Despite mounting losses, E-learning vendor DigitalThink Inc. is on track to reach profitability in 11 months, insists CEO and chairman Pete Goettner. That may be a lofty expectation after the company posted a loss for its fiscal year that was more than 150% greater than last year. But analysts say they're not concerned and are focusing instead on revenue that grew nearly 300% for the year.
For the year ended March 31, 2001, DigitalThink reported a loss of $52.2 million, or $1.51 a share, on revenue of $38.7 million, compared with a loss of $20.2 million, or 79 cents, on revenue of $10.8 million for the previous year. For its fourth quarter, the company posted a loss of $9.9 million, or 28 cents, on revenue of $12.8 million, compared with a loss of $7.7 million, or 24 cents, on revenue of $4.3 million a year earlier. Revenue was up 19% from the $10.8 million it brought in during the third quarter ended Dec. 31, when losses totaled $11.1 million, or 32 cents.
Thomas Weisel Partners analyst Fred McCrea called DigitalThink's results "encouraging." McCrea says strong leadership from newly appointed President Jon Madonna and a growing mix of new and old customers resulted in improved gross margins.
Goettner attributes the revenue growth to the addition of 22 new customers, a healthy renewal rate, and follow-on sales to existing customers. He says the news is especially encouraging given reports that technology companies, which represent 50% to 60% of DigitalThink's customers, are cutting budgets in the toughening economy. "Cisco, Sun--they're all coming back, driven by their customer satisfaction and the quality of our product," says Goettner.