Engage Announces Fiscal 2000 Third Quarter Results; Revenues Increase 87% over Second Quarter; Engage Knowledge Anonymous Profiles Grow to 70 Million.Business Editors ANDOVER Andover (ăn`dōvər), town (1990 pop. 29,151), Essex co., NE Mass.; inc. 1646. Chiefly a textile producer in the 19th cent., Andover now makes toiletries, electronic and computer equipment, chemicals, medical instruments, rubber products, , Mass.--(BUSINESS WIRE)--June 12, 2000 Engage, Inc. (Nasdaq: ENGA), the leading provider of next generation online marketing solutions and a majority-owned operating company operating company A business that engages in transactions with outsiders. of CMGI CMGI Commonly Maintained Grounds Infrastructures CMGI College Marketing Group Information (Services) , Inc. (Nasdaq: CMGI), today announced operating and financial results for its fiscal third quarter and the nine months ended April 30, 2000. All results of operations have been retroactively ret·ro·ac·tive adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin adjusted to reflect the results of Flycast Communications Corporation from January January: see month. 13th, 2000, the date CMGI acquired Flycast, and the operating results of Adsmart Corporation for all periods presented in a manner similar to a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. . Revenues for the fiscal 2000 third quarter were $58.7 million, a 1034% increase from last year's third quarter, and an 87% increase over the second quarter of fiscal 2000. This growth was primarily due to the acquisition of Flycast, as well as internal growth throughout the quarter. Revenues for the first nine months of the fiscal year were $110.1 million, a 968% increase over the comparable period last year. On a 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 basis, as if the results of operations of AdKnowledge and Flycast were included for all of the second quarter 2000, total revenues increased 13%, up from $51.9 million for the second quarter. Net loss for the third quarter fiscal 2000, excluding amortization of goodwill and other 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. , stock compensation, in-process R&D and acquisition costs was $38.3 million, or $0.22 per share. Including these costs, net loss for the quarter was $196.5 million, or $1.14 per share, compared to a loss of $14.4 million, or $0.19 per share, for the 1999 third quarter. Net loss for the nine months ended April 30, 2000, excluding amortization of goodwill and other intangible assets, stock compensation, in-process R&D and acquisition costs was $73.0 million, or $0.54 per share. Including these costs, net loss for the nine months was $265.6 million, or $1.97 per share compared to a loss of $26.7 million, or $0.37 per share in nine months ending April 30, 1999. Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. Schaut, president and chief executive officer, commented, "This quarter marked a turning point for Engage. We effectively transitioned from a pure technology company to an integrated, results-oriented online marketing solutions company, as evidenced by our expanded business model, broadened capabilities, strategic partnerships and name change. During the third quarter, we experienced organic revenue growth across each of our business segments, despite the media market's seasonal weaknesses. This growth was mainly due to the increased revenues from the Flycast acquisition, as well as an increase in the number of our marketing customers and the increased demand for Engage's Internet marketing See Internet advertising. solutions. We will seek to gain additional market share and 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>. new revenue-generating and cross-selling Cross-selling is the term used to describe the sale of additional products or services to a customer. Less frequently it is used to describe the sale of services to additional business units at an account or to different geographic units of a customer. opportunities for Engage's strengthened business model." Mr. Schaut added, "The global integration of our newly acquired assets is progressing as planned. Engage's proprietary technology platform, combined with our comprehensive product and service portfolio, creates a comprehensive, audience-driven targeting and measurement solution for online marketers. Our organization is firmly positioned to grow our customer base, extend into new markets and continue the successful execution of Engage's next generation strategy." Third Quarter Highlights: Integration Progress -------------------- Engage completed the acquisition of Adsmart and Flycast from CMGI on April 28, 2000, increasing CMGI's stake in Engage to approximately 87%. The combined company now has over 1,050 employees worldwide (over 250 in direct sales), with offices in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , United Kingdom, Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). , Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. , Japan, Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. , France, Italy and Canada. To date, Engage has completed the cross-training cross-training Multiskilling Sports medicine 1. The regular participation in multiple sports–eg, basketball and long-distance running 2. The exercising of muscle groups or participation in a sport differing from than an athlete's primary sport. See Training. of its salesforce; has fully integrated the Flycast and Adsmart networks with the Engage Knowledge database; and realigned and strengthened the senior management team and created five business divisions: Engage Media, Engage Business Media, Engage Enabling Technologies, AdKnowledge and I/PRO. Revenue Growth Across All Segments ---------------------------------- Revenues for the fiscal 2000 third quarter for Engage Media, which includes the former AudienceNet, Flycast, Adsmart networks, and the newly launched Business-to-Business network, were $43.3 million, an increase of 12% over the second quarter pro forma revenues of the combined entities and a 127% increase over actual second quarter Media revenues of $19.1 million, and represents 74% of total pro forma revenue. Media Management revenues, which are mainly comprised of revenues from the AdKnowledge and I/PRO subsidiaries, were $8.5 million, a 32% increase over the second quarter pro forma revenues and a 57% increase over actual second quarter Media Management revenues of $5.4 million, and represents 14% of total pro forma revenue. Software and Consulting revenues, which include revenues from AdManager, AdBureau, ProfileServer, and related software maintenance and consulting were $6.9 million up 1% over the second quarter revenues and represent 12% of total pro forma revenue. Strong Operating Metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. ------------------------ During the third quarter, Engage continued to make significant progress across all key metrics: -- Highlighting the synergies of Engage's newly integrated operations, the Company added over 1,300 new customers during the quarter, bringing the total customer base to 6,600. Of these 6,600 customers, about 1,850 are direct customers, and 4,750 are through channel partners. Engage's international customers grew approximately 31% in the second quarter to 200. -- During the quarter, Engage doubled the number of customers running audience profile campaigns (formerly AudienceNet campaigns) to 42. -- The number of Engage Knowledge anonymous global profiles grew to 70 million, up from 52 million at the end of January 2000. Supporting this growth was an increase in the number of contributing sites to the database, which reached 4,300 at quarter's end, up from 3,000. -- The combined number of ad impressions for the quarter, including Engage Media, AdKnowledge, and AdBureau were 36.5 billion, a 39% increase over last quarter. -- According to Media Metrix, in April, Engage's unduplicated potential reach continued to lead the industry at 60.9%. Formation Of Strategic Alliances -------------------------------- An integral part of Engage's enhanced business strategy is the pursuit of key alliances to expand its profiling applications and create new sales channels for its software. During the quarter, Engage announced agreements with SAS Institute SAS Institute Inc., headquartered in Cary, North Carolina, USA, has been a major producer of software since it was founded in 1976 by Anthony Barr, James Goodnight, John Sall and Jane Helwig. , Oracle, Xchange, Inc. (formerly Exchange Applications), and Hyperion, all of which were aimed at providing e-business solutions with customer-centric profiling and targeted marketing capabilities. Additionally, Engage extended into the wireless market through an alliance with Everypath and, subsequent to the quarter, aligned with Akamai Technologies Akamai Technologies, Inc. (NASDAQ: AKAM) is a company that provides a distributed computing platform for global Internet content and application delivery, headquartered in Cambridge, Massachusetts. to enable high-performance ad delivery for Engage's online media networks. Furthermore, Engage announced a comprehensive agreement with OneMediaPlace.com (formerly Adauction.com), designed to expand Engage's network reach, enhance the depth of the Engage Knowledge database and provide a new sales channel for Engage's online media products. Mr. Schaut concluded "Engage is committed to delivering value- added, results-oriented technology and resources that improve online ad campaign performance; facilitate customer acquisition and loyalty and, ultimately, substantially increase marketers' return on investment. Looking ahead, we will seek to leverage Engage's technology, infrastructure, market leadership and strict privacy standards to increase market share, generate new revenue opportunities, build strategic relationships and pioneer applications for Engage's behavioral-based, anonymous profiles." About Engage: Engage, Inc. (Nasdaq: ENGA) is the leading provider of next generation online marketing solutions and a majority-owned operating company of CMGI, Inc. Based in Andover, Mass., Engage helps marketers target online audiences and convert them into loyal customers. Engage has European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. headquarters in London and offices worldwide. For more information on Engage, please visit www.engage.com. About CMGI and CMGI @Ventures: With more than 70 companies, CMGI, Inc. (Nasdaq: CMGI) represents the largest, most diverse network of 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 companies in the world, including both CMGI operating companies and synergistic synergistic /syn·er·gis·tic/ (sin?er-jis´tik) 1. acting together. 2. enhancing the effect of another force or agent. syn·er·gis·tic adj. 1. investments made through its venture capital affiliate, CMGI @Ventures. CMGI leverages the technologies, content and market reach of its extended family of companies to foster rapid growth and industry leadership across its network and the larger Internet Economy The Internet Economy refers to conducting business through markets whose infrastructure is based on the Internet and World-Wide Web. An Internet economy differs from a traditional economy in a number of ways, including: communication, market segmentation, distribution costs, and price. . Compaq, Intel, Microsoft, Pacific Century CyberWorks and Sumitomo hold minority positions in CMGI. CMGI's majority-owned operating companies include Engage (Nasdaq: ENGA), NaviSite (Nasdaq: NAVI NAVI Nuclear Arms Verification Instrument NAVI New Analog Video Interface ), 1stUp.com, Activate (1) See trigger. (2) To interact with an activation server at the time copy-protected software is installed. The install program generates a code that is sent to the activation server, which responds with an authorization code that allows the software to operate. , AdForce, AltaVista, CMGion, CMGI Solutions, Equilibrium equilibrium, state of balance. When a body or a system is in equilibrium, there is no net tendency to change. In mechanics, equilibrium has to do with the forces acting on a body. , ExchangePath, iCAST, MyWay.com, NaviPath, SalesLink, Tribal Voice
CMGI's corporate headquarters are located in Andover, Mass. CMGI @Ventures has offices there, as well as in Menlo Park Menlo Park. 1 Residential city (1990 pop. 28,040), San Mateo co., W Calif.; inc. 1874. Electronic equipment and aerospace products are manufactured in the city. Menlo College and a Stanford Univ. research institute are there. 2 Uninc. , Calif. For additional information, see http://www.cmgi.com and http://www.ventures.com. Statement Under 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 ------------------------------------------------------------ This press release includes forward-looking information. All statements other than statements of historical fact, including without limitation, those with respect to the Company's objectives, plans and strategies set forth herein and those preceded by or that include the words "believes," "intends," "expects," "will," "anticipates," or similar expressions, 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. . These forward- looking statements are subject to a number of risks and uncertainties which could cause the Company's future results of operations to differ materially from those anticipated, and other risks detailed in the Company's 1999 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. and from time to time in the Company's other reports filed with the SEC.
Engage, Inc.
Consolidated Operating Results (a)
(Unaudited)
(In thousands, except per share data)
Three months ended
------------------
April 30, January 31, April 30,
2000 2000 1999
--------- ---------- ---------
Revenue $ 58,682 $ 31,419 $5,177
Cost of revenue 45,221 24,392 3,510
--------- ---------- ---------
Gross profit 13,461 7,027 1,667
--------- ---------- ---------
Operating expenses:
In-process research
and development 29,300 2,317 4,500
Research and development 8,613 5,124 2,028
Selling and marketing 32,837 18,328 4,757
General and administrative 10,189 5,033 1,447
Amortization of goodwill
and other intangibles 87,003 27,566 2,400
Acquisition costs 4,951 - -
Stock compensation 36,948 224 266
--------- ---------- ---------
Total operating expenses 209,841 58,592 15,398
Loss from operations (196,380) (51,565) (13,731)
Other income (expense):
Equity in loss of joint venture (315) (374) (257)
Other expense (73) (33) (174)
Interest income 1,498 1,430 -
Interest expense (1,235) (684) (220)
--------- ---------- ---------
Net loss $(196,505) $ (51,226) $(14,382)
========= ========== =========
Pro forma basic and diluted net
loss per share (b)(c) $(1.14) $ (0.41) $(0.19)
========= ========== =========
Pro forma weighted
average number of basic
and diluted shares
outstanding (b)(c) 172,408 125,188 76,206
========= ========== =========
Nine months ended
-----------------
April 30, April 30,
2000 2000
--------- ---------
Revenue $ 110,118 $ 10,308
Cost of revenue 85,836 7,613
--------- ---------
Gross profit 24,282 2,695
--------- ---------
Operating expenses:
In-process research
and development 31,617 4,500
Research and development 17,029 5,816
Selling and marketing 63,113 9,454
General and administrative 17,995 2,918
Amortization of goodwill
and other intangibles 118,808 4,696
Acquisition costs 4,951 -
Stock compensation 37,274 657
--------- ---------
Total operating expenses 290,787 28,041
--------- ---------
Loss from operations (266,505) (25,346)
Other income (expense):
Equity in loss of joint venture (1,016) (417)
Other expense (96) (174)
Interest income 4,284 -
Interest expense (2,282) (751)
--------- ---------
Net loss $(265,615) $ (26,688)
========= =========
Pro forma basic and diluted net
loss per share (b)(c) $(1.97) $ (0.37)
========= =========
Pro forma weighted
average number of basic
and diluted shares
outstanding (b)(c) 134,578 71,497
========= =========
(a) All amounts herein, including the share and per share amounts, have been retroactively adjusted to reflect the financial results of Flycast from January 13, 2000 and of Adsmart for all periods presented in a manner similar to a pooling of interests. (b) Historical basic and 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. net loss per share have not been presented for the periods herein because they are irrelevant due to the change in the Company's capital structure upon the completion of the initial public offering which included the conversion of debt to CMGI and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . The unaudited pro forma forma, adj/n minor elements between the members of a botanical species. basic and diluted loss per share information included in the accompanying statement of operating results reflects the issuance of shares in the Flycast acquisition from January 13, 2000 and the impact of the conversion of debt to CMGI and preferred stock for both Engage and Adsmart, after adjustment for the Engage exchange ratio, as of the date of the later of issuance of the convertible security or the beginning of each period, using the if-converted method. (c) The share and per share amounts herein have been adjusted to reflect the two-for-one stock split on April 3, 2000 to stockholders of record at the close of business on March 20, 2000. |
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