Surging Quest Software Plans Second Offering

With its stock price rising and quarterly earnings doubled, Quest Software Inc. unveiled plans Tuesday to raise more money on Wall Street--selling more stock barely six months after first shares were sold publicly.

The Irvine firm, which makes business software that tracks data internally or over the Internet, also said it is buying a smaller rival in Canada. The deal is its third acquisition in as many months.

Quest would not say how many shares it will issue, how much money it plans to raise or how it will spend the proceeds. It also would not say when it expects to offer the shares, which will be resold by existing shareholders and the company.

Quest has 38.8 million shares outstanding.

Quest’s client roster sports major Internet players such as Amazon.com and EarthLink, and manufacturers such as luxury leather goods company Coach.

Its approach of targeting businesses of all sizes appears to be paying off.

For the fourth quarter, Quest’s net income, including charges, was $1.6 million, or 4 cents a share, compared to earnings of $820,000, or 2 cents a share, for the previous year’s final three months. Quarterly revenue doubled to $24.3 million from $12 million.

For the year, Quest earned $3.4 million, or 7 cents a share, compared to $2.3 million, or 5 cents a share, for the previous year. Revenue jumped to $54.3 million for the year from $24.9 million.

Its results exceeded Wall Street’s expectations of 2 cents a share in fourth-quarter earnings, according to analysts polled by Zacks Investment Research Inc.

Vincent C. Smith, Quest’s 35-year-old chief executive, told analysts that the company’s strong performance came partly from a boost in licensing and service revenue.

“We are beginning to see new trends in our software license sales as well, including growth in the number of larger orders,” Smith said. “It’s an exciting time.”

The company’s initial public offering last summer was red hot as its share price tripled to $47 on its first day of trading. The stock debuted at $14 a share. Since then, the stock price has continued to rise quickly, recently trading at more than $100 a share.

The company’s stock price gained $2.15 on Tuesday, closing at $98.75 a share.

Under Smith, Quest has quietly expanded through key acquisitions and is poised this year to unveil several products that analysts predict will help the Orange County company dominate its market.

On Tuesday, Quest said it bought QMaster Software Solutions Inc., a privately held developer in Calgary, Canada, for an undisclosed sum. QMaster executives could not be reached for comment late Tuesday.

Late last year, the company bought closely held MBR Technologies Inc. for about $11.5 million in stock and cash. Soon after, Quest picked up closely held Foglight Software in Pleasanton, Calif., for about $86.3 million in stock.

All three deals have boosted Quest’s work force to 700, and given the company access to new technologies and products that complement its own line of tools, corporate executives said.