Gross Revenue - OK, so I like to have fun with the Venerable title on the Q3 revenue guestimated hip shot, but one reason I do this (aside from being a smart ass any one else) is to keep the focus on Gross Revenues. Most folks don't realize it, but the best thing Messagemedia has going for it is that it is a potential revenue monster.
The way to get a handle on Gross Revenue, is to compare revenues to cost of revenues. Considering we only have 6 mo data on Messagemedia operating as a pure messaging company, we have a short measuring stick, but here's what Messagemedia says about its cost of revenues.
For the three months ended June 30, 1999, the cost of revenues as a percentage of messaging revenue was 20.9 %.
For the six months ended June 30, 1999, the cost of revenues as a percentage of messaging revenue was 18.5 %.
biz.yahoo.com
These are very good numbers and puts the company up there with, believe it or not, Microsoft.
This is what Microsoft says about its cost of revenues... "Microsoft's cost of revenue as a percent of revenue was 18.2% in 1997, 16.1% in 1998, and 14.3% in 1999."
sec.gov
Give Messagemedia a couple of years to hone its edge and it could improve on its margins as has Microsoft.
Now, for all the yahooeys who worry about Critical Path, here's the skinny on Critical Path, in their own words...
"We expect that our cost of revenues, sales and marketing expenses, general and administrative expenses, operations and customer support expenses, and depreciation and amortization expenses will continue to increase in absolute dollars and may increase as a percent of revenues. If our revenues do not correspondingly increase, our operating results and financial condition could be negatively affected."
sec.gov
Critical Path doesn't quantify its cost of revenue as a percentage of revenues in its reports, but if you do the math it comes out to about 201%. That's 6,337/3,055; six months ended June 30, 1999. Not a lot of comfort when you consider it sales around $43/shr. It's like buying a new car but asking the company to drive it around the world before taking possession. Considering I said Messagemedia has a short ruler, I'll be fair and say that Critical Path is just a short in my book.
DELL has a cost of revenue around 78%. I don't have to tell you how the real word beats up on Dell for its margins...
biz.yahoo.com
Finally, Mail.com has a cost of revenues around 112%; ie, 3,656/3,242; six months ended June 30, 1999. Like Critical Path, Mail.com doesn't quantify cost of revenue as a percentage of revenues. I mean, why come out and say, we pay you to take it away.
In short, Messagemedia has the potential to become an earnings monster -- it's just a matter of time.
BTW, did someone say they had a yesmail.com fly in their soup? In yesmail.com's words...
"In the quarter ended March 31, 1999, we delivered over 1.3 million permission email messages for over 90 clients"
biz.yahoo.com
Not that Messagemedia will tell you, but when I asked them three months ago, they were doing 60 million emails/mo. I'll be polite and promise not to laugh when yesmail.com is mentioned. |
