Macromedia Reports Continued Record Profits
By S. Isaac Dealey
Macromedia CEO Stephen Elop and CFO Betsy Nelson reported the company's 8th consecutive quarter of record profits for the first quarter of fiscal year 2006 on Wednesday, July 20th, in spite of having announced a merger with Adobe during the same quarter.
Macromedia segmented its earnings into three categories: Designer/Developer, Consumer and Business. The Designer/Developer market consists of sales of ColdFusion, Dreamweaver, Flash and Flex. The Consumer market comprises the Flash-enabled secondary devices like cell-phones and now TV's. The Business market contains all the new Flash-based products with the exception of Flex -- Captivate, Breeze, Central. Gross sales of $85.4 million in the Designer/Developer market represent 75% of the company's revenues, with recently entered Business ($16.9 million) and Consumer ($12.9 million) markets representing 14% and 11% of overall revenue respectively.
ColdFusion Server products showed significant continued strength after the Blackstone release in February. The Macromedia Studio products continue to provide strong sales in spite of being 22 months past the latest release. The Breeze 5.0 product release in the previous quarter has driven a 56% annual increase in revenues in the Business market. The consumer market showed a record revenue increase of 98% annually, with Flash Lite continuing to gain ground in the handset market and in other devices, such as MP3 players and TV's.
Revenue from existing customers rose to 57% of overall revenues during the quarter.
Sales in international markets rose, with the greatest increases in the European and Asian markets.
Macromedia ended the quarter with an operating margin of 17%.
Overall the company reported a Generally Accepted Accounting Principles (GAAP) net income of $15.2 million or $0.19 per share or a non-GAAP income of $18.1 million or $0.22 per share. The difference between the GAAP income and non-GAAP income is attributed to $4.2 million non-recurring merger-related expenses (primarily legal and investment banking fees) and the application of a 20% effective tax rate for non-GAAP results.
Total stockholder equity stood at $705 million on June 30th.
Barring any unexpected impact from the Adobe merger, in Fiscal Year 2006 (ending March 31st) Macromedia anticipates revenue in excess of $500 million, with a target operating margin of 20%.
The company also announced the filing of an amended S4 with the SEC on July 20th and will be holding a special stockholder meeting on August 24th to adopt the merger with Adobe (coinciding with Adobe's stockholder meeting). The merger is still expected to close in the fall. Additional announcements included presentations at various investor events in August, including the AdamsHarkness conference in Boston (Aug. 2nd) and the Pacific Crest Technology Forum in Denver (Aug. 9th).
Macromedia Financial Earnings Meeting (July 20, 2005)
