Keynote's Marginal Year: Fool by Numbers

On Nov. 2, Keynote Systems (Nasdaq: KEYN  ) released earnings for its fiscal year, which ended Sept. 30.

  • Net income and EPS benefited from a $2.7 million tax credit from the partial recognition of a deferred tax asset. Without it, EPS would have been $0.23 per stub, in line with Wall Street estimates. Revenue, however, came up short of expectations.
  • Margins took a beating all the way down the line. That includes net margin, which dropped to 8.8% after excluding the tax gain provided by the deferred tax asset. Ouch.
  • No doubt, the squeeze on margins also hurt cash flow. Free cash flow declined a breathtaking 34% from 2004 to 2005.

Figures in thousands, except per-share data

Income Statement Highlights(What's this?)

Avg. Est.

FY 2005

FY 2004

% Change

Sales

$53,850

$53,692

$42,403

+26.6%

Net Profit

--

$7,365

$4,647

+58.5%

EPS

$0.23

$0.35

$0.22

+59.1%



Margin Checkup(What's this?)

FY 2005

FY 2004

Change

Gross Margin

72.97%

77.65%

-4.67%

Op. Margin

3.22%

4.75%

-1.54%

Net Margin

13.72%

10.96%

+2.76%



Balance Sheet Highlights(What's this?)

Assets

FY 2005

FY 2004

% Change

Cash + ST Invest.

$133,803

$148,117

-9.7%

Inventory

$ --

$ --

N/A

Accounts Rec.

$6,387

$6,138

+4.1%



Liabilities

FY 2005

FY 2004

% Change

Capital Leases

$67

$115

-41.7%

Accounts Pay.

$538

$1,692

-68.2%



Cash Flow Highlights*(What's this?)

FY 2005

FY 2004

% Change

Cash From Ops

$10,961

$15,163

-27.7%

Capital Expend.

$3,634

$4,015

-9.5%

Free Cash Flow

$7,327

$11,148

-34.3%

*Cash flow data is for the 12 months ending Sept. 30, 2005.

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Related Foolishness:

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 checkFool.comfor more of our in-depth discussion of what the numbers mean.

The Motley Fool has kicked off its ninth annual Foolanthropy campaign! Nominate your favorite charities on ourFoolanthropy discussion board through Nov. 9. For guidelines on what makes a charity Foolish, visitwww.foolanthropy.com.

Fool contributorTim Beyersowns shares of Akamai, aRule Breakersrecommendation. You can find out what else is in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.


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