Plumtree's Transition Is ProfitablePlumtree's Transition Is Profitable

Plumtree Software Inc.'s transition from being a pure portal vendor to a provider of tools for building, integrating, and delivering Web applications appears to have been a successful one. On the strength of its most-profitable quarter to date, Plumtree posted a profit of $2.4 million on revenue of $82.9 million for 2002, compared with a loss of $7.8 million on revenue of $81.5 million for the previous year.

In a conference call with analysts Thursday, CEO John Kunze stressed that Plumtree's newest modules, content and collaboration servers that shipped during the recent quarter, were key drivers of sales to new and existing customers. Plumtree's quarterly revenue of $19.5 million was down nearly 15% from last year, but that drop-off would have been steeper if not for the new products, Kunze says. Overall, Plumtree cut 89 deals during the quarter, 43 to new customers. Kunze acknowledged that a year-end spending push also helped keep revenue from dropping further. "We did benefit from a modest seasonal uptick," he said.

Plumtree's profits were fueled by cost-cutting measures, most notably in sales and marketing, where spending was down nearly 18% from the previous year. Going forward, the company is encouraged by studies indicating that portal deployments, still its bread and butter, are one of the top priorities for CIOs in 2003. Plumtree plans to release a major update to its portal app during the coming year.

With most of the pure-play portal vendors having been acquired, Plumtree's primary competitor is IBM's WebSphere product line, followed by BEA Systems, Microsoft, Oracle, and SAP. But the biggest competitive challenge, Kunze says, is the budget discretion that customers continue to demonstrate.