Engage Announces Fiscal 2001 First Quarter Results
Andover, MA - December 12, 2000 --- Engage, Inc., (Nasdaq: ENGA) a leading enterprise marketing software and interactive media company, and a majority-owned operating company of CMGI, Inc., today announced operating and financial results for its fiscal first quarter ended October 31, 2000.
Revenue for the first quarter of fiscal 2001 was $41.0 million, a 105% increase from last year's first quarter and a 38% decrease from the fourth quarter of fiscal 2000. The overall revenue decline was primarily attributable to continued softness in the online advertising market, as well as an unusually large fourth quarter software licensing arrangement that was not replicated in the first quarter. Gross profit for the first quarter of fiscal 2001 was $10.5 million, a 66% decrease over gross profit of $31.0 million in the fourth quarter of fiscal 2000, and a significant increase over gross profit of $3.8 million in the first quarter of fiscal 2000.
Engage's net loss before amortization, stock compensation, in-process R&D and restructuring costs increased to $48.7 million, or $0.26 per share versus a loss of $23.9 million, or $0.14 per share in the fourth quarter. Engage's per share loss for the first quarter of 2001 exceeded recent Company guidance of $0.25 per share loss due to additional bad debt expense recorded in the quarter, in response to a reassessment of amounts owed to us by customers that have become increasingly less financially stable as a result of market conditions. Including these costs, net loss for the first quarter of 2001 was $173.8 million, or $0.92 per share, compared to a net loss of $112.3 million, or $0.64 per share, for the fourth quarter of fiscal 2000.
"Clearly, we are very disappointed in the results for the first quarter," said Tony Nuzzo, Engage's new President and CEO. "In order to improve the financial health of Engage in this tough market, significant changes will be made in the short term. We intend to create a simpler, more efficient company capable of maximizing results for our customers and shareholders, and we will provide details of such changes within a few weeks."
As a result of these pending organizational changes, as well as expectations of continued softness in online media spending in the near term, Engage is reviewing its fiscal 2001 targets and expects to reduce prior 2001 revenue and operating guidance. In making organizational changes, the Company will be driven by its objective of achieving break even on a cash earnings basis, which excludes amortization of goodwill and other intangible assets, stock compensation, in-process R&D, restructuring and acquisition costs, by the end of fiscal 2001. The Company also intends to manage expenses so that its cash position is sufficient to fund Engage's operations through profitability. As of October 31, 2000, the company held $107.9 million in cash, cash equivalents and short-term securities.
Revenue and Gross Margin by Segment
Segment
|
Q101 Revenue (millions)
|
% of Total Revenue
|
Q101 Gross Margin
|
Q400 Revenue (millions)
|
% of Total Revenue
|
Q400 Gross Margin
|
|
Media
|
$21.3
|
52%
|
9%
|
$31.2
|
47%
|
15%
|
|
Media Management
|
$6.3
|
15%
|
23%
|
$8.3
|
12%
|
40%
|
|
Software & Consulting
|
$13.4
|
33%
|
54%
|
$27.2
|
41%
|
85%
|
|
Total*
|
$41.0
|
100%
|
26%
|
$66.7
|
100%
|
47%
|
"Engage has many valuable assets to help marketers profitably acquire and retain new customers, and we are encouraged by customer response to our products," said Nuzzo. "However, in order to construct a Company that delivers results to both customers and shareholders, we plan to work quickly to bring Engage up to the financial performance levels that our shareholders and directors expect. We believe that each business decision we make going forward must make a positive contribution to our bottom line, or make a key strategic contribution."
|
Metric
|
Q1 FY 2001
|
Q4 FY 2000
|
Q1 FY 2000
|
GENERAL
|
|
|
|
Total Revenue
($M)
|
$41.0 million
|
$66.7 million
|
$ 20.0 million
|
|
Customers
|
10,000
|
8,700
|
965
|
|
Employees
|
1,150
|
1,100
|
480
|
|
Sales Force
|
175
|
275
|
70
|
|
Revenue per Employee ($000s)
|
$35.7
|
$60.6
|
$41.7
|
|
|
|
|
|
PROFILING
|
|
|
|
|
Actionable Profiles
|
88 million
|
84 million
|
42 million
|
|
Contributing Sites
|
5,040
|
4,750
|
1,900
|
|
Customers
|
53
|
20
|
N/A
|
|
|
|
|
|
INTERNATIONAL
|
|
|
|
|
Int’l Customers
|
205
|
275
|
90
|
|
Int’l Revenue as a % of
Total
|
17.8%
|
15.3%
|
5.1%
|
|
|
|
|
|
SOFTWARE
|
|
|
|
|
Customers
|
445
|
400
|
200
|
|
|
|
|
|
|
MEDIA MANAGEMENT
|
|
|
|
|
Customers
|
480
|
370
|
265
|
|
Average Revenue per
Customer ($000s)
|
$13.1
|
$22.4
|
$9.0
|
|
|
|
|
|
MEDIA
|
|
|
|
|
Customers (direct)
|
1,050
|
1,500
|
500
|
|
Average Revenue per
Customer ($000s)
|
$20.3
|
$20.8
|
$23.5
|
|
Sites Within Network
|
5,040
|
4,500
|
370
|
|
Ad Impressions
|
28.6 billion
|
38.9 billion
|
7.4 billion
|
|
Potential Reach (month
ending)
|
63.4%
|
61.2%
|
N/A
|
|
B2B Network Sites
|
255
|
250
|
N/A
|
All first quarter fiscal 2000 results of operations and operating metrics shown in the accompanying table have been retroactively adjusted to reflect the results of Adsmart Corporation in a manner similar to a pooling of interests. Additionally, the MediaBridge and Space Asia acquisitions have been accounted for as purchases and accordingly, the first quarter of fiscal 2001 consolidated operating results reflect the operations of Space Asia for two months and MediaBridge for approximately one and one-half months.
Engage will conduct a conference call and simultaneous webcast today at 5:30 p.m. EST to discuss the Q1 2001 results. The call can be accessed via the Engage corporate Web site at www.engage.com/investor.
About Engage®:
Engage, Inc. (Nasdaq: ENGA) is a leading enterprise marketing software and interactive media company. A majority-owned operating company of CMGI, Inc., Engage enables companies to harness the power of interactive marketing to create more loyal customers, maximize revenue, and increase their brand's visibility and recognition. Based in Andover, Massachusetts, Engage has European headquarters in London and offices worldwide. For more information on Engage please call 877-U-ENGAGE or visit www.engage.com.
Engage is a registered trademark of Engage, Inc. All other products and services mentioned may be trademarks or service marks of their respective owners.
All services at reasonable price in our language translation agency.
Statement Under the Private Securities Litigation Reform Act.
This press release includes forward-looking information. All statements other than statements of historical fact, including without limitation, statements regarding the Company’s intention to create a simpler, more efficient company, the Company’s ability to provide maximized results for its customers and shareholders, the expectation of continued softness in online media spending and the Company’s ability to achieve profitability and manage expenses, are forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties which could cause Engage's future results of operations to differ materially from those anticipated. These risks include our ability to reduce expenses and improve gross margins, growth in online advertising, our ability to increase sales of our software and media offerings, the impact of competition within our industry, our ability to enter into additional strategic relationships, and other risks detailed in Engage's 2000 Annual Report on Form 10-K and from time to time in Engage's other reports filed with the SEC.
Click here for Consolidated Operating Results
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