Mortgage-technology company Ellie Mae's quarterly profit fell 26%, as higher costs offset rising revenue.
Ellie Mae earned $3.7 million in the second quarter, down from $5 million in the same period of 2012. Revenue rose 40%, to $25.7 million, but higher operating expenses and tax costs absorbed the gain.
Operating expenses rose 51%, to $19.7 million, as costs related to sales and marketing, research and development and administration all rose. The Pleasanton, Calif., company's income tax provision also rose to $2.5 million, an increase of more than $2.2 million.
The higher operating costs were due to investment in technology and infrastructure, as well as client and sales services, the company said.
The number of active users of Encompass360, Ellie Mae's mortgage-origination software, rose 42%, to 88,688, and the number of users of the software-as-a-service version of the program increased by 74%, to 55,952.
"Once again, we sold a record number of SaaS Encompass360 seats, with a particularly strong increase in new customers, while adding more users at current customers and upgrading existing licensed customers to our SaaS platform," said Sig Anderman, Ellie Mae's chief executive, in the news release. "We also experienced good momentum in increasing the number of new active SaaS users during the quarter, providing a solid foundation for future growth."