Jupitermedia Reports Financial Results . . .
Stock Asylum Staff Report
November 2, 2005
Alan Meckler told Wall Street analysts to expect a financially uneven
first half of 2006 from his company. But, the Jupitermedia chairman
and CEO said much progress should occur during the second half of the
year as the firm's stock photography division starts "hitting on
all cylinders."
At the same time, Meckler used the current financial results as evidence that Jupitermedia is on the right track while it transforms itself into a significant provider of visual content.
The company reported third quarter 2005 revenues of $34.4 million. For the same period in 2004, revenues were $15.8 million. Third quarter net income was $60.4 million compared to net income of $5.1 million for the same period last year. However, Jupitermedia said 2005 net income included $29.1 million from the sale of two businesses and a $23.5 million tax benefit.
Online image sales jumped from $6.8 million in the third quarter of 2004 to $24 million during the just reported quarter. Jupitermedia purchased a number of image suppliers during the last year.
"We believe that our growth and operating margins for the quarter show that we are on the right track," Meckler told analysts during his company's quarterly conference call this date. The company's stock was trading at $15.40 per share, down about 90 cents for the day, as Meckler was speaking.
JupiterImages, now the company's biggest division, faces two major challenges during the coming months, Meckler indicated.
First, the Darien, CT, firm must replace revenues lost because of the ending of subdistribution agreements with industry giant Getty Images. Second, JupiterImages must improve its new web site that integrates a number of stock photo brands under a single search engine.
Jupitermedia executives remained confident their company will successfully replace the lost Getty income as it moves forward. Getty Images is terminating a number of agreements with JupiterImages, saying it does not want support a major competitor. The last agreement ends December 15.
Christopher Cardell, Jupitermedia's president and chief operating officer, said Getty has already "de-emphasized" the remaining JupiterImages brands, resulting in decreased sales volume. He said his company expects $1.5 million in fourth quarter income from Getty.
Meckler claimed his company has replaced income lost when Getty terminated a subdistribution agreement with the Comstock brand earlier this year. He noted that, by licensing images directly, JupiterImages retains a higher percentage of collected revenues. Subdistributors typically take 50 to 60 percent of the sale price.
"We will be able to do that for PictureArts and the others," Meckler asserted.
Cardell also noted that JupiterImages is losing income because it no longer subdistributes the Digital Vision and Photodisc brands, both owned by Getty Images.
However, he told analysts that "We've had great success replacing Getty content with our own wholly-owned content."
As for the new JupiterImages web site, Meckler admitted that, "We're behind."
Late last month JupiterImages "soft-launched" a new web site that brings together a number of the company's image brands under a single search engine. ( Click here for earlier story. )
"Our goal is to be equal to, if not better than, anyone else by March," Meckler said.
He said JupiterImages plans to add improvements and new features to the web site almost every week between now and March in an effort to attract more high-end buyers of stock imagery.
But, he added, JupiterImages will not neglect the low end of the market where it has been particularly strong.
"You have to understand that we are different from some of the other companies in the field. We are concerned in a positive way with the lower end of the market -- smaller ad agencies, creative shops, the small office-home office segment," Meckler asserted.
In other matters, the company said: its gross margins have jumped from 63 to 67 percent and could soon rise another five percent due the large amount of wholly-owned imagery sold; it plans to purchase more stock distributors in the coming months; it projects revenues of $163 to $165 million on 2006; and it is happy with Corbis as a royalty-free subdistributor and expects to provide Corbis with more imagery.
JupiterImages can be found at: http://www.jupiterimages.com
Jupitermedia can be found at: http://www.jupitermedia.com
Getty Images is at: http://www.gettyimages.com
