The company, which sells software that analyzes traffic to Web sites, recently reported record revenue for its third quarter. Its net income was a loss of $17 million, due mostly to accounting requirements for publicly reported results and an increase in tax liabilities. But if those costs are excluded, the company made $8.2 million.
The net loss with the accounting charges was up from $1.1 million for the same quarter of last year.
Brad Whitt, a research analyst at American Technology Research Inc., said Tuesday that removing acquisition related items and noncash compensation such as stock options a normal practice for analysts shows the company earned 11 cents a share in the third quarter versus 7 cents from the same period last year.
Still, Whitt was the only analyst listed by Bloomberg with a "sell" recommendation on Omniture's shares.
"Their execution has not been consistent," he said, pointing among other things to lower than expected gross profit margins and higher than anticipated capital expenditures. "In many cases their cash flow has been less than we'd like to see. Some of them have been good but it just hasn't been consistent."
Whitt also said Omniture faces increased competition and, as a result, also downward pressure on prices for its products.
In explaining its results, company officials emphasized its record revenue in the third quarter and its addition of 250 new customers.
"We posted record revenues, improved profitability significantly and booked record cash flow," Josh James, Omniture CEO and founder, said in a conference call.
Despite that performance, James said a "tough economic environment" is challenging the company's customers. But he also said economic downturns like the U.S. is experiencing also is creating opportunities to acquire companies that could help Omniture grow.
The rapid decline in U.S. and world economic conditions led one analyst to downgrade expectations for economic performance for Omniture and other companies in its field.
"We believe Omniture remains the premier Web analytics vendor," said David Hilal, an analyst at FBR Capital Markets, in a report late last month. "However, we remain on the sidelines as we think its solutions are particularly sensitive to economic downturns, and the company could see deals in its pipeline downsized and pushed out."
Hilal also cited increased competition for clouding Omniture's prospects.
Revenues for Omniture have grown rapidly after it completed the acquisition of two other companies last year, but so have expenses.
In March of last year, Omniture acquired Touch Clarity Ltd., a London-based software company for up to $3 million, plus other possible payments depending on performance. In January, it purchased Visual Sciences Inc., for $446 million, $354 million of which was paid for with Omniture stock.
Omniture has nearly 1,090 employees, most of them in Utah. The company's shares closed at $9.73 on Tuesday, down 62 cents or almost 6 percent from the previous day.
tharvey@sltrib.com
