Napster reported its fiscal and Q4 2007 numbers yestserday (read press release). For the year, revenues increased to $110 million from $90 million. Subscribers increased 37% to 830,000. Net loss improved $37 million from $61 million. Gross margin improved to 29.38% from 28.06% in fiscal 2006.

For Q4, revenues mildly improved to $28.9 million versus $26.4 million in Q4 of fiscal 2006.

Looking at a few ratios indicate the company is becoming more efficient in generating sales: Sales & marketing is a percent of revenue decreased to 30.8% in 2007 from 54.6% in 2006. R&D as a percent of revenue improved to 9.9% from 13.9%. G&A as a percent of revenue, though, was basically flat: 21.8% in 2007 versus 22% in 2006. For a company that requires scale for profitability, these ratios are encouraging.

Napster has been a whirlwind of business development recently -- some look good, some look questionable. The joint marketing agreement with Motorola and its partnership with AT&T will test the potential of subscription services via mobile handsets. The deal with Circuit City seems years late and uninspired.

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