Workstream Makes It Official: It Made A Profit

Apr 15, 2009
This article is part of a series called Financial.

Workstream made it official last night, filing a third quarter report that showed it earned the first profit since it went public in 1999.

The $570,000 net profit wasn’t quite as good as the $780,000 it projected in preliminary numbers last month, but it clearly shows how far the company has come since the bleak months of 2008.

For the same quarter last fiscal year, Workstream reported a loss of $19.7 million. You read that right and we’re reporting the numbers correctly: For the quarter ending Feb. 28, 2008 Workstream lost $19.7 million primarily because of interest liabilities. Even so, its EBITDA, considered by analysts a better comparison of company performance across an industry, was $4.5 million in the red. For the third quarter of 2009, its EBITDA was a positive $1.3 million. (Workstream has an odd fiscal year. It begins June 1 and ends May 31.)

The financial report, released after the market closed Tuesday, didn’t have much of an effect on the market, which factored in the numbers when the preliminary report was issued last month. Workstream’s stock was trading down 2 cents at 28 cents a share just minutes before the market closed today. The stock has seen a big runup since the end of 2008, when it was trading at 2 cents a share.

Traders may also be looking at the company’s balance sheet, which is carrying a $19 million note and current liabilities of $7.8 million. However, where analysts and investors focus most — operating income — Workstream’s sale of its SaaS provisioned compensation, performance, and talent management services showed a surprising stability. For the quarter, software sales were actually up slightly over the same quarter of 2008. Workstream reported income of $2.1 million vs. $2.0 million. The category is down about $1 million for the nine months ended Feb. 28th, coming in at $5.7 million.

When he released the preliminary numbers last month, Workstream CEO Steve Purello told us the company has been focused on internal cost-cutting while sales “sought opportunities to assist our F2000 base of customers in managing their rapidly changing workforces. “

Besides the HCM software unit, Workstream also owns 6FigureJobs, and personal career consultant Allen and Associates, While the job board, like others, has taken a big revenue hit from the recession (down about $800,000 in the third quarter alone over the prior year), Purello said resume search revenue is buffering the job board as companies that have laid off workers selectively (and quietly) hire others for mission critical positions.

“In today’s environment we’ve found company HR departments with a focused discipline on cost-cutting, measuring and differentiating performers vs. non-performers, reviewing compensation structures, and even some strategic hiring of high-performers previously unavailable,” Purello told us.

As for his own company, Purello wore us last month that “Workstream is continuing its own discipline of seeking revenue opportunities while watching expenses so we may bolster our balance sheet. We realize that prospects and customers are making commitments for our software and services for many years and want to partner with a company they can count on to serve them well in the future.”

This article is part of a series called Financial.