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Irish e-learning company Riverdeep recorded a 226 percent jump in yearly revenues following two acquisitions, but earnings came in slightly behind expectations.
Riverdeep said on Wednesday that revenues for the year ended 30 June 2002 were USD169.3 million, a 226 percent rise from previous fiscal year.
The Dublin-based e-learning business, which mainly sells educational software and Web resources to US schools, also recorded a 155 percent increase in fourth quarter revenue from the same quarter a year ago to USD51.9 million. On a sequential basis, revenue was up 11.5 percent from USD46.6 million in Q3 2002.
This massive growth in revenues was aided by Riverdeep's acquisition of two educational companies, the Learning Company and Teacher Universe, during its latest fiscal year. Barry O'Callaghan, Riverdeep's executive chairman, said in a conference call that another factor was that education budgets had not been cut in the US and in some areas had actually been increased.
The rise in revenues helped Riverdeep report net income of USD8.8 million for the year, which compares to a USD52.7 million loss during fiscal 2001. Pre-tax profits for Q4 2002 were USD7.8 million, up from a loss of USD6.8 million in Q4 2001.
On a per share basis, the company earned USD0.23 per diluted ADS for the year and USD0.20 per diluted ADS (American depository share) for the fourth quarter. In contrast, it recorded a net loss of USD1.64 per diluted ADS in fiscal 2001 and USD0.20 in the fourth quarter of a year ago.
Despite the improved figures however, the company's per share earnings came in behind Wall Street's estimates, as a consensus of analysts polled by Thomson Financial/First Call were calling for earnings of USD0.24 in the fourth quarter. This failure to meet expectations could be to blame for the 6 percent fall in Riverdeep shares, which were trading at USD14.10 by mid morning on the Nasdaq.
Riverdeep generated USD8.9 million in cash during the quarter, which was a 49 percent sequential increase and compares with a cash burn of USD6.4 million in Q4 2001. For the year ended 30 June 2002, cash burn was USD8.6 million, which was well up from the USD31.5 million in cash used in the prior year.
With cash at its disposal, O'Callaghan declined to rule out further merger or acquisition activity from Riverdeep in the near future. "We have made six acquisitions in the last couple of years, but with many good businesses available at cheaper prices than six months ago, mergers and acquisitions will be a key strategy for Riverdeep going forward," commented O'Callaghan.
Unsurprisingly, given its acquisition of two businesses over the period, Riverdeep's total operating expenses increased from USD25.2 million in Q4 2001 to USD34.3 million in Q4 2002, and from USD101.1 million in fiscal 2001 to USD130.7 million in fiscal 2002. Overall, O'Callaghan said he was pleased that the company's latest results had beaten consensus estimates for the tenth consecutive quarter. "The maturing operating leverage of the business and improving operating margins demonstrate our ability to convert revenue growth into significant profits and cash flows," he remarked.
O'Callaghan added that the company remained confident in its ability to meet its previously announced targets, which includes revenues of between USD200 million and USD220 million in the 2002 calendar year.
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