Plumtree Sales Take A Tumble

The portal software vendor reported a small first-quarter profit, but revenue was down sharply due to a drop in software licensing.
As the economy slowed following the burst of the dot-com bubble, the portal software market remained one of the few bright spots, with companies placing a premium on using portals to expose content and applications to employees, partners, suppliers, and customers. But now the downturn may be catching up with makers of portal software.

Plumtree Software Inc., the best-known standalone portal vendor, reported lower-than-expected revenue and profit for the first quarter, and its guidance Thursday indicates that it doesn't expect things to turn around quickly. Slowed by customers delaying anticipated midsize purchases, Plumtree posted a narrow profit of $529,000 on revenue of $17.2 million for the quarter ended March 31, compared with a profit of $157,000 on revenue of $23.2 million a year earlier. Much of the revenue drop-off was tied to a decline in software licensing revenue, which fell to $8.5 million from $16.1 million a year ago. Profits were down sharply from the $1.9 million earned during the fourth quarter of 2002.

CEO John Kunze told analysts during a conference call that basically all vertical markets--with the exception of national defense and homeland security--have been similarly affected by the stagnant economy and the events unfolding in the Middle East. But there are reasons for optimism, Kunze added. Customers with small, departmental deployments that had put midsize purchases on hold in the first quarter have been closing deals in the early days of April. And the impending release of a suite of updated products is expected to fuel Plumtree's sales later in the year.

That said, the company's guidance for the second quarter is conservative, with executives predicting revenue of $17.2 million to $18 million, while the profits of the past several quarters are expected to give way to a modest loss of 3 or 4 cents a share. Said Kunze, "Our optimism is tempered by an environment of long and unpredictable sales cycles."