a21 Third Quarter Results

Posted on 12/2/2005 by Jim Pickerell | Printable Version | Comments (0)



December 2, 2005

a21, Inc. has reported revenues for the third quarter of 2005 of $2,064,000 compared to $2,077,000 for the same period in 2004 and down from $2,327,000 in the second quarter of 2005. The following lists revenue per quarter for the last six quarters.

Q2 2004


Q3 2004


Q4 2004


Q1 2005


Q2 2005


Q3 2005


The total revenue for the last four quarters is $8,804,000. About 15% of the company's revenue comes from international sales and the rest from domestic.

Revenues were $6,703,000 in the nine months ended September 30, 2005 compared to $5,402,000 in the nine months ended September 30, 2004. (However, this tends to give a false impression because a21 didn't acquire Superstock until March of 2004 so they are comparing 9 months of 2005 revenue with 7 months of 2004 since a21 had virtually no income until it acquired Superstock.)

Losses Increase

Net loss for the third quarter was $1,343,000 or $0.03 per share, versus a net loss of $1,046,000, or $0.03 per share, for the same period in 2004. Earnings per share for the third quarter of 2005 was calculated on the basis of 41,874,607 weighted average number of shares outstanding, compared to 38,115,732 weighted average number of shares outstanding for the same period in 2004. The third quarter 2005 results include non-cash charges of $531,000 primarily for compensation, depreciation and amortization expenses.

Net loss was $3,310,000, or $0.08 per share, in the nine months ended September 30, 2005 as compared to a net loss of $1,997,000, or $0.06 per share, in the nine months ended September 30, 2004. Earnings per share for the nine months ended September 30, 2005 was calculated on the basis of 41,752,336 weighted average number of shares outstanding, compared to 34,000,866 weighted average number of shares outstanding for the same period in 2004. The results for the nine months ended September 30, 2005 include non-cash charges of $1,880,000 primarily for compensation, depreciation and amortization expenses.

Chairman and CEO Albert H. Pleus said the company expects to turn things around after spending money in the third quarter on acquisitions and raising capital.

Pleus added, "While our revenues were even with the same quarter last year, we have invested more in our business in the third quarter, are pleased with the progress we are making and believe encouraging results will follow. Feedback from our customers, contributors, employees and other partners has been overwhelmingly positive. In addition, we believe our recent capital raises totaling over $5 million and the acquisition of Ingram Publishing Limited will enable us to further implement our business plan."

In the public announcement Thomas V. Butta, Vice Chairman and President of a21 and CEO of operating subsidiary SuperStock laid out a number of new developments in the past quarter that were designed to increase revenue. He said, "We believe we have made gains on a number of fronts: sales from direct customers, the number of channel partners carrying our products, the number of images available for sale, the number of image contributors, the further rollout of our new Royalty-Free (RF) brand, Purestock, the successful launch of an RF store on SuperStock.com, continued improvement in customer features on our web site, and in structuring our organization to have our most qualified people in critical positions."

While one would think that each of these actions would have provided some boost to revenue, clearly they did not. While we don't know the specifics of each of these initiatives, it seems that adding new images, increasing the number of contributors, rolling out a new RF brand and adding channel partners seem to have had no positive effect on increasing revenue. Maybe a long lead time is require before such actions start bearing fruit, but several of these actions have been ongoing for several quarters, not something that was just launched in Q3.

In light of the failure of such actions to increase revenue it is worth considering a few numbers from Getty. In spite of a huge increase in the number of Image Partners and the number of images available on Gettyimages.com, Getty's total revenue from RF single image sales dropped a little over $1 million in Q3 (See Story 767). Also the average price per RF image licensed dropped about $5 indicating that Getty is probably being more aggressive in discounting in an effort to increase volume and revenue.

On the RM side total the number of images Getty licensed was flat, the average price per image was also down about $5 and gross revenue was down about a million.

Meanwhile, Getty's gross annual return per RF image on its site was down from $634.63 a year ago to $558.02 last month. In the RM arena Getty's annual revenue per image dropped from $673.54 per image a year ago to $413.19 (See Story 775). If Getty, with all its power in the market, is having trouble increasing revenue while doing many of the same things a21 is doing, it is not surprising that a21 has trouble increasing revenue.

Photographers need to ask themselves, "What good does it do me to keep pumping new images into the market if revenue doesn't increase?"

Copyright © 2005 Jim Pickerell. The above article may not be copied, reproduced, excerpted or distributed in any manner without written permission from the author. All requests should be submitted to Selling Stock at 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, e-mail: wvz@fpcubgbf.pbz

Jim Pickerell is founder of www.selling-stock.com, an online newsletter that publishes daily. He is also available for personal telephone consultations on pricing and other matters related to stock photography. He occasionally acts as an expert witness on matters related to stock photography. For his current curriculum vitae go to: http://www.jimpickerell.com/Curriculum-Vitae.aspx.  


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