Staffing-software developer Taleo Corporation
In third-quarter earnings released Monday, revenues increased from $19.9 million to $24.9 million. In all, there were 110 new customers, which include biggies like Omni Industries and Phelps Dodge
Taleo is also showing progress on the bottom line. In the quarter, the net loss was $757,000, compared to a $2.5 million loss in the year-ago period.
Founded in 1999, Taleo is a top provider of so-called talent management software, helping companies with the recruiting, assessment and management of their workforces. The software's benefits include lower costs, greater employee satisfaction, and higher-quality recruits.
Taleo delivers its software on demand, a hallmark of other successful next-generation software companies such as Salesforce.com
Taleo has a strong focus on sales, with a telesales department that's been successful in building up the company's small- to medium-sized business segment. In addition, the company is effectively leveraging partnerships with major companies such as Accenture
The company has also been aggressive in launching new products such as its recent Talent Intelligence offering. Thus, as the customer base grows, it can realize cross-sale opportunities.
However, as is common for upstart companies, Taleo has had some internal problems, including a breakdown with its collections from customers. New CFO Katy Murray appears to be taking the necessary actions to fix the problem.
On the conference call, management was upbeat about 2007, saying that 20% revenue growth looks like a good bet. Given that run rate, the company's valuation is about 2.2 times revenues.
In fact, that does look cheap relative to other on-demand players, such as Salesforce.com, which trades at a forward P/E multiple of 7 (using consensus estimates for the next year). In other words, so long as Taleo continues its growth path -- and fixes its internal problems -- there seems to be more room for expansion in the stock price.
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