Continued year-over-year revenue improvements carried enterprise software provider SoftBrands, Inc. into the black in the fourth quarter, ended Sept. 30, 2007, and whittled down its full-year net loss.
Fourth-quarter revenue of $23.3 million was up 23% from $19 million a year earlier,. Of that total, the company's manufacturing business contributed $12.5 million, about even with the prior-year period.
Net income was $1.8 million, reversing a $17 million loss the year before. Operating income in the quarter was $2.5 million — the highest in the company's history — reversing an operating loss of $12.3 million in the fiscal 2006 quarter.
Software license revenue of $4.5 million was 19% of total revenue in the current quarter, up from 11% a year earlier. SoftBrands' biggest revenue stream — maintenance — totaled $13.3 million and accounted for 57% of total revenue, down from 65% a year ago, according to Gregg Waldon, chief financial officer.
Geographically, 62% of the quarterly revenue was generated in the Americas, 24% in the EMEA (Europe, Middle East, and Africa) region, and 14% in the Asia Pacific region, the company reported.
For the full year, revenue totaled $93.4 million, up from $69.3 million in fiscal 2006, though shy of the company's $95 million guidance. Operating income was $0.7 million, compared with a 2006 operating loss of $16.4 million. The company also grew its EBITDA (earnings before interest, taxes, depreciation, and amortization), but still posted a net loss for the year of $3.7 million, compared with a $21.1 million deficit for fiscal 2006.
The company attributed the fourth-quarter revenue gains primarily to an acquisition in its hospitality business in the 2006 fiscal fourth quarter, and further noted that a restructuring of its manufacturing business undertaken in June also bore fruit. The restructuring called for a focus on the company's partnership with SAP AG and a de-emphasis of its traditional FourthShift business. SoftBrands has set its sights squarely on the small and medium enterprise (SME) business.
On a conference call with analysts yesterday after the market closed, SoftBrands President and CEO Randy Tofteland said, "Our manufacturing business continued to improve its profitability, benefiting from tight cost controls throughout the year and the restructuring actions we undertook in the third quarter. And while manufacturing's overall revenue was even with the prior year, we did record a pickup in license revenue growth as a result of both channel and direct sales of our SAP-centric product."
Tofteland noted that SAP named SoftBrands one of 22 early partners for SAP's forthcoming software-as-a-service product Business ByDesign.
Despite its emphasis on SAP-related business, SoftBrands reported that its base business performed well in the fourth quarter, and the company continues to invest in its FourthShift product. The next release will be a business intelligence module. For the year, the base business contributed a 2% increase in maintenance revenue, Tofteland said.
"In fiscal 2008, we expect our manufacturing business to post modest revenue growth as our SAP business doubles its revenues from the prior year and closes the gap on the natural attrition in our base business, and we expect to see a significant uptick in our operating income as a result of the restructuring of the business this year," Tofteland said.
For fiscal 2008, SoftBrands' guidance is for revenue of $100 million to $105 million.