CDC Software, a unit of Beijing, China-based CDC Corp., yesterday reported a 35% increase in revenue for the fourth quarter, ended Dec. 31, 2006.
Total revenue for the software unit, which is home to such brands as Ross Systems and Pivotal, rose to $68.1 million from $50.5 million in the fourth quarter of 2005. Software license revenue jumped 45% to $14.8 million. For the full year, CDC Software revenue rose 19.1% to $240.2 million, from $201.7 million.
During a conference call with financial analysts, Atlanta-based CDC Software President Eric Musser attributed the strong results to a combination of organic growth, acquisitions, and a focus on vertical industries, such as food processing, chemicals, biotechnology, and pharmaceuticals, in addition to non-manufacturing businesses, such as financial services.
"We are now established in targeted vertical industries," Musser said. "I firmly believe we are in the right place at the right time."
Parent CDC, whose business units also include mobile applications, online games, and portals for the Chinese market, also turned in strong fourth-quarter and year-end results. The company reported a 43% increase in total fourth-quarter revenue to $89 million, compared with the prior year's $62.3 million, and adjusted net income on a non-GAAP basis of $8.8 million, an increase of 38% from $6.4 million in the fourth quarter of 2005. Adjusted diluted earnings per share rose to $.07 from $.06.
For the full year, CDC said total revenue increased 26% to $308.8 million, exceeding the company's previous guidance of $283 million to $290 million. Adjusted net income soared 119% to $35.4 million, from $16.2 million in 2005. Adjusted diluted earnings per share were $0.29, compared with $0.15 in the prior year.
Reiterating earlier guidance for 2007, CDC said it expects revenue in the range of $415 million to $420 million and adjusted net income of $57 million to $62 million.
CDC Software said that in its fourth quarter it signed contracts for enterprise software with 90 new customers, including Bayou Steel, Computerized Medical Systems, Masonite Corp., and Signature Foods. The company also said it signed upgrade and expansion agreements with 204 enterprise software customers.
Musser cited CDC Software's October 2006 purchase of MVI Technology, a provider of real-time performance management software to the food and beverage and consumer products industries, as an example of the ERP vendor's successful acquisition strategy. The customer base for MVI applications, which are complementary to Ross Systems software products, has grown by more than 10% since the acquisition, he said. "And we are still in the early stages of this acquisition," Musser noted.