Modem Media Exceeds Analysts' Earnings Estimates and Has Record Revenues forThird Quarter 2000
Revenues Up 79% to $37.8 Million Year-on-Year; Revenues and Earnings Driven by
Fortune 500 Clients; Positive Cash Earnings Reported
NORWALK, Conn., Oct. 25 /PRNewswire/ -- Modem Media (Nasdaq: MMPT), the exclusive builder and marketer of customer-focused Me-business(SM) solutions, today announced record revenues for the third quarter ending September 30, 2000.
Revenues for the third quarter totaled $37.8 million, a 79% increase over $21.1 million achieved in the third quarter of 1999. On a quarterly sequential basis, revenues rose 15% from $32.8 million in the second quarter of 2000. Earnings for the third quarter before interest, taxes and amortization of goodwill (EBITA) were $1.5 million representing an EBITA margin of 4%, which includes continued investment of approximately $2.9 million related to Modem Media's CentrPort subsidiary and international operations in Tokyo.
Domestic revenues, excluding CentrPort, reached $29.7 million, up 13% from $26.4 million achieved in the second quarter of 2000. EBITA for the domestic business, excluding CentrPort, reached $4.9 million, up from $1.2 million in the prior quarter, for an EBITA margin of 16.6%. International revenues increased 20% to $7.4 million from $6.2 million in the previous quarter. EBITA for the international operations improved to ($1.8) million from ($1.9) million for the prior quarter. EBITA of international operations, excluding Tokyo, was ($0.6) million, declining from ($0.1) million from the prior quarter. EBITA of CentrPort was a loss of $1.7 million, up from $1.0 million in the second quarter, driven by required investment levels needed to fund its significant growth.
The net loss for the third quarter of 2000 was ($3.8) million driven by increased amortization of goodwill to $4.1 million compared to $0.8 million in the third quarter of 1999, due to prior acquisitions. The diluted cash earnings per share returned to a positive $0.01, compared to the second quarter results of ($0.07), and $0.09 in the third quarter of 1999.
"We delivered another quarter of outstanding revenues and are pleased to have returned to the level of profitability previously demonstrated by our business. Since our inception in 1987, we have combined smart business practices with a strong entrepreneurial spirit, which has allowed us to continue to support our clients in a sustainable, profitable and focused manner," said G. M. O'Connell, Chairman and CEO of Modem Media.
"The investments in our international operations demonstrate our commitment to building a global company and the belief that this network will continue to be an important element in partnering with and supporting Fortune 500 clients. In addition, our continued investment in CentrPort reflects our excitement with its initial success and our belief that this platform will revolutionize the ability of global companies to manage, synchronize and deliver the right services to the right customers across any IP-enabled channel. In light of the current market dynamics, we will maintain careful management of these two areas of investment to ensure that we balance the appropriate levels of spending to match the strategic role they play in our business," commented O'Connell.
Third quarter operational highlights include:
-- Increased Spending From Top 10 Clients: Average annualized revenue for
the Top 10 accounts in the third quarter grew 44% to $9.2 million, up
from $6.4 million in the third quarter of 1999, and up 11% from
8.2 million achieved in the second quarter of 2000.
-- Lower Revenue Concentration: Revenue concentration from the Top 10
accounts was reduced to 61% from 63% in the second quarter of 2000.
This marks the fifth consecutive quarter with a reduction in the
concentration of our revenue streams. General Motors was the only
client accounting for more than 10% of revenues at 10.4%.
-- Strong International Growth: Year-to-date, Modem Media has achieved a
175% year-on-year increase in international revenues to $19.8 million.
-- CentrPort: CentrPort continues to progress ahead of plan and had
132% revenue growth over the prior quarter. This growth was driven by
existing Modem clients as well as two new clients who have chosen to
enable their sites with this technology.
-- Employee Growth: Select recruiting resulted in the total number of
employees growing to 1,036 at the end of the third quarter of 2000, up
from 963 at the end of the second quarter of 2000. Billable
professionals grew to 837 in the third quarter of 2000, up from 770 at
the end of the second quarter of 2000. Utilization was at 55% this
quarter. We realized an increase in average rate per hour for those
employees.
About Modem Media
Founded in 1987, Modem Media (http://www.modemmedia.com) provides Internet strategy and end-to-end Me-Business(SM) solutions to Fortune 500 companies and select Internet start-ups. As an Internet pioneer, Modem Media has been a driving force in the digital economy and is the exclusive developer of Me-business(SM) solutions, a unique customer-focused approach to Internet business. The Company's award-winning Internet-related services include strategic planning and consulting, engineering, visual and information design, media distribution and project management. With more than 1,000 professionals worldwide, Modem Media's global presence includes its headquarters in Norwalk, CT, and offices in New York City, San Francisco, Toronto, London, Paris, Munich, Tokyo, Hong Kong and Sao Paulo. Modem Media has created customer-focused Internet solutions for global brands such as Citibank, Weight Watchers, General Motors, Delta Air Lines, Philips, IBM and JCPenney.
Me-business is a service mark of Modem Media.
CentrPort is a service mark of CentrPort LLC.
This press release contains statements that are "forward-looking" within the meaning of applicable federal securities laws, including the Company's future investments, revenue growth and gross margins, and clients' demand for services and their spending, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. Factors that could cause actual results to differ include timing and scope of new projects and client initiatives, demand for the Company's services, spending levels of the Company's clients, costs and timing related to the expansion of the Company's business and investments, the ability to raise additional funding for CentrPort, the ability to attract and retain qualified professionals and other factors more fully discussed in our filings with the Securities and Exchange Commission.
MODEM MEDIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Nine Months
Ended Ended
Sept. 30, Sept. 30,
2000 1999 2000 1999
(unaudited) (unaudited)
Revenues $37,788,000 $21,121,000 $99,150,000 $49,546,000
Cost of revenues 19,187,000 9,063,000 51,338,000 22,380,000
Gross profit 18,601,000 12,058,000 47,812,000 27,166,000
Operating expenses:
Sales and marketing 1,304,000 421,000 4,486,000 1,198,000
General and
administrative 15,790,000 7,992,000 42,591,000 20,319,000
Write-off of
offering-related costs -- -- 722,000 --
Amortization of
goodwill 4,136,000 756,000 11,274,000 2,065,000
Total operating
expenses 21,230,000 9,169,000 59,073,000 23,582,000
Operating (loss)
income (2,629,000) 2,889,000 (11,261,000) 3,584,000
Interest income, net 427,000 565,000 1,408,000 1,406,000
(Loss) income before
income taxes (2,202,000) 3,454,000 (9,853,000) 4,990,000
Provision for
income taxes 1,593,000 2,146,000 2,664,000 3,574,000
Net (loss) income $(3,795,000) $1,308,000 $(12,517,000) $1,416,000
Net (loss) income
per share:
Basic $(0.15) $0.06 $(0.52) $0.07
Diluted $(0.15) $0.06 $(0.52) $0.06
Cash (loss) earnings
per share:
Basic $0.01 $0.09 $(0.05) $0.16
Diluted $0.01 $0.09 $(0.05) $0.16
Weighted-average number
of common shares
outstanding:
Basic 24,652,000 22,340,000 24,266,000 21,138,000
Diluted 24,652,000 23,624,000 24,266,000 22,344,000
SOURCE Modem Media |
