Supply chain software provider Logility Inc. today reported double-digit revenue growth for its second quarter, buoyed by service and maintenance contracts, and several significant customer wins, as well as an expansion of its reseller channel.
For its second quarter of fiscal 2008, ended Oct. 31, the company reported revenue of $11.1 million, an 11% increase over sales of $10 million in the prior-year period. GAAP net earnings in Q2 of 2007 totaled $1.7 million, up 50% from $1.1 million in the comparable period in fiscal 2007.
Software license revenue was the company's weak spot in the second quarter. The $3.4 million Logility earned was only a 2% increase over last year's Q2 license revenue. The real boon came from services, which were up 28% to $2 million, and maintenance revenues, up 12% to $5.7 million.
Looking ahead to the third quarter, Logility president and CEO J. Michael Edenfield told analysts on a conference call today, "We do have a couple of nice-sized deals in the pipeline for that [third] quarter that could make a difference...we think we'll have a strong second half."
Logility is following a financial pattern that reflects the growing market opportunity. Earlier in the year, the company reported a 25% increase in first-quarter revenue, on the heels of
record numbers in its fiscal 2007 fourth quarter. Logility may be benefiting from manufacturers' need to shrink lead times and reduce costs. ARC Advisory Group, for instance, recently issued a report stating that the worldwide market for supply chain execution solutions is expected to grow 10% annually. The market was $4.6 billion in 2006 and is forecast to eclipse $7.4 billion by 2011, according to the analyst firm.
In its second quarter, Logility inked agreements with 24 new customers from 12 different countries, the company said. Some of the notable new and existing customers that placed orders include: Atek Medical, Electrolux, Nike, and CooperVision. Last month, the company announced that CooperVision, a manufacturer of contact lenses, had selected the Logility Voyager Solution to support its new supply chain strategy aimed at improving demand management, inventory and replenishment planning, product lifecycle planning, and sales & operations planning processes. Financial details of the contract were not disclosed.
Logility executives said the company is doing well with its two-brand strategy, which includes Logility Voyager software for supply chain visibility and transportation and warehouse management, and its Demand Solutions suite, which provides forecasting, demand-planning, and point-of-sale analysis. Executives on today's call declined to provide detail on the size of some of the latest customer contracts, except to say that the Demand Solutions products had more six-figure deals than they did at this time last year.
Given the company's strong financial position, analysts on the call asked Edenfield about potential acquisitions in the future. He said Logility and its parent company, American Software, are both focusing on making acquisitions, but he would not comment on potential targets.
For now, Logility is focused on building out its sales and distribution channel, according to officials. In the second quarter, Logility added two new VARs, one serving the government market, and one geographically positioned in Shanghai, giving the company a broader global reach. Logility is also working to increase the size of its distribution channel by encouraging existing VARs to expand their sales forces.
"We are not only expanding VARS, but many of our existing VARS are expanding their sales channel within the existing territory," Edenfield said. "We have on board more sales people within the existing VAR network than we did this time last quarter."