By the Numbers: Publicly-Traded GIS Companies Report Mixed Bag of Financial Data

By Joe Francica

How financially healthy were the major GIS companies for the first three months of 2003, and what does that say about where we are in this weak economy?

Intergraph's GIS Division Shows Marginal Profit

Taking a look at Intergraph first, the company reported operating income of $4.2 million and net income of $8.1 million on revenue of $120.6 million for the quarter ended March 31.However, the Mapping and Geospatial Solutions division squeaked by with a profit of only $200,000, up from $100,000 in the prior quarter and from break even one year ago.Financial analysts attending the quarterly conference call were particularly interested in how the company was going to improve earnings in this division.Intergraph officials called it a "difficult business" and commented that the company was not number one in this market.They said that GIS technology was approaching a saturation point, and that getting into more state and local government accounts was difficult because that market was being hit hard by decreasing tax revenue.Going forward, they said that they would focus on the services business to look for more revenue.
In general, however, Intergraph officials said they were in a strong cash position but that they felt their stock had some built in premium due to the cash position they hold with respect to settlements with Intel in their intellectual property suit.From their perspective, they have engaged more potential clients this quarter that were interested in making investments in Intergraph technology, but it was too early to tell.They saw signs of improvement in the number of sales opportunities but they have not translated into orders.

MapInfo in Recovery Mode after Purchase of Thompson Associates

MapInfo reported revenues for their second quarter of fiscal 2003 of $27.1 million compared to the $20.9 million reported in the first fiscal quarter of 2003 and $23.5 million reported for the same quarter last year.Included in the revenue number was $3.3 million derived from Thompson Associates, which MapInfo purchased in early January.Overall, MapInfo reported an operating loss of $1.5 million, which included $1.7 million in severance and restructuring charges.Net loss was $742,000.Overall, MapInfo reported that 44% of there revenue was generated from products, while 33% of revenue was generated from data sales.
Mark Cattini, CEO, stated that they hoped to return to profitability in Q3. They noted that during the quarter, they had 76 transactions of more then $50,000, a substantial increase from the previous quarter. With the Thompson Associates acquisition, MapInfo was looking to focus on 'predictive analytics', which, semantically, is a change from what they were previously calling Analytical CRM (or aCRM; see our interview with aCRM VP Kevin Antram).
MapInfo indicated that AnySite, a site selection solution picked up in the Thompson acquisition is now packaged with MapInfo data and a new online version is coming available shortly.It was noted that the Telecommunications sector, battered by the stock market and one in which MapInfo had a heavy reliance for revenue, saw a 22% increase in sales, the first growth they have seen in five quarters.In general, Cattini was looking toward a more balanced revenue mix.
Consolidation in Data Quality/Geocoding Industry
During the quarter Group 1 Software (NasdaqNM: GSOF) acquired rival Sagent Technology.The two companies provide data quality, validation, and geocoding services.Group 1 will absorb Sagent's Centrus product line of geocoding software.Group 1 said it would meet revenue forecasts of full year revenue of approximately $102 million that will be released on May 12th.

Geodata: A Growing Business?
Stewart Geo Technologies Inc., a wholly owned subsidiary of Stewart Information Services Corp.(NYSE: STC) was formed from the consolidation of Landata Group Inc.(a former subsidiary) and the acquisition of GlobeXplorer earlier this year.In March, this new company acquired Citipix from Eastman Kodak.In its most recent quarterly report released April 25th, Stewart reported all-time record revenues of $441 million for the quarter compared with $348 during Q1 2002. Stewart provides title insurance and related information services through more than 6,400 issuing locations in the United States.
Pure data companies such as GDT, Tele Atlas, and Navigation Technologies are all privately held.However, all are battling heavily in the telematics marketplace, which can not be fairing much better than the LBS market. LBS has been put on the back burner while the wireless carriers figure out how to make money from location services.


So, what does this all mean? For Intergraph, it is clear that their GIS business is at or near a break-even point, able only to turn modest profit for the last few quarters and indicating that its focus on the local and state government market was not producing strong financial results. Resistance from ESRI, which is firmly entrenched in this market, is not a new problem for management to handle.They have been butting heads in this arena for years, and in a saturated market, there is just not that much market share to lure away.The company, however, has had recent successes in Asia for both GIS and Utility solutions.However, to spur growth, it is unlikely that any kind of shakeup at the company, in either management or product direction, or acquisition, that would add revenue to its bottom line, will occur before a replacement is found for retiring CEO Jim Taylor.
For MapInfo, they seem to have a bit of an identify crisis.Is it a solutions company or a product software company? Can it be both? The acquisition of Thompson Associates was a clear indication that they want to be a solution company and bolster support for the business sector in which they have been successful traditionally, namely in the business geographics marketplace of retail and real estate.However, with 44% of their revenue still being generated from software, it may be a tougher sell to convince customers that they are not just pushing product.Even more so, where does that leave business partners who make their money selling MapInfo solutions and services? Will this not continue to create more channel conflict? On the positive side, MapInfo seems to be turning the corner by reporting better revenues from the telecommunication sector and an increase in business in the public sector market, which has not always been a focus for the company.Financial analysts have also turned more upbeat in recent weeks, with First Call offering a more positive slant on earnings potential going forward.This has apparently influenced investors which have bullishly pushed the stock from under $3.50 in early March to a close of $6.51 yesterday.

Unfortunately, as a private company, ESRI does not report revenue numbers.But the IT business in general has been hurt by the economy, and the local and state government market sectors, ESRI's bread and butter, in particular. With so many public entities facing budget shortfalls, GIS spending across the board has likely affected the market leader as well.We'll have the numbers from Autodesk and other companies later in the month.

Published Friday, May 9th, 2003

Written by Joe Francica

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