• by Ross Fadner , August 4, 2004

Following poor second-quarter results from competitors DoubleClick and ValueClick, Seattle-based aQuantive Wednesday posted very solid results for the second quarter ending June 30. Overall revenue rose to $27.8 million from $15.2 million a year earlier--considerably stronger than Wall Street estimates of $24 million. Net revenue was $7.5 million for the quarter; at the end of the second quarter, aQuantive has already equaled its net total for 2003, according to CEO Brian McAndrews.

"Our exceptional second-quarter performance is a reflection of our business being well-positioned to take advantage of the growth opportunities in a healthy industry as well as very strong execution on the part of all our business units," said McAndrews. "Our company is performing beyond expectations, and with the strategic acquisitions we have made recently, I feel very confident about our future prospects."

Boosted by its recent acquisition of Web site marketing firm SBI.Razorfish, aQuantive anticipates full-year revenue of $148 million to $155 million, which is well ahead of the $122 million consensus estimate. McAndrews said the Razorfish acquisition sets the firm up "very well for the future," because Razorfish focuses on "in-bound marketing" as opposed to aQuantive's other marketing services properties, including interactive agencies Avenue A and i-Frontier. Razorfish is expected to contribute between $41 and $44 million in the second half of 2004.

aQuantive's digital marketing services (DMS) division brought in $12.8 million in revenue in the second quarter, up from $7 million in 2003. McAndrews said revenue was boosted by a combination of increased spending from existing clients aided by spending "beyond expectation" from new clients. In Q2, aQuantive DMS' top five clients contributed 38 percent of total revenues--compared to 2003, when the top five clients contributed 55 percent. McAndrews noted that diversification in spending reduces risk for clients, and that the Razorfish acquisition would contribute further to that end.

McAndrews also pointed out that Avenue A, which is to be integrated with Razorfish, is now the largest independent buyer of online media and the largest agency buyer of search, which accounted for 20 percent of aQuantive's second-quarter media spend.

aQuantive's digital marketing technology division, which includes Atlas DMT, Atlas OnePoint, and Drive PM, also had a strong quarter. Revenues grew 75 percent over the same quarter last year to $14.4 million, driven by Atlas DMT's ad serving technology and the contributions of Atlas OnePoint and the recently acquired NetConversions. Of the $14.4 million, 5.3 million came from business unrelated to Avenue A or i-Frontier.

Drive PM, aQuantive's fledgling behavioral marketing unit, operated to a loss of $80,000 in the Q2. aQuantive CFO Michael Vernon said the company wants to move slowly with Drive PM, and expects no significant contribution from it this year.

McAndrews said online advertising growth will be driven by search, rich media, and behavioral targeting, although he expects search to slow down. He pointed to strong growth in rich media and behavioral targeting, adding that the company is set to unveil a new rich media product later this year to rival that of DoubleClick, aQuantive's main competitor in ad serving technology.