Napster Ups Its Tune: Fool by Numbers

By Motley Fool Contributors February 9, 2007

7 Recommendations

On Feb. 8, Napster (Nasdaq: NAPS) released third-quarter earnings for the period ended Dec. 31.

Revenue increased by 20.6% to $28.4 million, driven by strong subscriber growth and its launch of Napster Japan in October of 2006.
The recent acquisition of AOL's music subscription business is expected to increase the company's subscriber base by more than 50%.
Although Napster still is not turning a profit, margins significantly improved year over year and revenue is expected to exceed $26 million for next quarter.
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(Figures in thousands, except per-share data)

Income Statement Highlights

	Q3 2007	Q3 2006	Change
Sales	$28,372	$23,532	20.6%
Net Profit	($9,510)	($17,007)	N/A
EPS	($0.22)	($0.40)	N/A
Diluted Shares	43,217	42,994	0.5%

Get back to basics with a look at the income statement.

Margin Checkup

	Q3 2007	Q3 2006	Change*
Gross Margin	30.1%	26.8%	3.3
Operating Margin	(33.4%)	(77.6%)	44.3
Net Margin	(33.5%)	(72.3%)	38.8

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q3 2007	Q3 2006	Change
Cash + ST Invest.	$80,905	$111,439	(27.4%)
Accounts Rec.	$2,210	$3,667	(39.7%)
Inventory	N/A	N/A	N/A

Liabilities	Q3 2007	Q3 2006	Change
Accounts Payable	$2,434	$4,777	(49.0%)
Long-Term Debt	N/A	N/A	N/A

Learn the ways of the balance sheet.

Cash Flow Highlights

	YTD 2007	YTD 2006	Change
Cash From Ops.	($25,375)	($39,993)	N/A
Capital Expenditures	$659	$3,392	(80.6%)
Free Cash Flow	($26,034)	($43,385)	N/A

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.