Baltimore Technologies, the Irish based Internet security software specialist, is on course for profitability within two years following the announcement of higher than expected second-quarter revenues and lower than expected losses.
Revenues of $24.6 million (€26.65 million) reflected an increase of 76 per cent on the previous quarter, boosted by Baltimore's acquisition of two new companies in the US, CyberTrust and NSJ. Despite sales around $4.5 million ahead of expectations, Baltimore's share price moved little over the day closing $20.69 up at 1.38 cents.
Baltimore's pre-tax loss also increased to $20.3 million from $13.6 million in the same quarter a year ago. But losses before interest, tax, depreciation and amortisation of $6.7 million reflected a 22 per cent improvement.
Primary contributing factors to the strong results included the contribution made by Baltimore's latest acquisitions to revenues outside Europe, boosting overall revenues by 30 per cent. However, allowing for these acquisitions, Baltimore revenues still increased by 26 per cent over the quarter.
Licensing revenues - a key area of business focus for Baltimore - continued to surge, increasing by 50 per cent on the previous quarter.
Gross margins from services revenues fell slightly from 68 per cent to 64 per cent quarter on quarter, and Baltimore chief executive officer, Mr Fran Rooney, attributed this to a new hosting business in the US. He promised the figure would be back up around 70 per cent before the end of the year.
Based on the strong quarterly growth, ABN Amro Stockbrokers, have revised upward Baltimore's projected revenue growth to the financial year-end by 15 per cent.
The figures also indicate Baltimore is gaining ground on its chief competitor, US-based Entrust, which recently announced flat growth for its second quarter and revenues of just $29 million. Analysts are now saying Baltimore will be profitable in the first quarter, 2000, and Mr Rooney says Baltimore would be "comfortable with those projections".
He says he now wants to make Baltimore a billion dollar revenue company, although he did not indicate a time frame. Analysts predict Baltimore will be recording revenues of $250 million by 2003. "It's a very big benchmark but that's where we want to position the company. That would make us not only a leading security player but also a leading software company. That's how big we want to be," Mr Rooney said.
Baltimore was expelled in June from the FTSE 100 share index after a technology sector stocks sell-off dramatically reduced Baltimore's capitalisation.
Baltimore now employs over more than 730 staff in 28 locations worldwide with customers in nearly 50 countries.
