JDA Sales Hampered and Profits Slammed by Downturn in Q1

Published: April 27, 2009

by Timothy Prickett Morgan

Retail and supply chain management application software maker JDA Software reported its financial results for the first quarter, and like just about every other IT vendor on the planet, JDA was hit by the economic downturn, which hurt sales a little and profits a lot.

For the quarter ended in March, JDA says that it had revenues of $83.3 million, down 11.2 percent, more or less matching the revenue decline that IBM itself saw in the first quarter of this year. JDA's software licenses in the quarter fell by a much more dramatic 23.5 percent to $15.3 million, but maintenance services on software packages held up pretty well with a decline of 6.1 percent to just under $43 million. JDA's services revenues fell by 10.8 percent in the quarter, to just over $25 million.

JDA was only able to do a small amount of cost cutting, so the lower sales came right out of the bottom line. Gross profit fell by 14.2 percent to $49.8 million, and net income fell by 50.6 percent to $2.6 million.

"We delivered a solid, profitable quarter with strong cash flows, which underscores the durable nature of our business model in these difficult times," explained Hamish Brewer, JDA's chief executive officer, in a statement accompanying the financial results. "We see continuing evidence that the market is focused on IT solutions that can reliably reduce working capital, improve margins, and minimize lost sales. This trend is good news for JDA as we are broadly recognized as the market leader proven to cost-efficiently deliver supply chain planning and optimization solutions that drive these results."

The company said that it closed 46 new software sales in the quarter, with three of them in excess of $1 million. By geography, software license sales in the Americas came in at $11.1 million, down 15.9 percent; in Europe, the Middle East and Africa were $3.2 million, down 31.9 percent; and in Asia/Pacific were $1 million, down a staggering 52.4 percent.

JDA exited the quarter with $63 million in cash and equivalents, up from $32.7 million at the end of the fourth quarter of 2008, which is a huge jump. While this may not be a huge war chest with which the company can do major acquisitions, it is a decent sized cushion to help tide JDA through bumpy times ahead, should the IT seas get a little choppier than they already are.

JDA has been spending some of its cash on buying back its own shares, and in the first quarter it shelled out $2.5 million to buy stock. This is used as compensation for employees and also boosts earnings per share figures a tiny bit--a practice that Big Blue has made an artform to appease EPS-obsessed Wall Street. JDA has a stock buyback program that runs out in March 2010 that allows the company to spend as much as $30 million on its own stock.

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