Logility, Inc. continued to ride the supply chain gravy train to substantial first-quarter year-over-year increases in sales and earnings, although the numbers were slightly off from record numbers in the fiscal 2007 fourth quarter.
The provider of collaborative supply chain planning products reported total revenue of $12 million for the quarter ended July 31, 2007, up 25% from nearly $10 million in the first quarter of fiscal 2007, but down roughly 5% sequentially from $12.7 million.
Software license fees totaled $4.7 million, a 42% increase from $3.3 million in the first quarter a year earlier, but down almost 18% from $5.7 million in the fourth quarter.
Company executives attributed the sequential declines to "normal seasonal patterns," and noted that Logility typically sees only 40% to 45% of its revenue in its first two quarters.
Logility said customers in 13 countries signed license agreements for its Demand Solutions and Logility Voyager Solutions products in the first quarter. That tally included 35 new customers, among them Alcoa Consumer Products, Johnson Controls, Parker Hannifin, Road Runner Sports, and VWR International. Executives declined to break out sales for the product lines.
Meanwhile, services and other revenue accounted for $2 million, also up 42% from a year ago, and about even with the 2007 fourth quarter. Maintenance revenue accounted for $5.3 million, an 8% boost from a year earlier and a 4% gain over the fourth quarter.
GAAP net earnings were $1.8 million, or $0.14 per share, in the first quarter of 2008, compared with $923,000, or $.07 per share in the year-earlier period. In the fourth quarter, the company recorded GAAP net earnings of $1.9 million.
On a conference call with financial analysts last Friday, Logility President and CEO J. Michael Edenfield stated, "The continued globalization of the supply chain is driving demand for our products." The trend to move sourcing to Asia "decreases supply chain transparency and puts pressure on the supply chain process," he said. "Lead times are longer, transportation costs are higher, and the cost of a mistake is greatly increased," he noted. He said those conditions create demand for Logility's products, as prospective customers look for ways to improve their sales and operations planning (S&OP) processes.
Many of Logility's customers are suppliers to mass-merchandisers Home Depot, Lowe's, Target, and Wal-Mart, all of which are turning up the pressure on their suppliers to increase fill rates, shrink lead times, and reduce costs. Although those merchandisers have experienced softness recently in a weak U.S. home market, Edenfield told Managing Automation through a spokeswoman that was not a factor in Logility's first-quarter performance, nor does he expect it to impact the company in the second quarter.
In discussing the company's outlook for the second quarter during the conference call, Edenfield said he expects Logility to perform as well as or better than a year ago, though he did not provide specific guidance.
Edenfield said the company's overall financial condition remains strong, with cash and investments of roughly $36.2 million and no debt as of July 31. A year earlier, the company, majority owned by American Software, reported cash and short-term investments of $28.5 million.
A recent Frost & Sullivan study pegged worldwide supply chain management software and services market growth at a compound annual rate of 8.7% through 2013.