Recently, Forbes magazine named WebExCommunications (NASDAQ:WEBX) No. 3 among the 25 fastest-growing technology companies. Well, its first-quarter results show the company is still growing quite nicely.
In the quarter, revenues were $88.5 million, which was up from $70.9 million in the same period a year ago (the analyst estimate was for $86.3 million). Net income was $9.1 million, or $0.19 per share, compared with $12.9 million, or $0.27 per share, a year ago. As with many fast-growing tech companies, the expense for stock options hurt the bottom line: Net income came in at $15.1 million ($0.31 per share), net of the options expense and the accompanying tax impact. In all, the company has $231.4 million in the bank.
WebEx expects the growth to continue, as reflected in its guidance. Revenues are expected to range from $91 million to $94 million in the second quarter, with earnings of $0.20 to $0.22.
The company provides collaboration software on demand. As with Salesforce.com (NYSE:CRM), there is no need to install software on a customer's premises. Instead, a customer logs onto the Internet to consume the software (often called "software as a service").
WebEx used to focus on allowing customers to conduct meetings via the Web. However, over the last few years, the company has greatly expanded its offerings into areas such as training, customer support, and sales presentations -- offering features like telephony and video as add-ons to its software packages.
Moreover, the acquisition of Intranets.com now allows WebEx to provide so-called asynchronous collaboration. Basically, this means users can share folders, calendars, and contact directories, and manage projects.
WebEx sells its software as a monthly subscription. So long as the company can maintain customer loyalty, such revenues build a solid foundation for growth. So you don't have the typical revenue volatility of traditional software companies.
It's no secret that Microsoft (NASDAQ:MSFT) wants to dethrone WebEx. Collaboration is certainly an extension of Microsoft's MS Office franchise. Through a variety of acquisitions -- such as Groove Networks and Placeware -- Microsoft has built Office Live Meeting.
No doubt, WebEx needs to take this threat very seriously, despite Microsoft's relative lack of success in new markets or ventures recently. It would appear the company has done its part to acknowledge Microsoft's threat, because WebEx has been aggressively enhancing its products and capturing new customers in the process. For example, WebEx recently launched an instant messaging product for the corporate market. The company formed an alliance with AOL to sell the product to small and mid-size companies.
And as I look at this, I'm compelled to agree that Microsoft was and is right that collaboration is a growing market. Unfortunately, it looks like it bought the wrong companies.
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Fool contributor Tom Taulli does not own shares mentioned in this article.
