CDC Software Corporation, a hybrid enterprise software provider of on-premise and cloud deployments, has announced financial results for the quarter ended 31 March, 2011. CDC Software Corporation is represented in South Africa by Rifle-Shot Performance Holdings.
For the first quarter of 2011, non-GAAP revenue was $52,6-million and non-GAAP net income was $3,1-million, or $0.11 in non-GAAP earnings per share, compared to non-GAAP revenue of $51,7-million and non-GAAP net income of $8-million, or $0.28 in non-GAAP earnings per share in the first quarter of 2010.
In the first quarter of 2011, CDC Software continued to invest strongly in sales and marketing and research and development for both its on-premise and cloud segments, and reported record revenue and SaaS bookings in its cloud business.
For the first quarter of 2011, CDC Software’s cloud business reported non-GAAP revenue of $6,8-million, an increase of 51% from $4,5-million in the first quarter of 2010. The cloud segment reported negative Adjusted EBITDA of $206 000 in the first quarter of 2011, compared to Adjusted EBITDA of $1,2-million in the first quarter of 2010.
Earnings in the first quarter of 2011 have continued to be impacted by increased investments in sales and marketing and R&D. As previously discussed, CDC Software believes earnings in 2011 will be lower than 2010 given the company’s increased investments in its cloud-based assets.
Operating cash flow for the quarter ended 31 March, 2011 increased 62% to $8,9-million, compared to $5,5-million for the quarter ended 31 March, 2010. DSOs (days sales outstanding) in the first quarter of 2011 were 73 days, compared to 80 days for the first quarter of 2010. CDC Software had cash on hand of $34,9-million as of 31 March, 2011 and minimal debt.
First quarter 2011 application sales, which is comprised of license revenue plus secured total contract value (STCV) for software-as-a-service (SaaS) sales secured, increased more than 52% to $12,5-million during the first quarter of 2011, from $8,2-million in the first quarter of 2010.
Application sales for the first quarter of 2011 included license revenue of $6,4-million and STCV, or bookings, for SaaS sales of $6,1-million, compared to license revenue of $7,9-million and STCV of $260 000 in the first quarter of 2010.
STCV is the contract dollar amount for the duration of the contracts for all SaaS contracts secured, including new logo contracts, up sell, rental, as well as all renewals received by the end of the quarter.
First quarter 2011, total contract backlog (TCB) increased approximately 6% to $144,7-million, compared to $136,6-million in the fourth quarter of 2010. Cloud TCB in the first quarter of 2011 was at its highest levels since the company started its cloud business in the fourth quarter of 2009.
TCB is the sum of the remaining revenue value of SaaS and term license or rental contracts through the end of their respective terms, the value of contracted renewals for current SaaS and rental contracts based on 12 months of value, plus maintenance revenues from existing contracts over the previous 12 months.
Also, the number of enterprise and SaaS deals in the first quarter of 2011 increased by approximately 16% to 340, from 294 in the first quarter of 2010. Total non-GAAP recurring revenue, which CDC Software defines as non-GAAP maintenance plus SaaS revenue, increased approximately 8% to $30,2-million in the first quarter of 2011, from $28-million in the first quarter of 2010.
Maintenance retention rates continued to be strong at more than 90% for the first quarter of 2011. First quarter 2011 services revenue was $14,9-million, compared to $14,8-million in the first quarter of 2010. During the first quarter of 2011, approximately 57% of license revenue was derived from North America, 28% from EMEA and 15% from Asia/Pacific.
Adjusted EBITDA was $5,6-million in the first quarter of 2011, compared to $10,6-million in the same period in 2010. First quarter 2011 adjusted EBITDA margin was 11%, compared to 20% in the same period in 2010.
In addition to the significant investments in the cloud business, especially in sales and marketing and R&D, adjusted EBITDA in the first quarter of 2011 also was impacted, in part, by expenses related to the integration of acquired businesses acquisitions and legal expenses.
“During the first quarter of 2011, we saw solid growth in our cloud business despite the first quarter typically being lower than other quarters,” says Bruce Cameron, president of CDC Software.
“While our profitability was impacted primarily by the upfront costs associated with our cloud investments, which we expect to continue in the foreseeable future, we are positioning ourselves for higher organic growth in that business. Our increased marketing investments also included a totally re-designed Web site and several scheduled user conferences, trade shows and marketing programmes.
"We believe that we are starting to see returns on these investments. Our recurring revenue as a percentage of total revenue in the first quarter of 2011 was at 57%, compared to 48% in the first quarter of 2009, and we believe that will continue to grow,” he says.
“As we have previously stated, our strategy is to develop recurring revenue streams reaching closer to 70% of total revenue over the next few years, after completion of our planned SaaS acquisitions and our strategic investments in SaaS companies.
“During the first quarter of 2011, our revenue from partnership and strategic alliances represented a strong 23% of total license revenue. Additionally, CDC Software continued to grow its business in emerging markets like India, where it won its largest license deal of the first quarter.
“In fact, we have been stepping-up our sales and marketing activities in markets such as Germany, Brazil, Australia, China, India, Poland and Russia, which we believe hold solid sales potential for our solutions.
"The company has also been seeing a solid trend of new business, which was up to 34% of license revenue in the first quarter of 2011, its highest levels in three years. Our total pipeline so far in 2011 is up to $81,5-million, compared to $79,7-million in the first quarter of 2010, with our cloud pipeline increasing approximately 20% to $19,9-million, compared to $17,7-million in the same period in 2010,” concludes Cameron.