Omniture – Analyze this!

I’ve used Omniture’s products in the past for analyzing web traffic, they have a great product and offer exceptional value to their customer. Their revenue model is strong in that they make a small amount of money for each server call that is made from the customer to their servers. One or more of these server calls happen with each page hit to register information such as the page name and page section information so traffic can be rolled up by page category.

Omniture’s web analytics software allows customers to see traffic trends, paths that visitors take through the site, information about their visitors such as geographic area, browser type, resolution, etc, and allows the customer to track how often certain users return to their site to get an idea of customer loyalty. The product is amazing.

The industry itself is competitive. Websidestory (public company: WSSI) has been a long time player in the field with their HitBox product, Google recently announced a free web analytics package that anyone can use to analyze their website’s traffic levels, and there are a number of other privately held companies which offer similar services.

While I see Google’s free service as offering perhaps a little low-end competition to Omniture, corporate customers need a robust solution, guaranteed uptime, reliable tech support, and consistent development of new features. Corporate customers will likely bypass Google’s package and go with a pay service so they can have a reliable, enterprise level app.

Since its Initial Public Offering in late June of 06, the stock has gone from 6.25 to its current level of 15.36 (1/12/07). The company is not yet profitable, but they have $65 million in cash and Yahoo! Finance shows Operating Cash Flow for the last 12 months at $-843,000. They are losing money, but it looks like they have a pretty good war chest to sustain them through their growth.

This company has been getting more and more press lately, I suspect due mostly to the fact that it has had such strong performance since its IPO and the fact that web analytics is a hot industry that will explode over the next few years as web companies realize that operating a web site without analytics software is like running a brick and mortar store with the lights off. Without web analytics software, you have no way to see your customers, where they go, what they are interested in, what they are not interested in, etc.

It seems there is a lot of hype getting built into Omniture’s stock price at these levels. With a market cap of 741 million dollars, I suspect they will start drawing a lot more attention over the coming year.