Avenue A, Inc. Announces Q1 Results; Meets Earnings Expectations; Conference Call and Webcast at 5:30 p.m. EDT Today.Business Editors SEATTLE--(BUSINESS WIRE)--April 24, 2001 Avenue A, Inc. (Nasdaq:AVEA AVEA American Veterinary Exhibitors Association ), a digital marketing and technology company, today announced financial results for the first quarter of 2001 that met consensus analyst earnings estimates. This follows yesterday's announcement of the launch of Atlas Atlas, in Greek mythology Atlas (ăt`ləs), in Greek mythology, a Titan; son of Iapetus and Clymene and the brother of Prometheus. DMT See DSL. , the company's new operating unit operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon that will provide its leading technology services directly to advertising agencies and large advertisers. For the first quarter ended March 31, 2001, Avenue A, Inc. reported revenues of $24.1 million, compared to revenues of $46.8 million for the first quarter of 2000. 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 net loss for the first quarter of 2001, which excludes the amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and deferred stock compensation was $9.1 million or $0.16 per share, including a non-recurring $1.5 million restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. related to staff reduction. Before the restructuring charge, the first quarter 2001 pro forma net loss was $7.6 million, or $0.13 per share. This compared to a pro forma net loss of $2.6 million, or $0.07 per share for the comparable 2000 quarter. Brian The name Brian (sometimes spelled Bryan) comes from an Irish backround. It is of Celtic origin and its meaning may be "hill" or "strong, noble, and high"[1]. McAndrews, president and chief executive officer of Avenue A Inc., stated, "Our results for the first quarter reflect the challenges to our industry presented by the dot-com (1) Refers to the period (dot) followed by the abbreviation of the commercial domain (.com) at the end of an Internet address. Since the .com domain is so widely used, the Internet became known as the "dot-com" world, and dot-com companies are those formed to offer services or shakeout Shakeout A situation in which many investors exit their positions, often at a loss, because of uncertainty or recent bad news circulating around a particular security or industry. Notes: During the dotcom boom and bust, numerous shakeouts occurred. and a weaker U.S. economy. While we do not expect an immediate rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective 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. , there are definite signs of greater stability in the market now. Therefore we are cautiously optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that we have felt the worst of the market decline. The outlook for the second half of the year appears to be more positive." "On a longer-term basis, we continue to believe strongly in the growth potential of digital marketing, and the ability of Avenue A, 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>. this growth. While we must remain vigilant in the management and execution of our business strategies during this difficult period, we are well-positioned to advance our status as the industry leader as conditions improve. We are particularly excited about our announcement yesterday regarding the launch of our new business unit, ATLAS(TM) DMT, which will build and support the proprietary Atlas(TM) Digital Marketing Suite and leverage the Suite into new sales channels. Our Avenue A service business will continue to utilize Atlas solutions in providing digital marketing services to advertisers. Now the Atlas DMT unit will make the Atlas Suite available to traditional and interactive advertising agencies, as well as large advertisers that have their own in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. media planning and buying units. We believe this will become a significant source of new business in the future," McAndrews added. In commenting on first quarter financial results, Michael Vernon Michael 'Mike' Vernon A.M. (2 April 1932 – 6 November 1993) was a prominent Australian consumer activist. Vernon was born in Portsmouth, United Kingdom in 1932 to John Ernest Vernon (a writer in the Royal Navy) and Caroline Vernon (nee Clark) (later a cryptologist in the , chief financial officer, stated, "Even in this market, we have been able to improve margins in our basic business. As we continue to demonstrate the value of our digital marketing services to clients, we have been able to realize better value for those services. As a result, gross margins for the first quarter were 23.5%, compared to 17.7% for the first quarter last year and 22.4% in Q4." Vernon also noted that Avenue A ended the first quarter with $124 million in cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments. Avenue A Scores New Business During the first quarter, the Company continued to focus its business on larger, more stable clients. During the first quarter, Avenue A provided digital marketing services for the first time to, among others, the following companies: -- Lancome division of L'Oreal USA -- HBO -- Hot Jobs -- The Sporting News Atlas Institute Formed The Company announced this quarter the formation of a group of analytics experts focused on educating advertisers on the effectiveness of digital marketing. Originally launched as the Avenue A Institute, the group has been renamed the Atlas Institute (AI) and is now part of the new Atlas DMT unit. AI publishes Digital Marketing Insights, a series of publications that communicate the benefits of digital marketing on such topics as campaign management, revenue creation and brand enhancement. This is part of the continuing commitment of Avenue A, Inc. to demonstrate the effectiveness of digital marketing. Avenue A Creates Vital Signs March 26, 2001, marked the launch of Vital Signs, the industry's first marketing analytics portal to allow advertisers to analyze aggregated web site data, customer behavior data and digital marketing through a single web interface. It provides clients with a comprehensive picture of how effectively they are driving online customer profitability Customer profitability (CP) is the difference between the revenues earned from and the costs associated with the customer relationship in a specified period. According to Philip Kotler,"a profitable customer is a person,household or a company that overtime,yields a revenue . Vital Signs is the latest addition to the Atlas Digital Marketing Suite. First Quarter 2001 Conference Call/Webcast Today Avenue A Inc. will host a conference call to discuss these financial results this afternoon at 2:30 p.m. Pacific/5:30 p.m. Eastern. The live call and replay will be available from the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's website at www.avenuea.com, under "Calendar of Events." Interested parties should log on to the conference call approximately 15 minutes prior to 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. any necessary software. About Atlas DMT Atlas DMT is DMT I Diabetes Mellitus Type 1 a provider of digital marketing management systems and an operating unit of Avenue A, Inc. Atlas DMT offers a system of services and technologies that help advertising agencies and other marketing professionals deliver efficient, profitable digital marketing programs. The Atlas Digital Marketing Suite is an integrated, end-to-end solution (jargon) end-to-end solution - (E2ES) A term that suggests that the supplier of an application program or system will provide all the hardware and/or software components and resouces to meet the customer's requirement and no other supplier need be involved. Compare: turn-key solution. for planning, executing, and analyzing digital marketing campaigns. Atlas Power Tools are additional tools and services that enhance the marketing power of the Atlas Suite. And the Atlas Institute provides research and education on the most effective digital marketing practices. The Atlas DMT team is made up of technologists, database marketing experts, and other digital marketing professionals who have years of front-line experience making digital marketing work. About Avenue A Avenue A is a digital marketing agency and operating unit of Avenue A, Inc. It offers a one-stop solution that seeks to drive breakthrough results for its clients' web and e-mail marketing Email marketing is a form of direct marketing which uses electronic mail as a means of communicating commercial or fundraising messages to an audience. In its broadest sense, every email sent to a potential or current customer could be considered email marketing. initiatives by using innovative technology and rigorous analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. methods that turn campaign data into actionable Giving sufficient legal grounds for a lawsuit; giving rise to a Cause of Action. An act, event, or occurrence is said to be actionable when there are legal grounds for basing a lawsuit on it. insights. Avenue A's integrated suite of services includes web advertising, affiliate programs, search engine optimization Designing a Web site so that search engines easily find the pages and index them. The goal is to have your page be in the top 10 results of a search. Optimization includes the choice of words used in the text paragraphs and the placement of those words on the page, both visible and hidden , strategic portal relationships, e-mail prospecting, e-mail list management, customer targeting, profiling and advanced analytical services. Avenue A focuses on achieving the best possible results and the highest possible return on investment for its clients' digital marketing efforts. Clients include Microsoft, Gateway, Household Finance and TicketmasterOnline-CitySearch. About Avenue A, Inc. Avenue A, Inc., the digital marketing services and technology company, was founded in 1997 to help marketers acquire, retain and grow customers across all digital media. Through its two operating units -- Avenue A, provider of digital marketing services, and the new Atlas DMT, provider of digital marketing management solutions -- Avenue A, Inc. seeks to bring value to a wide spectrum of interactions in the digital marketplace. The company is based in Seattle and operates offices 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 , Chicago and London. Avenue A, Inc. also offers digital marketing services through iballs, a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. based in New York. Avenue A, Inc. and iballs adhere to adhere to verb 1. follow, keep, maintain, respect, observe, be true, fulfil, obey, heed, keep to, abide by, be loyal, mind, be constant, be faithful 2. the NAI See Network Associates. privacy principles that have been endorsed by the FTC FTC See Federal Trade Commission (FTC). . These principles are designed to ensure Internet user Internet user n → internauta m/f Internet user Internet n → internaute m/f privacy. Certain statements in this press release are "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. " 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. Forward-looking statements include all passages containing verbs such as 'aims, anticipates, believes, estimates, expects, intends, plans, predicts, projects or targets' or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. The forward-looking statements in this release include, among others, statements about the growth potential of digital marketing, future sources of revenue and the outlook for the second half of 2001 and statements regarding client spending for online advertising and improved pricing for services. Forward-looking statements are based on the opinions and estimates of the management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect Avenue A's actual results include, among others, fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. or declining demand for our advertising services, the potential erosion in service pricing, failure to attract sufficient new business to Atlas DMT to materially and positively impact financial results, the potential failure to attract new clients, to maintain current, desired client relationships or to achieve effective advertising campaigns for existing clients, potential deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. or slower-than-expected development of the Internet advertising market, the potential need for additional funds to finance operations The execution of the joint finance mission to provide financial advice and guidance, support of the procurement process, providing pay support, and providing disbursing support.See also financial management. , the need to generate significant additional revenue to achieve profitability, quarterly and seasonal fluctuations in operating results, timing variations on the part of advertisers to implement advertising campaigns, costs related to any possible future acquisitions of technologies or businesses, the short term nature of Avenue A's contracts with clients which are cancelable on 90 days' or less notice, the fact that many of our clients have limited operating histories, are unprofitable and may not be able to pay for our services, and the uncertainties, potential costs, and possible business impacts of unfavorable rulings in the previously-announced class action lawsuit class action lawsuit A lawsuit in which one party or a limited number of parties sue on behalf of a larger group to which the parties belong. For example, investors may bring a class action lawsuit against a brokerage firm that has actively promoted a tax . More information about factors that potentially could affect Avenue A's financial results is included in Avenue A's 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 fiscal year ended December 31, 2000 filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, Avenue A undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.
Avenue A, Inc.
Consolidated Balance Sheets
(in thousands)
March 31, Dec. 31,
2001 2000
---------- ----------
Assets (unaudited)
Current assets:
Cash, cash equivalents, and
short-term investments $ 124,487 $ 134,145
Accounts receivable, net of allowance 20,090 39,343
Other receivable 1,667 1,824
Prepaid expenses and other current assets 993 716
---------- ----------
Total current assets 147,237 176,028
---------- ----------
Property and equipment, net 12,187 13,087
Intangible assets, net 3,016 3,519
Other assets 5,409 5,671
---------- ----------
Total assets $ 167,849 $ 198,305
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 27,947 $ 48,664
Notes payable, current portion 2,000 2,000
Deferred revenue 832 1,084
---------- ----------
Total current liabilities 30,779 51,748
---------- ----------
Long-term notes payable 3,056 3,556
---------- ----------
Total liabilities 33,835 55,304
---------- ----------
Shareholders' equity:
Common stock 581 581
Paid-in capital 220,906 222,901
Deferred stock compensation (15,421) (21,566)
Subscription receivable (918) (941)
Accumulated deficit (71,134) (57,974)
---------- ----------
Total shareholders' equity 134,014 143,001
---------- ----------
Total liabilities and shareholders' equity $ 167,849 $ 198,305
========== ==========
Avenue A, Inc.
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)
Quarter Ended
March 31,
----------------------
2001 2000
---------- ---------
Revenue $ 24,135 $ 46,774
Cost of revenue 18,454 38,515
---------- ---------
Gross profit 5,681 8,259
---------- ---------
Expenses:
Client support 3,348 3,326
Product development 3,507 1,577
Selling, general, and administrative 6,949 6,017
Depreciation and amortization
of property and equipment 1,462 608
Amortization of intangible assets 502 510
Amortization of deferred stock compensation 3,836 6,190
Corporate restructuring charges 1,500 -
---------- ---------
Total expenses 21,104 18,228
---------- ---------
Loss from operations (15,423) (9,969)
Interest income, net 1,943 709
---------- ---------
Net loss $ (13,480) $ (9,260)
========== =========
Basic and diluted net loss per share $ (0.24) $ (0.25)
========== =========
Shares used in computing basic and
diluted net loss per share 56,728 36,664
========== =========
Reconciliation of Loss
From Operations to Pro
Forma Loss From
Operations and Pro
Forma Net Loss
Loss from operations $ (15,423) $ (9,969)
Amortization of intangible assets 502 510
Amortization of deferred
stock compensation 3,836 6,190
Corporate restructuring charges 1,500 -
---------- ---------
Pro forma loss from operations (A) (9,585) (3,269)
Interest income, net 1,943 709
---------- ---------
Pro forma net loss (A) $ (7,642) $ (2,560)
========== =========
Basic and diluted net loss per share $ (0.13) $ (0.07)
========== =========
Shares used in computing basic
and diluted net loss per share 56,728 36,664
========== =========
(A) The pro forma loss from operations excludes amortization of
intangible assets, stock-based compensation, and corporate
restructuring charges, which are summarized in the above table.
These disclosures do not purport to be prepared in accordance with
Generally Accepted Accounting Principles (GAAP). The above table
reconciles the loss from operations in accordance with GAAP to pro
forma loss from operations and pro forma net loss for the periods
presented.
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