Two earnings reports from enterprise software providers this week showed contrasting results, as mid-market ERP provider CDC Software revealed a 22% year-over-year revenue drop, and its larger counterpart IFS showed a 14% increase in revenue, buoyed by industries less exposed to global economic conditions.
CDC Software, a unit of diversified CDC Corp., brought in total revenue of $53.5 million in the fourth quarter of 2008, 22% less than the $68.4 million it reported in the year-earlier period. License revenue was down 46% to $9.2 million, from $17.1 million a year earlier, while maintenance revenue was nearly flat at $24.9 million. Revenue from consulting services dropped 22% to $18.4 million in the quarter, from $23.7 million.
CDC Corp.’s total revenue was $96.2 million in the period, down 10% compared with $106.9 million last year.
CDC said it is seeking “strategic growth alternatives” for three of its four core businesses: CDC Software, CDC Global Services, and CDC Games. A company spokesperson today said those options could include a full or partial sale of certain assets, mergers, partnerships, or capital market transactions.
“While our businesses are not for sale,” said CDC Corp. CEO Peter Yip in a statement, “as a public company, we must explore all strategic and other growth alternatives for our various businesses in order to act in the best interests of our shareholders and our company.”
CDC declined to comment further on its previously announced plans to spin off the software business via an IPO.
Meanwhile, Swedish ERP provider IFS’ 14% year-over-year sales increase translated into net revenue of SKr 634 million in the first three months of 2009, due to what the company said was a comparatively stronger contribution from consulting and maintenance sales. The company also said that it has been protected from some of the negative effects of the global economic downturn because it focuses on less-vulnerable sectors, including defense, infrastructure, and utilities.
Revenue from IFS license sales dropped 9% to SKr 74 million, a decline that was more than offset by a 16% increase in consulting revenue to SKr 356 million and a 20% rise in revenue from maintenance and support, which totaled SKr 196 million.
The company’ profit after tax in the quarter was SKr 10 million, compared with a loss of SKr 5 million in the same period last year.
At the start of this year, IFS restructured its books to report results according to six geographic segments plus its defense business. In its Europe North segment, consisting of Denmark, Estonia, Finland, Latvia, Norway, and Sweden, license revenue was flat year over year at SKr 19 million, while higher maintenance, support, and consulting revenue pushed the segment’s results to a total of SKr 255 million, compared with SKr 235 million last year. In Europe West (France, Ireland, Spain, and the United Kingdom), lower license revenue was more than countered by strong returns from maintenance, support, and consulting, leading to revenue in the segment of SKr 84 million, up from SKr 72 million last year. Europe Central (Germany, Italy, Netherlands, and Switzerland), which saw higher year-over year revenue in all categories, contributed SKr 74 million, compared with SKr 54 million in the first quarter of 2008. Europe East, consisting of Czech Republic, Hungary, Poland, Romania, Russian Federation, Slovakia, Turkey, and Ukraine, contributed SKr 48 million, nearly flat with last year’s SKr 47 million, while the Americas region (Brazil, Canada, and the United States) brought in SKr 89 million, up from SKr 76 million last year, due to strong maintenance, support, and consulting sales. In the Africa, Asia, and Pacific segment, revenue rose in each category, totaling SKr 61 million in the period, compared with SKr 45 million last year.