With the nation’s unemployment rate nearing a woeful 10%, the second quarter proved equally troubling for a provider of software that helps companies manage those dwindling workforces.
Kenexa, which offers tools to manage employee hiring and on-the-job performance, reported on Tuesday that sales in its second quarter, ended June 30, totaled $39.5 million, 30% less than the prior-year’s $56.4 million. Executives signaled that depressed sales will be the norm for at least the remainder of the year.
Although expenses also declined in Q2, the sharp reduction in revenue ate away at the bottom line, lowering Kenexa’s net income to $1.3 million, 78% less than the approximately $6 million reported in Q2 of 2008.
One of the few bright spots was the fact that the software provider managed to pad company coffers, ending the first half with cash and cash equivalents of $25.4 million, up from $23.1 million at the end of last year’s first half.
As many companies have in this down economy, Kenexa touted its sequential growth as a positive sign, noting that the $39.5 million in second-quarter revenue beat out the first-quarter total of $38.8 million. Still, executives acknowledged the tall task they face as they seek year-over-year top-line growth.
“Headwinds created by the challenging economic environment and jobs market continued during the second quarter,” said CEO Rudy Karsan, in a statement. “A growing number of customers are engaging in strategic evaluations, and we believe they will deploy more comprehensive solutions and move ahead with strategic services engagements when the economic environment improves and IT budgets are more available.”
In its guidance, Kenexa is looking forward one quarter at a time. For the third quarter of 2009, the company said it anticipates revenue of $37 million to $40 million, and non-GAAP operating income of $3.7 million to $4.6 million. By comparison, Kenexa reported revenue of $54 million in the third quarter of 2008, and net income of $5.4 million.
Karsan also noted Kenexa’s plan to “selectively increase investments in R&D and sales and marketing as we currently expect the buying environment to begin improving at some point during 2010.”