Ask Jeeves Inc. reported a 70% increase in net income and a 278% jump in revenue for third quarter 2004, attributing those results to the acquisition of another search engine company and to strong growth in the paid-search market.
Quarterly profits at the Emeryville, Calif.-based search engine provider hit $10.7 million in the third quarter, compared to $3.8 million for the same quarter a year ago. Revenue grew to $75.7 million in the quarter, compared to $27.2 million in the third quarter of 2003.
Ask Jeeves CEO Steve Berkowitz said in a conference call that the enhanced results came from the company’s efforts to personalize its search function with the My Jeeves feature. Launched in September, My Jeeves allows users to save, organize, annotate and search past Web searches. Berkowitz also attributed the company’s revenue growth to heightened localization and improved mapping through a partnership with CitySearch, announced last June.
But in the same call, Ask Jeeves executives expressed disappointment with the quarterly results at the iWon and MyWay portals that the company acquired through its purchase of Interactive Search Holdings (ISH) in May. Berkowitz said the company would invest in the portals in the fourth quarter to enhance their content and to increase the targeting of their ads.
Other factors dampening Ask Jeeves’ financial picture for the third quarter included the company’s limited exposure to the high-growth international search market and a seasonal downturn in usage, Berkowitz said. Query volume was up 41% from third quarter 2003 but slipped 14% from second quarter 2004, he said, due to Ask Jeeves’ heavy usage by students.
Berkowitz also said the company’s fourth-quarter results will benefit from its new advertising products and sales division, AJinteractive, launched last week to consolidate the sales forces of Ask Jeeves and ISH.
“When we look at AJinteractive, what we see is an opportunity to diversify our revenue stream across a broader base of advertising types, with different ways to monetize users across the Web,” Berkowitz said in the conference call.
But while Ask Jeeves’ financial results, announced after market close Wednesday, were generally in line with analysts’ expectations, they were not as impressive as those recently announced by two of the company’s chief search rivals, Yahoo and Google. As a result, Ask Jeeves shares declined 18% in after-hours trading Wednesday night following the announcement.
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