Another Tough Quarter at MakeMusic

MakeMusic released its quarterly earnings on August 10th, and I went to review the earning report. If you remember correctly, there is a group that has proposed an acquisition of MakeMusic, so the performance of MakeMusic is a matter of discussion. If you would like to see the quarterly report for yourself, go to this webpage and look at the reports from August 10, 2012. You can read the press release here.

There is some good news…both notation revenue (2.1 million) and SmartMusic revenue (1.9 million) were up from 2011. COO and CFO Ms. VanDerBosch mentioned this represents an increase of revenue of 21%.

However, there was a net loss of $938,000 (almost 1 million) and if I'm understanding the concept of equity, the company is down to a value of 20 million (from 22 million in 2011). In the past six months, the company has lost 1.8 million dollars. These figures are all on Page 4 of the financial report.

I was a bit surpised to see that revenue from SmartMusic is less than the revenue collected from Notation sales. As a music educator, this would appear–to me–to be the area for substantial growth, particularly with notation competition from a open source competitor, MuseScore. I don't think we can understate the influence of MuseScore.

I was also surprised to see how much money was invested in development in the quarter (1.8 million) as well as sales and marketing (1.5 million). Remember that MakeMusic isn't a huge company with just over 100 employees.

My fear is that the financial report from the next quarter will bring even more bad news, as the company chose not to release a major version of Finale (and thus, increase revenue)1, and there is still no iPad version of SmartMusic, which I personally believe would bring more subscriptions to SmartMusic.

As a matter of personal involvment, I wish MakeMusic the best. I upgraded to Finale 2012 this summer, and our district is expanding the use of SmartMusic to all 6-12 Band and Orchestra programs. I'm going to be suggesting (not requiring) it as a purchase to all of my (choir) students as well. I use Finale each and every day. And every day I wish that the bundled scanning software (which I've upgraded, too, SmartScore Pro) was better and had been updated since July 2010. That isn't MakeMusic's fault…but they are partnered with SmartScore in terms of scanning capability.

1 I agree with the decision to skip Finale 2013 to make Finale 2014 a more significant release, at the same time, new versions of Finale did not ship during this quarter in past years, so to say that the non-release of Finale this year impacted this past quarter is a stretch–it will impact THIS quarter.


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