Bob and stockpeeker, CGI breakdown by division (FY04 proforma numbers):
Pro Forma Statement of Operations
Twelve Months Ended December 31, 2004
CGI WebCapades Pro Forma Adjustments Total
Net Revenue $ 21,473,565 $ 4,264,607 $ 25,738,172
Cost of Revenue 4,057,843 951,625 5,009,468
Gross Profit $ 17,415,722 $ 3,312,982 $ 20,728,704
Operating Expenses 12,691,946 1,264,520 (A)163,474 14,119,940
Income From Operations $ 4,723,776 $ 2,048,462 $ 6,608,764
Other Income(Expense) 2,423 10,978 13,401
Income Before Income Taxes $ 4,726,199 $ 2,059,440 $ 6,622,165
Provision for Income Taxes 1,786,233 0 (B)719,386 2,505,619
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So, Webcapades has better pretax margins, but Websourced is growing faster on the top line and has provides much more revenue. Organic growth for just these two divisions was tremendous in FY04 (55% for Webcapades and 169% for Websourced).
Stockpeeker, I agree that the growth via acquisition model is not well liked on Wall Street (for good reasons), but the organic growth here is still very strong and showing no signs of slowing down.
I think one of the key things to watch for is if pretax margins can come in higher than 20% of revenues. They slipped a quite a bit there last quarter (Q4) because of doing business with companies that didn't pay their bills. Here's the dropoff:
Quarter - Pretax Margin
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Q1.....25.1%
Q2.....25.7%
Q3.....25.4%
Q4.....15.5% (0uch)
Let's hope they've learned their lesson and have tightened up their credit policies!