Features
Jupiter reports on Q4 2005
On Thursday, March 9th, Jupiter Media released its financial results for the quarter and full year ended on December 31, 2005. The following day, CEO Alan Meckler, COO Christopher Cardell and CFO Christopher Baudouin hosted a conference call to review the results with analysts. The financial results reveal a company in transition as one would expect, given the many acquisitions and a key divestiture Jupiter made during 2005. The company reported a 101% increase in total revenue from 2004 to $124.6MM in 2005, marked by a shift in proportional sources of revenue reflecting their concentration on the Online Images business which grew by 257%. Despite this shift, revenue from Jupiter’s other main segments also grew at respectable rates from 2004 to 2005; Online Media by 10% and Research by 16%.
| Jupiter Images | $000s |
| $000s |
| year to year |
|
| FYE2004 | % of total | FYE2005 | % of total | % change |
| Online Images Revenue | $22,572 | 36% | $80,658 | 65% | 257% |
| Online Media Revenue | $30,019 | 48% | $33,065 | 27% | 10% |
| Research Revenue | $9,323 | 15% | $10,824 | 9% | 16% |
| Total | $61,914 | 100% | $124,547 | 100% | 101% |
Given the completely changed composition of the company over 2005, year-over-year comparisons serve little purpose. During the conference call, Mr. Meckler stressed the importance of having more wholly-owned content, both for improving margins and for giving the company flexibility to offer alternative licensing models to image buyers. A look at the sequential quarterly figures for the 2nd, 3rd and 4th quarters of 2005 bears out his remark about improved margins in the Online Images division. Interestingly, the margins have improved for the other two segments as well.
| Jupiter Images | 2Q05 | 3Q05 | 4Q05 |
| Online Images Gross Profit Margin | 65% | 70% | 70% |
| Online Images Operating Profit Margin | 41% | 43% | 47% |
| Online Media Gross Profit Margin | 63% | 62% | 69% |
| Online Media Operating Profit Margin | 41% | 42% | 46% |
| Research Gross Profit Margin | 50% | 50% | 55% |
| Research Operating Profit Margin | 13% | 12% | 21% |
On the conference call, management discussed the negative effect Getty’s removal of PictureArts images from its site had on Jupiter’s sales. That negative impact attributed to minimal growth rate in Online Image revenue for Q3 to Q4’05 of about 3%. Management expects to recover from the loss of revenue from Getty by the end of Q2’06.
Referring to 2006, management projects 15% organic (meaning excluding the effects of acquisitions) growth in image sales over 2005, and projects total revenue of $166 to $170MM for the year. To help make that happen, Jupiter has more than doubled its world-wide sales staff, year-over-year, from 70 to over 150, mostly through acquisitions, but also by hiring away 25 to 30 experienced sales people from the competition. Operating margins should continue to improve as well as the company implements more complete integration of accounting, technology and other activities of its recently acquired businesses.
Jupiter will continue to make judicious acquisitions in 2006, but at a much reduced rate compared to 2005. Management says they now have enough resources to produce their own content and do not need to make acquisitions to improve their image quality or increase their image quantity. The company expects good results from its investment of 49% in Haap Media, the Hungarian photo community and micro-stock business. (Jupiter has a right of first refusal should the 51% owner/founders decide to sell their share.) Haap’s business Stock.XCHNG, has over 600,000 members already, is growing well now that it has the marketing muscle of Jupiter behind it. Management does not see this micro-stock activity as a threat to its other businesses.
Jupiter has the on-line stock photo industry covered from every angle. As Meckler puts it, “The beauty of our model is how broad we are without having a weakness.” The company doesn’t expect to grow bigger than it’s main competitors, but it expects to take more than its fair share of the image market. In the meantime, relative to its competitors, the company has made aggressive moves into other on-line products, including flash, 3d animations, and RF footage. The company says investment in stock footage presently loses money but will pay off in the long term.
Click here to view the original press release.
Posted in: Features, Stock Photo Companies
