Using the web to deliver software to customers "on demand," companies such as Salesforce.com
In the fiscal fourth quarter, revenues increased 22% to $101.9 million -- the first time the company crossed the $100 million mark in sales.
Net income increased from $13.6 million, or $0.28 per share, to $16.7 million, or $0.33 per share. These numbers include a charge for stock-option compensation, as well as expenses for WebEx's acquisition of Intranets.com.
Founded in 1995, WebEx has a full-featured offering for web collaboration, letting users hold virtual meetings and sharing software applications, documents, and even video in real time. The firm sells its software service primarily on a subscription basis; there are 2.2 million registered users, and WebEx's retention rate is a fairly high 98.4%.
This large user base is a valuable asset, and management plans to leverage it by launching WebEx Connect. This allows software companies to integrate with the WebEx platform and sell into the large user base. The company's partners include Business Objects
WebEx has competition from players like Citrix Systems
As a sign of its competitiveness, WebEx's margins increased by 1% during the fourth quarter to 84.4% (compared to the prior quarter). This shows that management is able to scale its infrastructure as well as maintain strong pricing.
Going forward, management has increased its full-year guidance for 2007. Revenues are expected to range from $450 million to $465 million, which is up from its prior forecast of $450 million to $465 million. Earnings per share guidance has increased from $1.19-$1.29 to $1.24-$1.34.
However, with the surge in the stock price, it makes sense to me to hold off from jumping in. But in light of WebEx's strong core business -- as well as the potential for WebEx Connect -- this is definitely a company to keep an eye on.
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Fool contributor Tom Taulli does not own shares of any company mentioned in this article.