain statements in this news release are "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. 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 first quarter of 2006 and for the full year 2006. Investors are cautioned not to place undue reliance upon these forward-looking statements, which speak only as of 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. Management may reiterate re·it·er·ate tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it these forward looking statements subsequent to the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , but such reiterations should not be considered an update or reaffirmation re·af·firm tr.v. re·af·firmed, re·af·firm·ing, re·af·firms To affirm or assert again. re of these statements unless expressly so stated. The forward-looking statements are based on the subjective 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, geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. , tax, exchange rate and other risks associated with international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , which currently comprise a significant portion of the Company's revenue; the potential for enhanced competition, including with competitors that have substantially greater resources than those of the Company; potential issues that may arise in the Company's Search segment, which is a less seasoned business than the Company's other segments and which is in an ultra competitive and rapidly evolving industry, in which the Company's business is somewhat dependent on its ability to maintain good relations with a few search engines; due to these factors, the Company's Search business may not be able to expand as rapidly as projected, nor maintain its existing customer base or profitability structure; the potential loss of key employees and inability to attract qualified new employees, especially in our Search business, due to a very competitive and tightening job market; risks that the Company's technology will be insufficient to meet increased business levels; risk that the Company's technology services will be disrupted dis·rupt tr.v. dis·rupt·ed, dis·rupt·ing, dis·rupts 1. To throw into confusion or disorder: Protesters disrupted the candidate's speech. 2. by terrorist attack, disasters or malicious Involving malice; characterized by wicked or mischievous motives or intentions. An act done maliciously is one that is wrongful and performed willfully or intentionally, and without legal justification. DESERTION, MALICIOUS. intrusion, and that the Company's back-up facilities and disaster recovery plans will not be adequate; customer concentration or customer loss risks; potential deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. or slower-than-expected growth in the Internet advertising market; the uncertainties, costs and business impacts of potential new legislation; accounting risks and the risk of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005, which the Company expects to file with the Securities and Exchange Commission on or before March 15, 2006. 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 The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the 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
for the three months and the year ended December 31, 2005 and 2004
appears in the financial statement portion of this release.
(2) Our diluted pro forma operating income per share guidance for the
first quarter of 2006 and the full year 2006 excludes depreciation
expense of $0.9 million and $4.0 million, respectively;
amortization expense of $0.9 million and $3.4 million; and
stock-based compensation related to restricted stock vesting over
time of $0.8 million and $3.1 million. Also excluded are interest
income/expense, which we do not expect to be material; income
taxes, as we anticipate that net operating loss carry forwards
will offset any taxable income; equity instrument with
contingencies; and amounts related to stock-based compensation to
be incurred upon adoption of Statement of Financial Accounting
Standards ("SFAS") No.123(R), "Shared-Based Payments." We are in
the process of evaluating the requirements of SFAS 123(R) and have
not yet determined our exact method of adoption. Equity instrument
with contingencies include $6.0 million in stock based
compensation related to restricted stock that vest upon a market
contingency; warrant liabilities that effect the income statement
based upon changes in the price of our common stock; and
approximately 0.6 million shares of restricted stock that may
accelerate vesting based on the achievement of certain performance
criteria over the next one to three years that will be expensed
based upon the likelihood of reaching those targets and the price
of our common stock.
24/7 REAL MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three months ended Twelve months ended
---------------------------------------------------
December 31, December 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
(unaudited) (unaudited)
Revenues:
Media $ 18,903 $ 15,428 $ 65,363 $ 49,879
Search 16,367 6,781 51,430 16,439
Technology 6,451 5,261 23,001 18,937
------------ ------------ ------------ ------------
Total revenues 41,721 27,470 139,794 85,255
------------ ------------ ------------ ------------
Cost of revenues:
Media 13,092 10,211 44,562 35,197
Search 12,085 4,208 36,490 10,571
Technology 1,081 934 4,248 3,462
------------ ------------ ------------ ------------
Total cost of
revenues 26,258 15,353 85,300 49,230
------------ ------------ ------------ ------------
Gross profit 15,463 12,117 54,494 36,025
------------ ------------ ------------ ------------
Operating expenses:
Sales and
marketing 5,952 5,166 22,579 16,647
General and
administrative 4,750 4,599 19,207 14,226
Product
development 1,662 1,279 5,833 4,540
Other expenses:
Amortization of
intangible
assets and
deferred
financing
costs 972 1,061 4,391 4,331
Stock-based
compensation 780 (168) 2,227 538
Restructuring
costs - 340 973 841
Impairment of
intangible
assets - 896 - 896
Impairment of
property &
equipment - 787 - 787
------------ ------------ ------------ ------------
Total
operating
expenses 14,116 13,960 55,210 42,806
------------ ------------ ------------ ------------
Operating
income (loss) 1,347 (1,843) (716) (6,781)
Interest expense,
net (23) (92) (213) (463)
Change in fair
value of warrant
liability (37) (35) (381) 2,040
Recovery of
investment 240 - 2,340 -
Impairment of
marketable
securities - (1,052) (588) (1,052)
Gain on sale of
marketable
securities 34 - 16 -
Gain on legal
settlement - - - 2,896
Other income, net 248 105 153 228
------------ ------------ ------------ ------------
Income (loss)
before provision for
income taxes and
minority interest
in operations of
consolidated
subsidiary 1,809 (2,917) 611 (3,132)
Provision for
income taxes (517) 153 (701) (23)
Minority interest
in operations of
consolidated
subsidiary 107 - 128 -
------------ ------------ ------------ ------------
Net income (loss) 1,399 (2,764) 38 (3,155)
Dividends on
preferred stock - (11) (25) (306)
------------ ------------ ------------ ------------
Net income (loss)
attributable to
common
stockholders $ 1,399 $ (2,775) $ 13 $ (3,461)
============ ============ ============ ============
Basic net income
(loss)
attributable to
common
stockholders per
share $ 0.03 $ (0.06) $ 0.00 $ (0.10)
============ ============ ============ ============
Weighted average
shares used in
basic calculation 46,100,532 44,695,486 45,350,466 35,373,973
============ ============ ============ ============
Diluted net income
(loss)
attributable to
common
stockholders per
share $ 0.03 $ (0.06) $ 0.00 $ (0.10)
============ ============ ============ ============
Weighted average
shares used in
diluted
calculation 51,743,986 44,695,486 47,706,498 35,373,973
============ ============ ============ ============
Pro forma:
Operating income
(a) 3,988 1,490 9,866 2,441
Diluted operating
income per share $ 0.08 $ 0.03 $ 0.20 $ 0.06
============ ============ ============ ============
Weighted average
shares used in pro
forma calculation 51,743,986 48,210,279 49,795,724 43,685,255
============ ============ ============ ============
(a)Pro forma
operating
income
excludes
certain other
expenses
computed as
follows:
Operating income
(loss) $ 1,347 $ (1,843) $ (716) $ (6,781)
Excluding:
Amortization of
intangible
assets and
deferred
financing
costs 972 1,061 4,391 4,331
Stock-based
compensation 780 (168) 2,227 538
Restructuring
costs - 340 973 841
Impairment of
intangible
assets - 896 - 896
Impairment of
property &
equipment - 787 - 787
Minority
interest in
pro forma
operating loss
of
consolidated
subsidiary 100 - 122 -
Depreciation 789 417 2,869 1,829
------------ ------------ ------------ ------------
Pro forma
operating income $ 3,988 $ 1,490 $ 9,866 $ 2,441
============ ============ ============ ============
24/7 REAL MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
December 31, December 31,
2005 2004
------------ ------------
(unaudited)
Cash $ 40,009 $ 27,690
Short-term investments - 3,876
Accounts receivable 38,316 28,224
Total current assets 80,694 62,500
Total assets 142,804 121,398
Accounts payable and accrued liabilities 43,383 28,233
Deferred revenue 3,218 3,222
Short-term debt 14,542 7,500
Total current liabilites 61,143 38,955
Long-term debt - 6,431
Total liabilities 62,529 46,109
Minority interests 1,556 21
Total stockholders' equity 78,719 75,268
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