Jupitermedia has filed its third quarter 2008 Form 10-Q with the U.S. Securities and Exchange Commission, adjusting previously reported quarterly numbers. The adjustment was due to the recording of a non-cash impairment charge to goodwill in the amount of $40 million, in connection with the recently announced agreement to sell Jupitermedia’s images business to Getty Images. Sales figures remain as reported earlier.
In its Nov. 6 announcement, Jupitermedia focused on revenue growth from JupiterimagesUnlimited and Stockxpert. The company stated that JIU grew over 100% during the nine months ending Sept. 30.
Jupitermedia quarterly revenues , 2007–present (millions)
|
| Year |
2007 |
2008 |
| Quarter |
1 |
2 |
3 |
4 |
1 |
2 |
3 |
| Single images |
$14.3 |
$13.9 |
$13.2 |
$12.7 |
$12.6 |
$12.6 |
$10.9 |
| Subscriptions |
$6.8 |
$7.0 |
$7.1 |
$7.5 |
$7.7 |
$7.8 |
$7.7 |
| Distributors, other |
$6.8 |
$6.4 |
$6.5 |
$6.6 |
$5.9 |
$5.7 |
$4.9 |
| Total image revenue |
$27.9 |
$27.4 |
$26.8 |
$26.8 |
$26.1 |
$26.1 |
$23.5 |
| Total revenue |
$34.8 |
$34.7 |
$34.8 |
$36.1 |
$34.6 |
$35.0 |
$31.0 |
| Note: Numbers may not add up exactly due to rounding. |
Jupiterimages reports JIU revenues as part of the subscription category, which generated $21.009 million in the first nine months of 2007 and $23.176 million for the same period of 2008—a 10.3% year-over-year growth. If JIU grew by 100%, either its overall sales remain very low, or sales of Jupiter’s other subscription products have declined significantly. This leads to the conclusion that the people using subscription products are looking for higher quality images than those available in most of Jupiter’s cheaper subscription plans. The fact that buyers are willing to pay a much higher price for JIU also likely means these buyers represent businesses of significant size that are significant users of images.
It is notable that subscription sales declined 2.5% in the third quarter of 2008 compared to the previous quarter. Given the October shocks to the economy, additional declines can be expected in the fourth quarter.
Most of Stockxpert’s sales fall into the single images category, although some are included in subscriptions. Overall sales in this category fell by 17% compared to the same period of 2007 and by 13% compared to the second quarter of 2008. If Stockxpert, the cheapest single-image product among Jupiter’s offering, is growing, the higher priced rights-managed, royalty-free and CD product sales must be dropping at an even faster pace. Anecdotal information from various sellers indicates that rights-managed image sales, while declining, are holding up better than traditional royalty-free sales, which are falling rapidly.
The most disturbing aspect of Jupiterimages’ third-quarter financials is the 25% decline in sales through distributors, most of which are outside the United States.
Jupitermedia had $72.1 million in debt and $4.4 million in cash as of September 30. The company paid down $4.2 million of its debt in second quarter and $650,000 in the third quarter of 2008. Cost of revenue increased from 40% to 43% of sales.
At midday on Wednesday, Jupitermedia stock was trading at $0.26. By close of business, it fell to under $0.22, and the market capitalization was $7.75 million. The stock lost over 90% of its value since the beginning of the year.