VA Software Comments On SourceForge and Slashdot

Nov.29.06 | About: SourceForge, Inc. (LNUX)

Following its quarterly earnings report yesterday, VA Software executives commented in the conference call on developments with its SourceForge.net and Slashdot sites -- key excerpts from the call (emphasis added):

Ali Jenab - President, Chief Executive Officer, Director

Our SourceForge.net website, the world’s largest collaborative development site and repository of open-source projects, served a record number of downloads during the first quarter, averaging 66 million downloads per month during the quarter, a 53% increase compared to prior year periods.

Our Slashdot technology news site launched a beta version of a feature that we call The Firehose...

SourceForge.net continues to grow. With over 1.4 million registered users and over 135,000 projects, SourceForge.net continues to serve a tremendous amount of projects and download activity. In addition to a 53% year-over-year increase in the number of downloads, we added 7,650 SourceForge.net projects during the first fiscal quarter.

We continue to enhance our sites, including the launch of the beta version of the feature on our Slashdot website, which currently allows subscribers a view into the Slashdot story submissions bin that previously was only viewable by the Slashdot editors.

The Firehose will allow all Slashdot community members to vote on stories in the submissions queue, and provide them with the ability to choose their own custom view of Slashdot...

Patricia Morris - Chief Financial Officer, Senior Vice President

Advertising revenue grew by 43% to $3.7 million, from $2.6 million for the first quarter of last year, due primarily to increased buys by our advertisers, based on their continued building awareness of the demographic value of our audience, and in part to the online media sales organization being fully staffed.

Our average CPM during the quarter was $15.29, primarily due to the mix of ad pipe sold during the quarter.

Our sell-through rate was 9%, due to our total inventory growth from 1 billion impressions in the prior year’s first quarter to 1.5 billion impressions in the current quarter. In addition, we are seeing the trend of more advertisers requesting performance-based programs like costs-per-downloads and costs-per-click. We are finding efficient ways to serve these campaigns and maximize revenue...

Stewart Barry - ThinkEquity Partners

On the CPM pricing on the premium inventory, that is down from $20 last quarter, and you have spoken about a $20 to $30 target range. How should we think about that? Obviously you have a lot of unsold inventory. Maybe it is better just to lower the price to $10 and sell double or triple the amount of inventory.

Ali Jenab

Let me tell you. It was not intentional that we lowered the price to try to get the inventory sold. If we would have done that, hopefully we would have done more than 9%. It just happened to be the mix of the inventory that we ran. We did not have enough larger, more higher-paid campaigns running earlier during the quarter. So in the month of August and September, we did not have really higher-paying premium ads running. Because of the mix for the quarter, it ended up being $15.26.

Naturally, we are going to be focused on trying to get more of those premium ads sold so we can get it back online to the $20 to $30 range that we have always focused on. It is just how the advertising campaigns fell for the quarter.

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