If you take 24/7 Real Media (NASDAQ:TFSM) at its word, it had a spectacular December quarter. Revenue more than doubled to $27.5 million while its loss per share shrank from $0.26 to a petty $0.06.
No, 24/7 isn't lying, but you have to dig beyond the ambitious bullet points at the top of the press release to get to the nitty-gritty. The top-line growth wasn't all organic. Earlier in the year, the company had acquired Real Media Korea and Decide Interactive, two significant transactions. Over the past year, the diluted shares outstanding have nearly doubled -- from 22.8 million to 44.7 million. So even though the press release touts a 109% revenue growth over the previous year's showing, working the math reveals a rather measly 6% uptick in revenue growth per share.
The larger base of shares also means that the company's bottom line needs tweaking. It seems to be a dramatic improvement: A $0.26-per-share deficit being whittled down to a mere $0.06-per-share loss is notable. But the actual loss went from $6 million to $2.8 million.
In sum, it wasn't a bad quarter for the company. It just wasn't the blowout showing that will thrust this company back into the dot-com limelight. As a search engine marketer, 24/7 is also overshadowed by its interactive agency competition. Over the summer, Time Warner (NYSE:TWX) was impressed enough with Advertising.com to buy it whole before it could go public. One company I particularly like here is aQuantive (NASDAQ:AQNT).
Like 24/7, aQuantive has been taking advantage of a fragmented sector and shopping like crazy for upstarts. The difference is that while 24/7 needs to roll with the "pro forma" appendage to report a profit, aQuantive is refreshingly in the black. After an analyst-thumping December quarter, aQuantive is looking to earn between $0.21 and $0.23 a share this year.
This doesn't mean that 24/7 is a bad bet, though. The stock is selling at half of aQuantive's sales multiple, so if it's able to herd in all of its acquisitions and eventually produce consistent profitability, it will serve its shareholders well.
This is a growing field, since companies need proven players to help them map out appropriate online marketing strategies and track their effectiveness. 24/7 is a global player. In fact, it's now generating less than half of its business domestically. So while the company isn't as impressive as its bullet points may have one believe, it's also no slouch.
Want to kick the tires of the 24/7 competition?
- AOL takes to Advertising.com.
- Meanwhile, the market takes to aQuantive.
Longtime Fool contributor Rick Munarriz wonders what 24/7 does during daylight-saving time. Is it 25/7 or 23/7 then? He does not own shares in any companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
