, a provider of Internet marketplace software, reported Thursday that its loss was smaller than Wall Street expected and that its revenue climbed 80% from the previous quarter.
The report came a day after Commerce One's arch-rival,
, demonstrated that the appetite for online business-to-business services is strong.
Commerce One said its loss in the latest quarter was $14.7 million, or 9 cents a share, before non-operating charges, compared with a loss of $10.3 million, or 7 cents a share, a year earlier. Commerce One's revenue rose to $112.7 million, up from $10.4 million in the comparable quarter of 1999 and $62.7 million in the previous quarter.
The Pleasanton, Calif.-based company easily surpassed analysts' prediction of a loss of 12 cents a share in the quarter ending Sept. 30, according to earnings tracker
First Call/Thomson Financial
, and revenue of up to $80 million.
Before the profits announcement, which came after the market closed Thursday, shares of Commerce One climbed $4.69, or 7.9%, to settle at $63.88. In after-hours trading, the stock added $4.50 rising to $68.38, according to
The results prompted Mark Hoffman, chairman and chief executive of Commerce One, to move ahead his target date for profitability to the second quarter of 2001. In July, the company shifted the mark to the third quarter of next year from the fourth quarter, he noted in a statement.
Commerce One and Ariba, along with a crop of new companies, are battling for customers in the increasingly competitive world of online exchanges. The dependence on e-marketplaces, Web sites that allow buyers and sellers of goods to do business, is expected to grow as suppliers see additional revenue opportunities and others try to harness the Web to shave purchasing costs.
For Ariba and Commerce One, fighting for the audience's attention is nothing new. On July 12, Ariba impressed Wall Street with revenue of $80.7 million, more than 100% higher than revenue in the previous quarter, and losses that were half as wide as expected. Then about a week later, Commerce One followed with revenue of $62.7 million, up 79% from the previous quarter.
The bar was raised for Commerce One this time, too, after positive announcements from Ariba and
, which makes software that links supply chains. But while the two competitors are accustomed to being mentioned in the same sentence, their business strategies diverge in some ways, making it difficult to compare their performances each quarter.
Commerce One focuses less on collecting up-front software licensing fees, choosing instead to benefit down the road from revenue-sharing pacts with customers. Ariba, meanwhile, concentrates more heavily on getting licensing sales, garnering more revenue up front. Over time, analysts say, as e-marketplaces get up and running, Commerce One's plan could be lucrative.
"Ariba has been labeled the blue-chip company. It was a little earlier to the game, and it has more customers than Commerce One," said Gavin Mlinar, an analyst at
Sands Brothers & Co
. "Revenue-sharing agreements take a long time to build up, but once it's built up, it creates a tremendous revenue opportunity."
Mlinar explained that worries about slower growth in Ariba's network revenue, which is generated from customers' transaction fees, contributed to a brief sell-off of Ariba's shares. On Thursday, Ariba ended up finishing strong, up $3.42, or 2.7%, at $130.48.
Mlinar, whose firm rates Commerce One a strong buy and has not done any underwriting for the company, said he had anticipated revenue of $80.4 million, and a loss of 12 cents a share, in line with the Wall Street consensus.
Jockeying for position in a competitive industry, the two also have formed a number of partnerships aimed at boosting revenue. Commerce One created a pact with
, the German enterprise-software company, while Ariba moved to integrate its services with i2 Technologies and
Ariba and Commerce One also have volleyed back and forth with announcements about new customers and Internet exchanges, and last month they simultaneously held user conferences in Miami and Las Vegas, respectively.
Ariba recently said it had won a contract to use its software to power
, an e-marketplace for the food industry, and Commerce One announced it had linked up with
, an online exchange for the high-tech industry.
Including all charges in the latest quarter, Commerce One said its net loss widened to $60.6 million, or 37 cents a share, compared with a loss of $10.4 million, or 7 cents a share, a year earlier.