After its public offering in August, DemandTec
Q2 revenues clocked in at $14.7 million, up 40% over the past year. The sequential increase was a hefty 11%. However, there was a net loss of $1.1 million, or $0.10 per share, which compares to a net gain of $110,000, or $0.01 per share in the same period a year ago. The loss is the result of having to plow lots of money into research and development in order to remain competitive against rivals like SAP
DemandTec builds software to help retailers optimize pricing, promotions, and discounts. The roster of customers include blue-chip names like Wal-Mart
While there are more than 130 customers, DemandTec gets most of its revenues from 30 customers. For example, nearly 30% of revenues come from only three customers. What's more, the average contract size is over $2.4 million.
In other words, DemandTec's business can be lumpy. And the loss of a customer or two can be a serious problem, especially for a company that posted only $27.9 million in revenues for the past six months. So Foolish investors should be cautious and expect DemandTec's stock to be volatile, which it has already been during its short life as a public company.
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