Seagull Software Announces Financial Results for the First Quarter of Financial Year 2006
Company Reports Profitability and Strong Revenue Growth of 21%
ALL FINANCIAL DATA INCLUDED IN THIS PRESS RELEASE IS PREPARED IN ACCORDANCE WITH IFRS, IS PRESENTED IN US DOLLARS AND IS NOT AUDITED
DORDRECHT, The Netherlands and ATLANTA - 24 August, 2005 - Seagull Software (AEX: SEAGULL), a leading provider of software products for connecting legacy applications to Internet architectures, today announced financial results for the quarter ended 31 July 2005, which is the first quarter of the Company's financial year 2006 (Q1 FY 2006).
Total revenues for the period were $6.6 million, representing an increase of 21% as compared with total revenues of $5.5 million for the first quarter of the previous financial year. Net income for the first quarter was $52K as compared with a net loss of $1.5 million in the corresponding period of the previous financial year.
"We are very pleased with this strong performance," said Don Addington, President and CEO of Seagull Software. "Seagull Software showed solid revenue growth and profitable results in the first quarter, and we are well-positioned to build on this success and further strengthen our market position."
License revenue for Q1 FY2006 was $2.7 million, an increase of 31% as compared with license revenues of $2.1 million for the first quarter of the previous financial year. The Company added 38 new customers (not counting customers via acquisition) to the installed base as compared with 19 new customers added in the same period last year, making a significant contribution to the growth in license revenues. Service and maintenance revenues for the quarter were $3.8 million representing an increase of 14% as compared with similar revenues the first quarter of the previous financial year. Maintenance revenues increased by 19% as a result of a new maintenance revenue stream from the acquisition of SofTouch, as well as consistently high maintenance renewals from the Company's installed base of customers.
Gross margin was $5.3 million or 81% of total revenues, as compared to gross margin of $4 million or 74% of total revenues for the corresponding quarter in the previous year. Gross margin for both consulting and maintenance increased year-over-year as a result of improved consultant utilization and increased maintenance revenue. Total operating expenses covering the sales & marketing, research & development and administrative functions were $5.5 million, in line with the first quarter of the previous year.
Business Highlights
Global Expansion of Enterprise Account Customer Base
During Q1 FY2006, Seagull Software added more than 38 new customers across all geographies and targeted verticals. The company achieved new and follow-on business from customers such as AGL Resources, Capgemini UK, CSX Transportation, Dominion Resources Services, the Dutch Police, Florida Department of Revenue, Hydron Flevoland, iesy Hessen GmbH, JDA Software Australia, Legal and General Group, Nurnberger Lebensversicherung AG, Ryder Truck Rental, State of Indiana, State of West Virginia and Texas Workforce Commission.
Acquisitions
Seagull Software recently completed two acquisitions that significantly enhance and differentiate the LegaSuite solution platform, which offers unrivaled Service-Oriented Architecture (SOA) enablement for large enterprises with heterogeneous legacy systems.
Just prior to the start of Q1 FY 2006, Seagull Software completed the acquisition of SofTouch Systems, Inc., a privately-held software company that specializes in high-performance mainframe integration. The Company has already recognized maintenance revenue from the addition of approximately 70 new customers, including American Express, Getronics PinkRoccade, the New York Times, Dassault Falcon Jet, Columbia University and the State of Minnesota.
On 15 July 2005 Seagull Software completed the acquisition of Oak Grove Systems, Inc., a privately-held software company that specializes in business process management (BPM) technology. In addition to intellectual property, the Company gained over 60 new customers including SAS, Sybase, Plumtree Software, Macnica, Empolis GmbH (Bertelsmann MOHN Media Group), Intentia International and the U.S. Navy.
Both acquisitions were completed without incurring debt and have already contributed revenue through maintenance and additional product license sales.
"These strategic acquisitions demonstrate technology strategy leadership and uniquely position Seagull Software as offering the most comprehensive platform of SOA-enablement solutions for legacy environments," said Don Addington.
In accordance with the reporting requirements of Euronext Amsterdam Exchange, Seagull Software will report detailed results for the half-year period ending 31 October 2005 in November 2005. Due to the uncertainty of the technology market, the Company is not providing estimates of revenue or earnings for future periods at this time.