JDA Recovers Nicely in the Second Quarter

Published: August 3, 2009

by Timothy Prickett Morgan

There's plenty of bad news coming out of software companies these days as license sales are dropping and profits are dropping even faster. But not at retail and supply chain software maker JDA Software, at least not in the second quarter.

For the quarter ended June 30, JDA said that software license sales rose by 77.4 percent to $27.6 million, not only outstripped sales in the second quarter of last year, but also outselling by a far margin the company's $18.6 million in license sales in the second quarter of 2007. The net effect is that after a pretty harsh first quarter, when software license sales fell by 23.5 percent to $15.3 million, JDA has come out ahead so far in 2009, with overall license sales up 20.6 percent to $42.9 million. While software license sales increased as retailers bought software to better manage their supply chains (and therefore increase their own profits), JDA's maintenance services sales fell 4.9 percent to $44.4 million as retailers presumably cut costs and fought hard on maintenance contracts. JDA's consulting services sales were also down 5.9 percent to $25.1 million, and its reimbursed expenses dropped to $2.45 million. Still, despite the services slump, JDA booked $99.5 million in total sales in the second quarter, up 8.4 percent. By keeping an iron hand on the cost tiller, JDA was able to bring $8.9 million to the bottom line, nearly triple the net income it had in the year-ago quarter.

For the six months, JDA's overall sales are actually down 1.5 percent to $182.8 million, with net earnings nonetheless up 37.5 percent to $11.6 million.

These numbers illustrate why companies and investors are wise to think outside of 13-week cycles and more long term. This is especially true in the retail software business, which is a relatively small sector in terms of potential customers and which has always been choppier than the ERP and supply chain markets for manufacturers and distributors at large.

JDA said that it had 68 new software deals in the quarter, with five of them in excess of $1 million; three were in the Americas region, one was in Europe, and one was in Asia/Pacific. The company had $14.4 million in license sales in the Americas in Q2, a big improvement from the $8.9 million it booked in the second quarter last year. License sales in EMEA were only up a smidgen to $5 million, however. Sales in Asia/Pacific exploded in the quarter, more than quadrupling to $8.2 million. To that end, JDA said it was going to quadruple the number of sales, consulting, and support Chinese employees serving its Chinese market and added that it now had 534 employees in its center of excellence in India, who do product development, support, and other IT services related to its application software.

JDA exited the quarter with $92.7 million in cash, nearly triple what it had a year ago, and no debts. There are clearly worse positions to be in.

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