24/7 Real Media Reports Results for Third Quarter of 2004; Raises Revenue Guidance for Full Year 2004; Third Quarter 2004 Highlights.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) --Revenue climbed 72.9% from the same quarter last year and grew 6.2% sequentially from the second quarter of 2004; --Positive 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. for fifth consecutive quarter; --Acquired Australian-based Decide Interactive, a leading provider of paid search engine marketing technology and products; --Launched the "24/7 OnTarget" behaviorally targeted advertising solution; --Won the ClickZ "Best Ad Serving Software Solution" award for Open AdStream(R) Central. 24/7 Real Media, Inc. (Nasdaq: TFSM), a pioneer in interactive marketing and technology, today announced that revenue for the third quarter, ended September September: see month. 30, climbed 72.9% to $20.8 million from the $12.0 million reported in the same period in 2003 and rose 6.2% sequentially from the $19.6 million reported in the second quarter of 2004. Pro forma operating income(1) for the third quarter of 2004 was $13,000, or $0.00 per share, versus pro forma operating income of $145,000, or $0.00 per share, for the same period a year ago. Both revenues and pro forma operating income were within the Company guidance issued August 5, 2004. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss for the third quarter of 2004 was $1.7 million, or $0.04 per share, versus a net loss of $1.6 million, or $0.10 per share, for the third quarter of 2003. As previously guided, pro forma operating income and GAAP net loss for the third quarter of 2004 were negatively affected by one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. costs related to Sarbanes-Oxley compliance. "As our robust revenue growth demonstrates, 24/7 Real Media is continuing to execute and grow in a dynamic 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. marketplace," 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. "With our acquisition of Decide Interactive, we have expanded our footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. in the paid search advertising market, and we expect this segment to contribute significantly to our future growth. Media and technology continue to gain new customers and market share, affirming our belief that the seamless integration An addition of a new application, routine or device that works smoothly with the existing system. It implies that the new feature or program can be installed and used without problems. Contrast with "transparent," which implies that there is no discernible change after installation. of products and services is the key to customer acquisition and retention." Nine Months, Ended September 30, 2004 For the nine months, ended September 30, 2004, revenue rose 60.5% to $57.8 million from $36.0 million in the same period of 2003. Pro forma operating income increased to $1.0 million, or $0.02 per share, in the first nine months up from a loss of $0.9 million, or $0.06 per share, in the same period a year ago. The GAAP net loss of $0.7 million, or $0.02 per share, in the first nine months of 2004, was significantly smaller than the GAAP net loss of $8.5 million, or $0.57 per share, in the first nine months of 2003. As of September 30, 2004, the Company had $34.1 million in cash and cash equivalents on its balance sheet. Third Quarter 2004 - Segment Overview In connection with the acquisition of Decide Interactive, the Company has begun reporting three operating segments - Media Solutions, Search Solutions and Technology Solutions. The Company is providing additional financial information about its businesses to provide greater visibility into the contributions of each business segment and to allow greater comparability to other companies. The financial items set forth below for Media Solutions should not be compared with those reported in the Company's prior financial statements. Media Solutions generates revenue through the 24/7 Web Alliance of more than 800 Web sites, primarily from fees paid by client advertisers for advertising impressions. Revenue for this segment climbed 109.4% to $12.1 million in the third quarter 2004 from $5.8 million in the same quarter of 2003 and was down slightly from $12.4 million in the second quarter of 2004, due to expected market seasonality. Gross margins declined sequentially to 23.9% from 28.6% in the second quarter of 2004, primarily owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de a fall off in 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. traffic and other difficulties resulting from uncertainty surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the recently completed sale to Daum
to convert a set of data by, for example, converting them to logarithms or reciprocals so that their previous non-normal distribution is converted to a normal one. to approximately 30%, starting in the fourth quarter of 2004. The number of ad impressions delivered more than doubled to 13.7 billion from 5.9 billion in the same period of 2003. The Company continued to establish new relationships with branded publishers during the third quarter and saw strength in both the number and diversity of advertisers on the 24/7 Web Alliance. The Company launched "24/7 OnTarget," its behavioral targeting Delivering ads based on a user's habits. If a customer registers with an e-commerce site to make a purchase, those sales along with the user's site navigation history are often stored and analyzed to make targeted offers the next time. solution, across the 24/7 Web Alliance in the third quarter. 24/7 OnTarget enables advertisers to target users using anonymous behavioral behavioral pertaining to behavior. behavioral disorders see vice. behavioral seizure see psychomotor seizure. data, rather than Web site content, and enables Web publishers to take advantage of underperforming inventory on their Web sites. Search Solutions generates revenue primarily from cost-per-click, or CPC (1) (Central Processing Complex) An IBM mainframe that has two or more central processors (CPs) that share memory. It is the collection of processors, memory and I/O subsystems manufactured with a single serial number, typically all contained in one cabinet. , fees paid by client advertisers when users click-through On the Web, the act of linking to a third party. As a noun, one click-through is one instance of a person clicking on a link. It often refers to how many times ads are clicked. See CTR. to their Web sites as a result of our submission of their Web sites into search engines databases. These services are commonly referred to as bidded services for pay-for-placement search engines, and paid inclusion for algorithmic al·go·rithm n. A step-by-step problem-solving procedure, especially an established, recursive computational procedure for solving a problem in a finite number of steps. search engines. Search Solutions revenue advanced 87.7% to $4.1 million from $2.2 million in the same quarter of 2003 and rose 62.3% from $2.5 million in the second quarter of 2004. Decide Interactive, acquired in August, contributed to the revenue increase with new distribution channels and 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 accounts producing a higher volume of searches and resulting click-throughs. The integration of the 24/7 Search and Decide Interactive businesses is proceeding well, and the Company is benefiting from expanded relationships with several of its existing distribution partners. Gross margins for the segment were 45.5% in the third quarter compared to 34.3% in the second quarter of 2004. This increase was primarily due to the addition of higher margin services gained through the acquisition of Decide, including the supplying of XML XML in full Extensible Markup Language. Markup language developed to be a simplified and more structural version of SGML. It incorporates features of HTML (e.g., hypertext linking), but is designed to overcome some of HTML's limitations. feeds as a TFG TFG Transitional Federal Government TFG Tactical Fighter Group (USAF) TFG Taken for Granted TFG Timber Framers Guild TFG Technologie–Fonds GmbH (German, now TFG Venture Capital) TFG The Fall Guy partner for Overture's Site Match Xchange program. The Company anticipates growth among all our paid search solutions, however, the greatest potential for expansion lies in services for which traffic acquisition costs are accounted for as a cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold . Because of this, maturing blended margins in this segment should be in a range of 35% to 40%. Technology Solutions primarily consists of Open AdStream(R) Internet advertising delivery and management software and services, the Insight XE(TM) web analytics and audience management software and services and the Insight ACT(TM) behavioral targeting service (collectively referred to as Open AdSystem(TM)). The Company licenses software products to customers that are hosted locally and provides services from software hosted centrally on its servers as an application service provider. Technology revenue climbed 13.4% to $4.6 million in the period from $4.1 million in the same quarter of 2003, and remained steady sequentially from the $4.7 million reported in the second quarter of 2004 due to seasonality. Impression growth from hosted products, as well as several significant new-client wins globally, contributed to the year-over-year revenue increases. Technology Solutions gross margins widened slightly to 82.1% during the quarter from 81.3% during the second quarter of 2004. During the third quarter, 24/7 Real Media added a number of Open AdStream customers, including TheKnot.com, Date.com and Mail.com Wikipedia is not the place for advertisement or self-advertising. mail.com is a popular web based Email service that offers free and premium Email products, shopping mall and a customized toolbar that makes online navigation easier and fun. History Mail. ; the last also joined the 24/7 Web Alliance. Additionally, the Company continued to leverage relationships with existing clients such as Accuweather AccuWeather is a large American company that provides weather forecasting services. It was founded in 1962 by Dr. Joel N. Myers, then a Penn State graduate student working on degrees in meteorology, who was forecasting weather for a gas company in Pennsylvania. and Yellowpages.com Yellowpages.com is an Internet Web site operated by YELLOWPAGES.COM LLC, a wholly owned subsidiary of AT&T.[1]. History Yellowpages.com began on April 6,1996 when C. , both of which expanded their licenses to include the entire Open AdSystem suite of integrated ad serving and analytics solutions. 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). , existing Open AdStream clients ntl and
Telewest now also rely on 24/7 Real Media's ad serving and sales
representation solutions for their digital television initiative.24/7 Real Media's excellence in technology and advertising sales won recognition from the industry during the quarter. Open Adstream(R) Central won ClickZ Network's "ClickZ Marketing Excellence award for 2004" in the category of "Best Ad Serving Software Solution." In addition, 24/7 Real Media's 24/7 Web Alliance advertising network tied for first place in the voting as the "Best Advertising Network." The ClickZ Network is the largest resource of interactive marketing news, research and reference information on every aspect of interactive marketing. Guidance The Company expects fourth quarter revenue to be between $26 million and $28 million, the mid-point of which represents an increase of 104.5% from fourth quarter 2003 revenue of $13.2 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 fourth quarter of 2004 to be between $0.02 and $0.04 per share. The Company anticipates full year 2004 revenue to be in the range of $84 million to $86 million, the mid-point of which represents an increase of 72.8% from revenue of $49.2 million in 2003. This is an update of previously provided 2004 revenue guidance by the Company of $80 million to $82 million to reflect the acquisition of Decide Interactive. The pro forma per share earnings guidance for the year as a whole is $0.04 to $0.06. In conjunction with this release, a conference call will be held at 5:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. today 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. 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. (1)Pro forma operating income is a non-GAAP financial measure. Please see the attached schedule for a reconciliation of GAAP net income to pro forma operating income. 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, Asia and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. . 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, 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 November 4, 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 Nine months ended
----------------- -----------------
September 30, September 30,
2004 2003 2004 2003
-------- -------- -------- --------
(unaudited) (unaudited)
Revenues:
Media $12,070 $5,764 $34,451 $17,046
Search 4,109 2,189 9,658 7,611
Technology 4,628 4,081 13,676 11,351
-------- -------- -------- --------
Total revenues 20,807 12,034 57,785 36,008
-------- -------- -------- --------
Cost of revenues:
Media 9,180 3,590 24,986 10,845
Search 2,241 1,172 6,363 4,512
Technology 827 957 2,528 3,183
-------- -------- -------- --------
Total cost of revenues 12,248 5,719 33,877 18,540
-------- -------- -------- --------
Gross profit 8,559 6,315 23,908 17,468
-------- -------- -------- --------
Operating expenses:
Sales and marketing 4,272 3,116 11,481 9,487
General and administrative 3,626 2,787 9,627 8,485
Product development 1,115 870 3,261 2,213
Other expenses:
Amortization of intangible
assets and deferred financing
costs 1,068 661 3,270 1,970
Stock-based compensation 209 295 706 489
Restructuring costs - - 501 -
-------- -------- -------- --------
Total operating expenses 10,290 7,729 28,846 22,644
-------- -------- -------- --------
Operating loss (1,731) (1,414) (4,938) (5,176)
Interest income (expense), net (93) 6 (371) (141)
Change in fair value of warrant
liability 266 - 2,075 -
Gain on legal settlement - - 2,896 -
Other income (expense), net 12 (17) 123 (849)
-------- -------- -------- --------
Loss before income taxes (1,546) (1,425) (215) (6,166)
Provision for income taxes 44 12 176 52
-------- -------- -------- --------
Net loss (1,590) (1,437) (391) (6,218)
Dividends and conversion discount
on preferred stock (73) (200) (295) (2,268)
-------- -------- -------- --------
Net loss attributable to common
stockholders $(1,663) $(1,637) $(686) $(8,486)
======== ======== ======== ========
24/7 REAL MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three months ended Nine months ended
----------------------- -----------------------
September 30, September 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
(unaudited) (unaudited)
Basic and diluted net
loss attributable to
common stockholders
per share $(0.04) $(0.10) $(0.02) $(0.57)
=========== =========== =========== ===========
Weighted average shares
used in basic and
diluted calculation 37,007,505 17,017,331 32,244,122 14,811,118
=========== =========== =========== ===========
Pro forma:
Operating income (loss)
(a) 13 145 951 (877)
Diluted operating
income (loss) per
share $0.00 $0.00 $0.02 $(0.06)
=========== =========== =========== ===========
Weighted average shares
used in diluted
calculation 45,702,612 33,989,686 42,236,148 14,811,118
=========== =========== =========== ===========
(a) Pro forma operating income (loss) loss excludes certain other
expenses computed as follows:
Operating loss
Excluding: (1,731) (1,414) (4,938) (5,176)
Amortization of
intangible assets
and deferred
financing costs 1,068 661 3,270 1,970
Stock-based
compensation 209 295 706 489
Restructuring costs - - 501 -
Depreciation 467 603 1,412 1,840
----------- ----------- ----------- -----------
Pro forma operating
Income (loss) 13 145 951 (877)
=========== =========== =========== ===========
24/7 REAL MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited, in thousands)
September 30, December 31,
2004 2003
----------------- -------------------
Cash $34,122 $21,645
Accounts receivable 23,626 11,603
Total current assets 62,262 34,917
Total assets 120,808 46,180
Accounts payable and accrued
liabilities 27,093 16,352
Deferred revenue 3,114 2,544
Total current liabilities 30,207 18,896
Long term debt 13,778 13,320
Total liabilities 44,807 36,143
Total stockholders' equity 76,001 10,037
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