Avenue A, Inc. Announces Q2 Results; Revenue Growth of 48% Drives Significantly Improved Bottom Line; Conference Call and Webcast at 11 a.m. EDT Today.Business Editors SEATTLE--(BUSINESS WIRE)--Aug. 1, 2002 Avenue A, Inc. (Nasdaq:AVEA AVEA American Veterinary Exhibitors Association ), a digital marketing and technology company, today announced financial results for the second quarter and first six months of 2002. Second quarter highlights include: -- Revenue of $30.4 million, a 48% growth from the comparable year-ago period and 29% growth from the prior quarter -- Gross profit of $8.4 million, an increase of 45% from the comparable period in 2001 and an increase of 23% from the prior quarter -- Pro forma net loss of less than $1 million, a 92% improvement from the comparable year-ago period and a 44% improvement from the prior quarter -- Continued balance sheet strength, with cash and short-term investments increasing to $117.9 million -- Added to Russell 3000 Index "We are pleased to report continuing positive momentum for Avenue A, Inc., reflecting solid performance by our Avenue A(TM) interactive agency division and increasing market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" by our Atlas Atlas, in Greek mythology Atlas (ăt`ləs), in Greek mythology, a Titan; son of Iapetus and Clymene and the brother of Prometheus. (TM) DMT See DSL. technology division," said Avenue A, Inc. President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. 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. "Despite what many have viewed as a difficult market, our agency business had several clients increase their online ad budgets materially during the second quarter and our Atlas DMT division added a significant number of new customers." Mr. McAndrews added, "We remain well-positioned to reach our objective of profitability by year's end." For the second quarter ended June 30, 2002, Avenue A, Inc. reported revenue of $30.4 million, compared to revenue of $20.6 million for the second quarter of 2001. 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 second quarter of 2002, which excludes the amortization of deferred stock compensation, was $998,000, or $0.02 per share. This compares to a pro forma net loss, which excludes amortization of deferred stock compensation and 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. , of $12.1 million, or $0.21 per share, for the comparable 2001 quarter. 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), for the second quarter ended June 30, 2002 was $1.8 million, or $0.03 per share, compared to a net loss of $15.5 million, or $0.27 per share, for the second quarter of 2001. Revenue for the first six months of 2002 was $53.9 million, compared to revenue of $44.8 million for the comparable six-month period in 2001. Pro forma net loss for the first six months of 2002, which excludes the amortization of deferred stock compensation, was $2.8 million, or $0.05 per share. This compared to a pro forma net loss of $21.2 million, or $0.37 per share, for the first half of 2001. GAAP net loss for the first six months of 2002, including the impact of a change in accounting principle associated with the amortization of intangible assets, was $5.7 million, or $0.09 per share, compared to net loss of $29.0 million, or $0.51 per share, for the same six-month period in 2001. Avenue A, Inc. ended the second quarter with $117.9 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, an increase of $4.2 million from the end of the first quarter. During the second quarter, the Company announced the addition of two members to Avenue A, Inc.'s new Advisory Board. Graham Phillips Graham Phillips is an Australian television presenter. Currently a member of the Catalyst team, he has also presented the technology programmes Beyond Tomorrow and Hot Chips. , former CEO of Ogilvy & Mather, and Erv Shames, former CEO of General Foods USA, will join President and CEO Brian McAndrews and corporate board member Dr. Jack Sansolo on the Advisory Board, whose mission is to assist in charting the strategic direction and to help accelerate the growth of Avenue A, Inc. Also during the quarter, both divisions announced significant milestones. Atlas DMT launched the newest version of its campaign management technology, Atlas Digital Marketing Suite 3.0. The Atlas Suite was also chosen by the Interactive Advertising Bureau (IAB (1) See Internet Architecture Board. (2) (Interactive Advertising Bureau, New York, www.iab.net) An industry association founded in 1996 to set standards and guidelines for interactive advertising and marketing. ) as the technology for its first ever ad campaign. Avenue A, the agency, announced BrandOptics, a service that ties survey data to actual sales data. Avenue A also positioned its client, AT&T Wireless, as the launch customer for the new At-Work Network, the industry's major initiative on day-part advertising. Guidance The company projects that its Q3 revenue will be in the range of $33-36 million, with a pro forma net loss of 1-2 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . The company also reaffirmed that it would achieve pro forma profitability by the end of 2002. Second Quarter 2002 Conference Call/Webcast Today Avenue A, Inc. will host a conference call today, August 1, 2002, to discuss these financial results at 11:00 a.m. Eastern/8:00 a.m. Pacific. The webcast 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.avenueainc.com, under "Calendar of Events." Interested parties should visit the website 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. and install any necessary software. About Avenue A, Inc. Avenue A, Inc., a 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 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 -- Avenue A, an interactive agency, and Atlas DMT, provider of advertising technology solutions -- Avenue A, Inc. is able to touch and bring value to any interaction in the digital marketplace. Both units are headquartered in Seattle and have offices in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . Avenue A, Inc. and Avenue A/NYC 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 applauded 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. Please visit www.avenueainc.com to learn more. About Atlas DMT Atlas DMT is DMT I Diabetes Mellitus Type 1 an advertising technology provider and creator of the Atlas Digital Marketing Suite 3.0, the industry's first end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. , fully-integrated ad serving and campaign management platform built by and for marketers. The Atlas Suite helps advertising agencies and other marketing professionals deliver efficient, profitable digital marketing programs. The Suite manages online media planning, buying, ad serving, analysis and optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. , with four integrated modules: Atlas Media Console, Atlas Creative Management System, Atlas Delivery and Tracking Services and Atlas Analysis and Optimization Engine. Atlas DMT's patent-pending analytics architecture -- Web Analysis Results Profiler (WARP) -- seeks to provide marketers with the depth and granularity The degree of modularity of a system. More granularity implies more flexibility in customizing a system, because there are more, smaller increments (granules) from which to choose. they need to answer their most important marketing questions. WARP is just one of a long list of Atlas DMT innovations, including online ROI (Return On Investment) The monetary benefits derived from having spent money on developing or revising a system. In the IT world, there are more ways to compute ROI than Carter has liver pills (and for those of you who never heard of that expression, it means a lot). processing, behavior-based media planning, and online GRP GRP Group GRP Group (file name extension) GRP Glass Reinforced Plastic GRP Gastrin-Releasing Peptide (biology) GRP Gross Rating Point (advertising) and reach forecasting. Atlas DMT serves its clients from offices in Seattle, San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. and 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 . To learn more, please visit www.atlasdmt.com. About Avenue A Avenue A is an interactive 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, AT&T Wireless, and Best Buy. Please visit www.avenuea.com to learn more. 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 financial projections for Q3 2002 and expectations of pro forma profitability by the end of 2002. 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. These risks and uncertainties include, among others, the risk of 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 risk of erosion in service pricing, potential 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 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 need to generate 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, Inc.'s contracts with clients which are cancelable on 90 days' or less notice, the uncertainties, potential costs, and possible business impacts of unfavorable rulings in the previously-announced class action lawsuits 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, Inc.'s financial results is included in Avenue A, Inc.'s Form 10-Q Form 10-Q See 10-Q. for the quarter ended March 31, 2002 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, Inc. 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)
June 30, Dec. 31,
2002 2001
---------------------
Assets (unaudited)
Current assets:
Cash, cash equivalents, and short-term
investments $ 117,875 $ 117,754
Accounts receivable, net of allowance 16,346 16,127
Other receivables 1,248 1,369
Prepaid expenses and other current assets 994 242
---------------------
Total current assets 136,463 135,492
Property and equipment, net 4,884 6,664
Other assets 827 1,325
Intangible assets, net - 1,330
---------------------
Total assets $ 142,174 $ 144,811
=====================
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 27,743 $ 25,448
Notes payable, current portion 1,861 2,000
Deferred revenue 695 488
---------------------
Total current liabilities 30,299 27,936
Notes payable, less current portion 694 1,555
---------------------
Total liabilities 30,993 29,491
---------------------
Shareholders' equity:
Common stock 587 584
Paid-in capital 217,255 216,884
Deferred stock compensation (2,393) (4,063)
Subscription receivable (414) (548)
Accumulated deficit (103,854) (97,537)
---------------------
Total shareholders' equity 111,181 115,320
---------------------
Total liabilities and shareholders' equity $ 142,174 $ 144,811
=====================
Avenue A, Inc.
Consolidated Statement of
Operations
(in thousands, except per share data)
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
--------------------------------------
2002 2001 2002 2001
--------------------------------------
Revenue $ 30,394 $ 20,586 $ 53,929 $ 44,758
Cost of revenue 22,031 14,810 38,752 33,300
--------------------------------------
Gross profit 8,363 5,776 15,177 11,458
--------------------------------------
Expenses:
Client support 3,507 3,700 6,845 7,969
Product development 1,566 3,496 3,298 7,003
Selling, general, and
administrative 4,241 6,098 7,867 12,127
Depreciation and
amortization of property
and equipment 1,157 1,499 2,318 2,961
Amortization of deferred
stock compensation 758 2,880 1,530 6,716
Amortization of intangible
assets - 498 - 999
Corporate restructuring
charges - 2,166 - 3,666
--------------------------------------
Total expenses 11,229 20,337 21,858 41,441
--------------------------------------
Loss from operations (2,866) (14,561) (6,681) (29,983)
Interest income, net 1,110 1,586 2,359 3,529
Impairment of cost-basis
investment - (2,500) - (2,500)
--------------------------------------
Net loss before cumulative
effect of change
in accounting principle (1,756) (15,475) (4,322) (28,954)
Cumulative effect of change in
accounting principle - - (1,330) -
--------------------------------------
Net loss $ (1,756) $(15,475) $(5,652) $(28,954)
======================================
Basic and diluted net loss per
share before change in
accounting principle $ (0.03) $ (0.27) $ (0.07) $ (0.51)
Cumulative effect of change in
accounting principle - - (0.02) -
--------------------------------------
Basic and diluted net loss per
share $ (0.03) $ (0.27) $ (0.09) $ (0.51)
======================================
Shares used in computing basic
and diluted net loss per share 58,409 57,051 58,269 56,890
======================================
Avenue A, Inc.
Reconciliation of Loss From Operations to
Pro Forma Loss From Operations,
Pro Forma Net Loss, and Pro Forma Net
Loss Excluding Non-recurring items
(in thousands, except per share data)
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
--------------------------------------
2002 2001 2002 2001
--------------------------------------
Loss from operations $ (2,866) $(14,561) $(6,681) $(29,983)
Amortization of deferred
stock compensation 758 2,880 1,530 6,716
Amortization of intangible
assets - 498 - 999
--------------------------------------
Pro forma loss from
operations (A) (2,108) (11,183) (5,151) (22,268)
Interest income, net 1,110 1,586 2,359 3,529
Impairment of cost-basis
investment - (2,500) - (2,500)
--------------------------------------
Pro forma net loss (A) $ (998) $(12,097) $(2,792) $(21,239)
======================================
Pro forma basic and diluted net
loss per share $ (0.02) $ (0.21) $ (0.05) $ (0.37)
======================================
Shares used in computing pro
forma basic and diluted
net loss per share 58,409 57,051 58,269 56,890
======================================
Pro forma net loss (A) $ (998) $(12,097) $(2,792) $(21,239)
Corporate restructuring
charges - 2,166 - 3,666
Impairment of cost-basis
investment - 2,500 - 2,500
--------------------------------------
Pro forma net loss excluding
non-recurring items (B) (998) (7,431) (2,792) (15,073)
Pro forma basic and diluted net
loss per share excluding
non-recurring items $ (0.02) $ (0.13) $ (0.05) $ (0.26)
======================================
Shares used in computing pro
forma basic and diluted
net loss per share 58,409 57,051 58,269 56,890
======================================
(A) The pro forma loss from operations and net loss exclude
amortization of intangible assets and stock-based compensation
charges, which are summarized in the above table. These disclosures do
not purport to be prepared in accordance with Generally Accepted
Accounting Principles (GAAP).
(B) The pro forma net loss excluding non-recurring items excludes
corporate restructuring charges and impairment of cost-basis
investment, which are summarized in the above table. These disclosures
do not purport to be prepared in accordance with Generally Accepted
Accounting Principles (GAAP).
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