"I thought that the company was traded below its value, and I expected that something would unleash the stock, and happily, this quarter loosened the stopper," Top Image Systems Ltd. (Nasdaq: TISA; TASE:TISA) CEO Dr. Ido Schechter told "Globes" today, after the company's share price soared 64.2% in New York yesterday following the release of its first quarter results.
In today's session so far, the stock has corrected by 1.82% to $2.16, giving a market cap of $20 million.
Trading volume in the stock was the second highest yesterday since the company was floated on Nasdaq in 1996. The trigger for the share price rise was 36% growth in revenue in the first quarter to $7.2 million, and a switch from a loss of $1.1 million in the first quarter of 2010 to a profit of $700 thousand in the current quarter.
"The first quarter is the most frightening," Schechter said. "Its the start of the year and of budgets, when its hardest to close deals, and so we were surprised at the amounts of the deals that were in the pipeline and were closed in the quarter."
Top Image develops software that can process information entering an enterprise, classify it, and transmit it to the right places within the enterprise, untouched by human hand. The program, called Eflow, is also used to collate population census information. The company employs 135 people, 30 of them in Israel, mostly in R&D.
What caused you to switch to profit?
"The most significant thing as far as we are concerned is that the average sale to a customer rose from around $120,000 for a system to $250,000-300,000, and that's a big difference, making it easier for us to be profitable. Also, we achieved the revenue growth without expanding the workforce, and I estimate that we will manage to reach the revenue figure we gave in the annual guidance with eth same number of employees."
Top Image raised its annual revenue guidance from $25.5-26.75 million to $26.1-27.2 million, representing 20-25% growth over 2010.
Schechter believes that there is no seasonal factor, so that if the company maintains average quarterly sales of $7 million, 2011 revenue could be higher.
"If we killed ourselves over deals, we could do more. It's not that we don't press, but we don’t allow ourselves to be pressured when it comes to 'I'm prepared to make the order, what are you prepared to do for me?', because the customers know that you are under pressure to show sales growth and demand a discount," says Schechter.
Published by Globes [online], Israel business news - www.globes-online.com - on May 12, 2011
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