FreeMarkets Reports 2Q Loss, But Revenue Is Rising - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


FreeMarkets Reports 2Q Loss, But Revenue Is Rising

FreeMarkets' second-quarter earnings report shows that it's on track to achieve profitability next year.

FreeMarkets Inc. is bucking the trend among many business-to-business companies, reporting earnings that keep it on track to achieve profitability next year despite the slowing economy.

The Pittsburgh company, which sells software and services that let manufacturers conduct online auctions with suppliers, Monday reported revenue of $37.6 million for the second quarter ended June 30, a 94% increase over the same period last year. On a quarter-to-quarter basis, revenue jumped 14%.

However, the revenue increases weren't enough to take the company into the black. Excluding noncash stock-based expense, noncash goodwill charges, restructuring charges, and a charge for costs related to the failed merger with Adexa, FreeMarkets lost $6.6 million for the quarter, or 17 cents per diluted share. The company reported a loss of 24 cents per diluted share in the first quarter.

Despite the loss, Joan Hooper, executive VP and chief financial officer, told financial analysts Monday that FreeMarkets is on target to break even in the first quarter of next year and expects to post a profit of 15 cents to 20 cents per share, excluding certain items, for 2002.

FreeMarkets executives attributed the company's growth, despite the economic conditions that have stymied competitors Commerce One, E.piphany, and i2 Technologies, to the high return on investment achieved through its software. The company says its applications reduced costs for customers an average of 18%. Besides auction capabilities, FreeMarkets software also provides spending analyses and helps companies choose suppliers and decide which products are best for auction.

In February, FreeMarkets introduced version 2.0 of QuickSource, its online auction software for the small and midsize market. Version 3.0, scheduled for general availability later in the year, contains expanded bidding formats to accommodate more complex transactions and support of negotiations with suppliers that don't use auctions. Executives declined to discuss pricing.

Despite the good news, FreeMarkets has not been immune to the economic downturn. In June, the company laid off about 8% of its 1,059 workforce worldwide, but it expects the remaining head count to remain unchanged the rest of the year. Also, analysts have questioned whether the company has been adding new customers fast enough, prompting executives Monday to point out that the number of customers grew from 111 to 123 in the third quarter. "As we grow and scale this business, we look for both Asia and Europe to grow dramatically both in revenue and customer count," FreeMarket chief executive Glen Meakem told analysts. International business currently accounts for 20% to 25% of the company's total revenue.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of IT & Cybersecurity Operations 2020
The State of IT & Cybersecurity Operations 2020
Download this report from InformationWeek, in partnership with Dark Reading, to learn more about how today's IT operations teams work with cybersecurity operations, what technologies they are using, and how they communicate and share responsibility--or create risk by failing to do so. Get it now!
Gartner Forecast Sees 7.3% Shrinkage in IT Spending for 2020
Joao-Pierre S. Ruth, Senior Writer,  7/15/2020
10 Ways AI Is Transforming Enterprise Software
Cynthia Harvey, Freelance Journalist, InformationWeek,  7/13/2020
IT Career Paths You May Not Have Considered
Lisa Morgan, Freelance Writer,  6/30/2020
Register for InformationWeek Newsletters
Current Issue
Key to Cloud Success: The Right Management
This IT Trend highlights some of the steps IT teams can take to keep their cloud environments running in a safe, efficient manner.
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll