News
Jupiter reports record sales for 1Q06
Margins down. Meckler sees growth in new markets.
Jupiter Images reported a year over year gross revenue increase of 72% from 1Q05 to 1Q06, posting record revenue of $33.9MM in the most recent quarter. Operating margins, however, declined. Management attributes the lower operating margins to seasonal weakness in the Online Media division, increased salary expense for new hires in both the Sales and IT areas and, to a lesser degree, an unfavorable change in the mix of wholly-owned vs. commission-generating images sold. Management says most of the sales personnel come to the company from the competition. It now has a staff over 150 employees world-wide as opposed to about 70 a year ago. The company also states that it will fully recover from the loss of revenue caused by Getty discontinuing the marketing of all Jupiter-owned collections by the end of the second quarter. (The PictureArts RF collection, BrandX, came down completely from Getty's site as of January 2006)
When reporting results for the 4th quarter of 2005, management urged analysts to consider sequential quarterly results rather than year over year quarterly results on the reasoning that the company's many acquisitions over the last year diminish the value of year over year comparisons. In fairness, the same rationale should apply to this most recent period. Looking at sequential figures, the overall revenue growth appears less remarkable. The following table showing various sequential quarterly figures puts the 1Q06 results in perspective:
Click to view Jupiter Images Sequential Quarterly Results chart.
While these figures appear less impressive than the year over year quarterly jump of 72%, we note that the 7% increase in Online Image Revenue for 4Q05 to 1Q06, if sustained, would work out to a still impressive 28% increase over the full year.
To this writer, the most interesting part of the conference call Jupiter management held with analysts to discuss these results, were the comments of Jupiter CEO Alan Meckler about where he thinks the industry is headed. He anticipates low single digit growth in the high-end of the stock photo licensing business over the next ten years, but significant double digit growth in the subscription and micro-payment business. The market for this lower-priced imagery will come from web-designers who were not stock photo customers before but will become the new digital asset buyers as they create millions of new web-sites over the coming years. Such buyers will eventually dominate the industry, Meckler says, and will increase the size of the market "many times over" its currently estimated size of $2 or $2.5 billion. He acknowledges this market of the (near) future represents "uncharted territory" and therefore can't be measured against previous trends. On the supply side, he also states that the implications of the ease and affordability of digital photography getting more and more images on the market is bound to have an adverse effect on the high end image licensing business. He adds that Jupiter is better positioned than its competitors to take advantage of such trends.
These comments and this approach to the industry is nothing new from Mr. Meckler. He now claims, however, that the growth trends Jupiter now sees in its subscription businesses support his convictions about the direction of the industry. The implications are truly enormous for anyone in this business; small agency owners and photographers, especially.
Click here to view the Q106 Press release from Jupiter.
Posted in: News, Stock Photo Companies
