JDA Software Reports Gains With Q2 Financials

September 4, 2012 Jenny Thomas

Software license sales picked up for retail and supply chain management software maker JDA Software Group in the second quarter ended in June, rising 6 percent to just over $32 million and helping push up and overall sales for the company by 2 percent to $168.8 million.

During the Q2 earnings conference call, JDA president and CEO Hamish Brewer said the company saw some improvement in the first quarter in U.S. retail, which was good news after decline in license sales in North America in the retail market in the fourth quarter of 2011.

Software and subscription revenues were a bright spot for JDA, which grew 5 percent to $35.8 million in the second quarter. Software and subscription revenues also increased 22 percent sequentially from $29.4 million in the first quarter of this year. The gain was attributed to stronger sales in the company’s North America and Asia/Pacific regions, where JDA closed 57 software deals, including 11 deals in excess of $1 million in the second quarter, compared to 68 deals, including 10 over $1 million, in the prior year period.

“In the first half of 2012, JDA generated excellent cash flow and we delivered improved license growth in the second quarter: two factors that are key to the momentum we expect to continue to build in the second half of the year,” said Brewer.

That said, software maintenance, which accounted for $66.8 million of the revenue in the quarter, or about 40 percent of the total pie at JDA, continues to be one of the three legs of the stool at the company. Maintenance revenue saw a tiny jump of 1 percent to $66.8 million in the second quarter 2012 from $66.1 million in the second quarter 2011, which JDA honchos said was due to a continued strong retention rate of 95.9 percent and the high level of attachment of maintenance contracts to new license deals. Maintenance gross margins also improved to 78.4 percent in the second quarter, up from 77.7 percent in the year-ago period.

Consulting and other services revenues at JDA also saw a 1 percent increase to $66.1 million in the second quarter.

The breakdown of regional software sales performance went like this: In its Americas region, JDA reported $26.0 million in software license and subscription revenues during Q2 2012, an increase from $22.4 million reported in the second quarter 2011. Companies signing new software licenses in second quarter 2012 include Ace Hardware, CVS Corporation, Easy, and O’Reilly Automotive/Ozark Auto.

Software license and subscription revenues in the EMEA region came in at $4.5 million in the second quarter 2012 compared to $8.6 million in the previous period. In the Asia/Pacific region, software license and subscription revenues increased to $5.3 million in the second quarter of 2012, a big improvement when compared to $3.1 million in the second quarter of 2011.

The company also offered a peek at its financial expectations for the full year 2012. JDA is predicting overall software revenues for 2012 to total between $140 million and $150 million, maintenance revenues at approximately $270 million, consulting revenues to land between $265 million to $270 million, which would put JDA’s total guesstimated revenues for 2012 somewhere between $675 million and $690 million.

Looking ahead, Brewer said JDA plans to continue the focus on creating sustainable, long-term growth by expanding customer solutions, including launching a new product offering in the retail sector and expanding options with JDA’s cloud services.

In conjunction with the release of the 2012 Q2 financials, JDA also announced it had completed its filings for restating its annual and quarterly financial results for fiscal years 2008 through 2011, which The Four Hundred originally reported on in April of this year. The restated results reflect a change in the timing of recorded revenue over the indicated periods. JDA stated its internal investigation found no indication of fraud or intentional wrongdoing, and did not reveal any issues with the existence of the recorded revenue or any impact to actual cash received or reported cash balances as of December 31, 2011, 2010, and 2009. With these filings, JDA believes it is in compliance with applicable requirements.