From Raging Bull:
Here's Dain Rauchers review of 2Q 2000
June-Quarter Results: Net Perceptions, Inc. reported a strong June quarter. Revenues grew 30% sequentially to $12.4 million, topping our estimate of $11.5 million; EPS, excluding amortization, of ($0.15) were $0.02 better than expected. Strong indirect channel sales drove revenue
upside, and higher interest income favorably impacted EPS. The balance sheet was solid; deferred revenues grew 33% sequentially (vs. 24% last quarter) to $5.5 million, DSO dropped to 85 days (down 8 days), and cash and equivalents totaled $82.2 million.
Details: Repeat customers generated 53% of total revenue (vs. 37% last quarter) as average selling price (excluding OEM sales) increased to $340,000, up from $300,000 last quarter. Dot-com customers accounted for 24% of revenues, consistent with last quarter. The company continues
to gain traction with OEMs and other partners, with indirect channels accounting for 38% of this quarter’s revenues, vs. 28% and 12% over the previous two quarters respectively. The company added seven quota-carrying sales reps, bringing the total to 39, and remains on track to end the year with 60. Overall, 34 new people were added, bringing headcount to 369. International revenues were 16% of total sales, vs. 36% last quarter, mainly due to a slower-than-expected ramp-up of joint ventures in Japan. From a product perspective, e-commerce revenues totaled 77%, knowledge management 1% (vs. 15% last quarter, which contained a few very large deals), and OEM licenses 22%.
Customer Wins: Net Perceptions added 22 new license customers, bringing the total to 210; 80 are currently live, vs. 68 last quarter. Prominent wins included Best Buy.com, Palm Inc., Warner Music Group, Samsung Corp., William-Sonoma, and Cabelas.com. The company also signed six customers for Personalization Channel, its newly released ASP offering. ASP revenues represented only approximately 2% of this quarter’s business, but a higher percentage of bookings.
Strengthening Indirect Channels: Benefiting from recent indirect expansion efforts, the company continued to strengthen its alliances with OEMs, resellers, and system integrators. Notable new partners included i2 Technologies, Hewlett-Packard, Xchange, and Documentum. Three
partners (i2, Xchange, and Vignette) accounted for the bulk of indirect sales from among 31 total resellers. Going forward, we expect the company to continue this effort, especially as it broadens its focus to non-retail markets.
Catalysts: We see two near-term product catalysts for Net Perceptions. First, we believe the recent introduction and quick customer wins of the ASP-based Intelligence Channel offering bode well for revenue growth and visibility during the next several quarters. Targeted at small- and
medium-sized businesses without analytical infrastructure, Intelligence Channel is expected to begin generating recurring revenues in earnest in the September quarter. Second, the upcoming product Personalization Manager, is on track for a December-quarter release. We expect this
product, designed for multi-channel retail operations and targeted at senior product managers, to provide incremental revenues beginning in the March quarter.
Stock Opinion:
Our revised revenue projections for 2000 and 2001 are $51.4 million and $85.1 million, vs. previous estimates of $48.9 million and $78.2 million, respectively. Our revised EPS projections for 2000 and 2001 are ($0.52) and $0.10, vs. previous projections of ($0.56) and $0.07, respectively.
We maintain our Buy-Speculative rating on NETP shares. We are adjusting our 12-month price target slightly, to $65 from $75. Our target is based on a 20x multiple of estimated 2001 revenues, a valuation that is in line with comparable Internet software companies. |
