Can High Flying NetGravity Maintain Its Position?
D. Geller - October 1, 1999

Vendor Genesis

NetGravity was founded in 1995 by Chairman John Danner as the first commercial provider of online advertising solutions. NetGravity had $11.6 million in revenues in 1998, with an 81.2% increase over 1997's $6.2 million. Revenues for the six months ending June 1999 were $10.5 million, a 136% increase over the same two quarters in 1998. The company lost $11.3 million in 1998, compared with a $6.9 million loss in 1997. The Q2 1999 loss was $2.1 million ($0.12 per share), an improvement over the Q1 loss of $3.7 million ($0.28 per share). Revenue growth from 1997 to 1998 was heavier in Service and Maintenance ($5M, representing growth of $2.8M or 220%) than in software licenses ($6.5M, representing growth of $2.5M or 163%). Both cost of sales and R&D have decreased as a percentage of revenues, the former from 97% in 1997 to 90% in 1998, and the latter from 47% to 40%. The company went public (NETG; NASDAQ) in June of 1998, and had a second public offering in April 1999. Recent prices have been in the high twenties to low thirties, with earnings per share of -$1.28. The number of NetGravity's customers increased from approximately 250 at June 30, 1998 to approximately 380 at June 30, 1999...