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Quark sales up 23%

Following its acquisition play for competitor Adobe Systems, Quark provides a glimpse of its financial condition.

Publishing software developer Quark seems to have become quite brazen of late.

The normally quiet, privately held company, which has largely avoided industry analysts and issuing statements on its revenue growth, is not only going public with its recent acquisition play for competitor Adobe Systems but also unveiling a glimpse of its financial condition.

Quark today reported revenues grew 23 percent in the second quarter, as compared to the same period a year ago. Revenues in the Americas rose 42 percent against year-ago figures, thanks to robust sales of its flagship product, QuarkXPress 4.0.

Sales in Asia climbed 6 percent in the quarter, despite the region's economic woes, while revenue from European sales jumped 18 percent in the three-month period.

Worldwide unit sales grew 72 percent over the year-ago period. And in the Americas, unit sales increased 131 percent compared with last year.

"We see strong growth equally in new product sales as well as upgrades throughout the world," said Kurt Dressel, Quark's vice president of sales and marketing, in a statement.

"We are particularly pleased with our performance in the Americas and the Pacific Rim, where we are gaining market share. During the latter part of the second quarter of 1998, we released QuarkXPress 4.0 Japanese, and we are looking for continued strong results in that market."

Suzanne Snygg, a Dataquest analyst, estimates Quark's annual revenues to fall between $200 million to $400 million. Adobe generated $911.9 million in revenues last year.

Denver-based Quark held 36 percent of the desktop publishing market, slightly ahead of Adobe's 28 percent, Snygg noted.

"They are the two dominant players in this space," Snygg said, adding she doubts federal antitrust regulators would approve such a deal if it goes through.

Quark, which competes against Adobe's PageMaker layout software with its QuarkXPress, said it would sell PageMaker and other products if a deal is struck. But Snygg said its unlikely that any buyers would be found for such a sale.

"Adobe has a lot more products than they do and they are at a point where they need to be expanding, especially in the graphics area," she said. But Snygg questions where Quark will get the more than $1.6 billion needed to pay a premium over Adobe's current stock price.

Quark, which finished 1996 with a pre-tax profit in excess of $100 million, has been gearing up to make changes to its operations over the past year. Last summer, the company announced it would form a corporate development group to invest or acquire companies and technologies that would either complement its existing products, or allow it to move into new markets. The development group was launched with a bankroll of more than $200 million to invest over a three-year period.

Funding for the investments was to come from the company and venture capital firms, and its investments were to focus on companies developing client-server, Internet, publishing, and education technologies.

One of its first purchases was Coris, which produces publishing and production content management software with its Coris Publisher 3.0. Quark made the acquisition last February, intending to produce content management solutions for future Quark client/server applications.

Then, last May, Quark hired a chief operating officer, as it looked to free its co-owners from daily operational duties and enable them to consider new strategies and investments for the company.

The COO post was one of two key positions the company filled in the past four months, in addition to a vice president of sales and marketing.

The sales and marketing executive was named earlier this month, and given marching orders to focus on establishing a new division for the Americas. Quark is also planning to focus its sales and marketing efforts on new markets for client/server products.