Digitas Sees Strong Q4

NEW YORK Digitas today reported big increases in sales and profits, thanks to existing clients increasing their spending on digital marketing initiatives and new clients.

The Boston-based agency group, which includes Modem Media, said fee revenue for the fourth quarter was $87 million, up 23 percent from the year-ago quarter. Net income was $10.7 million, 11 cents per share, a 40 percent increase from the same period in 2004.

Digitas CEO David Kenny told financial analysts in a conference call that the agency was less dependent on its three largest clients—General Motors, Delta Air Lines and American Express—due to increased business from smaller accounts and new business.

Kenny said Digitas does not expect its GM business to grow in 2006, as a result of cost cutting by the carmaker. GM represented 22 percent of Digitas’ fee revenue in 2005, according to CFO Brian Roberts.

“Until the sales numbers get better, they have to be conservative with their marketing,” Kenny said.

Digitas forecast continued growth in the first quarter, with fee revenue between $92 million and $95 million. It expects net income between 12 and 14 cents per share.