Orchard Losses Jump Even As Revenue Doubles

NEW YORK (Hypebot) – The Orchard posted a 99% jump over previous year revenue in the 4th quarter of 2007, but losses also grew from $1.4M to $2.4M as gross profit margins fell 34% to 25%. The merger with publicly traded Digital Music Group factored into all results.

For 4Q 2007, Orchard revenues were $9.9 million, compared to $4.9 million for 4Q 2006, an increase of 99%. These results for 2007 reflect $1.1 million of revenues from Digital Music Group from the 11/17 merger through December 31, 2007. The historical results for 2006 reflect the stand-alone results of The Orchard.

The net loss for the fourth quarter of 2007 was $2.4 million, or $0.53 per share based on 4.6 million weighted average shares outstanding, compared with a net loss of $1.4 million, or $1.18 per share based on 1.2 million weighted average shares outstanding for the fourth quarter of 2006.

Gross profit margin was 25.1% in the fourth quarter of 2007, as compared to 34.4% in the corresponding period of 2006. In November 2006, the Company settled an outstanding dispute with a supplier and realized a gain of $403,000 in the fourth quarter of 2006 that was recorded as a reduction of cost of revenues. Excluding this one-time settlement, gross profit margin in the fourth quarter of 2006 would have been 26.2%. Operating expenses were $4.4 million for the fourth quarter of 2007 as compared to $3.0 million for the fourth quarter of 2006.

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