Two mid-market ERP providers reported quarterly earnings late last week, with results that painted a mixed picture of recent and future performances.
Exact Holding N.V. reported a 2.5% revenue increase to €121.3 million in the first half of 2007 from €118.3 million in the first half of 2006. Negative foreign exchange rates stripped the company of €2.6 million, while revenue from acquisitions poured almost that much back into the company's coffers, contributing €2.5 million.
The company said it achieved organic revenue growth at constant currencies of 2.6%. The first-half numbers were buoyed by the performance of the e-Synergy Web-based collaboration product, which was up 17% from the year-earlier period and represented 11.5% of total revenue. Overall license revenue increased by 7.1% in the first half to €34.6 million. The company said most of the license sales were in its home Netherlands market and the Europe-Middle East-Africa (EMEA) region. Maintenance revenue grew just 0.6% year over year, while services revenue inched up 1.4%.
Exact's bottom-line performance was a bright spot, as net income increased nearly 17%, to €18.5 million in the first half of 2007, from €15.8 million a year earlier.
Looking ahead, Exact said it anticipates organic license revenue growth of 6% to 8% for 2007. The company said this is subject to its finding the right acquisitions, in line with its previously announced growth-through-acquisitions strategy. The guidance also incorporates increases derived from a corporate realignment, executed in the first half of 2007, into four geographical regions led by a corporate headquarters, to increase cross-selling opportunities and leverage product lines globally.
AMR Research analyst Simon Jacobson was upbeat about Lawson Software's prospects. The ERP provider reported fourth-quarter and year-end gains in the quarter, which ended on May 31 and marked the one-year anniversary of its Intentia International AB acquisition.
Lawson's fourth-quarter revenue was $212.9 million, up 69% from $126.1 million a year earlier. Roughly 75% of the increase was due to Intentia revenue — in the year-ago quarter, only five weeks worth of Intentia sales were reflected. The legacy Lawson business accounted for 25% of the year-over-year increase.
New license revenue came in at $40.6 million, driven by the Lawson System Foundation 9, the technology platform product that accounted for 450 deals in the quarter and has been a hit with companies in the healthcare, retail, and public sectors. A year ago, Lawson reported new license revenue of $19.2 million. The company signed five new Lawson M3 deals with customers in the Americas, its strongest region, which accounts for 54% of total revenue.
Lawson swung to earnings of $8.1 million, from a net loss of $4.8 million in the fourth quarter of 2006.
For the full year, Lawson reported a GAAP net loss of $20.9 million on revenue of $750.4 million, compared with GAAP net income of $16 million on revenue of $390.8 million a year earlier. The company attributed the loss primarily to restructuring and amortization costs related to the Intentia acquisition.
In its guidance for the first quarter of 2008, Lawson estimated revenue of $183 million to $188 million. First-quarter revenue in 2007 was $161.8 million.
AMR's Jacobson said the mid-market, which has experienced heavy consolidation over the past few years, is where the ERP opportunity lies. New, modern ERP products are needed, he said, and customers are looking for out-of-the-box solutions that will offer low total cost of ownership and will adapt and grow with the business. Service-oriented architectures (SOAs) are providing new functionality, creating opportunities for the mid-range vendors. Lawson is positioned well to take advantage of this opportunity with its Foundation 9, which serves both the M3 and S3 customer bases, he said.
AMR has predicted 11% compound annual growth rates for the overall ERP market through 2011.
As first reported, this story contained incorrect references to Plexus Systems, an on-demand ERP provider with no affiliation with Plexus Corp. Plexus Systems is a privately held provider of ERP systems.