Stockholm-based internet marketing company, TradeDoubler, encountered a tough end to 2011, according to its year-end report. Gross profit fell by 1% to SEK 167.2, down from SEK 172.6m in the corresponding period in 2010. This occurred even with net sales rising from SEK 679.4m to 701.5m – an increase of 5% year-on-year. TradeDoubler’s cashflow from operating profits also suffered a setback with a decrease from SEK 76.0m to 67.9m.
No Christmas rush for TradeDoubler
These results are strange given that the period they relate to is traditionally the most profitable for most businesses. We asked TradeDoubler for comment on these figures, but they hadn’t responded by the time of publication. A potential reason for the drop could be the company’s recent transactions – it has just transferred its search assets to NetBooster (a strategic partnership it announced in November). These results could be the first financial repercussions of the move.
It’s not all disappointment for the company, however: operating profit climbed from SEK 33.8m to 38.7m. 2012 will no doubt see TradeDoubler build upon this figure now that its search assets have successfully transitioned to NetBooster.
TradeDoubler responded to our request for comment by giving the following reasons for the moderate rise in gross profits:
- Stronger growth in Northern Europe, where GP margins are lower, than in Southern. UK is one market that has developed well, but in such a mature market margins are lower than in Spain and Italy for example.
- Strong growth for international clients where margins are lower as well, since these do greater volumes
- Category mix effects