Firm would not be surprised if management had relatively strong visibility into Q1 targets, given that the Q4 results were announced late in February (vs. instead of in late January) and given that firm's checks suggest that Q1 was off to a good start. They're aware of a large Visual Sciences deal with a new customer and also some other opportunities which were closed early in Q1, which drives their comfort levels with their targets (which are slightly ahead of street estimates).
Online ad spending continues to be healthy (especially with increased interest in online video advertising or mobile ads and ramping credibility of Yahoo search), although any mild slow down in online ad spending could potentially be positive news for web analytics vendors: In fact, firm wouldn't be surprised to see organizations shift some focus to improving online measurement and optimization in order to drive increased funding for online advertising programs in the intermediate term. Given that web analytics is a key enabler of online site measurement and optimization, they expect that overall interest in web analytics and related customer targeting (search, bid management) continues to grow nicely.
WebSideStory going after the broader customer analytics opportunity via the Visual Sciences platform, which opens the door to a larger IT spending pool: Firm believes that WebSideStory is differentiated vis- -vis other web analytics vendors on its ability to solve broader, more complex customer analytics opportunities. This broader customer analytics opportunity requires a next generation platform to span both online and offline worlds and cut across channels (email, IVR, kiosk, catalog, POS, reservation) in real time, and enable more flexible, deep dive, and real-time analysis of customer trends and opportunities.
Firm believe that the budget for a broader customer analytics solution could come out of the IT budget instead of the online marketing budget, and thus opens the door to much larger pool of spending (could be 10x more spending on Business Intelligence to support marketing than on Web Analytics to support online marketing). They acknowledge the increased challenges in navigating the more technical conversations with IT and the business intelligence teams in sales cycles, and are comfortable that the reps are appropriately and quickly ramping up.
Firm has Buy rating and $22 tgt for the stock.
Notablecalls: There are some comments about the current quarter too, but overall it's rather for you investors out there.
WSSI 1-yr chart: