July 24, 2003

Overture Services on Wednesday reported better-than-expected second-quarter revenue as it signed up more advertisers willing to pay for placement in search results.

The commercial search company reported second-quarter net income of $7.6 million, or 12 cents per share, on revenue of $265.3 million. That compares to net income of $17.5 million, or 29 cents per share, on revenue of $152.5 million during the same period of 2002. Analysts had expected the company to earn 6 cents in the second quarter, according to a survey by First Call, which tracks analyst forecasts.

Overture attributed the sales boost to a larger number of "paid introductions"--or the number of times Web surfers clicked on an advertiser's ad--and a rise in the average price advertisers paid for those introductions. The company has also focused on expanding internationally and developing new services for advertisers.

"Our second-quarter results provide clear evidence that we continue to drive the core business while rapidly transforming Overture from a one-product company to a multi-product enterprise operating successfully on a global scale," Overture Chief Ted Meisel said in a statement.

The earnings announcement comes nearly a week after Yahoo said that it will buy the company for about $1.63 billion. With the acquisition, Yahoo will shift from being one of Overture’s biggest portal and search distribution partners to becoming a major player in search-related advertising. Yahoo has reported that Overture provides roughly 19 percent of its revenue.

Overture said its advertisers' links were clicked on 646 million times in the second quarter, compared to 515 million in the comparable period a year ago. In addition, advertisers paid the company an average of 40 cents for each paid introduction during that time, up from 30 cents a year ago and 37 cents in the first quarter of 2003.

The company also said it added 7,000 advertisers in the second quarter, for a total of 95,000. That's up 42 percent from the same period last year and up 8 percent from the first quarter.

Overture has $113 million in unrestricted cash and liquid investments, including cash payments made to complete acquisitions of the Web search unit of Fast Search & Transfer and AltaVista.

Source: Business Week

        

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