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Jupiter posts 4q 06 numbers Revenue up, profit down
Jupiter Images announced its results for the end of 2006 today showing a 21% jump in revenue for the full year over 2005 to $137.5MM. The company’s revenue from its images division, which accounted for 78% of total revenue, actually grew by 32%, but this was partially offset by a drop in Online Media revenue. Nearly every expense category, however, grew at a faster rate during the year, leading to lower gross profit and operating profit margins. As expected, during today's conference call with analysts, the matter of the termination of the talks with Getty came up but CEO Alan Meckler would say only that Getty initiated the talks and the decision to discontinue them was mutual.
Management attributed the lower year-over-year gross margins (from 68% to 62%) on a higher percentage of RM sales, which usually carry higher commissions payable than RF or subscription sales, in the revenue mix. The reasons for the across-the-board increases in each operating
expense category relate to severance payouts as well as expenses related to the integration of the company’s numerous acquisitions. As a result, Jupiter saw its operating profit margin decline from 27% in 2005 to 12% in 2006.
Other highlights of the conference call:
Management attributed most of the growth in images revenue to strong performance of its direct selling efforts as well as the success of its high-end subscription service, Jupiter Images Unlimited. JI Unltd. not only showed growth but, at the point of its first renewal cycle, has also achieved a 90% renewal rate.
Revenue from Jupiter’s RF distribution channels was flat in 2006.
Jupiter's online media division has hsown the results of thre eeyars of neglect on the mart of management, but with recent acquisitions and the launch of several new web-sites and compnaion trade conferences this division, management expects this sector to improve dramatically in 2007.
Integration of the various companies Jupiter has acquired is still a work in progress, but management expects to see efficiencies from streamlining its operations in 2007.
The company has made plans to launch a superstore in 2008 where clients will have the opportunity to purchase all the various kinds of digital content Jupiter offers from one web-site.
Jupiter has brought its RF music subscription service online which it believes is the only such subscription service available.
Alan Meckler believes there will be 1 Billion web-sites online within ten years.
Alan Meckler believes that micro-stock is accretive to revenue (i.e., will not cannibalize the other parts of the RF business) and he has seen no evidence of the price pressure Wall Street seems to be so concerned about.
The company says about 85% of its images revenue comes from RF (which includes subscriptions) and the other 15% from RM.
The pace of acquisitions will slow at the company in 2007 while it works to streamline operations.
The company’s guidance calls for a break-even performance for the first quarter of 2007.
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