JDA Says Big Deals Drive Record Q3 Results

November 1, 2011 Alex Woodie

JDA Software Group, which develops enterprise software for large retailers that runs on IBM i and other platforms, set records for its third quarter revenue and earnings, the company said last week. The logistics software company recorded revenue of $171.6 million for its quarter ended September 30, an 8 percent increase from last year, and net income of $16.8 million, a 100 percent increase.

The third quarter was expected to be really good as the result of sales pipeline that JDA three months ago said appeared to be “uncharacteristically strong” at the end of a rotten second quarter, which saw the company haul in just $162.4 million.

Software license revenue for the third quarter came in at $33.1 million, which was a 27 percent increase from its Q2 license revenue of $26.9 million, and a 104 percent increase compared to its 2010 Q3 license revenue of $16.2 million. Subscription revenue of $3.7 million was relatively flat compared to Q2, but was down 35 percent compared to last year.

JDA closed a total of 49 software deals during the quarter, nine of which were worth more than $1 million. During the second quarter, JDA closed 67 new software license deals, including nine worth more than $1 million. So while JDA closed fewer deals compared to Q2, the deals during Q3 were worth a lot more, which was indicated by a large uptick in the average deal size for the last 12 months. Sales increased by 67 percent in the Americas and more than doubled for EMEA, while sales in the Asia Pacific region declined.

JDA’s maintenance revenue increased 6 percent to $68.3 million, up slightly compared to 2010. Revenue from consulting services declined 8 percent to $66.4 million, thanks to a particularly good quarter consulting-wise a year ago; gross margins remained at 23 percent.

Overall profitability increased substantially. GAAP (generally accepted accounting practices) net income attributable to common shareholders for third quarter 2011 was $16.8 million or $0.39 per diluted share, compared to $8.3 million or $0.20 per share in third quarter 2010. When looked at from a non-GAAP basis (to take into account the amortization of intangibles and stuff related to the i2 acquisition), earnings per share rose to $.64 per share, a 36 percent increase from last year.

The record earnings, however, was calculated on an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) basis. The company says its “adjusted EBITDA increased 29 percent to a record $51.1 million in third quarter 2011 compared to $39.7 million in the third quarter of 2010, generating an increase in adjusted EBITDA margin to 30 percent in the current quarter compared to 25 percent in the third quarter of 2010.”

The results gave JDA president and CEO Hamish Brewer reason to be pleased. “In the third quarter, we saw strength across our business despite the current economic environment, and are especially pleased with our year-to-date software license growth, spurred by success in many of our major markets,” Brewer said.

“We continue to execute on our business plan. Our strong competitive third quarter wins demonstrate the importance of strategic supply chain management in these uncertain times, and JDA’s ability to deliver differentiated solutions to address today’s business challenges.”