Third Quarter Disappoints Harris

Harris Interactive has reported third quarter fiscal 2008 results showing consolidated revenue up 11% to $57.3m, with a very good performance from newly acquired companies in Asia, France, Canada and Germany. However, due to declines in the US and UK, consolidated pro forma organic revenue dropped 4%.

President and CEO Greg Novak said that while the firm is disappointed with the overall figures, the result primarily of revenue shortfalls in its US healthcare business, it was encouraged by the solid organic growth seen in many of the firm's business groups. Organic revenue in the acquired companies was up 26% to $11.7m.

Operating loss was $1.9m, compared with operating income of $1.4m reported for the same period last year. The net loss for the quarter was $2.1m compared with net income of $1.2m for the third quarter of fiscal 2007. 'Lower than anticipated revenue, higher fixed costs, $1.9m in charges related to cost-reduction actions, an increased effective tax rate and higher interest expenses all added up to a loss in the quarter,' explained CFO Ronald Salluzzo. He added that the firm has now taken steps which will save approximately $9m of costs in FY09.

Bookings were up 7% to $61.3m, although while North American bookings increased 17%, European bookings were down 20%. Salluzzo says the firm is now seeing 'very solid' bookings in the UK, which when combined with expected strong performances from France and Germany, should improve this measure for the fiscal fourth quarter.

Year-to-date revenue increased 13% to $175.2m. However, on a year-to-date basis, pro forma organic revenue growth in Asia, Europe and a number of North American business units was not enough to offset the substantial revenue decline in the US healthcare business.

Operating income for the fiscal-year-to-date was $3.1m, down 62% and net income was $1.0m, down 82% when compared with the same period in fiscal 2007.

Novak commented that the firm has now resized the business to match the revenue outlook and installed new leadership in its US healthcare business to position it for future growth and profitability. Despite this, he added that revenue growth in healthcare research is unlikely to return until 2009.

The firm is now projecting revenue of between $237m and $240m, adjusted EBITDA of between $17m and $19m, and fully diluted EPS of between $0.01 and $0.03.

Web site: www.harrisinteractive.com .

Decima in Canada and MarketShare in Asia Pacific were acquired in August last year in deals with a combined value of more than $24 million. Germany's MediaTransfer joined the group in April, and France's Novatris in 2004.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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