Fourth quarter 2018 revenues were $70.2 million, compared to $99.9 million during the same quarter last year, a $29.7 million, or a 29.7% decline. This decline was due to lower revenue in our B2B, Consumer, Financial Services, Retail and Transportation verticals, offset by an increase in our Healthcare vertical. 3Q Digital’s revenue, which contributed revenue of $9.7 million in the fourth quarter of 2017, was absent from fourth quarter 2018 results. Excluding this impact, fourth quarter 2018 revenues would have declined $20.0 million or 22.2%. The 3Q Digital business was sold in the first quarter of 2018.
Fourth quarter operating loss was $4.3 million, compared to an operating loss of $33.7 million in the same quarter last year. The loss was due to lower revenue, which was partially offset by the impact of the company’s cost reduction efforts which lowered operating expenses, including a $12.9 million or 25.4% reduction in labor expense and the absence of expenses related to the company’s 3Q Digital business.
Full year 2018 revenues were $284.6 million, compared to $383.9 million for the full year 2017, a $99.3 million, or a 25.9%, decline. This decline was due to lower revenues in all industry verticals, led by Consumer Brands and Retail, along with the absence of 3Q Digital revenue which contributed $6.9 million in 2018 compared to $36.0 million in 2017. Excluding this impact, full year 2018 revenues would have declined $70.1 million or 20.2%. The 3Q Digital business was sold in the first quarter of 2018.
Full year 2018 operating loss was $26.0 million, compared to an operating loss of $40.9 million in 2017. The loss was due to lower revenues of $99.3 million, offset by a larger $114.1 million decrease in operating expenses. The sale of 3Q Digital, which accounted for a $26.8 million reduction in total operating expense, partially contributed to the $114.1 million year-over-year decline.
Full year 2018 Adjusted Operating Income was a loss of $21.7 million, compared to a loss of $3.7 million in 2017. The decrease in Adjusted Operating Income was due to the impact of lower revenue, partially offset by the company’s cost reduction efforts, which reduced expenses.
Bant Breen, Harte Hanks’ Chief Executive Officer stated, “The strategic transition that began in the second half of 2018 to improve operational and financial performance accelerated in January when the new executive leadership team joined the Company. The actions that were implemented by the board of directors in the latter part of 2018 to reduce spending, streamline operations and refocus attention on our core competencies were an important first step in stabilizing the business.”
“In my first 60 days as CEO I visited with the Harte Hanks team in our offices across the country and met with many of our clients. We are known for our innovative strategies, our tried and tested best practices and commitment to real results, our creative problem solving and having the talent that rolls up our sleeves and truly can make things happen.”
“We believe we are at one of the most exciting inflection points for how customer data is utilized from a marketing perspective. With the perfect storm of privacy regulation, technological possibility with machine-learning and cloud-based infrastructure, Harte Hanks is in a powerful position to assist companies’ transition into this opt-in, omni-channel world where direct customer relationships and first-party data matter more than ever. We have taken steps to reposition our core service lines to the market within the context of our data capabilities and we have successfully begun building a pipeline of new opportunities.”
Breen concluded, “During and subsequent to the fourth quarter, actions to reduce expenses and strengthen our balance sheet were initiated and we ended 2018 with a cash position of more than $20 million. We believe there will be meaningful opportunities to further streamline our organization going forward and as we advance efforts to backfill our pipeline with new data driven opportunities, we hope to offset the potential of future revenue declines. Based on our current visibility, I believe that we have the necessary runway to generate positive quarterly EBITDA later this year.”
Source: Harte Hanks Earnings Release