Notes
"Insightful Corporation (IFUL) and its subsidiaries (collectively, the "Company") provide enterprises with data and text analysis products and services designed to drive better decisions faster by revealing patterns, trends and relationships. The Company is a developer and supplier of software and services for the statistical data mining, business analytics, knowledge management, and information retrieval industry segments, enabling customers to gain intelligence from numerical data and text. The Company's solutions include its S-PLUS product family for data analysis and InFact product for text analysis, as well as customized software and consulting services and training for the design, development and deployment of customized analytics solutions. The Company's customers include primarily companies in financial services, life sciences, telecommunications and manufacturing, as well as government and research institutions. Headquartered in Seattle, Washington, the Company also has offices in New York, North Carolina, France, Switzerland, and the United Kingdom, with distributors around the world.http://www.insightful.com/
Annual Report 2006:
Its text analysis product, InFact, is becoming obsolete, and the company expect few sales in the future. InFact provided 4% of revenues in 2006.
"Total operating expenses increased by 20%, or $3.1 million, during 2006 compared to 2005. This increase was primarily driven by increases in sales and marketing and research and development expenses as we executed on our strategy to position the company for future revenue growth.
17JUL07
May 31 Quarterly Report (ended March 31)Revenue increased 12% from the same quarter last year
A large amount of its revenue depends on a contract with a single customer:
"We continue to perform consulting work for a large international financial services customer that accounted for 17% of our total revenues and 48% of professional services revenues for the three months ended March 31, 2007. We expect this customer to continue to account for a substantial proportion of our revenues in 2007."
The report suggests, with no specificity, that type of work is increasing:
"In general, we are seeing larger professional services engagements with multiple customers as a result of successfully implementing our strategy of marketing larger, more complex customer-specific solutions to a broader user base and higher levels within the hierarchy of an organization.
Net profit was negative, but operating cash flow was positive.
This is actually sort of suggesting that a pattern of being profitable might develop in the second half of 2007 (or am I hallucinating):
" We posted net losses for each fiscal quarter from the fourth quarter of 2001 through the third quarter of 2003, during the first and second quarters of 2006, and during the first quarter of 2007. We achieved only slight profits during the third and fourth quarters of 2006. As of March 31, 2007, we had an accumulated deficit of over $27 million. In 2007, we plan to continue making investments in sales, marketing and development in order to expand our market position, create new product and service offerings, and further increase acceptance and sales of our solutions. As a result of these investments and the costs of complying with the internal control provisions of SOX 404, we expect our expenses to be higher in 2007 than in 2006 and we may incur losses in the second quarter of 2007 and possibly beyond.
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Boatload of insider buying lately, near or above the current price. All by two people: a director and the CEO.
Market cap.: 30M
Price/Sales Ratio 1.20
Price/Book Value 2.76 (almost all tangible)
Price/Cash Flow Ratio 81.60
No earnings.
Debt/Equity Ratio 0.00
Current Ratio 1.5
No growth estimates.
The products S-PLUS and Insightful Miner get excellent reviews: "S-Plus is well known to anyone involved in any way with scientific computing, whether they have used it or not. It is one of the high-end data-analysis products built around a purpose-written language, a large subset of which can be accessed from a graphical user interface (GUI), working well in both exploratory and batch modes. Its application in science is widespread, and there is an extensive base of ready-made user-generated programs, routines, and applets, for most purposes. There is also a strong constituency out there who will argue that S-Plus is the best tool around for building scientific data-mining operations."
http://www.scientific-computing.com/scwnovdec03northern.html
Thoughts: On paper, this is a mediocre micro cap at best. The main promise is in the 11% sales growth, and 11% just isn't that much for the risk; you can get 11% sales growth in a bigger, more stable company. You have to believe in the future of the product, and then explain why the great future isn't evident in the track record. The growth of consulting and custom solutions is probably the key to the future. The insider buying is a good sign, as its reputation for quality software.
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