In 2007, Globalscape was riding high with 67% growth in revenues over the previous year and its stock, which had been around $3.00 to $3.50 began to move in-sync with its growth rate up to the $6.00 level. It even reached higher levels for a short period ($7.71 intraday on Oct 22, 2007). However, the worldwide economic disaster lay at the door, and their growth rate did not continue at 67%. Indeed, it didn't continue at 50%, 25% or even 10%, and instead actually went into negative territory down to -15%. That's a change of negative 122% percent in the growth rate when that rate fell backwards 82 points to -15% in 2008!
The stock followed suit and dropped just as dramatically over 2008, losing 82-89% of its Oct 22, 2007 close of $7.44. So far, from the full annual data we have then, the stock appears to have followed its growth rate up and down. It is also noteworthy that each of the last two full years we have data for the stock went beyond its growth rate percentage, rising more than 67% in 2007 and dropping more than 82% in 2008. The verdict is still out for 2009 since the 4th quarter 2009's annual report is not due out till later this month.
Will we see growth in Q4 2009? Better still, will there be growth in 2010? While attending the Association for Corporate Growth this past week at Frost Bank in San Antonio, Texas, Jim Morris, Globalscape CEO & President stated that they were expecting to grow top line numbers in 2010 with a range of approximately 25-50%. They've just recently added major partners, including one very large San Antonio company, RackSpace, NYSE: RAX, whereby GlobalSCAPE will be reselling their hosting service. You're hearing this in the press for the first time here. It's about time these two San Antonio firms joined hands in partnership as a match made in heaven for CuteFTP founder and this top-tier web hosting company.
Globalscape also this week announced a major partnership with Advanced Micro Devices, NYSE: AMD, and that AMD selected GlobalSCAPE’s Enhanced File Transfer (NYSE:EFT) Server™ and CuteFTP Pro® in late 2009. As I write AMD is planning to deploy multiple instances of GlobalSCAPE solutions throughout its IT infrastructure. Said Richard Crawford, AMD IT Networking, "We plan to deploy GlobalSCAPE throughout our global enterprise to reap the benefits of file transfer management, with complete auditing capabilities and governance." How good is this product? Network Products Guide this March has named it winner of the 2010 Product Innovation Awards for Managed File Transfer (NYSE:MFT) stating "No other managed file transfer product provides an equivalent level of compatibility with industry standards and support for regulatory compliance mandates!"
AMD is currently a $5.5 Billion market cap company; RackSpace is currently a $2.44 Billion market cap firm. With more partners, clients, channel partners in the wings, positive top line growth appears to be the ticket in 2010. Additionally, GlobalSCAPE will become a worldwide reseller of BOUNCER by CoreTrace ™, the most tamper-proof and automated application whitelisting solution in the industry, according to GlobalSCAPE sources; GlobalSCAPE announced a $2.3 million investment in privately-held CoreTrace of Austin, obtaining a seat on the board in the process, back on January 11 of this year.
If the past is any indicator of how the stock will perform, then GSB is going to more than follow its growth rate up, in my opinion. The company is GROWing UP!
Disclosure: Long GSB