By WTT Contributing Columnist Gail Kailing Editor’s Note: Last evening, Printcafe Software announced revenue of $11.3 million for its third quarter ended September 30, 2002, a 5% increase over the the third quarter of 2001.  Earnings before interest, taxes, depreciation, amortization, non-cash charges, other expense and restructuring charges (EBITDA) for the third quarter of 2002 were $18,000, compared to a loss of $541,000 computed on the same basis in the prior year period. The Company's pro forma net loss for the third quarter of 2002 was $1.0 million, compared to a pro forma net loss of $3.3 million in the third quarter of 2001.  Several of our columnists frequently listen to the quarterly conference calls held by publicly traded industry firms. In many cases, the calls are usually a repeat of what their press releases state. In some cases new and interesting information can be gained during the question and answer session between company executives and financial analysts. We asked Gail Nickel-Kailing to listen in on Printcafe’s conference call last evening. Print management software companies are of significant interest to our members - and Printcafe news items are always highly visited by our readers for various reasons. We determined the new intelligence provided from the call warranted a special report for Premium Access Members. Notes on the Printcafe Software Earnings Conference Call October 16, 2002 -- While each quarter public companies publish their quarterly financial results, listening to earnings conference calls often produces tidbits that aren’t included in the official documents. Printcafe (NASDAQ: PCAF) held a web cast with Marc Olin, President and Chief Executive Officer, and Joe Whang, Chief Financial Officer and Chief Operating Officer, to discuss the Company's performance. Earnings are up, costs are down. That’s good. But there is still work to do over at Printcafe. Items gleaned from the Q&A session following the reading of the financials: 1. Segmentation of revenue for the quarter: Small printers 15% Medium-sized printers 35% Large printers 27% On-Demand printers 7% Publishers 6% Print Buyers 11% 2. Almost all the revenue was generated by Printcafe’s direct sales force, a small amount ($150,000) came from Creo referrals. The Creo referrals generated two stand-alone ERP sales. 3. Sales of the print buyer solution are slow. The biggest issue on the buyer side is not proving the ROI, but getting the sale through the corporate buying process in this economy. 4. PrintFlow is new in the sales process and most of the leads at Graph Expo were from prospects rather than existing Printcafe clients. People who looked at PrintFlow often had home-grown systems, and now are looking at ERP systems. PrintFlow drives across the entire product line for new clients, and was very instrumental in recent European sales. 5. The sales pipeline is very strong with a significant number and more prospects than in the third quarter. 6. At Graph Expo, the Printcafe booth was far busier than anyone had anticipated. Volume exceeded all expectations and booth staff collected 500 leads. Follow up since Graph Expo has validated the quality of the leads. 7. While no one is willing to say that the industry has turned around, Printcafe is forecasting a small amount of growth and the management team expects conditions to improve in the fourth quarter. 8. On the competitor front, Printcafe’s products match Heidelberg technology well. Scheduling and data collection systems compare favorably. 9. Printcafe has launched an international sales force and, though only a few international leads were generated at Graph Expo, the company now has 5 people selling in the UK and mainland Europe. No real market leaders have pulled ahead in Europe so demand has been pretty much unfulfilled. The small number of sales reps can turn over leads quickly and close 4 or 5 highly qualified deals in a quarter. 10. Cash and cash equivalents are expected to be in the mid $9 million range at the end of the year. 11. Printcafe is still targeting to break even mid-2003. 12. With a debt of $20.6 million, 90% held by people close to company, Printcafe will be focused on managing that debt. $12 million is due to Creo and another $6 million is still to be paid for acquisitions that make up Printcafe Software. One piece of the debt is due in 2003 however the bulk is not due until 2004. The strategy has not yet been determined as to how to reduce the debt.