PASADENA, Calif., Apr 25, 2002 (BUSINESS WIRE) -- Overture Services,
First Quarter 2002 Highlights:
First quarter revenue was $142.8 million versus $101.2 million in the
fourth quarter of 2001.
First quarter net income was $29.3 million, or $0.48 per diluted share,
versus $20.8 million, or $0.35 per diluted share, in the fourth quarter
First quarter EBITDA (earnings before interest, taxes, depreciation and
amortization) was $32.5 million, or $0.54 per diluted share, versus $24.5
million, or $0.41 per diluted share, in the fourth quarter of 2001.
Number of paid introductions increased to 587 million on a worldwide basis
versus 442 million in the fourth quarter of 2001.
Average price per paid introduction increased to $0.24 on a worldwide
basis versus $0.23 in the fourth quarter of 2001.
German Pay-For-Performance marketplace was launched.
Overture Services, Inc. (Nasdaq:OVER), the world's leading provider of
Pay-For-Performance search to Web sites across the Internet, today announced
first quarter 2002 revenue of $142.8 million, a 175% increase over revenue
of $52.0 million in the first quarter of 2001, and a 41% increase over
revenue of $101.2 million in the fourth quarter of 2001.
Overture reported first quarter 2002 net income of $29.3 million, or
$0.48 per diluted share, compared to a first quarter 2001 net loss of
$(6.7) million, or a net loss of $(0.13) per basic and diluted share.
In the fourth quarter of 2001, Overture reported net income of $20.8 million,
or $0.35 per diluted share.
Overture also reported first quarter 2002 EBITDA of $32.5 million, or
$0.54 per diluted share, compared to a first quarter 2001 EBITDA loss
of $(3.9) million, or an EBITDA loss of $(0.08) per basic and diluted
share. In the fourth quarter of 2001, Overture reported positive EBITDA
of $24.5 million, or $0.41 per diluted share.
Overture ended the first quarter of 2002 with a strong balance sheet,
including approximately $226 million in unrestricted cash and liquid investments.
Revenue Drivers/Key Metrics
The key metrics driving Overture's revenue are paid introductions, or
paid clicks, and the average price per introduction paid by Overture's
advertisers. On a worldwide basis, in the first quarter of 2002, Overture
facilitated 587 million paid introductions compared to 318 million paid
introductions on a worldwide basis in the first quarter of 2001 and 442
million in the fourth quarter of 2001.
On a worldwide basis, advertisers paid Overture an average of $0.24 for
each paid introduction during the first quarter of 2002 compared to an
average of $0.16 for each paid introduction in the first quarter of 2001
and $0.23 in the fourth quarter of 2001.
Expanding Affiliate Relationships and Enhancing Product Quality
On April 24, 2002, Overture announced that its existing U.S. search distribution
agreement with America Online has been extended through May 1, 2002. During
this extension period, Overture will continue to serve America Online
with its Pay-For-Performance search results under the current implementation.
In the first quarter of 2002, Overture announced an expanded agreement
with MSN through December 2003 under which Overture is providing its Pay-For-Performance
search results to MSN Search in the U.S., U.K. and Canada. The agreement
builds upon an existing relationship between Overture and MSN, under which
Overture provides its search results to users of MSN Search from the Microsoft
Internet Explorer search pane.
Also in the first quarter of 2002, Overture signed an exclusive, one-year
renewal agreement with Infoseek Corporation, which is part of the Walt
Disney Internet Group. As part of the agreement, Overture provides its
full set of search results to Infoseek's Web site located at www.go.com.
In addition, Overture announced a two-year agreement with BellSouth, as
well as renewed and extended the term of its agreement to provide services
to iWon.com through July 2003.
Subsequent to the first quarter of 2002, Overture announced an agreement
with Hewlett-Packard Company to provide HP's Pavilion notebook and desktop
PC owners in the United States access to Overture's search results. In
addition, the company recently announced a renewal agreement to become
the exclusive keyword search provider for United Online's Internet Service
Provider properties, NetZero and Juno, for two years.
Expressed as a percentage of revenue, traffic acquisition costs were
54% in the first quarter of 2002, compared to 51% in the fourth quarter
of 2001. The company expects that its traffic acquisition costs as a percentage
of revenue could increase in coming quarters due to the cost of entering
new international markets, facilitating long-term growth of the business
as well as the competitive landscape.
Product quality is a key factor in building relationships with the company's
affiliate partners. Overture's 100-person editorial team rejects approximately
35% of all submitted listings, which helps ensure relevant results to
the users of the company's affiliate partners. It is this filtering system
that differentiates Overture from other paid listings products in the
Focus on Advertiser Retention and Growth
Overture brings its advertisers together with consumers by allowing them
to bid on search terms that are relevant to their businesses. Overture's
advertisers represent a broad spectrum of direct marketers, including
retailers, service providers and publishers; online and offline businesses,
including well-recognized companies with broad product lines.
Overture continued to attract a mix of small, medium and large advertisers.
These new advertisers represent a diverse cross-section of consumer and
business-to-business industries. Lenscrafters, Hickory Farms and Sunglass
Hut are some examples of the well-known brands that have recently become
By the end of the first quarter of 2002, Overture's worldwide advertiser
base grew to approximately 60,000 active, paying advertisers, up from
43,000 advertisers at March 31, 2001 and up from 53,000 advertisers at
December 31, 2001. Advertiser spending with Overture also continued to
increase during the first quarter of 2002 as the company's advertisers
spent an average of $2,540, up 102% in the quarter from an average of
$1,260 in the prior year period, and up 28% from an average of $1,980
in the fourth quarter of 2001.
Continued Momentum in International Markets
Overture continued to gain momentum overseas with the February 2002 launch
of its operations in Germany. Overture's marketplace in Germany reaches
73% of German Internet users through partners such as T-Online, the Deutsche
Telekom subsidiary, freenet.de and AltaVista Germany. By the end of the
first quarter of 2002, close to 1,000 businesses had signed up to participate
as advertisers in Overture's German marketplace.
Overture's European operation signed its first pan-European contract to
provide its Pay-For-Performance search listings on the search results
pages of AOL Europe's Web properties in the U.K., Germany and France under
a multi-year agreement. Overture's listings are already live on AOL Europe's
Web properties in the U.K. and Germany, and listings on AOL France will
commence in conjunction with Overture's launch in that market.
In the first quarter of 2002, Overture signed an agreement to provide
its search results to www.MSN.co.uk, distributing its high-quality Pay-For-Performance
search listings on MSN Search in the United Kingdom. With the implementation
of these agreements, Overture extended its reach in the U.K. to over 80%
of the U.K.'s 22 million Internet users. In addition, Overture recently
renewed its agreement with AltaVista in the U.K. for an additional year
with an improved implementation.
In addition, Overture is committed to launching in France in the second
half of 2002 and is continuing to explore its approach to entering Japan.