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JUPITERMEDIA Q3 RESULTS
November 6, 2004
Jupitermedia Corporation has reported revenues for the third quarter of 2004 of $18.8 million up from $17.8 million in the previous quarter and compared to revenues of $13.3 million for the same period in 2003. Net income for the third quarter was $5.1 million, or $0.15 per diluted share, compared to a net income of $653,000 or $0.02 per diluted share, for the same period last year.
The company is on track to generate between $70.4 and $71.4 million in revenue in 2004.
Given current trends total sales for the Online Images division for the year should be in the range of $22 million. Online Images includes: Comstock Images, Photos.com, ClipArt.com, Thinkstock.com and Thinkstockfootage.com. Revenue for the Images division grew approximately 20% in the last quarter from $5.791 million in Q2 to $6.797 in Q3. About half of this growth resulted from the acquisition of Thinkstock on July 28, 2004.
Jupitermedia's Chairman and CEO Alan M. Meckler said, "What we're seeing is a transformation of Jupitermedia from a Media company that has images to an Image company that has Media."
It should be noted that virtually all the growth of the company in this quarter resulted from the Online Image division while sales in the other division were either very flat, or lower from the previous quarter and a year earlier.
In July, Jupitermedia announced that it acquired over 30,000 high-resolution image assets from a variety of leading content providers in several transactions. These images had been produced for Photos.com on a royalty basis and Jupiter bought out the copyright. Owning these images did not in any way increase gross revenue, but it did help to increase Jupiter's gross margin on online image sales to 82% of gross revenue up from 80% in the second quarter. Their Operating Margin for online images was 67% compared with 54% for the previous quarter.
"Our financial results this quarter provided both record quarterly revenues and net income," stated Meckler. "Significant highlights for the third quarter included continued growth of our JupiterImages division both organically and with the acquisition of the assets of the Thinkstock Images and Thinkstock Footage businesses on July 28, 2004, as well as growth in our Events business lead by a very successful Search Engine Strategies Summer trade show," added Meckler.
Sales Trends Within Image Division
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Q3 2003
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Q4 2003
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Q1 2004
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Q2 2004
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Q3 2004
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Art Today
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$1.8
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$2.2
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$2.5
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$2.8
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$2.9
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Comstock
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$3
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$3.4
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Thinkstock
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$0.5
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It should be noted that they only owned Thinkstock for about two months of the quarter so the revenue it contributed is not an accurate comparison of its size relative to the other brands. Meckler also said that while Art Today generated a little under $1 million a month on average, today it is over $1 million a month and probably closer to a rate that would generate $15 million a year on an annual basis.
In the first quarter of 2005 Jupiter expects to have an overall digital asset management system that will allow them to offer all the wholly owned RF images from all the brands on one site. It will be the largest collection of wholly owned images in the world.
Currently they wholly own over 177,000 digitized still photo images. Not all of them are online at this time, but they are working rapidly towaard that goal. They also own several million clipart images and are building animation, flash and stock footage collections. With prospective acquisitions there is a good chance they will finish the year owning several hundred thousand additional photos. They intend to continue to aggressively purchase images in 2005.
Comstock Developments
Last week Jupitermedia made the lowest resolution (1.7MB) of the 20,000 image Comstock collection available on a subscription basis (See Story 674 ). Meckler said that Comstock's subscription model should not in any way hinder its basic business, rather it is a whole new line of business requiring no new investment other than building a web site.
While some in the stock photo industry are concerned that the availability of these images through subscriptions at a much lower price than traditional RF, will eventually result in a decline of traditional RF sales and revenue, most RF producers seem to believe that customers who buy subscriptions are a totally separate group of image buyers from those who have been purchasing single RF and RM images. They also believe this segment of the market is significantly under served. Time will tell if this is correct.
In the Online Images business Jupiter reduced their advertising and selling expenses by about half in the quarter as a result of a significant reduction in the marketing of Comstock images by print catalog. Now they rely more on the synergies of Internet marketing and while there may be future quarters where they do large print promotions such promotions will never be as large as they were previously.
It is expected that Jupitermedia will announce within a few weeks new product lines within their brands that will offer an "organic and revolutionary" way of selling Rights Mananged images.
New Online Media Offerings
In September, Jupitermedia launched TheCreativeForum.com ( www.thecreativeforum.com ), a Web-based community for the creative professional that will allow graphic designers, art directors, commercial photographers and other commercial artists to exchange creative ideas via posting of images and work samples for discussion and critique. Creative professionals need the opportunity to share creative thoughts, to get input on projects and ideas and to discuss their work. TheCreativeForum.com is an online environment established to support the creative needs of commercial artists and to give them the chance to help each other.