In the third quarter, IHS's revenues increased 19% to $139.9 million. Excluding non-cash items, net income was $29.1 million, up from last year's $21.2 million.
IHS got its start in 1959 as a provider of product catalog databases -- on microfilm -- for aerospace engineers. By the late 1980s, it was the largest commercial producer of microfilm products.
Luckily, IHS moved to the Internet in the mid-1990s. As of now, it has a comprehensive offering of technical information, decision-support tools, and high-end services for the energy, defense, construction, and auto industries. Its offerings are all based on industry-standard systems from the likes of Oracle
IHS's most important assets may be its databases for the energy industry. Oil companies can use them to identify attractive exploration investments. Given the huge costs of exploration, this information is a must.
IHS sports several key competitive advantages. Its databases took decades to accumulate, creating a formidable moat of acquired knowledge for potential competitors. In addition, it has hundreds of information-services experts who continue to add value to those databases. All this data helps make IHS a trusted brand in its industry segments. Better yet, the company's subscription-based business model gives it mostly recurring revenue and generates substantial cash flows -- $29 million in the third quarter alone.
In our fiercely competitive global economy, companies' need to leverage data helps to drive IHS's continuing growth. Management recently upped its full-year 2006 guidance, now forecasting revenue growth of 11.5% to 12.5%, compared to the prior estimate of 10% to 12%. Earnings before interest, taxes, depreciation, and amortization (a measure some analysts use in this industry) are now expected to grow at 28% to 31%, up from the previous estimate of 21% to 25%.
It's hard to believe that IHS is 47 years old. But when it comes to understanding data, experience is critical -- and IHS is definitely making its shareholders happy.
Further timeless Foolishness:
Fool contributor Tom Taulli does not own shares of companies mentioned in this article.
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