Santa Ana-based Starbase Corp. has made a few acquisitions over the past three years, but officials say the company basically grew its revenue the old-fashioned way: by selling more of its core products.
Starbase, a maker of a family of software products that permits Web page builders to manage both code and content at the same time, went from $1.2 million in sales in the 12 months ended June 30, 1997, to $21.1 million in the 2000 period. The 2,332% gain was good for No. 4 on the Business Journal list of fastest-growing companies.
On the other hand, Starbase, which like many tech firms has spent heavily on product development, staffing and marketing to grow revenue, has yet to post a profit. It recorded a $6.3 million loss in fiscal 2000, ended March 31, an improvement over the $10.0 million loss in fiscal 1999.
The company has acquired several small firms recently, including Premia Corp., ObjectShare Inc. and Genitor Corp. But that’s not what’s been driving growth.
“All of our growth is organic,” said Starbase CFO Doug Norman, CFO.
Starbase added about 450 new customers during the past year, Norman said, raising the company’s customer base to about 1,300. Customers include the U.S. Naval Air Warfare Center, Net Library, OneChannel.net, PlanetSoft, Princeton eCom, CarsDirect.com, Lockheed Martin, Oxygen.com and the U.S. Mint.
Norman said the growth was achieved by beefing up sales and marketing staffs, filling out management positions and honing the company’s message. Also, the company in March of last year released the newest version of its flagship product, StarTeam 4.2, which enables designers to put together so-called “third generation” Web sites.
“The product has enterprise-wide functionality. That allowed our sales force to go after Fortune 1000 companies,” said Norman.
The revenue growth has yet to show signs of significant slowing. For the fiscal first quarter ended June 30, revenue increased 102% year-to-year, to $7 million,the 13th consecutive quarter of revenue growth. Net loss for the quarter was $3.9 million, almost triple the loss of the previous first quarter. Norman said the company has been taking losses to invest in infrastructure and build its workforce. Its employee count has grown to 213, compared with 92 a year ago.
“We could have been profitable, but the market wanted to see our revenue grow,” he said.
But with the recent market correction there is more of an emphasis on profitability, and some analysts are projecting Starbase will be profitable within the next two quarters.
In any case, the company is attracting interest. It raised $18.5 million in net cash in 1999 and 2000 through the sale of preferred and common shares.
