MessageMedia Q3 revenues swell, closes private offer
By Eric Auchard
NEW YORK, Oct 26 (Reuters) - MessageMedia Inc. (NasdaqNM:MESG), which provides e-mail and marketing services to Web sites, on Tuesday said third-quarter revenue grew 135 percent from the second-quarter, but losses widened due to merger write-offs.
In addition, the company said it had completed Monday a $42 million round of private placement equity financing, from investors led by Van Wagoner Capital Management and including large stakes from the company's two largest existing backers, Softbank Venture Capital and Pequot Private Equity Funds.
The third-quarter net loss, before amortization of goodwill was $5.4 million, or 11 cents per share. Including the write-down of goodwill, the company posted a net loss of $13.7 million, or 29 cents per share.
These results compared with a net loss in third-quarter of 1998 of $1.7 million, or 5 cents per share, based on roughly 25 percent fewer shares outstanding a year-ago.
MessageMedia is a product of the merger of two private companies with First Virtual, a pioneering developer of Internet-based payment systems, founded in 1994 in San Diego. First Virtual exited the Web payments business in August 1998.
''The third quarter was a major win for us not only in terms of revenue growth but also because we positioned the company to capitalize on its current momentum,'' Larry Jones, MessageMedia president and chief executive, said in a statement.
Revenue of $3.1 million, aided by partial results from the August acquisitions of Revnet Systems and Decisive Technology, marked a 783 percent rise over the $300,000 in the 1998 third quarter and 135 percent over the 1999 second quarter's $1.3 million.
A year ago, MessageMedia, then still known as First Virtual, acquired Email Publishing Inc., a provider of e-mail subscription list management and delivery services to Web sites and Distributed Bits, a supplier of response systems that manage large volumes of customer-initiated e-mail.
The company relocated to Boulder, Colo., the headquarters of Email Publishing, and began business as MessageMedia late in 1998.
Primed with backing from Pequot and Softbank, the Internet investment arm of Japan software retailer Softbank Corp. , which now owns 40 percent, First Virtual transformed itself into an emerging leader in the e-mail marketing market.
The so-called ''e-marketing'' business, as MessageMedia executives prefer to call it, is growing in importance as Internet businesses seek to retain Web site visitors and build loyalty among existing customers, Jones said.
''In the third quarter of 1999 alone, we saw a dramatic increase in the use of permission-based e-messaging by prominent e-commerce players,'' Jones said. Permission marketing refers to systems that give customers some say over who markets promotions to them via e-mail.
The private placement of 4.1 million shares of MessageMedia was seen as a necessary step to solidify its position with Wall Street and could lead to financial analysts beginning official coverage of the company, the company said. The company had roughly 47 million shares as of Sept. 30, 1999.
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