Digital Impact Reports Strong Fiscal Q3 Results; Revenues Grow 23% Sequentially.Business Editors/High-Tech Writers SAN MATEO San Mateo (săn mətā`ō), city (1990 pop. 85,486), San Mateo co., W Calif., on San Francisco Bay; inc. 1894. It is a commercial and retail center with some high-technology manufacturing. San Mateo, Spanish for St. , Calif.--(BUSINESS WIRE)--Jan. 24, 2002 Digital Impact, Inc. (Nasdaq:DIGI DIGI Digital DIGI Digital Input ), the premier provider of online direct marketing solutions for enterprises, today reported revenues of $10.3 million for the fiscal third quarter ended December December: see month. 31, 2001, near the high end of the estimated range previously announced by the company, and up 23 percent from the quarter ended September September: see month. 30, 2001. This is 15 percent below record revenues of $12.2 million in the quarter ended December 31, 2000. The 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 fiscal third quarter ended December 31, 2001, was $2.6 million, or a loss of $0.09 per share, compared with a pro forma net loss of $5.5 million, or a loss of $0.22 per share, in the quarter ended December 31, 2000. Pro forma net loss excludes stock-based compensation, the amortization of goodwill and purchased intangibles, and non-recurring charges. On a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, the net loss for the quarter ended December 31, 2001 improved to $3.2 million, or a loss of $0.11 per share, compared with a net loss of $8.5 million, or a loss of $0.34 per share, representing a 62 percent improvement over the prior year. Total expenses declined by 37 percent, or $7.8 million, from the same quarter last year and by $1.6 million from the prior quarter, resulting in improved cash flow as the company continues to reduce costs across all operating areas. The company's net cash outflow declined to less than $2 million for the quarter ended December 31, 2001 as net losses declined by 62 percent from the quarter ended December 31, 2000 and 51 percent from the quarter ended September 30, 2001. The company ended the quarter with $28 million in cash, cash equivalents, and restricted cash, representing more than two years of operating cash based on fiscal third quarter results. During the quarter Digital Impact: -- Added 20 new clients to an already impressive roster, including many in the Fortune 1000. New client wins included: United Parcel Service, SkyMall, Gloss, Sharper Image, Odeon and Lawson Software. -- Renewed contracts with Eddie Bauer, Citicorp, Bear Creek Corporation and Electronic Arts, while also expanding its relationship with Hewlett-Packard by adding divisions in Asia Pacific. -- Increased revenue contribution from Fortune 1000 companies to 78% of total revenues, up from 52% in the same quarter last year. Revenues from dotcom clients totaled less than 10% of revenues in the quarter ended December 31, 2001. Outlook "We are targeting revenues in the quarter ended March 31,2002 in the $10.0-10.5 million range, with additional growth during the remainder of 2002 dependent on the rate of economic recovery and growth in client marketing budgets. On a pro forma basis, we currently project earnings per share for the quarter ended March 31, 2001 will be in the range of $(0.07)-(0.09). Going forward, we plan to continue managing expenses aggressively, improving our bottom line. We continue to project that we have enough cash to operate for well beyond our anticipated operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations by June June: see month. 2002," said William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack Park, president and chief executive officer. Third Fiscal Quarter 2002 Conference Call Digital Impact's conference call will be held at 1:30 p.m. PT. Those wishing to participate should call 212/346-0144 or access the call at www.digitalimpact.com at approximately 1:20 p.m. PT. A replay of the call will be available until January January: see month. 31st by dialing 800/633-8284 and entering reservation No. 20217148 or at www.digitalimpact.com and on www.streetevents.com. About Digital Impact Digital Impact is the premier provider of online direct marketing solutions for enterprises, including market leaders such as Citibank CITIBANK First National City Bank , Dell Computer Corporation (company) Dell Computer Corporation - One of the biggest US manufacturers of IBM PC compatibles. "From notebooks to networks", their slogan says. http://us.dell.com. , MasterCard, and Hewlett-Packard. Digital Impact's solutions -- Strategy, Customer Acquisition and Customer Marketing -- enable corporations to create and deliver highly successful email marketing programs that drive revenue, influence behavior and deepen deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. deepen Verb to make or become deeper or more intense Verb 1. customer relationships. Digital Impact solutions provide deep customer insight and powerful execution through a combination of hosted web applications, messaging technology infrastructure and professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. . Digital Impact is a member of the TRUSTe Privacy Program and works only with companies that are advocates of strict consumer privacy guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. . Digital Impact was founded in October 1997 and currently has approximately 300 employees in its Silicon Valley, 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. , Chicago, 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 and London offices. The company is publicly traded on the Nasdaq Stock Market Nasdaq stock market The first electronic stock market listing over 5000 companies. The Nasdaq stock market comprises two separate markets, namely the Nasdaq National Market, which trades large, active securities and the Nasdaq Smallcap Market that trades emerging growth companies. under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors DIGI. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement The statements contained in this press release that are not purely historical 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 Section 21E of the Securities and Exchange Act of 1934, including statements regarding Digital Impact's expectations, beliefs, hopes, intentions or strategies regarding the future. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected. Such risks include, but are not limited to, the following: (i) that due to possible conditions such as the need to continue providing world-class service to its clients, the company's ability to implement further material expense reductions may be hampered and (ii) that due to possible conditions such as the loss of clients, the inability to collect fees for services performed, the reduction in campaign volume for existing clients, reduced demand for the company's services, price pressure from the company's competition and inability to adequately reduce expenses, the company's revenue, earnings, cash burn and profitability projections for the future may not be met. Further risks are detailed in Digital Impact's filings with the Securities and Exchange Commission, including its most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. and 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 fiscal year ended March 31, 2001. Note to Editors: -- Digital Impact is a registered trademark of Digital Impact, Inc. All other brands or trademarks are the property of their respective owners. -- Financial schedules attached.
DIGITAL IMPACT, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
December 31, December 31,
2001 2000 2001 2000
-------- -------- -------- --------
Unaudited
Revenues $ 10,329 $ 12,156 $ 28,755 $ 30,001
Cost of revenues 4,840 5,326 13,612 13,193
Gross margin 5,489 6,830 15,143 16,808
Operating expenses:
Research and
development 2,493 4,934 9,216 12,800
Sales and
marketing 3,576 4,935 12,480 13,085
General and
administrative 1,948 3,111 6,566 8,178
Stock-based
compensation 278 595 2,428 4,353
Amortization
of goodwill and
purchased
intangibles 375 2,411 1,125 4,018
Goodwill
impairment
charge -- -- -- --
Nonrecurring
charges -- -- -- 4,563
Total operating
expenses 8,670 15,986 31,815 46,997
Loss from
operations (3,181) (9,156) (16,672) (30,189)
Other income and
(expense) (26) 664 299 2,500
Net loss $ (3,207) $ (8,492) $(16,373) $(27,689)
Net loss per
common share
-- basic
and diluted $ (0.11) $ (0.34) $ (0.59) $ (1.17)
Shares used in
net loss per
common share
calculation
-- basic and
diluted 28,340 25,080 27,650 23,760
Pro forma net
loss (A) $ (2,554) $ (5,486) $(12,820) $(14,755)
Pro forma net
loss per
share --
basic and
diluted (A) $ (0.09) $ (0.22) $ (0.46) $ (0.62)
(A) Excludes charges for stock-based compensation, amortization of
goodwill and purchased intangibles, and nonrecurring charges.
DIGITAL IMPACT, INC.
Balance Sheets
(In thousands)
Unaudited
Dec 31, Mar 31,
2001 2001 Change
-------- -------- ---------
ASSETS:
Current assets:
Cash and cash equivalents $ 26,319 $ 35,038 $ (8,719)
Accounts receivable, net 9,096 12,899 (3,803)
Prepaid expenses and other
current assets 1,313 551 762
Total current assets 36,728 48,488 (11,760)
Net property and equipment 11,127 13,100 (1,973)
Restricted cash 1,932 1,847 85
Intangible Assets 3,396 5,005 (1,609)
Other assets 494 579 (85)
Total assets $ 53,677 $ 69,019 $(15,342)
Dec 31, Mar 31,
2001 2001 Change
-------- -------- ---------
LIABILITIES & STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 3,706 $ 4,557 $ (851)
Deferred revenues 1,670 1,050 620
Accrued liabilities 2,514 3,429 (915)
Current portion of capital
lease obligations 699 862 (163)
Current portion of long
term debt 1,808 913 895
Total current liabilities 10,397 10,811 (414)
Capital lease obligations,
less current portion 123 524 (401)
Long term debt, less
current portion 1,326 2,129 (803)
Total liabilities 11,846 13,464 (1,618)
Total stockholders' equity 41,831 55,555 (13,724)
Total liabilities and
stockholders' equity $ 53,677 $ 69,019 $(15,342)
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