LexisNexis and Sageworks, Inc. (http://www.sageworksinc.com) have announced that Sageworks has licensed reports from one of its proprietary technologies, ProfitCents public, to LexisNexis. ProfitCents public is a software program that can load the SEC data of any publicly traded firm in the U.S. and convert the numbers from the SEC financial statements into easy-to-understand text reports of approximately three to four pages. The ProfitCents public technology is used to quickly produce analyst reports without all of the technical jargon that often makes it difficult to quickly extract relevant information. ProfitCents public contains all of the SEC data for the previous 2 years. Additionally, as the reports are generated automatically from the SEC data, the chance of personal bias, as there might be from a financial analyst, is removed.
ProfitCents public operates using Sageworks' proprietary technology FIND (Financial Information to Narrative Data), which employs an artificial intelligence engine. According to the sample report at the ProfitCents public Web site, reports include the following:
- The company's industry and the time periods being compared
- Rankings and discussions of the company's liquidity, profits and profit margins, borrowing, assets
- The raw data used to generate the report
- Graphs of current ratio, quick ratio, inventory days, accounts receivable days, and accounts payable days, comparing the company to its industry
- Several other graphs
- A list of standard financial indicators with their definitions
Here's a sample discussion of profits and profit margins:
If the company cannot boost sales soon, the challenge may be to cut some long-term expenses to build profitability. If the company does not do so, it may be difficult to sustain the business in the long-term. Sometimes, it is not a problem to see flat net profitability if sales and the profit margin are strong. Conversely, flat sales are acceptable if profitability is improving at a significant rate. However, neither of these dynamics is occurring here.
Anne Forsyth of Sageworks explained that the LexisNexis version of ProfitCents public will have all of the features of the same product offered directly through Sageworks; it will not be a limited version. All company data available through Sageworks will also be available through the LexisNexis version. However, the reports in the LexisNexis version will be prepackaged reports that will be updated as the SEC data is updated. There will not be a transition from the LexisNexis system to the Sagework system; all of the reports will reside directly on the LexisNexis system. The LexisNexis user will need only to input a ticker symbol or the name of a publicly traded U.S. company and the resulting output will be a prepackaged report for that company. In Sageworks' direct version, reports may be created on-the-fly; but the output will be identical in both versions. The capability to compare the current period with a prior period will exist in both systems, as well as the ability to analyze data from a particular year or a particular quarter.
For Sageworks, this agreement further expands its customer base and extends the awareness of the company, its products, and its technologies.
From the LexisNexis point of view, adding ProfitCents public to its stable of other financial resources is quite a coup and allows it to offer leading edge technology to its customers. It also further expands its financial offerings and turns its service into even more of a one-stop shop for financial information. This addition helps to minimize the number of different services needed for someone trying to prepare a complete financial picture of a company.
According to Jennifer Aleknavage, a media contact at LexisNexis, ProfitCents public will be available to LexisNexis users whether they use a Web version of LexisNexis or the software version. However, availability and pricing will depend on the type of subscription and LexisNexis users should contact their representatives for specific information. Pricing for the direct ProfitCents public product is also tailored to the user and should be discussed directly with Sageworks. Although no date has been set for the launch of ProfitCents public on LexisNexis, it is expected to be ready within the month.
Without working with the actual product, it appears to be most appropriate for either the end user (such as an executive who needs a quick overview of a company) or the information professional who is compiling a thorough report on a company for a client. However, Sageworks has licensed its technology to thousands of financial professionals, and companies like BNA, Intuit, Wells Fargo, Citibank, and H&R Block. Sageworks said that it conducted rigorous testing to establish the accuracy and stability of its technology. (For more information and to view a sample report, visit http://www.valuecents.com).
Though the idea of an easy-to-read text-based analyst report sounds very tempting, I would be reluctant to use ProfitCents public in a vacuum without first comparing the results to complete, human-compiled analyst reports. Being a cynic at heart, I'm skeptical of a computerized algorithm being able to make sense of the mumbo-jumbo in SEC filings and turn it into accurate, readable text. Possibly, after several successful comparisons, I might be willing to trust the computerized version enough to allow it to fly solo. But then again, I might not.