Sales and Profits Up at Idion Technology Holdings
March 27, 2006 Timothy Prickett Morgan
The high availability and clustering software for the OS/400 platform has always been a major driver of platform sales, but because the HA players are generally privately held firms, we generally do not know how business is going. To be sure, from time to time, vendors give a peek inside their books to highlight when things are going well, but only DataMirror and Idion Technology Holdings, the parent company of HA software provider Vision Solutions, are public companies.
It was Idion’s turn to report financial results recently. Idion, which is a South African company that is traded on the Johannesburg Stock Exchange, reports its financial results in U.S. Dollars because the bulk of its sales come from the Vision Solutions unit. For the year ended December 31, 2005, Idion had total sales of $33.25 million, up 6 percent. Software license sales were up 9 percent to $13.95 million, and maintenance revenues were up3 percent to $17.19. And while services and consulting fees were a modest $2.11 million in sales in the quarter, revenues in this category were up 20 percent. Even with the costs of the acquisitions of OS Solutions and increased marketing expenses too, Idion was able to bring $729,000 to the bottom line, or about 6 cents per share, which compares well against the $841,000 loss (8 cents per share) it booked for all of 2004.
According to Idion’s financial filings, the company generated $1.2 million in net cash in 2005, and paid $2.73 million for acquisitions, which presumably was for the OS Solutions deal. The company ended the year with $10.25 million in cash and equivalents in the bank.
Idion attributed the revenue growth it saw in 2005 to several large transactions with existing Vision Solutions customers as well as to new customer accounts it secured in Europe and Asia. The OS Solutions unit also brought in $951,000 in sales for the year, too, which would seem to imply that this acquisition will pay for itself in about two to three years, depending on how well the extra presence in the United Kingdom that Idion got by buying OS Solutions translates into sales of other products. Idion said that sales in the North American region, where the competition for HA products is fierce, were below its expectations. The America’s region represented 50.3 percent of its sales in the quarter, but only 33.6 percent of license sales. Europe accounted for 36.1 percent of total sales, but 49.4 percent of license sales.