For the first time in many quarters Workstream (profile; site) was in the money - sort of - eking out a half-million dollar finish to its 2008 fiscal year. The talent management software company reported Thursday evening that it had an EBITDA of $516,000 for the fourth quarter that ended May 31. That compares to an EBITDA of ($4.5 million) for the previous quarter and ($1.3 million) for the fourth quarter last year.
Still, the company reported losing $14.9 million in the last quarter and $39.4 million for the year.
Only sketchy and incomplete numbers were released by the publicly traded company, so it isn’t possible to detail the company’s income and expenses other than to say the fourth quarter revenues were $7 million, up from the $6.2 million of the third quarter.
The company attributed the incomplete financial statement to an “on-going goodwill analysis.” “This item does not have an impact on EBITDA, revenues or cash,” the company noted in the announcement of its financial results. However, goodwill is a business asset that has to be adjusted if its fair value is different from the value carried on the books. Workstream valued its goodwill at $45.3 million in an April filing with the Securities and Exchange Commission. But in the financials it released Thursday appears to be anticipating a reduction of $13.6 million.
Regardless of the eventual accounting decisions, Workstream is a troubled company. Its operating expenses have exceeded its revenues every year since the company went public in 1999 and for two years before that as well. It is very likely to be delisted by NASDAQ, where it trades under the ticker symbol WSTM. To remain on the active exchange Workstream would have to lift its stock price to at least $1. It closed today at 16.27 cents. A planned merger with payroll processor Empagio fell apart in June.
Still, Chief Executive Officer Steve Purello says in the press release announcing the financial, “Workstream had a solid finish to its fiscal year.”
Purello could not be reached for additional details.
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Sylvia Dahlby Jul 25, 2008 at 5:35 pm
As a veteran of this volatile ASP software industry who remembers the implosion of iSearch back in 2001, the subsequent fall of Personic, and seen a lot of the so-called “consolidations” and infusions of VC funding into the relative newcomers, it remains astonishing to me how many of my competitors are simply not profitable.
The recent acqusition of Vurv/Vurv Lite by Taleo/Taleo BE was not only surprising, I was shocked to learn from the press release that Vurv (fka Recruitmax/ProHire) was $9MM (that’s NINE MILLION DOLLARS) in debt. Where did all that money go?
This article about Workstream’s “sketchy and incomplete numbers were released by the publicly traded company” attributed to an “on-going goodwill analysis” must be scary for customers with data hosted by an outfit that admits its “operating expenses have exceeded its revenues every year since the company went public in 1999 and for two years before that as well.”
Obviously this business is drenched in red-ink (remember when WebHire got delisted by NASDAQ?). No wonder so many ATS tend to over-promise and under-deliver when the sales-quota pressure to get the company out of the holes dug by bad management must be intense.
The Workstream “good news” hurts us all. Vendors take heed and buyers beware!
eric shannon Jul 26, 2008 at 8:24 am
thank you and for the reminder - 6 figure jobs.com was missing from my list of publicly traded job boards: http://www.internetinc.com/public-company-job-boards
– Eric
Software Vendor Workstream On Verge of Being Delisted by NASDAQ : ERE.net Sep 24, 2008 at 1:58 pm
[...] the fourth quarter last year. Only sketchy numbers were released then, however, with the company explaining there was some sort of analysis underway of its accounting for [...]