Over the past few months I have become increasingly obsessed with a company that I have followed for a very long time. For most people, today was like any other Monday. They went to work, talked about their weekend and couldn’t wait for it to be over, but for me I spent the day waiting in anticipation of something that I’ve been looking forward to for several months now.
For the first time ever, I had the opportunity to listen to DivX publically comment on their business plan and their execution over the last few months. In the past, I’ve followed DivX as closely as any other tech enthusiast and while I understood that the quality of their codec and the underground roots that set them apart, very little information was leaked out about this private company based in San Diego California. While many have either never heard of DivX or have no idea of what the company does, over the years, I’ve formed a fond appreciation for their technology and their inexplicable ability to survive regardless of the competitive landscape.
When I found out that the company was going public, I was very excited, in part, because I wanted to see DivX succeed, but also in part because it meant that going forward they had to a legal obligation to share intimate details about their business on a quarterly basis. While I never had the opportunity to see DivX’s roadshow prior to their going public, you can bet that I wasn’t going to miss their first conference call and in retrospect, I’m glad that I tuned in.
From a bottom line perspective, DivX realized another quarter of strong growth. During the last three months, they took in $15.4 million in revenue, which represented an 83% increase over a year ago. They also realized a mind blowing 94% gross profit margin on those revenues, which was an improvement on the 92% margins that they saw earlier this year.
After paying compensation and administrative costs, the company was left with $3.1 million in net income for the quarter. This compared to approximately $750,000 in net income from the year before. DivX also reported that over the quarter they had seen their 50th million DivX certified device shipped and promised to update investors as they hit the 60th, 70th and 80th million milestones. While the earnings growth was impressive, in the grand scheme of things, it is only a small part of the DivX story. With the conference call being the first time that DivX was allowed to unmuzzle their executives, management took advantage of the opportunity by helping to better educate less tech saavy investors on what exactly DivX is, and what their growth strategy would be going forward.
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