Omniture IPO Analyzed

TheStreet.com takes a look at the recent Omniture IPO and tries to evaluate whether the company will be a sure-thing or not.

The 10 year old company is certainly one of the more dominant web analytics vendors, but faces tough challenges from Web Trends and WebSideStory.

The upside:

Omniture’s revenue has more than doubled for three years in a row. And the first quarter showed it’s on track to make it four in a row: Revenue in the quarter rose to $16.4 million from $8 million. That quarter also showed operating expenses, which went from 69% of revenue in 2004 to 93% in 2005, fell back to 79% in the first quarter of 2006.

The downside:

Then there is that nagging problem of Omniture’s sustained losses. The company has an accumulated deficit of $35 million…Sales and marketing expenses are likely to remain high. Omniture says much of the $70 million it raised in the IPO will go toward “expansion of our domestic and international sales and marketing organizations.”

Unfortunately, while Google may quickly become known as the company that launches a thousand products a year – but never really mastering any of them – one of their biggest hits, Google Analytics, is also one of the biggest thorn in Omniture’s side. I’d be willing to bet that at least 90% of all companies can get everything they need from Google’s free analytics offering, and once the company opens up the sign-up process, Omniture and other analytics companies could face a big squeeze.