Marketing number-cruncher WebSideStory (NASDAQ:WSSI) reports its first-quarter 2007 earnings results Monday afternoon. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.

What analysts say:

  • Buy, sell, or waffle? Fifteen analysts remain glued to WebSideStory, which gets twice as many buy ratings as holds.
  • Revenues. Analysts expect to see 47% sales growth to $19.74 million.
  • Earnings. Even so, profits are predicted to be up just 17% to $0.14 per share.

What management says:
In March, WebSideStory published an epilogue (which fellow Fool Tom Taulli reviewed) on its preliminary fourth-quarter and full-year 2006 results. Upping Q4 revenues by $200,000 brought the quarterly tally to $18.4 million and the full-year number to $64.5 million. Upping the cost of stock options issued as part of last year's Visual Sciences merger increased the quarter's loss to $0.09 per share and brought the year's loss to a total of $0.41 per share.

What management does:
If your reaction to the above goes something like "Ugh," then you're not alone. These are pretty ugly numbers, no question. Uglier still are the ones below, which show that WebSideStory's rolling gross, operating, and net margins are all continuing their yearlong slide.

Margins

9/05

12/05

3/06

6/06

9/06

12/06

Gross

83.9%

83.5%

82.1%

80.5%

79.6%

78.4%

Operating

15.4%

17.1%

12.3%

4.3%

2.8%

0.4%

Net

14.2%

24.5%

14.9%

6.1%

(0.7%)

(12.0%)
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Viewed from another perspective, however, things don't look quite so bad. Indeed, when a company is signing up cash-cow clients such as Bank of America (NYSE:BAC), AT&T (NYSE:T), JPMorgan Chase (NYSE:JPM), Amazon.com (NASDAQ:AMZN), and Google (NASDAQ:GOOG), you'd hope there'd be something right going on.

And there is. It's called free cash flow. According to the 10-K filing, which came out after the preliminary earnings news, WebSideStory generated $9.3 million in cash profits last year, which was up 45% from 2005, which in turn was up 94% from 2004. On one hand, the rate of growth is slowing dramatically, while on the other, it remains, well, dramatic. Currently, the business commands a price equal to 24 times its trailing free cash flow. If it can maintain anything like last year's rate of cash profit growth -- or even "just" the 35% that analysts project for it over the course of the next five years, WebSideStory could well become a classic.

What did we expect to read about WebSideStory last quarter, and what did we get? Find out in:

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Fool contributor Rich Smith does not own shares of any company named above.