Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Attunity's Shows Sharp Q3 Profit Improvement

|Includes:Attunity Ltd (ATTU)

This is a LIVE draft of my upcoming analysis of ATTU's Q3 results. I will be adding and making changes to it as the conference call and other information unfolds. Also, I'm scheduled to speak with the management team at 11:30AM ET. Overall, I'm impressed, as you will read below...

Here's my quick take on Attunity's (NASDAQ:ATTU) Q3 press release:

After digging through the Q3 release and comparing every line to its Q2 release, it's clear that some exciting things happened for ATTU this quarter.

The company posted a bigger profit than I expected. The direct sales force is clearly not fully ramped yet, but it appears that strong partner revenue drove higher margins and much higher operating income. Operating income was up 1,000% versus Q2. Wow.

So, ATTU's partner channel KILLED it (bullish). Gross profits vs Q2 = wow. The only weakness I see is direct sales. Revenue LOOKS light, but it really isn't. Partners take their cut BEFORE giving ATTU their share, so the mix of revenue was strong for partners (which is almost 100% profit) and light for direct sales (which is much less profitable, and therefore not as important).

I should have explained this possibility in yesterday's preview. Mea culpa.

In other words, EMC, HPQ, IBM, MSFT, ORCL, etc are driving business to ATTU rapidly. This is a VERY good sign and a bullish earnings release. Don't be fooled by the revenue line. All the action happened beneath it.

I'd rate it a 100, but have to subtract 10 points for the direct sales force. Thus, I give it a 90, which is an A-. Thumbs up.

UPDATE: The earnings call was quite bullish. My exclusive call with management was even more so. I'm busy with getting the new pick to triple ready to go out (today at 2PM ET!), but will provide details on both calls ASAP. Suffice it to say, I'm a buyer today!

Stay tuned to PTT Research. Our next pick to triple will be announced there today!

Disclosure: I am long ATTU.

Stocks: ATTU