On the cusp of its expected acquisition by German systems software vendor Software AG, WebMethods Inc. yesterday reported that its fourth-quarter revenue and earnings both took a tumble.
WebMethods, a provider of business integration software, said it achieved revenue of $51.2 million for the quarter ended March 31, a 13.8% drop from $59.4 million in the fourth quarter a year ago. The Fairfax, VA, company reported a GAAP (generally accepted accounting principles) net loss for the quarter of $2.9 million. That compared to net earnings in the like period a year ago of $10.5 million.
WebMethods saw a 33.3% drop in first-quarter license revenue, which totaled $18.4 million, compared with $27.6 million in the same period last year. Only WebMethods' maintenance revenue showed an increase for the quarter, growing 10% to $21.1 million. The company's revenue from services fell 6.4% to $11.7 million.
The fourth-quarter results contributed to a full-year loss of $18.4 million. The company's overall revenue for the year fell 3.7% to $201.1 million, while software license revenue was down 23.1% to $67.2 million.
Despite the poor results, WebMethods President and CEO David Mitchell, in a prepared statement, said, "We're pleased with our improved performance over the past half year as our efforts to achieve better sales force productivity and more consistent execution continue to take hold." Mitchell added that the fourth quarter saw "solid contributions" from the company's newest business process management and service-oriented architecture products. Those include the new X Registry product, acquired last September along with Infravio Inc., as well the BPMS tools that are part of the WebMethods 7 product suite announced at the end of December, according to a company spokesman.
Efforts to improve sales force productivity have included additional sales force training and more vigilant pipeline management, according to the spokesman.
WebMethods saw its biggest fourth-quarter skid in the North America region, where revenue was down 22% year over year. Revenue from Europe/Middle East/Africa fell 1%, and revenue from Japan was down 7%. Revenue from the rest of the Asia/Pacific region, however, grew 19% during the quarter.
WebMethods is not the only SOA platform vendor to struggle financially in recent weeks. Earlier this month, competitor BEA Systems Inc. released preliminary results for its first quarter, ended April 30, that showed slowing overall revenue growth and reduced software license revenue. BEA said it expects software license revenue for the quarter to come in anywhere from $111 million to $116 million, down from $132.4 million reported in the first quarter a year ago. BEA said overall revenue would be in the range of $342 million to $347 million. First-quarter 2006 revenue was $323.2 million.
"This quarter we saw a difficult selling environment, especially in the Americas, and several large deals slipped out of the quarter," said BEA founder and CEO Alfred Chuang in a prepared statement.
Following release of its fourth-quarter results, WebMethods' share price rose less than a percentage point to $9.07. That is below Software AG's per-share offer of $9.15.
Separately, Software AG yesterday announced its intention to extend the expiration date of its tender offer for WebMethods from Tuesday, May 15, to Friday, May 25. In a statement, WebMethods said the extension is necessary to allow time for a required review of the deal by the Committee on Foreign Investments, part of the U.S. Department of the Treasury.