| Abstract: | An early release of the mid-market ERP vendor's fourth-quarter results shows big gains in license revenue and overall sales. |
| Keywords: | Epicor revenue, Epicor financials |
In a marked improvement on its recent performance, mid-market ERP provider Epicor Software Corp. said that it expects to post record software license and total revenue for the quarter ended Dec. 31, 2007, when it announces its financial results on Feb. 5.
Fourth-quarter 2007 software license revenue will come in between $36 million and $37 million, the company said, representing a year-over-year increase of 11% to 15% compared with 2006 fourth-quarter license revenue of $32.3 million. Total revenue for the quarter will amount to $115 million to $117 million, up from $104.4 million in the comparable period in 2006.
Speaking today at an investors conference in New York, Epicor CEO George Klaus attributed the company's "fantastic" quarter to a solid sales pipeline coupled with a strong close rate.
"In my opinion, we had a 'B' quarter in Q3," Klaus said, noting that software revenue in that period came in below the company's guidance. In response, he said, the company set conservative expectations for the traditionally strong fourth quarter that were "very attainable."
In announcing the preliminary results, Epicor also reiterated its previous guidance of 8% to 10% license revenue growth for the full year of 2008.
"We believe that we're in a very strong market to continue our growth, which has been 10%-plus for many years, on an organic basis," Klaus said, citing industry analysts' predictions that the challenging economic conditions anticipated in 2008 won't translate into a negative impact on mid-market ERP spending.
Some market analysts indeed anticipate a robust environment for ERP vendors in 2008, as mid-market companies, grappling with increasing supply chain complexity, look to renewed technology investments for help. AMR Research, for example, predicts that 48% of mid-sized enterprises will increase their ERP budgets in 2008, with an expected average spending increase of 5.1%.
Epicor has sold approximately 2,500 licenses of its service-oriented architecture (SOA)-based core product, Vantage, since it was reconfigured on Microsoft's .NET Web services platform in 2005, Klaus noted.
The next major version of Vantage, scheduled for release in the third quarter, will include internationally regionalized functionality that the company hopes will help to boost sales efforts in such markets, Klaus said.
The chief executive noted that while Epicor's new-license sales effort will focus exclusively on the latest version of Vantage once it's released, the company will protect a major source of its revenue by continuing to offer maintenance support for its legacy products. Epicor also plans enhanced functionality for legacy products, including portal, business intelligence, and workflow capabilities, he said.
Klaus said that while Epicor will continue to focus on the mid-market, it will also persist in its efforts to reach larger customers. Last October, when discussing Epicor's prior-quarter results, Klaus and Epicor President and COO Mark Duffell suggested that sluggish license sales in the period were due both to protracted sales cycles typical with larger companies and a failure to close traditional business in the mid-market while the company was focused on those larger deals.
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