Subscription Revenue Decline Mars JDA Financial Report

January 16, 2012 Dan Burger

JDA Software powered its way through 2011 to post decent financial numbers despite the legal battles it fought with Oracle over patent infringements and a lawsuit it inherited with the acquisition of i2 in August 2010. Revenue increased slightly in Q4, and overall 2011 was a good year for the retail and supply chain software pillar.

JDA has not finalized its financial results for Q4 2011, but because it had a downtick in software license sales, it decided to put out preliminary financial results to give Wall Street the head’s up. JDA estimates it will have approximately $173 million in revenue in the quarter, which would represent a 3 percent uptick compared to Q4 2010. For the year ending in December, it brought total revenue to approximately $670 million and a comfortable 9 percent bump from 2010. JDA says it will formally issue its Q4 results January 31.

Within that seemingly good news is the stinging evidence that fourth quarter software and subscription revenue dropped 12 percent to $37 million, compared to a Q4 2010 total of $42 million. This sore point originates from a $10 million dip suffered in the Americas region. This was partially offset by the Europe, Middle East and Africa (EMEA) market where JDA picked up a little more than $4 million. Software and subscription revenue was also up slightly in the Asia-Pacific region.

For the year, unaudited software and subscription revenue is expected to be approximately $141 million, an increase of about 8 percent from $130.7 million in 2010. This is below the software and subscription revenue guidance range of $145 million to $160 million.

Maintenance revenue, often used as a good health barometer for software companies, is estimated to have increased 4 percent to approximately $67 million. A year ago, this revenue total was $64.4 million. The company attributed this increase to a customer retention rate of approximately 95 percent plus maintenance contracts attached to new license deals. For the year the maintenance revenue is estimated to jump 8 percent, which reflects an increase from $246.2 million in 2010 to approximately $266 million in 2011.

Last on the list is revenue from consulting services. In the fourth quarter JDA anticipates a 9 percent increase to approximately $68 million, and for the year a similar 9 percent increase to approximately $262 million.

With regard to the legal entwinements JDA wrestled with during 2011, it came out on the positive side of a legal engagement with Oracle, but was stung with the litigation baggage that came with the i2 acquisition.