Content Management Stays In Growth Mode

Amid rampant consolidation in their market, content-management vendors are firmly in growth mode, even if profits aren't rolling in. Two of the market's notable players, Documentum Inc. and Stellent Inc., reported Tuesday third-quarter earnings that showed improvement on both the software license and service fronts.

Documentum, fresh off the news that it's being acquired by storage vendor EMC Corp., saw revenue climb 31% over the same quarter last year and 8% from the previous quarter. Profits were hampered by amortization charges of more than $3 million related to recent acquisitions, as well as seasonal fluctuations that make the third quarter a traditionally slow one. But the fourth quarter is setting up well, CEO Dave DeWalt told analysts during a conference call. "We do see a very strong pipeline going forward."

DeWalt said he sees a lot of potential integration points between Documentum's products and EMC's growing line of storage software. (EMC's $1.3 billion acquisition of Legato Systems Inc. closed Tuesday.) For the quarter ended Sept. 30, Documentum reported net income of $881,000 on revenue of $73.5 million, compared with a profit of $2.0 million on revenue of $56.3 million a year earlier. License and service revenue rose similarly, with licensing up 24.6% to $36.0 million, while service revenue rose 36.6%, to $37.5 million.

Meanwhile, Stellent saw its quarterly losses shrink substantially from a year ago, while service revenue accounted for most of the company's 19% year-over-year revenue growth. For the third quarter ended Sept. 30, Stellent reported a loss of $2.5 million on revenue of $18.5 million, compared with a loss of $8.9 million on revenue of $15.6 million last year. Service revenue was up 39.4%, to $8.3 million, while software licenses rose a modest 6.4%, to $10.2 million.