When you specialize in the digital delivery of the spoken word, it helps when you have something worth saying. Audible (NASDAQ:ADBL) did just that yesterday, with the release of a healthy quarterly report and an announcement that it's raising its revenue targets for all of 2005.

With revenues soaring by 91% to hit $12.9 million -- and a $0.03-per-share profit reversing a loss a year earlier -- the company that was once expecting to produce $59 million to $62 million in revenues this year has raised those figures. It is now looking to report between $62 million and $65 million for 2005. The market liked the news -- Audible stock shot up nearly 20% in after-hours trading.

But skepticism comes easily when you ponder whether a $3 million spike in its top-line guidance is worth the added weight of $60 million in market cap. The company expects to generate as much as $2 million in free cash flow this year after posting $2.9 million in free cash flow in the first quarter. In other words, the rest of the year isn't expected to be positive on that front. And sure, profitability is a great thing, though 43% of those earnings came from the interest earned by its idle cash. That greenery is welcome and substantial (about $2.50 per share), but the end result is a company whose diluted shares outstanding have shot up by nearly 40% over the past year.

Then again, maybe I'm just being cynical because I'm jealous.

Some folks struck it rich by buying into Audible early. A little over two years ago, the stock was trading for pennies, well off its dot-com-mania highs set shortly after the company went public in 1999. It was around that time that folks like our own Rex Moore bought into the stock. Those who learned about the company in the October 2003 issue of Motley Fool Hidden Gems, when Audible was placed on Tom Gardner's watch list as a promising $70 million company, may also be sitting pretty today.

The company clearly has established a niche in the competitive digital-audio space. While companies like Apple Computer (NASDAQ:AAPL), Napster (NASDAQ:NAPS), and RealNetworks (NASDAQ:RNWK) fight it out in music downloads, Audible's mastering the distribution of the spoken word. The company's AudibleListener user base -- those paying for monthly subscriptions -- more than doubled over the past year to 55,400 members.

Audible's growing library of audiobook best-sellers, syndicated broadcasting, and original programming like its Robin Williams show have put the company on a nice upward trajectory. Companies like Apple and Amazon.com (NASDAQ:AMZN) may seem like potential threats down the road, but for now, they are more than happy to be distribution partners for Audible.

So, read on, Audible. Keep making me jealous.

Some more words to live by:

  • Bill Mann wonders whether folks who bet the farm on Audible -- successfully -- are prudent, or whether they just completed the mother of all Hail Marys.
  • Learn how Rex turned Audible into his first 7-bagger.
  • See which will be the next hot stock unearthed in our Hidden Gems newsletter service.

Longtime Fool contributor Rick Munarriz did not make a vocal recording of this article. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.