April 6, 2006 | Read Time: 3 minutes
While total revenue increased in 2005 for Kintera, the online fund-raising company, so too did its losses, according to the company’s year-end earnings statement.
Kintera’s total revenue for the year was $40.9-million, an increase of 73 percent over the company’s $23.7-million in total revenue for 2004. The company processed $302-million in online donations for its charity customers in 2005, more than double the $149.2-million it processed in 2004.
But the company’s net loss for 2005 was $41.9-million, compared with a net loss of $19.2-million in 2004. As of December 31, 2005, Kintera had an accumulated deficit of $95-million.
The day after the company released its earnings statement, the price of Kintera’s stock dropped from $2.40 a share to $1.63, a 32-percent decrease.
The day the company had its initial public offering, December 19, 2003, the price of its stock closed at $10.30 per share. Kintera’s stock price peaked at $18 per share in March 2004, but has been trading at less than $4 per share since the middle of August 2005.
Harry Gruber, president and co-founder of Kintera, attributed the losses posted by the company to the money spent developing a new product Kintera plans to start offering this month. The product will provide charities with a system for managing their donor contacts that works with the company’s software and databases.
Mr. Gruber says taking the financial hit was “a strategic decision to invest in a new product that we think is necessary for this market,” he says.
Some nonprofit leaders and fund-raising consultants speculated that the losses could be a sign that Kintera will not be able to survive over the long haul. That prospect caused mixed reactions from nonprofit leaders and fund-raising consultants.
“We have a limited number of good vendors in the nonprofit marketplace, and one of them is Kintera,” says Jeff Patrick, a consultant in San Francisco and author of “The Online Solutions Market Review,” a 2004 report that draws on interviews with executives at software companies that serve the nonprofit world.
“They have a lot of clients, and they have also grown rapidly. From a financial standpoint, they have arrived at a place where over the next two quarters, they’re going to need to demonstrate the ability to show us that this company can be viable in the long term.”
Mr. Patrick is careful to say that he doesn’t recommend that charities break their ties with the company: “What we are doing with our clients is saying, ‘Don’t do anything yet, but definitely watch this.’”
Rick Christ, president of NPAdvisors, an online fund-raising consulting company in Warrenton, Va., says it would be a shame if any of the three major companies that serve nonprofit groups — Convio, GetActive, or Kintera — ceased operations, but that charities would not face a serious change if one collapses.
“If company A went out of business, companies B and C would see it as an opportunity to work overtime to figure out how to create a tool that says, Here’s how you can move your Company A data onto our Company B platform,” says Mr. Christ. “It produces a huge market opportunity. I don’t see any economic issues related to any one company as being a real problem.”
