TradeDoubler’s interim report for the period of January to March 2012 reveals that the company is struggling to come to terms with high costs and the impact of macroeconomics on its financials. Gross profit stood at 146.4 MSEK, down 7% currency adjusted.
Urban Gillström, TradeDoubler’s President and CEO, presented the results and explained the company’s take on the figures. He emphasised that Q1 2012 was always going to be a difficult period in terms of comparison because the company had such a strong quarter for Q1 2011. He also pointed out that TradeDoubler has accrued far higher costs this year as it has strived to improve the business. Measures taken to increase efficiency and improve TradeDoubler’s various systems were responsible for an increase in costs by about 10 MSEK. Accounting and billing were given as examples of two departments under investment, with the purpose being to free the sales teams from administrative tasks like reporting and have them concentrate more on actual sales.
Two-thirds of the decline in gross profit were accounted for by France and TradeDoubler‘s South East region, which includes struggling Italy. France was also earmarked as having a weak economy, with Gillström believing that the country’s elections are partly to blame because political uncertainty brings with it reduced spending. The country’s gross profits were down 16% currency adjusted to 23.5 MSEK. It was noted, however, that the business was starting to improve after an extremely slow start compared to last year.
Other countries receiving marked investment were Brazil, Russia, the UK and Sweden. TradeDoubler announced that it was working hard on its Brazilian and Russian operations and viewed these as two key markets for the future, with Brazil’s burgeoning population and advancement in IT infrastructure making it a particularly ripe prospect. Sweden saw a strengthening of its sales force, while in the UK, TradeDoubler renegotiated a number of contracts.
In a piece of good news, the network’s technology department turned a gross profit of 14.3 MSEK and was up 22% currency adjusted. TradeDoubler believes that the investment it has pumped into this side of the business is working, with Gillström going as far as to call it “the star in this quarter”.
TradeDoubler obviously has plenty to work on if it wants to improve financially, but Gillström didn’t shy away from this fact. His top priority is to return the business to growth, though he also said that he intends to continue to execute the efficiency improvements, which have contributed to financially poor quarters previously. In light of these results, there’s still a question mark over whether the two different strategies can coexist.