24/7 Real Media Reports Strong Results for Fourth Quarter and Full Year 2004.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.: Fourth Quarter Highlights: --Revenue of $27.5 million, an increase of 109% over the comparable period in 2003. --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 $1.5 million, or $0.03 per share, compared with $0.2 million, or $0.01 per share, in Q4 of 2003; GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss of $2.8 million, or $0.06 per share, versus a loss of $6.0 million, or $0.26 per share, in Q4 of 2003. --Integration of leading Search Engine Marketing company, Decide Interactive. --Continued expansion and development of Pacific-Rim operations. 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, 2004. Revenue for the fourth quarter of 2004 was $27.5 million, an increase of 32% from the $20.8 million reported during the third quarter of 2004, and an increase of 109% from the $13.2 million reported for the fourth quarter of 2003. Fourth quarter comparisons benefited from the inclusion of a full quarter of operations for 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. and Decide Interactive, acquired in January January: see month. and August of 2004, respectively. The Company reported solid revenue growth and improved profitability, both sequentially and year-over-year, in each of its business segments and geographic regions. 24/7 Real Media continued to expand its global reach in 2004, and non-U non-U adj. Chiefly British Not characteristic of the upper class, especially in language usage. [non- + U2. .S. operations contributed 52% of the Company's revenue in the fourth quarter. 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 2004 was $1.5 million, or $0.03 per share. This compares with pro forma operating income of $206,000, or $0.01 per share, for the fourth quarter of 2003. Net loss computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with 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) for the fourth quarter was a loss of $2.8 million or $0.06 per share compared with a loss of $6.0 million or $0.26 per share for the fourth quarter of 2003. For the year ended December 31, 2004, revenue was $85.3 million, an increase of 73% from the $49.2 million reported for the year ended December 31, 2003. Pro forma operating income for the 2004 fiscal period was $2.4 million, or $0.06 per share, a significant improvement over a loss of $670,000, or $0.04 per share, in the prior year. GAAP net loss for 2004 was $3.5 million, or $0.10 per share, compared with a GAAP net loss of $14.4 million, or $0.86 per share, in 2003. "2004 was a dynamic 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 achieved a number of key objectives during the year, in particular our expansion into Asia and a significant Search acquisition, which has already been validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. by industry recognition for its leading search technology platform, Decide DNA DNA: see nucleic acid. DNA or deoxyribonucleic acid One of two types of nucleic acid (the other is RNA); a complex organic compound found in all living cells and many viruses. It is the chemical substance of genes. (TM). Working with new management at 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. , we improved our working relationship, and we completed the integration of Decide Interactive, transitioning all existing 24/7 Search clients onto the new technology platform. Finally, we continued with the development and marketing of behaviorally targeted advertising solutions through 24/7 OnTarget. All of these efforts combined to produce a strong performance by the Company in the fourth quarter, and we are pleased to report that the solid business momentum has continued into the first part of 2005." "Driven by these goals," Mr. Moore continued, "and executing on our business model, 2004 represented a key year in our Company's development and as a result, we achieved our sixth consecutive quarter of pro forma operating profitability. Entering 2005, we are poised 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 positive trends in the market, namely increased spending online and the rapid growth of paid search. We will continue to make the necessary strategic moves to stay ahead of the industry curve, and indeed, we have already taken some important steps in that regard with the opening of our branch office in Japan and by integrating the Google AdWords A targeted advertising program in which business ads appear as "sponsored links" on the Google results pages as well as the results pages of Google's partners, such as AOL and Ask.com. (TM) Application Programming Interface (API (Application Programming Interface) A language and message format used by an application program to communicate with the operating system or some other control program such as a database management system (DBMS) or communications protocol. ) into Decide DNA." Segment Overview Revenue in the Media Solutions segment climbed 137% to $15.4 million in the fourth quarter of 2004 from $6.5 million in the same quarter of 2003 and up 28% sequentially from the $12.1 million reported in the third quarter of 2004. The Company increased the impression volume and the number of advertisers on the 24/7 Web Alliance, with CPMs remaining stable throughout the significant increase in volume. Gross margins rose sequentially to 33.8% from 23.9% in the third quarter of 2004, primarily due to positive contribution resulting from the amendment to the Lycos agreement and the renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. operating strength from that partnership. Going forward into 2005, gross margins in this segment are anticipated to normalize normalize 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%. Search Solutions revenue advanced 148% to $6.8 million from $2.7 million in the same quarter of 2003 and rose 65% from $4.1 million in the third quarter of 2004, primarily as a result of the acquisition of Decide Interactive in August 2004. Gross margins for the segment were 37.9% in the fourth quarter compared to 45.5% in the third quarter of 2004. This decline in gross margin was anticipated and previously forecast, as the lower margin services in the segment grew at a faster rate than the higher margin services. Technology Solutions revenue climbed 34% to $5.3 million in the period from $3.9 million in the same quarter of 2003, and rose 14% on a sequential basis from the $4.6 million reported in the third quarter of 2004. Technology revenue benefited from a significantly higher volume of impressions, consistent with the seasonal trends typical of the fourth quarter. Technology gross margins of 82.2% were stable versus 82.1% reported in the third quarter. Guidance The Company expects first quarter revenue for 2005 to be between $26 million and $27 million, the mid-point of which represents an increase of 52% from first quarter 2004 revenue of $17.4 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 2005 to be between $0.01 and $0.02 per share. The Company anticipates full year 2005 revenue to be in the range of $115 million to $120 million, the mid-point of which represents an increase of 38% from revenue of $85.3 million in 2004. The pro forma per share earnings guidance for the year as a whole is $0.13 to $0.17. 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 3 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.
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 and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. 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 March 2, 2005. 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. (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.
24/7 REAL MEDIA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
Three months ended Year ended
------------------------- -----------------------
December 31, December 31,
2004 2003 2004 2003
----------- ----------- ----------- -----------
(unaudited) (unaudited)
Revenues:
Media $ 15,428 $ 6,515 $ 49,879 $ 23,562
Search 6,781 2,731 16,439 10,342
Technology 5,261 3,927 18,937 15,277
----------- ----------- ----------- -----------
Total
revenues 27,470 13,173 85,255 49,181
----------- ----------- ----------- -----------
Cost of revenues:
Media 10,211 3,831 35,197 14,676
Search 4,208 2,436 10,571 6,947
Technology 934 848 3,462 4,032
----------- ----------- ----------- -----------
Total cost
of
revenues 15,353 7,115 49,230 25,655
----------- ----------- ----------- -----------
Gross
profit 12,117 6,058 36,025 23,526
----------- ----------- ----------- -----------
Operating expenses:
Sales and
marketing 5,166 3,097 16,647 12,584
General and
administrative 4,599 2,380 14,226 10,865
Product
development 1,279 887 4,540 3,100
Other expenses:
Amortization
of intangible
assets and
deferred
financing
costs 1,061 755 4,331 2,724
Stock-based
compensation (168) 828 538 1,316
Restructuring
costs 340 1,651 841 1,651
Impairment of
intangible
assets 896 1,321 896 1,321
Impairment of
property &
equipment 787 - 787 -
----------- ----------- ----------- -----------
Total
operating
expenses 13,960 10,919 42,806 33,561
----------- ----------- ----------- -----------
Operating
loss (1,843) (4,861) (6,781) (10,035)
Interest income
(expense), net (92) (207) (463) (343)
Change in fair value
of warrant liability (35) - 2,040 -
Gain on legal
settlement - - 2,896 -
Impairment of
investments (1,052) - (1,052) -
Other income
(expense), net 105 (745) 228 (1,601)
----------- ----------- ----------- -----------
Loss before income
taxes (2,917) (5,813) (3,132) (11,979)
Provision for income
taxes (153) 89 23 37
----------- ----------- ----------- -----------
Net loss (2,764) (5,902) (3,155) (12,016)
Dividends and
conversion discount
on preferred stock (11) (130) (306) (2,397)
----------- ----------- ----------- -----------
Net loss
attributable to
common
stockholders $ (2,775) $ (6,032) $ (3,461)$ (14,413)
=========== =========== =========== ===========
Basic and diluted
net loss
attributable to
common
stockholders
per share $ (0.06) $ (0.26) $ (0.10)$ (0.86)
=========== =========== =========== ===========
Weighted average
shares used in
basic and diluted
calculation 44,695,486 22,770,441 35,373,973 16,817,502
=========== =========== =========== ===========
Pro forma:
Operating income
(loss)(a) 1,490 206 2,441 (670)
Diluted operating
income (loss) per
share $ 0.03 $ 0.01 $ 0.06 $ (0.04)
=========== =========== =========== ===========
Weighted average
shares used in
diluted
calculation 48,210,279 34,775,832 43,685,255 16,817,502
=========== =========== =========== ===========
(a)Proforma operating income (loss) excludes certain other
expenses computed as follows:
Operating loss (1,843) (4,861) (6,781) (10,035)
Excluding:
Amortization
of
intangible
assets and
deferred
financing
costs 1,061 755 4,331 2,724
Stock-based
compensation (168) 828 538 1,316
Restructuring
costs 340 1,651 841 1,651
Impairment of
intangible
assets 896 1,321 896 1,321
Impairment of
property &
equipment 787 - 787 -
Depreciation 417 512 1,829 2,353
----------- ----------- ----------- -----------
Pro forma
operating
income (loss) 1,490 206 2,441 (670)
=========== =========== =========== ===========
24/7 REAL MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
December 31, December 31,
2004 2003
------------ -----------
(unaudited)
Cash $ 27,690 $ 21,645
Accounts receivable 28,224 11,603
Total current assets 62,922 34,917
Total assets 121,398 46,180
Accounts payable and accrued liabilities 28,233 16,352
Deferred revenue 3,222 2,544
Total current liabilities 38,955 18,896
Long term debt 6,431 13,320
Total liabilities 46,130 36,143
Total stockholders' equity 75,268 10,037
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