CoolSavings Misses Street Estimates

Chicago-based online loyalty marketer CoolSavings released its third quarter results Wednesday, narrowly missing Wall Street’s earnings estimates.

“During the third quarter, we experienced significant momentum in each of our vertical categories, even during a slow retail selling period that is typically the most challenging for our company and our industry,” said chief executive Steven Golden.

Nevertheless, the company posted a loss of $8.5 million, or about $0.21 per share. Street consensus expected a loss of $0.20.

That loss comes as the company posted record revenues of $11.3 million, versus operating costs of $18.9 million.

On the positive side, the loss is an improvement over last quarter, when the company posted a loss of $25.6 million, or $0.73 per share.

CoolSavings’ third quarter revenue was up 26 percent from last quarter, and represented increased business from offline and click-and-mortar clients, including Sears, JCPenny and BestBuy.com. The firm said 57 percent of its total revenues come from brick- or click-and-mortar stores, up from 44 percent from last quarter.

The company’s revenue also includes a royalty payment of $650,000 as part of a patent license agreement with e-centives. The companies has been involved in patent infringement lawsuits on couponing technology. If CoolSavings wins another patent suit against SuperMarkets Online parent Catalina Marketing, — thereby attesting to its patent’s legal validity — e-centives will pay the company an additional $700,000.

“CoolSavings results for the third quarter … are superb by every measure. When looking at any metric, our business has proven successful,” Golden said. “This is only the beginning in what we see as significant ongoing growth potential.

The company said it expects to hit profitability in the second half of 2001. That’s good news because the company last reported that it had about $25 million in cash remaining. At a current burn rate of $8.5 million per quarter, that gives the firm about three quarters to stay afloat.

At press time, shares of CSAV were down 4.17 percent on the day, to $1.44 — 80 percent off its 52-week high of $7.13.