DoubleClick's stock fell over 7% on Friday after the company announced Q4 results that beat consensus estimates, but provided guidance below consensus. Here's what Amtech Research analyst Mark Mahaney wrote to clients:
DCLK chart below.
DCLK posted a Beat & Lower quarter -- $83.5MM revenue was $2.4MM ahead of the Street, and $0.08 EPS was $0.02 better, although the revenue upside appears to have come from the Performics acquisition. March mid-point guidance of $72.5MM and $0.01 EPS was below consensus. The net/net? There continues to be very limited to no growth in DCLK's key TechSolutions segment.
Fundamental trends were weak. Organic Y/Y revenue growth (excluding Performics) accelerated marginally, as did organic TechSolutions revenue growth. But mid-point March quarter guidance implies negative organic growth -- not deceleration, but decline. And EBITDA margins declined 650 bps Y/Y. On the positive side, gross margin was markedly stronger in Q4.
We reiterate our Hold rating. At the margin, we are more negative on DCLK shares. Yes, DCLK beat estimates and may be set up to beat conservative estimates again. But there is NEGATIVE GROWTH expected in March, and guidance is for a gross margin decline. The stock was down 3% in the aftermarket, and while we favor more downside from here, we would not be sellers of the stock because of the ongoing risk that someone may come along and pay up for one or more of DCLK's divisions.