After rocketing nearly 115% from February through April, Absolute's stock price shot up 9.8% on May 1 as it reported another set of impressive quarterly results. In its fiscal third quarter ending March 31, Absolute, which makes software for theft recovery and data protection on laptops, grew orders 126% from the same period last year, while revenue was up 77% and cash flow of 15¢ per share was more than double the median expectation. “They've got a business model that is in high demand by a whole bunch of different groups,” says Spencer Churchill, Toronto-based analyst with Clarus Securities. The company has now grown its business by more than 100% in each of three consecutive quarters.
The groundwork for this success was laid in the previous fiscal year, which ended June 2006. Not only did Absolute license the well-known LoJack brand name for its consumer product, but it also recruited four more of the world's top computer manufacturers ? HP, Dell, Gateway and Fujitsu (in addition to Lenovo, an existing partner) ? to embed Absolute's programs directly into their laptops' basic input/output system. Known as BIOS, it's the program in a computer's microprocessor that is intrinsic to starting up the operating system when the PC is turned on. When a subscriber's stolen laptop is connected to the Internet, Absolute can trace its location or automatically delete files on the hard drive. “They have four key markets, and they're all firing on all cylinders. There was upside in every single one of the markets this quarter, all the markets are growing at 80% to 100%-plus year-over-year,” says Churchill. “Getting embedded in the BIOS of all these laptops was that catalyst that enabled them to reap the benefits of all these business drivers.”
In February, Dell announced it was bundling Absolute's Computrace service with other computer protection service packages, and on March 13, Absolute announced it had passed the one-million-subscriber mark, three months ahead of its fiscal year-end target.
