7/27/04

As web operations become more complex, performance companies prosper

Keynote Systems and Gomez, web site performance management companies, report record quarters as more web site operators turn to outside help in making sure their web sites are performing at the highest levels.

Kurt Peters , Executive Editor

Two web site performance management companies report record quarters as more web site operators turn to outside help in making sure their web sites are performing at the highest levels.

Web site performance management company Keynote Systems Inc. reports that third quarter revenue was up 14% over last year’s third quarter, reaching $10.7 million. Net income for the quarter was $1.5 million compared to $1.3 million a year ago.

The company says it generated free cash flow, defined as cash flow from operations less cash used for purchases of property, plant and equipment, of $3 million for the third quarter vs. $1.5 million for the third quarter of fiscal 2003. The company says it believes that free cash flow is an important measure of its performance as it provides investors with an additional method for evaluating operating performance and liquidity and reflects resources available to invest in acquisitions or to repurchase stock.

“We are pleased with our third quarter results as we enjoyed sustained profitability, continued positive cash flow from operations and continued growth in the performance management part of our business. I am also pleased that we were able to achieve modest growth in the measurement business,” said Umang Gupta, chairman and CEO of Keynote.

Keynote serves 2,100 customers worldwide. New customers during the third quarter included Autotrader.com, Expedia Inc., MasterCard International, and Nordstrom Inc.

Privately held Internet performance management company Gomez Inc. also reported strong performance. Bookings in the second quarter increased 70% compared to Q2 last year. "The second quarter-our eleventh straight period of growth-was a real break-through for Gomez," says CEO Alex Stein. "With application delivery growing increasingly complex, outside-the-firewall testing continues to be a high-growth business."

Gomez also announced that executive vice president of worldwide operations Bruce Reading has been promoted to the new position of chief operating officer.

Topics:

business, business finance, Free cash flow, Keynote Systems, Technology Internet

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