JDA Software Group, Inc. recorded a 75% year-over-year increase in total revenue and a 336% gain in net income for the second quarter, ended June 30, 2007, thanks in part to its acquisition a year ago of Manugistics Group, Inc. The Manugistics business contributed $40.1 million to the supply chain company's total revenue of $90.8 million, which was up substantially from $51.8 million a year earlier, and up only slightly from the first quarter's $90.7 million. GAAP net income for the quarter was $4.8 million, up from $1.1 million in the second quarter 2006, but down from $5.4 million in the 2007 first quarter. "We marked the one-year anniversary of our Manugistics acquisition by delivering record total revenues, a sequential and quarter-over-quarter increase in software licenses, and triple-digit earnings growth over second quarter 2006," said JDA CEO Hamish Brewer, in a prepared statement. "We have been heavily focused on sales execution since the acquisition, and I believe these efforts are paying off with excellent sales and a solid pipeline of new business opportunities." On a conference call with financial analysts yesterday, Kristen Magnuson, executive vice president and chief financial officer, explained that the company's software and maintenance revenue was hindered in the quarter from pushback by Manugistics customers on annual rate increases. "This is the first major renewal cycle for the acquired Manugistics installed base, and we applied our standard rate increases, which has led to protracted negotiations," Magnuson said, adding that JDA is working to restore the resulting revenue suspensions. Overall, she noted, JDA's customer retention rate has been running 95% per year. Brewer noted on the conference call that the company has seen increased demand from new customers, which represented 40% of the company's software license sales during the first half of 2007, up from 20% in the first half of 2006. In fact, the company signed 71 new software license deals, including four contracts above $1 million, in the second quarter. Software licenses accounted for $18.6 million in the quarter ($6.9 million of that from Manugistics), up from $10.4 million a year earlier and from $17.0 million in the first quarter of 2007. Maintenance services came in at just under $43 million, almost double the $21.7 million in the 2006 second quarter, but down sequentially from $44.5 million. The executives cited consulting services as a weak spot in the portfolio. Nevertheless, Brewer said that the consulting business "may have bottomed out now," and he anticipates a gradual recovery continuing into 2008. The company ended the quarter with $65.4 million in cash after paying off $20 million of its debt. The remaining debt is $106.1 million. JDA released its Supply Chain Planning and Optimization 7.4 product suite in June. The suite includes enhancements and integration of 15 applications. According to Mike Griswold, research director at AMR Research, the 7.4 offering represents the beginning of the integration of JDA and Manugistics products. "They're pushing this idea of a single demand forecast, and they're well-positioned to do that. At the end of the day, they'll have a very solid footprint," he said in an interview with Managing Automation. Brewer was upbeat about the success of the Manugistics acquisition. "Since we acquired Manugistics, people see JDA as a long-term contender in this marketplace," Brewer said. "People recognize us as a specialized vendor that will be there for the long run," and that has enabled the company to go head-to-head with its main competitors, which he cited as horizontal vendors SAP and Oracle. "JDA is an enterprise provider," he stated. Griswold agreed that as JDA positions itself more and more as an ERP company on the strength of its Manugistics-originated products, it will come up against SAP primarily. But in the manufacturing supply chain arena, it will more likely run into pure-play vendors i2 and Manhattan Associates. And "JDA has moved to the head of that list. The Manugistics acquisition was huge for them," he said. Manhattan Associates' second-quarter results, announced today, reveal a heated battle. Manhattan Associates' revenue increased 15% to $89.6 million in the quarter, just shy of JDA's $90.8 million. License revenue of $23.4 million was up 10% year over year, and services revenue of $55.9 million was up 15% from a year ago. GAAP operating income rose 26% to $13.7 million. For its part, i2 has stumbled in the first two quarters of 2007. The company last week revealed that its second-quarter results would miss projections and that it would not meet its full-year targets. Earlier, it announced that President and CEO Michael McGrath would step down at year's end. Meanwhile, at JDA, Brewer said he expects the forward momentum to continue through the second half of the year, and adjusted his financial guidance for the company's full-year performance. Total revenue guidance now ranges from $353 million to $371 million, compared with previous predictions of $358 million to $368 million. GAAP earnings per share is now expected to reach $0.56 to $0.73 cents, up from earlier guidance of $0.56 to $0.66. "All of this implies 19% to 20% operating margins," Brewer told analysts. He also stated that he would consider making another acquisition in the future.