Supply chain software stalwart i2 Technologies Inc. today reported flat revenue for its second quarter even as its bottom line saw a big boost from a recent legal settlement with SAP.
For the quarter ended June 30, 2008, i2 reported revenue of $64.7 million, compared with $64.9 million in the second quarter of 2007. The company’s software solutions line was a lone bright spot, growing revenue 9% to $12.5 million, up from $11.4 million in the year-prior period. However, software accounts for only about 13% of the company’s sales.
Late last month, i2 announced that it had settled an intellectual property lawsuit against SAP for $83.3 million. Although the one-time payment from SAP occurred on July 28, i2 recorded the gain as “a benefit to the second-quarter operating expenses,” which boosted net income to $81.5 million, compared with $2.3 million last year. i2’s costs and expenses in the quarter reached $60.7 million, down from $61.7 million in Q2 of 2007, leaving the company with an operating expense benefit of $20.6 million. Assets also increased to $307.5 million from $202.1 million.
On a conference call today to discuss the results, CEO Pallab Chatterjee called the outcome of the settlement “a strong validation of the value of our intellectual property.”
For the quarter, i2’s total bookings were $64.1 million, down from $75 million a year earlier. Services and maintenance — including software offered as a service — accounted for $55.7 million of that total.
CFO Mike Barry said the subscriptions business has been beneficial to i2. “It is a significant trend to want subscription-based transactions and we will continue to see subscriptions as part of our revenue.”
i2 is still considering selling its business, but officials were mum on developments, saying the strategic review committee (SRC) would report on its progress in a couple of weeks. i2 plans to dedicate $2 million to $2.5 million to the expenses involved, such as employing external advisers. “SRC is continuing its discussion and expects an update in its review of transactions within the next two weeks,” he said, adding that there was no assurance that the committee would recommend a new or different course of action.
Referring to the SAP suit’s role in possible discussions, Chatterjee said the resolution “takes one more uncertainty out of the picture.”
When asked what the company will do with the money acquired from SAP, Barry said it would use the infusion to “grow [the] business” and “take a hard look at patent litigation activity.”
Cash flow from operations was a strong point for i2, reaching $11.5 million, which Barry said was the company’s fifth quarter in a row of positive cash flow. He noted that i2 will “continue to focus on this important metric.”