Smaller Q3 Loss, Projected Q4 Profit for LookSmart
Online ad network, tech provider and search portal LookSmart reported that an increase in pay-per-click revenue on its network led to a smaller loss in third-quarter 2006 compared to last year.
As a result mostly of lower traffic acquisition costs, the company announced that it expects to see positive adjusted earnings in the fourth quarter of 2006 — “an important first threshold in our return to profitability,” according to LookSmart CFO John Simonelli.
Revenue from the company’s three lines of business grew 33% during Q3 $12.2 million, from $9.2 million in the same quarter a year ago. LookSmart reported a loss of $3.9 million for the quarter, compared to a loss of $4.3 million in Q3 2005.
LookSmart reported 100 million total paid clicks on its ad network during the quarter, a 15% increase from the previous quarter and a 41% year-over-year increase for the period. Average revenue per click amounted to 10 cents, against 11 cents per click in Q3 2005.
LookSmart managed to cut its traffic acquisition costs to 64% during the quarter, a 2% reduction from Q2.
LookSmart CEO Dave Hills said in a conference call after the earnings release that those cost reductions led to improved margins and should continue in Q4.
“Optimization is critical in this business, and we are good at it,” he said. “With our technology, our customers are given the ability to do performance tuning during an ad campaign. We are constantly working to find the right balance between the [return on investment] we provide to the advertiser and our TAC costs.”
Simonelli said the company expects to see fourth-quarter revenue grow 26% to 28% over the quarter just ended.
