February 13, 2008, 12:00 AM

Napster turns up sales volume to $32.8 million for Q3

Revenue for Napster’s third quarter of fiscal 2008 grew to $32.8 million, up about 15.5% from $28.4 million in the third quarter of fiscal 2007, its third consecutive quarter of positive cash flow, says Chris Gorog, chairman and CEO.

Mark Brohan

Research Director

Net revenue for Napster Inc.’s third quarter of fiscal 2008 grew to $32.8 million, up about 15.5% from $28.4 million in the third quarter of fiscal 2007. Net loss for the third quarter of fiscal 2008 dropped to $2.8 million, compared with a net loss of $9.5 million in the prior year quarter.

“Napster made strong progress during the quarter as we delivered record revenues of $32.8 million, posted our third consecutive quarter of positive cash flow, and rolled out new content and features for Napster 4.0, our web-based music subscription service,” says Chris Gorog, chairman and CEO.

Napster plans to shift its PC-based download sales catalog to the MP3 format in the near future, says Gorog.

Napster, No. 108 in the Internet Retailer Top 500 Guide, ended the third quarter with $69.3 million in cash, equivalents and short-term investments, an increase of $900,000 from the prior quarter. The online music retailer had about 743,000 paid subscribers as of December 31, 2007, down less than 1% from September 30, 2007.

“We believe that Napster’s multi-platform web-based services, combined with DRM-free downloads and complemented by the continuing expansion and development of our wireless partnerships, create a very compelling and attractive choice for music fans globally and provide strong growth drivers for the coming year,” Gorog says.

Fourth quarter revenue is expected to be flat with the third quarter, in the range of $29 million to $31 million, says Suzanne M. Colvin, interim CFO. Revenue for fiscal 2008 is expected to exceed $125 million, growing more than 17% year-over-year, she says.

Napster Mobile also recently launched with two new carriers that expand its footprint in Europe and establish entry into Latin America, Gorog says.

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