Edgar Online's 'Free To Fee' Program Is Paying Off

Edgar Online finds new revenue stream with "Free to Fee" program.
Edgar Online Inc. has been handing out Electronic Data Gathering, Analysis, and Retrieval-based corporate and financial information on the Internet since 1995. But the business of collecting and organizing all data from the Securities and Exchange Commission is becoming increasingly competitive. So earlier this month the Internet firm launched its "Free to Fee" program, hoping to make money off large-scale corporate subscriptions for accessing its data.

Under the program, Edgar Online's historically free usage is restricted, and users have been forced to pay up if they want the dirt on companies and their competitors before making investments. And pay they did. Edgar Online says it has seen its highest one-month growth spurt ever as the corporate licenses sold to 150 companies, including Charles Schwab, Deloitte & Touche, KPMG, and Wells Fargo, kicked in. The exact revenue jump won't be released until the company's next earnings report.

Before it created the new revenue stream, Edgar Online made its money mostly from corporate contracts for data and custom financial applications, either hosted or in-house. That has accounted for 75% of its business, while the other 25% came from ad revenue and individual subscriptions. The company is looking at the new program as a means to push its business-to-business contracts.

This added revenue stream could save Edgar Online from the bleak picture it painted May 14 with the release of its earnings report for the first quarter, ended March 31. Corporate contract revenue grew 412% to $2.6 million over the same period a year ago, boosting revenue 128% to $4.3 million for the period. But advertising revenue fell 42%, or $311,000 from the previous year. The company's losses were $1.7 million during the quarter, bringing Edgar Online's total accumulated deficit to $25.9 million.

Guidance for the future in the quarterly report was less than optimistic. The statement warned that reaching profitability would be a challenge and hard to maintain if ever attained. Increased competition is the reason, as companies such as Bloomberg and Livedgar are offering the same services. Not to mention the fact that the SEC has said it will modernize its own Web site, which traditionally has offered Edgar filings on a 24-to 72-hour delay, and could offer the data on a real-time basis. Plus, the price for a real-time Edgar database feed from the SEC has dropped to $45,000 per year, so customers who buy their data from Edgar now might be tempted to subscribe directly to the SEC for the information.

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