Friday, 21 August 2009

Encouraging messages from across the water

(By Philip Carnelley, 21 Aug 2009, 09:30) No local news to report on this morning, but several things from the US of note. First, reported its 2Q results, which showed bookings up 16% year on year, and revenue of $316m, up 20% year on year. Europe was 18% of total sales ($56m). Revenues and profits were above expectations, and the company raised guidance for the year (both earnings and revenues). It also reported 3,900 net new customers during the quarter: its total customer base is now 63k, up 32% year on year.

These results can be seen as an indication that the applications market is starting to move in the right direction, although the company also claimed increased market share due to defections from other companies, particularly Oracle. It is definitely an indication that software as a service (SaaS) continues to gain ground. Interestingly, we have been hearing about the growing number of companies – both IT user companies and software developers – who are starting to build or extend applications using the application development platform. The company said 500 customers are now using, to support 123,000 custom applications. Like all proprietary software, once built, applications on a cloud platform can be very difficult to migrate away from. Coupled with the subscription/rental model of payment, this bodes well for Salesforce’s future revenue growth, and for those developing products on its platform. Salesforce is encouraging uptake through a “your first application hosted free” offer. Other software developers taking the SaaS route will be greatly encouraged by these results.

Also reporting last night was Intuit. The US supplier of accounting software for small businesses reported sales up 4% for the year, to $3.2bn, with a flat fourth-quarter. It did however report an increased net loss for the quarter (-$71m, up from -$62m) and forecast an increased loss (yoy) for the next quarter, too. The company generally makes a loss in the summer months due to seasonally low revenues from its tax business, but its losses were worse than expected. Its shares fell 3% after hours, despite a bullish statement on earnings and revenue growth: on revenue, it predicts growth of 4 – 8% next year.

Intuit’s UK business is small: 95% of its sales are to the US, the rest is Canada and the UK, and frankly we’re not sure why it bothers with the UK presence. But we see this as a further indication of the improving climate for software sales to small businesses generally. Sage should be quite pleased, as this shows both that the US market for financial software is stabilising, and that one of its major competitors is having some internal difficulties. The US represents 41% of Sage’s business (around $1bn), and it’s been having problems there (see Sage plugs hole in its US Channel).

Finally there was news that Oracle has received clearance from the US DoJ for its proposed takeover of Sun. It still awaits approval from the European Commission, which should come at the beginning of September. This brings us back to In its results call, CEO Marc Benioff took the opportunity to praise Dell servers, favourably comparing their performance to Sun Solaris (and describing Dell, somewhat strangely, as 'open' and 'standard') - surely a thinly-veiled swipe at Oracle. He's learned a lot from his own time at Oracle.

No comments:

Post a Comment