KEYN misses and lowers guidance (4Q04 earnings)

| About: Keynote Systems, (KEYN)

Keynote Systems, which provides performance management services for e-commerce companies, missed the consensus EPS by a penny and set guidance for Q1 below consensus. The stock fell by over 4% in late trading. Here were the key points from the earnings announcement, in the company's own words, and then a description of what really happened:

Keynote said:

  • Diluted EPS of $0.04 Meets Company's Guidance
  • Revenue of $13.6 Million up 40% Compared to the Same Quarter Last Fiscal Year
  • Performance Management Solutions Revenue Up 143% Compared to  Same Quarter Last Fiscal Year
  • Sixth Consecutive Quarter of Increased Revenue and Sixth Consecutive Quarter of Profitability
  • Twelfth Consecutive Quarter of Positive Cash Flow from Operations
  • Entering into a plan to repurchase up to 2.0 million shares of common stock

Keynote currently expects that for the second fiscal quarter ending March 31, 2005:

  • total revenue will be between $13.0 million and $13.6 million;
  • total expenses will decrease by approximately 2% to 4%  compared to the first quarter of fiscal 2005;
  • diluted earnings per share will be between $0.03 to $0.06;
  • cash flow from operations will be between $2.0 million to $2.5  million; and
  • capital expenditures will be approximately $1.0 million, absent any acquisition costs or other extraordinary transactions.
The reality: Keynote met "Company's Guidance", but it missed the consensus estimate of $0.05 by a penny, and also provided guidance for next quarter below consensus estimates of $0.06 in EPS and revenue of $14.1 million. 76% of Keynote's revenues came from subscriptions, and that amount rose by only 1% quarter over quarter.

One year chart for KEYN below.