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US Results Hamper Harris Growth
Harris Interactive has released results for its second quarter and first half of fiscal 2008, ending December 31. Acquisitions drove the overall Q2 revenue figure up 13% on the year, but pro forma organic revenue dropped 2%, mainly due to a 5% decline in North America.
The Company has also announced it will close its offices in Orem, Utah, which includes its last US-based phone center, next month.
Revenue rose from $55.7m a year previously to $62.7m in the quarter, thanks to the acquisitions, which have given the firm new presence in Germany, Canada and Asia. President and CEO Gregory T. Novak says the firm's 'global expansion and harmonization strategy is working'. However, he adds: 'Deteriorating economic conditions in North America continue to cause disruption - especially in our healthcare and financial services groups, reinforcing the fact that in addition to the aforementioned benefits gained from global expansion, a larger footprint will help buffer the effects of industry and regional economic declines'.
Q2 operating income was down 39% vs last year, to $3.5m, with net income down 42% to $2.1m, or $0.04 per diluted share. First half operating income was down 24% to $5.1m; net income for the first half was down 29% on the year to $3.2m, or $0.06 per diluted share.
There are major differences in European and North American results. In Europe, revenue from Internet-based research is now around half of the total, up from one third or less in previous half years: in the US the proportion remains around two thirds. In Europe, bookings were up 45% for the quarter while in the US they fell 17% - overall and including recent acquisitions, bookings are 4% up on Q2 the previous year. Novak comments: 'Strong US bookings growth in our technology and consumer goods groups were offset by bookings declines in healthcare and financial services; two of the sectors that have been most affected by the downturn in the US economy.'
Says CFO Ronald E. Salluzzo: 'Based on our results for the first half, we continue to drive toward the low end of revenue guidance; however the volatile and rapidly changing macro-economic outlook could continue to negatively impact our results. We will continue to invest in the high-growth areas of our business, which we expect will dampen our profitability in the second half. The company also expects to implement a series of changes designed to streamline its structure and increase its operating efficiency. We expect these changes will incur approximately $1.0 to $1.5 million in charges in our third fiscal quarter.'
The Orem closure is expected to be completed early next month, with phone center and mail services work shifting to facilities in Canada and other resources outside North America.
The firm is online at www.harrisinteractive.com.
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