DoubleClick exceeded consensus analyst expectations despite a weak online advertising environment. DoubleClick also met key strategic goals, launching its Research unit, Diameter; positioning DoubleClick for leadership in the email business through its pending acquisition of FloNetwork Inc.; and realigning its Global Media offerings into two new networks.

DoubleClick reported revenue of $114.9 million for the first quarter of 2001, an increase of 4% over the same period last year. Gross profit for the first quarter of 2001 was $64.5 million, a 12% increase over gross profit of $57.6 million in the first quarter of 2000. Exclusive of certain non-cash and non-recurring items, pro forma net loss was $10.5 million for the first quarter, with pro forma EPS of ($0.08), beating consensus analyst expectations.

TechSolutions(1)

The global TechSolutions division reported revenue of $54.9 million in the first quarter, an increase of 38% over the same period last year. TechSolutions revenues exceeded Media revenues by $8.8 million, continuing the trend of the growing importance of this business to DoubleClick overall. The company served 181 billion ads globally across the DART (Dynamic Advertising Reporting and Targeting) platform during the first quarter of 2001, up from 125 billion ads in the same period last year, for an annual increase of 45%. In fact, DoubleClick served its trillionth online advertisement during the quarter.

The TechSolutions division added 177 new clients this quarter including 24 wins from competitive ad serving solutions. Web site publishers such as Getmusic.com, Major League Baseball, and EMAP have signed recent agreements to use DART for Publishers (DFP), while advertising agencies such as Arnold Worldwide, Margeotes, Jordan McGrath Agency, and Foote Cone Belding have become DART for Advertiser (DFA) clients. DFA is now used by all of the top ten advertising agencies. AdServer, DoubleClick’s software ad serving solution, also had a strong quarter, based on performance in international markets. Asia Pacific Sales were robust for all three products, with 32 new contracts signed for DFP, DFA, and AdServer.

Industry-wide, the number of unique email marketing messages is expected to grow at a compound annual growth rate of over 100%. During the first quarter, FloNetwork delivered over 996 million emails on behalf of over 150 publishers, merchants, and advertising agencies including CNET, CMP, J.Crew, and Virgin Records. DARTmail served 727 million emails during the same period.

The Data division reported quarterly revenue of $18.2 million, up 24% over first quarter of 2000. The core business of Abacus Direct continues to grow, and DoubleClick is the leader in catalogue modeling. There are now 1806 members contributing to the Abacus Alliance for direct-mail marketing. A number of focus areas continued to show robust growth – including the B2B alliance where revenues grew in excess of 100% over first quarter 2000.

At the start of this Quarter, the Abacus Online businesses were absorbed into Abacus Direct, leveraging the sales and production teams already servicing the alliance members.

The Intelligent Targeting product suite for Internet marketing campaigns went through a rigorous testing campaign in Q4 2000 and Q1 2001. The results are extremely encouraging with Intelligent Targeting campaigns producing on average a conversion lifts of over 200%. The database now contains over 120MM anonymous profiles of clickstream behavior that is updated daily.

Also within the Data Division, DoubleClick launched Diameter as its platform for entering the online research business. Diameter is a complete suite of research tools, offering media intelligence, audience measurement, and advertising effectiveness tools. Diameter offers both pre-campaign as well as post-campaign analysis tools that give e-businesses, advertisers, and direct marketers a more complete understanding of how to reach their target audiences.

Diameter’s offerings for Media Intelligence include products from @plan, which DoubleClick acquired during the quarter. New clients this quarter include Listen.com, Epinions, and Tribal DDB. For audience measurement, Diameter has partnered with comScore Networks, to exclusively sell netScore Traffic in the United States, which captures visitor and demographic information based on massive sample sizes from home, work, school and internationally. netScore Traffic clients include MSN Marketing and Alta Vista.

Media

The DoubleClick Networks generated global media revenue for the first quarter of $46.1 million, a decrease of 23% versus the same period last year and 24% versus Q4 2000. The proportion of revenues from traditional advertisers continued to grow, from about 55% in Q4 2000, to over 59% in Q1 2001. Over 2,300 customers advertised on the global DoubleClick Networks during the quarter, and 80% of companies who advertised on DoubleClick’s Networks in Q4 2000 also did so during Q1 2001.

During the quarter, DoubleClick restructured its operations, with most of the changes occurring in Global Media. The total restructuring charge was $29 million.

In the United States, DoubleClick Media will now offer two distinct networks. The DoubleClick Brand Network contains sites that are recognized media brands with strong traffic and significant marketable inventory, including Kelley Blue Book, NASDAQ, Cheap Tickets, and Better Homes and Gardens. The DoubleClick Audience Network offers key content-specific vertical categories with an emphasis on reach, targeting, and optimization. The goal of this restructuring was to leverage the Media sales force more efficiently and improve client service levels with a dedicated team focused on key sites and advertisers.

International

International Operations accounted for 28% of DoubleClick’s revenue during the quarter. Performance was particularly strong in China and Japan. A total of 32 new TechSolutions clients were added across Asia, including Sohu, one of China’s top three portals, and Chinabyte, the top IT site in China. Operations in Brazil and Finland were discontinued to allow stronger focus on operations with faster growth.

DoubleClick also set a date for the IPO of DoubleClick Japan, in which DoubleClick has controlling interest. The offering is expected to raise between $16 million and $28 million for DoubleClick Japan, and is expected to be completed by April 25, 2001.

Healthy Balance Sheet

At the end of Q1 DoubleClick had $831 million in cash and marketable securities, versus long term debt of $257 million.

CFO Stephen Collins noted Our tech customers, some of whom are signing long term contracts, take great comfort in our strong financial position. It also gives DoubleClick a leg up in considering possible acquisitions and opportunities for internal growth.