Riverdeep, the interactive learning solutions company which floated on the Dublin and Nasdaq markets in March, has reported revenue of $2.2 million (A2.4 million) and a loss of $7.3 million (A8 million) for its third quarter.
On a falling Nasdaq market in the US, Riverdeep shares remained steady after the results announcement at $28.62 1/2 before slipping back to close at $26, down $2.62 or 9.17 per cent. Since its flotation earlier this year at $20, the shares have been wildly volatile, hitting a high of $72 and a low of $16.25.
Revenue was up from $97,000 for the corresponding three months of 1999, but just marginally ahead of the $2.1 million recorded for the previous quarter to end December.
But chief executive Mr Barry O'Callaghan insisted the total contract value - recorded and unrecorded revenue - for the quarter of $3.9 million, up from $1.6 million for the previous quarter, was a better indication of performance.
With the company's change to subscription-based revenue, and accounting rules now requiring the recording of revenue from subscriptions over the period of the contract, he said this showed that underlying revenue performance was stronger.
Other positive indications were a 77 per cent increase in the number of subscribers to 708,000, with new subscribers added at an average revenue of $6 per subscriber, he said.
He added that he was comfortable with brokers' forecasts that the company would start producing profits by the second quarter of 2002 - within 24 months.
Riverdeep's net loss for the three months to end March rose to $7.3 million, or 33 cents per US share, from $1.8 million, or 11 cents per share.
The latest results show that for the nine months to end March Riverdeep generated total revenue of $6.6 million, up from $124,602, but losses jumped to $27.7 million ($1.40 per share) from $4.5 million (28 cents per share). The $28 million loss for the nine-month period includes a once-off non-cash consultancy fee of $12.5 million, according to the company statement. This fee arose through the provision of free shares to Mr O'Callaghan to join the company.
Riverdeep said yesterday it had agreed to buy ED-Vantage Software for $24.25 million in a deal to be completed in six to eight weeks. The consideration will be made up of $17.5 million in Riverdeep American Depository Shares and $6.5 million in cash payable when the deal closes.
ED-Vantage develops language, arts and academic software products incorporating audio, video and virtual reality for school and home markets. In January, Riverdeep made a licensing arrangement with EDVantage to develop and dis tribute nine interactive reading and writing titles. The acquisition aims to expand the range of Web-based educational products Riverdeep can offer.
Mr O'Callaghan said: "[It will] accelerate our curriculum product rollout. Content is key and the addition of high-quality, web-enabled reading and writing titles will round out our current scholastic offerings and provide us with the opportunity to increase our subscription-based price points."
He added that the latest results reflected strong market demand for its products and services. Following the Web enablement of its products, the company was moving towards subscription-based revenue faster than expected, he said.
"The advantages of subscription-based revenue are multifold: recurring high-margin revenue along with other revenue streams such as e-commerce and advertising resulting from traffic."
