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aQuantive Reports Strong Q2 Results

Revenue and Net Income Show Outstanding Growth; Exceed Guidance

SEATTLE--(BUSINESS WIRE)--Aug. 4, 2004--aQuantive, Inc. (Nasdaq:AQNT), a digital marketing services and technology company, today reported financial results for the second quarter ended June 30, 2004.
Second quarter highlights include:

-- Revenue of $27.8 million, an increase of 83 percent from net revenue(1) of the comparable year-ago period.

-- Net income of $7.5 million, or $0.11 per diluted share, an increase of 216 percent from the comparable year-ago period, exceeding company guidance and marking the company's 12th consecutive quarter of improved bottom line performance.

-- EBITDA(2) of $8.9 million, an increase of 184 percent from the comparable year-ago period

-- Acquisition of SBI.Razorfish, combines the largest independent Web site marketing services agency with Avenue A, the largest independent buyer of Internet media and search. The deal officially closed on July 27th.

"Our exceptional second quarter performance is a reflection of our business being well positioned to take advantage of the growth opportunities in a healthy industry as well as very strong execution on the part of all our business units," said Brian McAndrews, president and CEO of aQuantive. "Our company is performing beyond expectations, and, with the strategic acquisitions we have made recently, I feel very confident about our future prospects."

For the quarter ended June 30, 2004, aQuantive reported revenue of $27.8 million, compared to net revenue of $15.2 million for the quarter ended June 30, 2003. Net income for the 2004 second quarter was $7.5 million, or $0.11 per diluted share, compared to $2.4 million, or $0.03 per diluted share for second quarter 2003. EBITDA was $8.9 million for the second quarter 2004, compared to $3.1 million for the second quarter 2003.

(1) Net Revenue for 2003 is a non-GAAP financial measure as it excludes media costs paid to publishers. Effective January 1, 2004, Avenue A began recording revenue exclusive of media costs as a result of contractual changes with advertisers and publishers. The Company has shown net revenue in 2003 to allow for better comparability with its 2004 results.

(2) EBITDA, (or earnings before interest and other income, income tax, depreciation and amortization) is a non-GAAP financial measure. See supplemental schedule of EDITDA reconciliation to GAAP net income.

The Company is providing additional financial information about its businesses in order to provide greater visibility into the contributions of each business segment and to allow greater comparability to other companies. These segments are as follows:

Digital Marketing Services

aQuantive's digital marketing services segment, consisting of interactive agencies Avenue A and i-FRONTIER, had second quarter revenue of $12.8 million, compared to 2003 second quarter net revenue of $7.0 million. Operating income for the second quarter of 2004 was $4.7 million, compared to $887,000 for the second quarter of 2003. In July, aQuantive closed its acquisition of Razorfish, a leading web site marketing services company. Razorfish has been combined with Avenue A, making Avenue A/Razorfish the industry's largest independent interactive agency.

Digital Marketing Technologies

aQuantive's digital marketing technologies segment, consisting of Atlas DMT, Atlas OnePoint (formerly GO TOAST) and Atlas NetConversions, had revenue of $14.4 million in the second quarter of 2004, compared to revenue of $8.2 million in the second quarter of 2003. Operating income for the second quarter of 2004 was $5.9 million, compared to $3.0 million in the second quarter of 2003. In July, aQuantive acquired U.K.-based TechnologyBrokers, now Atlas Europe, the exclusive European reseller of Atlas DMT.

Digital Performance Media

aQuantive's digital performance media segment consists of DRIVEpm, a performance media company. DRIVEpm had revenues of $665,000, and an operating loss of $374,000 in the second quarter of 2004. In July, aQuantive acquired MediaBrokers, a U.K.-based performance media company.

Financial Guidance

Guidance for the second half of 2004 is impacted by the items listed below. The company noted that guidance for net income is not provided on a basis consistent with past guidance, in that it includes non-cash charges for a higher income tax rate and amortization of intangible assets associated with the Razorfish acquisition that were not reflected in past guidance. The company also noted that EBITDA guidance eliminates the impact of these non-cash charges.

-- Financial contributions from the company's recent acquisitions: Razorfish, Technology Brokers and Media Brokers. These contributions include revenues, operating expenses, and amortization of intangible assets. The asset valuation for Razorfish has not been completed yet, but amortization of intangible assets has been estimated at $1.0-$1.2 million per month in the company's guidance.

-- Increased fully diluted share count to reflect the convertible notes provided as part of the consideration in the Razorfish acquisition. Diluted share count has been assumed to be 73.6 million in third quarter and 75.6 million in fourth quarter.

-- The company may eliminate its deferred tax asset valuation reserve, which would provide a one-time credit to income tax expense and net income, and then a full income tax rate against pre-tax earnings thereafter. For guidance, the company has not provided for an estimate of the one-time credit to income taxes and net income, but it has assumed an income tax rate of 40 percent of pre-tax income. The company noted that these are non-cash items, and it does not expect to begin paying federal income taxes at the full rate until 2005.

The company provided guidance as follows:

Third Quarter Guidance:

-- Revenue of $44-$46 million

-- Net income of $0.03-$0.05 per fully diluted share, assuming an income tax rate of 40%.

-- EBITDA of $0.11-$0.13 per fully diluted share(3)

Fourth Quarter Guidance:

-- Revenue of $54-$58 million

-- Net income of $0.04-$0.06 per fully diluted share, assuming an income tax rate of 40%

-- EBITDA of $0.14-$0.17 per fully diluted share(3)

Full Year 2004:

-- Revenue of $148-$155 million

-- Net income of $0.24-$0.28 per fully diluted share

-- EBITDA of $0.45-$0.50 per fully diluted share(3)

(3 )EBITDA, (or earnings before interest and other income, income tax, depreciation and amortization) is a non-GAAP financial measure. In our estimate of EBITDA for the third quarter of 2004, we have excluded estimates for interest expense of $300,000 to $400,000, depreciation expense of $900,000 to $1.0 million, interest and other income of $140,000 to $160,000, amortization of intangible assets of $2.8 to $3.2 million and income taxes at an effective rate of 40%. In our estimate of EBITDA for the fourth quarter of 2004, we have excluded estimates for interest expense of $400,000 to $500,000, depreciation expense of $1.1 to $1.2 million, interest and other income of $80,000 to $100,000, amortization of intangible assets of $3.8 to $4.6 million and income taxes at an effective rate of 40%.

Second Quarter 2004 Conference Call/Webcast Today at 1:30pm PDT/4:30pm EDT

aQuantive, Inc. will host a conference call /Webcast to discuss second quarter financial results today at 1:30pm PDT/4:30pm EDT. The conference call will be webcast from the Investor Relations section of the Company's website at www.aquantive.com/investor. Interested parties should log on to the webcast approximately 15 minutes prior to download any necessary software. The webcast is not interactive.

About aQuantive, Inc.

aQuantive, Inc. (NASDAQ: AQNT), a digital marketing services and technology company, was founded in 1997 to help marketers acquire, retain and grow customers across all digital media. Through its operating units, full-service interactive agencies Avenue A/Razorfish (www.aa-rf.com) and i-FRONTIER (www.ifrontier.com); Atlas DMT (www.atlasdmt.com), a provider of advertising technology solutions; and DRIVEpm (www.drivepm.com), a performance media company, aQuantive is positioned to bring value to any interaction in the digital marketplace. aQuantive (www.aquantive.com) is headquartered in Seattle. Atlas DMT is a member of the NAI and adheres to the NAI privacy principles that have been applauded by the FTC. These principles are designed to help ensure Internet user privacy. For more information about online data collection associated with ad serving, including online preference marketing and an opportunity to opt out of the Atlas DMT cookie, go to: www.networkadvertising.org.

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "predicts," and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Forward-looking statements also include any other passages that relate to expected future events or trends that can only be evaluated by events or trends that will occur in the future. The forward-looking statements in this release include, without limitation, statements regarding expected financial performance for the second quarter of 2004 and for the full year 2004. The forward-looking statements are based on the opinions and estimates of management at the time the statements were made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include, among others, the risk that the company may not successfully integrate Razorfish, TechnologyBrokers and MediaBrokers, the risk that the company may incur unforeseen expenses relating to such acquisitions, the risk of unforeseen changes in client online advertising budgets, unanticipated loss of clients, the potential failure to attract new clients due to the company's inability to competitively market its services, the risk of fluctuating demand for its advertising services, the potential failure to maintain current, desired client relationships or to achieve effective advertising campaigns for existing clients, potential deterioration or slower-than-expected development of the Internet advertising market, quarterly and seasonal fluctuations in operating results, timing variations on the part of advertisers to implement advertising campaigns, costs and risks related to acquisitions of technologies, businesses or brands, the short term nature of the company's contracts with clients, which generally are cancelable on 90 days' or less notice, and the uncertainties, potential costs, and possible business impacts of unfavorable rulings in previously announced lawsuits involving the company. More information about factors that could cause actual results to differ materially from those predicted in aQuantive's forward-looking statements is set out in its annual report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements, which speak only as to the date of this release. Except as required by law, aQuantive, Inc. undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.

aQuantive, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)


June 30, Dec. 31,
2004 2003
--------- ---------
Assets

Current assets:
Cash, cash equivalents, and short-term
investments $147,360 $123,255
Accounts receivable, net of allowances 63,933 48,480
Other receivables 522 1,674
Prepaid expenses and other current assets 1,725 1,141
--------- ---------
Total current assets 213,540 174,550

Property and equipment, net 9,661 6,802
Other assets 1,574 1,355
Goodwill and other intangible assets, net 21,744 18,052

--------- ---------
Total assets $246,519 $200,759
========= =========

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued expenses $85,165 $58,329
Pre-billed media 9,998 4,545
Deferred rent, current portion 341 285
Deferred revenue 5,198 5,773
--------- ---------
Total current liabilities 100,702 68,932

Deferred rent, less current portion 1,282 1,234
Deferred taxes 198 54

--------- ---------
Total liabilities 102,182 70,220
--------- ---------

Shareholders' equity:
Common stock 612 602
Paid-in capital 223,124 220,637
Accumulated deficit and other comprehensive
income (79,399) (90,700)
--------- ---------
Total shareholders' equity 144,337 130,539

--------- ---------
Total liabilities and shareholders' equity $246,519 $200,759
========= =========

aQuantive, Inc.
Consolidated Statement of Operations
(in thousands, except per share data)
(unaudited)

Three Months Six Months Ended
Ended
June 30, June 30,
----------------- -----------------
2004 2003 2004 2003
-------- -------- -------- --------

Revenue $27,849 $51,961(1) $50,491 $99,494(1)

Costs and expenses:
Cost of revenue 4,497 39,152 8,535 74,171
Client support 7,393 4,946 14,239 10,063
Product
development 1,414 759 2,906 1,687
Sales and
marketing 2,140 1,134 3,984 2,523
General and
administrative 4,521 3,629 8,590 6,940
Amortization of
deferred stock
compensation - 301 - 604
Amortization of
intangible
assets 333 72 846 132
-------- -------- -------- --------
Total costs
and
expenses 20,298 49,993 39,100 96,120
-------- -------- -------- --------
Income from operations 7,551 1,968 11,391 3,374
Interest and other income, net 477 507 1,057 1,044
-------- -------- -------- --------

Income before provision for
income taxes 8,028 2,475 12,448 4,418

Provision for income taxes 520 97 793 164
-------- -------- -------- --------

Net income $7,508 $2,378 $11,655 $4,254
======== ======== ======== ========

Basic net income per share $0.12 $0.04 $0.19 $0.07
======== ======== ======== ========
Diluted net income per share $0.11 $0.03 $0.17 $0.06
======== ======== ======== ========
Shares used in computing basic
net income per share 60,965 59,099 60,741 58,786
======== ======== ======== ========
Shares used in computing diluted
net income per share 69,753 68,104 69,752 66,833
======== ======== ======== ========

(1) Effective January 1, 2004, Avenue A began recording revenue
exclusive of the costs paid to publishers for media as a result of
contractual changes with advertisers and publishers. During the
quarter ended June 30, 2003, net revenue was $15,207, which excludes
media costs of $36,754 and during the six months ended June 30, 2003,
net revenue was $30,095, which excludes media costs of $69,399.

EBITDA

The term "EBITDA" refers to a financial measure that is defined as
earnings before interest, income taxes, depreciation and amortization.
EBITDA is commonly used to analyze companies on the basis of leverage
and liquidity. However, EBITDA is not a measure determined under GAAP
in the United States of America and may not be comparable to similarly
titled measures reported by other companies. EBITDA should not be
construed as a substitute for net income or as a better measure of
liquidity than cash flow from operating activities, which are
determined in accordance with GAAP. We have presented EBITDA to
provide additional information on the company's operations and our
ability to meet future capital expenditures and working capital
requirements. The following schedule reconciles EBITDA to net income
on the company's consolidated income statement, which the company
believes is the most directly comparable GAAP measure. (in thousands,
except per share data)



Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2004 2003 2004 2003
----------- ------- ----------- -------
(unaudited) (unaudited)

Net income $7,508 $2,378 $11,655 $4,254
-
Depreciation and amortization
of property and equipment 803 774 1,546 1,675
Amortization of deferred stock
compensation - 301 - 604
Amortization of intangible
assets 545 92 1,078 169
Less: Interest and other
income, net (477) (507) (1,057) (1,044)
Provision for income taxes 520 97 793 164

----------- ------- ----------- -------
EBITDA $8,899 $3,135 $14,015 $5,822
=========== ======= =========== =======

EBITDA per basic share $0.15 $0.05 $0.23 $0.10
=========== ======= =========== =======
EBITDA per diluted share $0.13 $0.05 $0.20 $0.09
=========== ======= =========== =======

Supplemental Schedule of Segment Information

Beginning in 2004, the company has reclassified revenue and
expenses associated with an analytics and optimization product that
supports DRIVEpm and is marketed to certain publishers from the
Digital Marketing Services segment, where it was developed, to the
Digital Marketing Technologies segment, where it is now integrated
into the Atlas DMT business unit. Results shown reflect that change
for both the three and six months ended June 30, 2004 and 2003.
Beginning in 2004, the Company is now showing all revenues derived
from selling proprietary ad serving technologies through its Digital
Marketing Services as part of the revenue of Atlas DMT. Results from
the three and six months ended June 30, 2003 still include a small
portion of that technology revenue in the results of the Digital
Marketing Services segment.

(in thousands) Digital Digital Digital Unallocated Total
Marketing Marketing Performance Corporate -----
Services Technologies Media Expenses
(1) (2) (3)
--------- ------------ ---------- ---------- ------
(unaudited)
Three Months ended June 30, 2004
--------------------------------------------------
Revenue $12,785 $14,399 $665 $- $27,849
-------- ------- ------ ------ -------
Costs and expenses:
Cost of revenue - 3,605 700 192 4,497
Client support 7,102 - 291 - 7,393
Product development - 1,414 - - 1,414
Sales and marketing 179 1,961 - - 2,140
General and
Administrative 812 1,519 48 2,142 4,521
Amortization of
deferred stock
compensation - - - - -
Amortization of
intangible assets - - - 333 333
-------- ------- ------ ------ -------
Total costs and
expenses 8,093 8,499 1,039 2,667 20,298
-------- ------- ------ ------ -------

Income from
operations $4,692 $5,900 $(374) $(2,667) $7,551
========= ======= ====== ======= ========

Three Months ended June 30, 2003
-------------------------------------------
Revenue $7,016 $8,191 $ - $- $15,207(4)

Costs and expenses:
Cost of revenue - 2,398 - - 2,398
Client support 4,946 - - - 4,946
Product development - 759 - - 759
Sales and marketing 148 986 - - 1,134
General and
Administrative 1,035 1,095 - 1,499 3,629
Amortization of
deferred stock
compensation - - - 301 301
Amortization of
intangible assets - - - 72 72
-------- ------- ------ ------ -------
Total costs and
expenses 6,129 5,238 - 1,872 13,239
-------- ------- ------ ------ -------

Income from operations $887 $2,953 $ - $(1,872) $1,968
========= ======== ======= ======= ========

(in thousands) Digital Digital Digital Unallocated Total
Marketing Marketing Performance Corporate -----
Services Technologies Media Expenses
(1) (2) (3)
--------- ------------ ---------- ---------- ------
(unaudited)
Six Months ended June 30, 2004
--------------------------------------------------


Revenue $22,647 $26,394 $1,450 $- $50,491

Costs and expenses:
Cost of revenue - 6,671 1,672 192 8,535
Client support 13,745 - 494 - 14,239
Product development - 2,906 - - 2,906
Sales and marketing 356 3,628 - - 3,984
General and
Administrative 1,774 3,048 98 3,670 8,590
Amortization of
deferred stock
compensation - - - - -
Amortization of
intangible assets - - - 846 846
-------- ------- ------ ------ -------
Total costs and
expenses 15,875 16,253 2,264 4,708 39,100
-------- ------- ------ ------ -------

Income from
operations $6,772 $10,141 $(814) $(4,708) $11,391
======== ======= ====== ======= =======

Six Months ended June 30, 2003
----------------------------------------------------
Revenue $14,168 $15,927 $ - $- $30,095(4)

Costs and expenses:
Cost of revenue - 4,772 - - 4,772
Client support 10,063 - - - 10,063
Product development 68 1,619 - - 1,687
Sales and marketing 558 1,965 - - 2,523
General and
Administrative 1,759 2,040 - 3,141 6,940
Amortization of
deferred stock
compensation - - - 604 604
Amortization of
intangible assets - - - 132 132
------------------------------------------------------
Total costs and
expenses 12,448 10,396 - 3,877 26,721
-------- ------- ------ ------ -------
Income from
operations $1,720 $5,531 $- $(3,877) $3,374
======== ======= ====== ======= =======


(1) Digital Marketing Services includes our interactive agencies
Avenue A and i-FRONTIER.

(2) Digital Marketing Technologies includes Atlas DMT, GO TOAST,
and NetConversions

(3) Digital Performance Media includes DRIVEpm

(4) Effective January 1, 2004, Avenue A began recording revenue
exclusive of the costs paid to publishers for media as a result of
contractual changes with advertisers and publishers. During the
quarter ended June 30, 2003, net revenue was $15,207 which excludes
media costs of $36,754. During the six month ended June 30, 2003, net
revenue was $30,095, which excludes media costs of $69,399. The
company has shown net revenue in 2003 to allow for better
comparability with our 2004 results.



Contacts


aQuantive, Inc.
Investor Relations
Michael Vernon, 206-816-8599
or
Public Relations
Angela Gamba, 206-816-8245

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