Seagull Software Announces Financial Results for Second Half and Full Year Ended 30 April 2005
Reports $1.9 Million Profit and 10% Growth for Second Half, Full-Year Loss Reduced from $4 Million to $908K and Full-Year Revenue Up 2%
DORDRECHT, THE NETHERLANDS - 21 June 2005 - Seagull Software (AEX: SEAGULL) a leading provider of software products for transforming legacy applications into Web services for service-oriented architecture, today reported financial results for the second half (H2 FY05) and the full financial year ended 30 April 2005 (FY 2005).
Total revenue for H2 FY05 was $12.2 million, an increase of 10% as compared with the first half of the financial year. Net income for H2 FY05 was $1.9 million, as compared to a loss of $2.8 million for the first half of the year.
For the full financial year, total revenue was $23.4 million, an increase of 2% as compared with total revenue of $22.9 million for the previous year. The Company reported a net loss of $908K for FY 2005, as compared with a net loss of $4 million in FY 2004.
Net loss for FY 2005 was $0.11 per share as compared with a net loss per share of $0.52 in the previous financial year. On a fully diluted basis, the FY 2005 net loss per share was $0.10 as compared with a net loss per share of $0.46 in the previous year.
Total license revenue for H2 FY05 was $5.2 million, an increase of 15% from $4.5 million in the first half. Maintenance and service revenues for H2 FY05 were $7.1 million as compared with $6.6 million in H1 FY05.
For the full year, license revenue was $9.7 million (FY 2004 $10.6 million). Maintenance and service revenues grew from $12.2 million in to $13.7 million in FY 2005.
"We are pleased to report a significant improvement in both half-over-half and year-over-year results," said Seagull Software CEO and President Don Addington. "In FY 2005 we reduced expenses by 9%, grew maintenance revenues by 14% and grew consulting revenues by 8%. The software industry still remains vulnerable to quarterly fluctuations in license revenues, so we've worked successfully to grow the maintenance and consulting line items. FY 2005 results show good progress in overall performance on both an EBITDA and net basis."
Geographically, the Americas region contributed 69% of total revenues in FY 2005 with the remaining 31% generated by Europe and Asia Pacific, in line with results from the previous year.
Total gross margin for FY 2005 was $18 million or 77% of revenues, as compared with $17.9 million (78% of revenue) for the previous year. Gross margin on license revenue was $9.6 million (FY 2004 $10.5 million). Maintenance and service gross margin was $8.4 million as compared with $7.4 million in FY 2004.
"Our growing maintenance and service revenues also contributed higher gross margin this year," commented Seagull Software Chief Financial Officer Mory Motabar.
Total operating expenses (excluding restructuring expense) were $20 million, a reduction of 9% as compared with total operating expense of $22 million in FY 2004. Sales and marketing expenses were $11.3 million (FY 2004: $12.5 million). Research and development expenses decreased from $5.3 million to $4.5 million as a result of consolidation of European development labs, now concentrated in the Netherlands. General and Administrative expenses including the finance, IT, maintenance renewal, HR, and administration departments as well as legal and accounting fees were $4.2 million (FY 2004: $4.1 million).
Total cash balance increased from $6.4 million at the end of H1 FY05 to $6.9 million on 30 April 2005. Days Sales Outstanding (DSO) on 30 April 2005 was 42 days, comparing very favorably with industry averages of more than 60 days.
"We continue to experience outstanding DSO, reflecting customer satisfaction with our products and services," said Mr. Motabar.
Business Highlights
Global Expansion of Enterprise Account Customer Base
In FY 2005 Seagull Software continued to steadily grow its customer base in its target market of enterprise accounts with the addition of 129 new customers across a variety of vertical markets including financial services, government, telecommunications, transportation and utilities. The Company secured new and follow-on business from customers such as ADP Nederland, Aquila, Atlanta Gas Light, Bank of America, Cap Gemini for the Inland Revenue, Cendant Car Rental, Consumers Energy, CSC Healthcare, Dutch Ministry of Defense, Fetzer GmbH, Florida Department of Revenue, Hydron Flevoland, Island Pacific, MCI, Metavante Corporation, Nestle, New England Motor Freight, Nürnberger Versicherungsgruppe, PeopleSoft, Ryder Truck, State of Texas, SunTrust and Swiss Army Brands.
Acquisition
In April 2005 Seagull Software acquired SofTouch Systems, Inc., a privately-held software company that specializes in high-performance middleware to integrate mainframe applications with service-oriented architectures (SOA). This strategic acquisition immediately furthered the Company's vision to offer unrivaled SOA-enablement for large enterprises with heterogeneous legacy systems. In addition to intellectual property, the company gained a new customer base of approximately 70 enterprises, including American Express, Getronics PinkRoccade, the New York Times, Dassault Falcon Jet, Columbia University and the State of Minnesota.
Strategic Partnerships
During FY 2005, Seagull Software and JBoss, Inc., a leader in professional open source middleware, announced a strategic partnership under which Seagull Software will distribute and support the open source JBoss Application Server, expanding the capabilities of the LegaSuite platform and delivering even greater productivity and savings to customers. As a JBoss Authorized Service Partner (JASP), Seagull Software now offers JBoss production support and indemnification to customers and resells JBoss enterprise-level services.
A global alliance was also established with Cordys, a Netherlands-based international software company providing the most comprehensive Composite Application Framework (CAF) commercially available. Under the agreement, the companies will collaborate on technology, marketing and sales initiatives worldwide.
Seagull Software expanded its presence in the Asia Pacific region by establishing distributor relationships with iMon Technologies in China and Select Software in India.
Other Accomplishments
In FY 2005, Seagull Software introduced LegaSuite Transformation Methodology (LTM™), a software development methodology for unleashing new value from legacy application assets. Complementing the LegaSuite software platform, LTM provides a proven roadmap for liberating business processes that are trapped in mainframe, midrange and Windows applications. The combination of LegaSuite and LTM exponentially speeds the service-enablement of legacy applications, helping IT to provide rapid support for business change while simultaneously migrating existing systems to a SOA.
Additional achievements for FY 2005 include:
Ranked in the Leader Quadrant by Gartner Group in the 2005 Magic Quadrant for Programmatic Integration Servers for the third consecutive year
Achieved PeopleSoft certification of LegaSuite to provide SOA-based integration between legacy applications and PeopleSoft enterprise applications
Ranked 313 in Software Magazine's prestigious Software 500 List for 2004
Achieved Microsoft's 'Designed for Win