Despite a significant decline in software license sales, mid-market ERP provider Epicor eked out a 2% increase in revenue in the fourth quarter, ended Dec. 31, 2009, and remained solidly in the black.
For the fourth quarter, total revenue reached $121.9 million, up from the year-earlier total of $119.7 million. License sales took a big hit, falling 34% to $25.2 million in the quarter. But strong performances in Epicor’s consulting business, where revenue spiked 8% to $38.1 million, and its maintenance wing, which surged 14% to $47.3 million, helped right the ship.
Epicor’s “hardware and other” category, typically a minor blip on the balance sheet, also scored big in the fourth quarter, growing more than 100% to $11.4 million. Officials portrayed the spike as an anomaly.
Still, that bounty failed to straighten out a sagging bottom line, as fourth-quarter net income sank 87% to $2.9 million, from $22.5 million a year earlier. Sharply higher software development costs — likely attributable mainly to the new Epicor 9 product, which began shipping in December — ate away at profits, as did a $4.4 million restructuring charge associated with the company’s November decision to cut 10% of its workforce.
Epicor’s full-year results followed equally divergent paths, as revenue shot up nearly 14% to $487.9 million, while income dropped 97% to $1 million, from $41.2 million in 2007.
George Klaus, hosting his first quarterly announcement as CEO since returning to the role in the wake of Thomas Kelly’s departure last month, struck a cautious note on a conference call with investors. “It is unrealistic to expect that we will not continue to be impacted by the current difficulties of the overall market, whether through delayed decisions, longer approval cycles, or reduced budgets,” he said on Wednesday’s call.
Given those conditions, Epicor followed the recent lead of other public companies and reined in predictions, saying a full-year outlook wouldn’t be prudent under such economic circumstances. For the first quarter of 2009, officials expect revenue of $100 million to $105 million, with non-GAAP earnings per share of $0.06 to $0.08. In the first quarter of 2008, the company logged $102.2 million in revenue and a loss of $0.12 per diluted share.
Interestingly, Klaus devoted a portion of the conference call to discussing the point solutions outside of the converged Epicor 9 suite, including business intelligence, time and expense management, enterprise performance management, procurement and sourcing for ERP, and CRM. He noted that these software offerings had performed well with customers over the course of the year, a statement that echoed SAP’s announcement this week that it would make its giant enterprise software suite easier to purchase modularly.
Damon Wright, senior director of investor relations at Epicor, said the trend of point purchases has tracked the flagging economy.
“Where people may not want to pony the big dollars for the full solution, there’s still things they can do now in the budgets they have,” he told Managing Automation.