Agile Software Corp., a developer of product lifecycle management software, yesterday posted a net loss of $5.8 million, or $0.10 per share, in its third fiscal quarter, ended Jan. 31, 2007, as revenue rose just 1% to $33.2 million.
The software company, which earlier this month completed a review of stock-option grants that enabled it to resume its Securities and Exchange Commission reporting, said the third-quarter 2007 loss, on a GAAP basis (generally accepted accounting principles), compared with a net loss of $4.1 million, or $.08 per share, in the third quarter of 2006.
Agile said that non-GAAP results (excluding amortization of intangibles, stock compensation, and stock-option review costs) showed net income of $488,000, or $.01 per share, compared with a non-GAAP net loss of $122,000 in the third quarter of fiscal 2006.
License revenue for the third quarter slipped to $11.5 million, from $13.4 million. Agile's total revenue of $33.2 million for the quarter came in slightly below the company's guidance of revenue of between $33.5 million and $34.5 million.
On March 5, Agile announced that it had completed its review of stock-option grant practices, including grant dates, from the time of the company's initial public offering, in August 1999, to July 2006. Of 200 grant dates, 140 were found to be appropriate, the company said. On others, the review determined that there was "an insufficient basis" for the grant dates. The expense resulting from these errors is $69.6 million. But Agile said that any financial restatement "will not have a material effect" on its fiscal year ended April 30, 2006, or any subsequent fiscal years.
In a conference call with financial analysts yesterday, Agile President and Chief Executive Jay Fulcher said that while he was pleased with the third-quarter results, he was focused on growing the company's top line in coming quarters. "I'm happy with the business fundamentals despite the distraction of the past few quarters," he said, in reference to the stock-option review. "Our business is fundamentally sound."
He said he based that assessment on growth in the PLM market and what he described as "broad adoption" of the Agile 9.2 PLM product. The Agile 9 line accounts for 51% of the company's revenue. Fulcher said he sees increased interest in PLM in all industries, and noted that the PLM market continues to be competitive.
Based on the rollout of Agile 9.2, augmented by a new release dubbed 9.2.2, due in the fourth quarter, Fulcher said he expects an acceleration in Agile's business over the next three to four quarters. "On the enterprise side, the platform is key," Fulcher said. "During the last three to four quarters, we've been consumed with getting customers to the new platform." He said that 140 customers are either live with or in the process of deploying 9.2.
What he's counting on in predicting an acceleration of the business, he noted, is that the installed base will be inclined to "absorb" more software over time. The upcoming 9.2.2 release, with what he described as a "dramatically improved user experience across all modules," as well as improved levels of functionality, will be the other major driver in this growth, he said.
Industry analyst Charles Foundyller, president of research firm Daratech Inc., said in an interview that he had a mixed view of Agile's growth plan. While it is possible for Agile to push the business forward using the new release, the real key is for the company to reshape its business model and return to profitability, he said.
"They do have a customer base looking to upgrade," Foundyller said. "I think [Agile] can be a good provider of PLM and a niche player. But they have to do something dramatic about costs and change their business model."
In Agile's fourth-quarter guidance, also announced yesterday during the analyst call, the company projects that it will have $34 million to $35 million in revenue, and per-share earnings of $.01 to $.02.