24/7 Real Media Reports Strong Third Quarter 2005 Financial Results; Company Exceeds Q3 Guidance; Raises Guidance for Full-Year 2005 and Full-Year 2006.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): Third Quarter Highlights: --Revenue of $35.1 million, an increase of 69% 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 $0.05 per share compared with $0.00 per share in Q3 of 2004; GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss of $0.02 per share versus a GAAP net loss of $0.04 per share in Q3 of 2004. --Formation of joint venture with Dentsu Dentsu Incorporated (株式会社電通 Kabushiki-gaisha Dentsū Inc. to deliver search engine marketing services in Japan. 24/7 Real Media, Inc. (Nasdaq: TFSM), a pioneer in interactive marketing and technology, today announced financial results for the third quarter ended September September: see month. 30, 2005. Revenue for the third quarter of 2005 was $35.1 million, an increase of 69% over the $20.8 million reported for the third quarter of 2004, and rose 4% sequentially from the $33.9 million reported in the second quarter of 2005. 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 third quarter of 2005 was $2.3 million, or $0.05 per share. This compares with pro forma operating income of $13,000, or $0.00 per share, for the third quarter of 2004. Net loss 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 third quarter of 2005 was $0.8 million, or $0.02 per share, compared with net loss of $1.7 million, or $0.04 per share, for the third quarter of 2004. "24/7 Real Media performed very well in the third quarter, building on the success and momentum the company demonstrated throughout the first half of 2005," 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. "Additionally, the company successfully executed upon its strategic priority for 2005, the formation of a significant partnership to address the rapidly-growing paid search sector in Japan." "As the largest, most prestigious advertising agency in Japan, Dentsu is the ideal partner to help us quickly become the leader in the 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 market for search engine marketing services and capture a significant share of the sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. future revenue opportunities that exist
there."
Segment Overview Revenue in the Media Solutions segment increased 29% to $15.5 million in the third quarter of 2005 from $12.1 million in the third quarter of 2004. Gross margins remained sequentially stable at 32.4%. Search Solutions revenue surged 234% to $13.7 million from $4.1 million in the third quarter of 2004. Gross margins for the segment decreased to 27.0% in the third quarter of 2005, as the lower gross margin search engine marketing managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality business performed significantly better than expected. Year-over-year comparisons for this segment are influenced by the acquisition of Decide Interactive in the third quarter of 2004. Technology Solutions revenue advanced 26% to $5.8 million in the third quarter of 2005 from $4.6 million in the third quarter of 2004. Technology gross margins were 82.9% in the third quarter of 2005. Guidance The Company now expects revenue for the fourth quarter of 2005 to be between $36.5 million and $37.5 million, the mid-point of which represents an increase of 35% from fourth quarter 2004 revenue of $27.5 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 2005 to be $0.06 per share. The Company now anticipates full year 2005 revenue to be in the range of $134.5 million to $135.5 million, the mid-point of which represents an increase of 58% from revenue of $85.3 million in 2004. The Company now anticipates pro forma operating income per share for the full year of $0.18. The Company expects full year 2006 revenue to be in the range of $175 million to $185 million and anticipates pro forma operating income per share for the full year of $0.30 to $0.32. This 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. 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. , November November: see month. 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, 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 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 fourth quarter 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 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. 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 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. 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, 2004, filed with the Securities and Exchange Commission, and will be set out in its Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the three months ended September 30, 2005, which the Company expects to file with the Securities and Exchange Commission on or before November 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 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
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 Nine months ended
------------------------- -------------------------
September 30, September 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
(unaudited) (unaudited)
Revenues:
Media $ 15,547 $ 12,070 $ 46,460 $ 34,451
Search 13,731 4,109 35,063 9,658
Technology 5,839 4,628 16,550 13,676
----------- ----------- ----------- -----------
Total revenues 35,117 20,807 98,073 57,785
----------- ----------- ----------- -----------
Cost of revenues:
Media 10,516 9,180 31,470 24,986
Search 10,026 2,241 24,405 6,363
Technology 998 827 3,167 2,528
----------- ----------- ----------- -----------
Total cost of
revenues 21,540 12,248 59,042 33,877
----------- ----------- ----------- -----------
Gross profit 13,577 8,559 39,031 23,908
----------- ----------- ----------- -----------
Operating
expenses:
Sales and
marketing 5,606 4,272 16,627 11,481
General and
administrative 4,885 3,626 14,457 9,627
Product
development 1,563 1,115 4,171 3,261
Other expenses:
Amortization of
intangible
assets and
deferred
financing costs 1,140 1,068 3,419 3,270
Stock-based
compensation 493 209 1,447 706
Restructuring
costs - - 973 501
----------- ----------- ----------- -----------
Total operating
expenses 13,687 10,290 41,094 28,846
----------- ----------- ----------- -----------
Operating loss (110) (1,731) (2,063) (4,938)
Interest income
(expense), net (48) (93) (190) (371)
Change in fair
value of warrant
liability (384) 266 (344) 2,075
Recovery of
investment - - 2,100 -
Impairment of
marketable
securities - - (588) -
Loss on sale of
marketable
securities (25) - (18) -
Gain on legal
settlement - - - 2,896
Other income
(expense), net (55) 12 (95) 123
----------- ----------- ----------- -----------
Loss before
income taxes and
mintority
interest in
operations of
consolidated
subsidiaries (622) (1,546) (1,198) (215)
Provision for
income taxes (164) (44) (184) (176)
Minority interest
in operations of
consolidated
subsidiaries 21 - 21 -
----------- ----------- ----------- -----------
Net loss (765) (1,590) (1,361) (391)
Dividends and
conversion
discount on
preferred stock (3) (73) (25) (295)
----------- ----------- ----------- -----------
Net loss
attributable to
common
stockholders $ (768) $ (1,663) $ (1,386) $ (686)
=========== =========== =========== ===========
Basic and diluted
net loss per
share
attributable to
common
stockholders $ (0.02) $ (0.04) $ (0.03) $ (0.02)
=========== =========== =========== ===========
Weighted average
shares used in
basic and diluted
calculation 45,478,444 37,007,505 45,097,696 32,244,122
=========== =========== =========== ===========
Pro forma:
Operating
income (a) 2,284 13 5,855 951
Diluted operating
income per share $ 0.05 $ 0.00 $ 0.12 $ 0.02
=========== =========== =========== ===========
Weighted average
shares used in
diluted
calculation 49,930,554 45,702,612 49,248,344 42,236,148
=========== =========== =========== ===========
(a)Pro forma operating income excludes certain other expenses
computed as follows:
Operating loss $ (110) $ (1,731) $ (2,063) $ (4,938)
Excluding:
Amortization of
intangible
assets and
deferred
financing costs 1,140 1,068 3,419 3,270
Stock-based
compensation 493 209 1,447 706
Restructuring
costs - - 973 501
Depreciation 761 467 2,079 1,412
----------- ----------- ----------- -----------
Pro forma
operating income $ 2,284 $ 13 $ 5,855 $ 951
=========== =========== =========== ===========
24/7 REAL MEDIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
September 30, December 31,
2005 2004
------------ ------------
(unaudited)
Cash $ 34,903 $ 27,690
Short-term investments 1,826 3,786
Accounts receivable 31,314 28,224
Total current assets 70,419 62,500
Total assets 128,254 121,398
Accounts payable and accrued liabilities 32,282 28,233
Deferred revenue 2,793 3,222
Short-term debt 14,389 7,500
Total current liabilites 49,464 38,955
Long-term debt - 6,431
Total liabilities 50,818 46,109
Minority interests 1,729 21
Total stockholders' equity 75,707 75,268
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