MandrakeSoft, the French Linux distributor, says it is on track to profitability by the end of this year, following a sharp increase in revenues and some cost cutting. The results buck the general trend of the high-tech industry in general and Linux companies in particular, which have both faced hard times due to the downturn in technology spending.
The company said late on Monday that its operating loss for its financial third quarter, ending in June, was one-fourth that of the same quarter last year, dropping from 3.12m euros to 790,000 euros. Losses have been falling steadily every quarter for the past year.
The improved situation was largely due to higher revenues, which hit 1.6m euros for the quarter, following the release of Mandrake Linux 8.2 in April. Revenues were 1.18m euros for the third quarter last year.
"The third quarter was the best in MandrakeSoft's history," the company said in a statement.
MandrakeSoft has continued to expand its presence in retail sales and through high-profile deals. In June the company said it would provide server software to the French government, and in July Wal-Mart began selling low-cost PCs preloaded with Mandrake Linux via its Web site.
Mandrake Club, a subscription scheme, contributed to the increased revenues, as did increased gross margins on all revenue streams, the company said. MandrakeSoft plans to continue to develop its high-margin lines, such as MandrakeClub, online sales and OEM licences, while continuing to cut costs.
The discontinuation of an e-learning venture in April of last year also contributed to lower costs.
MandrakeSoft launched its user club in March, but some industry observers said the scheme seemed more appropriate to a non-profit organisation than a private business. Some confusion also surrounded the club in April when MandrakeSoft released premium software to some members, but left out "basic" members.
However, the club has generally proved a success amongst the company's community-minded user base, according to MandrakeSoft. Fees range from $60 to $1,200 (£38 to £768) per year.
MandrakeSoft has often predicted imminent profitability, but has delayed the target date several times. At the time of the club's launch this spring, MandrakeSoft said it expected to turn a profit in early 2002.