Convera: Vertical Search Is a Slow Climb
July 29, 2008
In 2000, Convera was one of the big dogs in the enterprise search engine game. The company showed promise. Then the company hit a rough patch, losing deals with Intel and the NBA. More information about this 2001 business shift is here. The company reinvented itself by selling its enterprise search unit. Autonomy nabbed a small chunk. Fast Search & Transfer gobbled the balance. The streamlined Convera emerged as a company specializing in indexing selected sets of Web sites. Convera describes itself as a vertical search engine company. A person with a list of urls can create a vertical search engine for free using Google’s Custom Search Engine. You can read about it here. I’m doing most of this math in my head, so if you find an error, please, use the comments section to set me straight. I am a bit rushed after a weekend in the hospital watching my mom sleep.
How is Convera doing? The answer can be found it the company’s financial results for the period ending April 30, 2008.
- Revenue from continuing operations for the first quarter of fiscal 2009 increased to $402,000 or 44% over the $280,000 in revenue recorded in the fourth quarter of fiscal 2008.
- Backlog, grew from $4.0 million at January 31, 2008 to $4.7 million April 30, 2008. These backlog balances represent future revenues stemming from the contractual minimum revenue commitment amounts from customers.
- As of April 30, 2008, a total of 45 Excalibur supported vertical search sites from 25 different publishers that have been commercially launched. There were 39 vertical search sites from 24 publishers that had been commercially launched at January 31, 2008.
- Search traffic activity from the Excalibur supported vertical sites continued to grow, increasing 187% from 9.5 million searches in the fourth quarter of last year to 17.8 million in the first quarter ended April 30, 2008.
- A total of 75 Excalibur supported vertical search sites are under contract with customers, 47 of these sites have been commercially launched and 28 of these sites are in development. These contracted sites represent publications in over 15 major vertical industries. Convera is presently providing vertical search services to 30 different trade publishers.
More information about Convera’s financial are available here. The company’s historical financials are quite interesting, and I have not figured out what has happened to Convera’s debt. The company lost $47 million in 2007 and is still losing money in 2008. Allen & Co. has a stake in the firm, and two Allens serve on the Convera Board of Directors.
The Outsell consulting firm, a group of true wizards in Burlingame, California, described Convera as “a rising star in 2008”. I don’t think I would characterize Convera’s losses in 2007 and 2008 as characteristics of a rising star. But I live in Harrods Creek, Kentucky, and watch my neighbors shoot squirrels with shotguns, so what do I know?
You can see the Convera system in action. Navigate to DwellingWell.com and enter the query “outdoor paint”? Did you get results? I did not. The screen was blank. Zero results. I wish vendors would keep their demo sites current, don’t you?
You can navigate to PureContemporarySearch here. Enter the query “wall coverings”. The result set appears below:
The results seemed useful. The search page allows the user to narrow the query to editor-selected sites, the Web, and other categories. The results show suggestions with more slices of content available by clicking on the tabs above the results display.
What’s this mean?
First, the company seems to be in a position to break $2 million revenues by the end of 2008. Profits are on the horizon–the distant horizon where maybe the morning star will make a brief, faint appearance.
Second, the company added in 90 days, six sales. At that rate, the company will land about 25 new customers by the end of 2008. With traditional publishers uncertain of what to do about their core business implosion, I am not sure Convera can make enough money to reverse its trajectory.
Third, total search over 12 weeks was about 18 million or about 215,000 searches per day. The average traffic per site works out to 4,600 searches per site per day. The Auto Channel, a vertical site not affiliated with any search vendor, attracts more one million unique visitors every 12 weeks who run queries on the TACH.com site. The Auto Channel is performing somewhat better than Convera’s results. The Auto Channel is a firm one of Convera’s customers should buy and clone in my opinion.
Convera is a useful case to review when one wants to know how the financial fortunes of a search company can change. I have dropped the company from my watch list, but I do check on its performance once a year.
The core of Convera was a document scanning and optical character recognition software and services vendor. Now, it’s a “star” in vertical search. I wonder if Google is aware of Convera or if Convera is aware of Google’s CSE.
Stephen Arnold, July 29, 2008
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