Articles tagged: software

• Friday 3rd February 2012

  Revenue grows but losses pile up for NetSuite and SuccessFactors

  SaaS-only providers are still powering ahead as far as top line growth is concerned but at the bottom line they continue to post losses.

  NetSuite’s Q4 revenue (period ending December 31 2011) was impressive, coming in 23% up on the previous year at $64.1m and beating estimates of $63.4m. That shows the provider has momentum and that confidence in the cloud continues to grow for complex core business applications such as ERP. The level of growth is a positive sign because ERP has limped way behind CRM in terms of adoption. However, that growth has come at a cost because the company also made a net loss of $7.6m, which was higher than the year ago loss of $6.4m. Looking at the financial detail, it does not look like any particular area of cost has risen disproportionality.

  For the full year NetSuite made a loss of $32m vs. a loss of $27.5m the previous year, on revenue that grew 22% to $236m. The results indicate that NetSuite experienced consistent growth over the year, avoiding peaks and troughs, which is testament to the recurring revenue model and NetSuite’s ability to execute in a market that is now readily accepting cloud-based applications.

  Elsewhere in SaaS-land, SuccessFactors released Q4 prelims indicating revenue of $97m and an operating loss of $8.3m. Q4 will probably be the last set of SuccessFactors results – we say probably because its $3.4bn acquisition by SAP is being held up because it is waiting on approval from the US Committee on Foreign Investment. There are no adverse signs that we are aware of and SAP is still hopeful of a Q1 close. SAP’s Business Objects acquisition was similarly held up but went through.

  Both providers have adopted market and revenue growth strategies but we continue to question the sustainability of this approach and the SaaS-only commercial model. Salesforce.com’s results are due later this month and we can’t see the high cost of growth trend being broken. 

  Posted by

  Angela Eager

  at 09:40 - 0 comments

• Friday 3rd February 2012

  Misys and Temenos confirm merger talks

  Misys is back in the bid game, this time with Swissbased banking software competitor Temenos. Both parties have confirmed they are in discussions regarding an all share merger (and gave the usual cautions: early stage, no certainty that a transaction will take place etc).

  Misys was in discussions with Fidelity National Information Services (FIS) last August over an all cash offer but both parties walked away when they could not agree a price (see Misys and FIS leave the table).

  Neither Misys nor Temenos has had an easy time over the last year and more (see Temenos’ growing pains and most recently Misys acts to cut costs as market deteriorates). They are competing with bigger, richer providers in the banking software market such as Infosys with Finacle, TCS with BaNCS, and Oracle/iFlex with Flexcube. Against that background a merger would make sense by providing greater critical mass and pooled resources. It’s early days though. 

  Posted by

  Angela Eager

  at 08:36 - 0 comments

• Thursday 2nd February 2012

  Brazilian ERP player Totvs aiming for international status?

  ERP is a hard market to break into especially in mature markets such as western Europe and the US, but we’re musing over whether a new name will appear. Brazil’s Totvs Solutions seems to have international expansion plans, piggybacking on the international ambitions of its own customers.

  Pegging itself as the sixth largest ERP provider and the leader in Brazil and Latin America, and given the growth in the Brazilian economy (now the sixth largest, see The highs and lows of the Brazilian market), it could indeed break out into wider markets. Brazil is opening up to UK IT companies (see The B of the BRICs) but Brazil’s economic strength also means suppliers risk new competitors in their home and traditional markets.

  In 2011 Totvs had revenue of R$1.4bn (c$800m/c£500m/c614m Euros at current currency conversion rates) which was 12% up on the previous year. Infor, the third largest ERP provider had revenue of c$2bn in its last full year (cR$3.5bn/c£1.3bn/c1.5bn Euros).

  Posted by

  Angela Eager

  at 09:50 - 0 comments

• Thursday 2nd February 2012

  Digital Barriers announces significant UK deal

  Buy-and-build firm, Digital Barriers, has announced a significant contract valued at £2.5 million over five months with an existing UK client. In the year to 31st March 2011, Digital Barriers, which is focusing on the provision of advanced surveillance technologies, reported revenues of £6.6 million (see Digital Barriers: partnerships with SIs will help to build scale), and for H112 reported revenues of £4.8 million. Digital continues to grow acquisitively, and FY12 will be boosted by the numerous acquisitions it has undertaken during 2010 and 2011 (see Digital Barriers acquisition: all part of the plan and work back!). However, this contract will significantly boost the organic growth picture. We’re sure Digital Barriers would love to announce a similar size deal on the international markets (see Digital breaks down international Barriers) but in the meantime, Group MD Colin Evans is keen to highlight “the strength of our position here (the UK) continues to act as a compelling platform from which to target a wide range of exciting international growth markets”.

  Posted by

  Georgina O'Toole

  at 09:26 - 0 comments

• Wednesday 1st February 2012

  Revenues still falling at Charteris

  It would be good to be able to say the situation at business and IT consultancy Charteris was improving but given the latest trading statement, that’s not to be. The declining revenue trend of the last couple of years (see Charteris charts sliding revenues) continued into H1 2012 (ending January 31 2001) and revenues are expected to be ‘significantly lower’ than the £6.6m of H1 2011.

  Cost cutting measures have had some impact on the business and reduced the break-even point. The best that can be said is that the reported operating loss will be of a similar magnitude to the operating loss before exceptional items in H1 2011 (£498K on revenue of £6.6m). That is a good sign, but there is an awfully long way between reducing the relative decline and generating profit. Although it is managing at the moment, cash flow could be a concern so the company is looking into alternative finance options.

  The move to focus on Microsoft business solutions, spend-to-save initiatives in the public sector, and private sector consultancy ‘are giving grounds for some optimism’ but this positive indicator is outweighed by management comments regarding uncertainty about the economy and the markets Charteris operates in.

  The statement that the company believes it can get back to profitable month-on-month trading - if economic pressures do not increase - sounds plaintive to our ears. It said the same when it released it full year 2011 results. Public sector consultancy is still hard to secure and austerity reigns (see TechMarketView Local Government Dinner Debate). The private sector is still spending and Microsoft’s own sales of Dynamics ERP and CRM were noticeably up in Q2 (see here) so there could be some hope of improvement for Charteris. 

  Posted by

  Angela Eager

  at 12:04 - 0 comments

• Wednesday 1st February 2012

  IBM bolsters mobile with planned Worklight purchase

  As part of our enterprise software predictions for 2012 (see here) we highlighted mobile as a key area of activity, and specifically movement around the Mobile Enterprise Application Platform area. It has not taken long for the first piece of action – IBM’s plan to acquire privately-held mobile Worklight, a provider of mobile development tools. Terms of the deal were not disclosed.

  Mobile applications developed using Worklight tools can be developed once and run across multiple mobile platforms, which is a key requirement in today’s mobile environment. Worklight customers include Best Western, FIS Software and AT&T, who use the tools to create mobile applications for employees and customers.

  Worklight only enables mobile application development so IBM has also announced Endpoint Manager for Mobile Devices, which provides the ability to secure and manage employee’s mobile devices. The new software tool is based on technology gained through IBM’s BigFix acquisition in 2012. Application development and device management are twin requirements where mobile devices are concerned and MEAP’s such as Rhomobile, Syclo, Antenna, Pyxis and SAP’s Sybase, combine the two. Currently IBM’s solution is/will be based on separate tools, which may not be ideal. We’ll have to wait for the deal to close to find out how IBM will pull them together.

  The acquisition will add to the tools part of IBM’s software portfolio. Recently the company has concentrated on making purchases in the high growth areas of analytics and cloud applications. Mobile is a different area but shares the high growth potential. 

  Posted by

  Angela Eager

  at 08:51 - 0 comments

• Wednesday 1st February 2012

  Dillistone enters 2012 in a strong state

  The market softened towards the end of 2011 but AIM-listed recruitment software provider Dillistone Group expects pre tax profits to be in line with market expectations. Last year it delivered a 9% lift in pre tax profits. Larger than average order wins have enabled it to start 2012 with record recurring revenues.

  It is well set up for 2012. The purchase of Voyager Software last September (see Dillistone undertakes a bold voyage for growth) has “made a positive contribution” to the year (ending December 31 2011) and will add to recurring revenues during 2012. Dillistone did not say that an order win with a FTSE 100 firm came about because of its increased mass but we feel it must have helped. Hopefully 2012 will bring more. 

  Posted by

  Angela Eager

  at 08:13 - 0 comments

• Tuesday 31st January 2012

  Sopheon short on new customers

  2011 will be a flat year for Sopheon with expected revenue of £10.3m (vs £10.5m) and anticipated EDITDA of £1.5m (vs £1.51m). The details will be confirmed when the full year results (for YE December 31 2011) are released on March 22 but the preliminary numbers are no surprise given the tone of its trading statements through the year.

  The company, who provides product lifecycle management software and services, is not pulling in new customers, which is dragging down its already falling licence revenues (see No half time surprises from Sopheon). 2011 licence deals, including extensions to existing customers, were down to 54, vs 58 last year, and licence revenue as a proportion of total revenue dropped to 29% vs 37%.  Neraly 80% of new orders came from existing customers. The percentage is up on last year (62%), attributed to customers placing small initial orders than extending. That is a healthy sign but it needs new customers to fill the pipeline and based on today’s trading statement they are in short supply. Sopheon is working on new product releases so this might help the customer count during 2012. 

  Posted by

  Angela Eager

  at 09:38 - 0 comments

• Tuesday 31st January 2012

  @UK optimistic after beating expectations

  E-procurement software and services minnow @UKPlc is bullish about its prospects, having raised new capital and cut costs following a faltering performance last year (see @UK revenue down 11%). Its performance for the year ended 31 December is now ahead of expectations with revenue up 18% to £2.4m, and pre-tax losses narrowing to £140k vs. £592k in 2010. Investors were pleased with the positive news sending @UK's shares up 8%.

  In particular it is @UK’s e-commerce business which is performing better than expected, and is now the ‘main growth engine’ for the business with revenue up 61% in the year. @UK’s e-commerce offering is a cloud-based platform called SiteGenerator, which is used for self-build e-commerce sites through to larger b2b e-commerce systems. It claims to have 100,000's of sites created to date.

  @UK is in a tough and highly competitive e-procurement market space, so it is encouraging that its broader set of offerings - in this case e-commerce services - are helping it to remain more resilient. The challenge will be to see this continue through 2012.

  Posted by

  John O'Brien

  at 07:55 - 0 comments

• Monday 30th January 2012

  SDL/Alterian: now the work begins

  SDL has now completed the acquisition of Alterian (see here for the background), paying £69.7m in cash, and Alterian shares have been taken off the stock exchange. Now the work begins to meld the two entities on a financial and product level.

  On a conference call this morning to discuss the acquisition, SDL executive chairman Mark Lancaster said that unraveling Alterian’s numbers and identifying where its customer base is, has been a challenge in the light of Alterian’s financial restatements and restructuring.

  His view is that Alterian’s web content management business was declining, although it has a nice maintenance stream and there is scope for some new licence sales. It will be wrapped into SDL’s content management solutions. SDL views Alterian’s marketing, analytics and campaign management (which is where the bulk of its revenue has been) plus its social media capabilities (small revenues but high growth potential) as the real points of value within the business and will continue to invest in them to the tune of £1m to £2m.

  Lancaster tagged Alterian as a highly strategic acquisition and from the top level plans laid out this morning and ongoing investment in R&D clearly has big plans for the company. Alterian has a good set of technologies and is operating in some hot technology spaces but poor execution means it has never really been able to deliver on its potential, Hopefully that will change under SDL.

  Posted by

  Angela Eager

  at 10:00 - 0 comments

• Monday 30th January 2012

  Delcam still achieving enviable growth

  Delcam has matched its record breaking H1 with a record breaking H2 (to December 31 2011) despite earlier concerns about the unpredictability of the market (see here). It expects full year revenue to come in at c£41m vs £36.6m for last year, and £20.1m in H1. Profits before tax should be head of market expectations of £3.2. Last year PBT was £2.26m for the full year and H1 delivered PBT of £1.5m, so the CAD/CAM company is driving up profits as well as achieving growth. The rate of growth is slowing, last year full year revenue was up c17%, this year it looks closer to 12%, but that is still an impressive rate. The detail that will come with the full year results in March will provide insight.  

  Posted by

  Angela Eager

  at 08:37 - 0 comments

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