CDC Software’s Second Quarter Results

Let’s talk numbers. CDC Software Corporation, a hybrid enterprise software provider of on-premise and cloud deployments, recently announced financial results for the quarter ended June 30, 2010. For the second quarter of 2010, Non-GAAP revenue was up $3.4 million from Q2 last year at $54.0 million and Non-GAAP net income was down $0.6 million from Q2 of 2009 at $7.8 million. They’ve had a slight decrease in their Q2 2010 Adjusted EBITDA at $11.7 million, compared to $10.6 million in the first quarter of 2010 and $13.7 million in the second quarter of 2009.

Second quarter 2010 application sales increased 73 percent to $13.5 million, from $7.8 million in the second quarter of 2009. Application sales are comprised of license revenue plus new secured total contract value of SaaS contracts. Secured Total Contract Value (STCV) is the contract dollar amount for the duration of the contracts for all SaaS contracts secured, including new logo contracts, upsell, rental, as well as all renewals received by the end of the quarter. The company’s estimates, announced in June 2010, provided that application sales during the second quarter of 2010 would increase by approximately 33-42 percent from the second quarter of 2009. The higher than expected results were due primarily to organic growth in the company’s core product lines.

License revenue from new logo sales in the second quarter of 2010 increased 131 percent to $3.0 million, compared to $1.3 million in the second quarter of 2009. New logo sales in the second quarter primarily came from the company’s Pivotal CRM, CDC Factory, CDC gomembers and China-based Human Resource Management products.

Second quarter 2010 license revenue increased by 13 percent to $8.8 million, compared to $7.8 million in the second quarter of 2009. Non-GAAP SaaS revenue(a) increased 53 percent to $2.6 million, compared to $1.7 million in the first quarter of 2010. STCV was $4.7 million, compared to $480,000 in the first quarter of 2010, due to organic growth, as well as recent acquisitions. Also, the number of enterprise deals (which includes on-premise and SaaS product lines, but excludes SaaS renewals) in the second quarter of 2010 totaled 344, compared to 249 in the second quarter of 2009 (which did not include SaaS). The number of new logo deals in the second quarter of 2010 increased to 120, compared to 108 in the second quarter of 2009.

“We are very pleased with the strong growth in application sales that included a significant increase in new logo organic sales from our Front Office, Plant Floor, China-based HRM on-premise applications and CDC gomembers SaaS solutions,” said Bruce Cameron, president of CDC Software. “We have also been seeing our SaaS applications serve as mission critical solutions for our customers, as our SaaS renewal rates averaged approximately 95 percent in the second quarter of 2010. Based upon the increase in SaaS revenue we have seen, our preliminary estimates and projections, and our projected bookings so far this year, we expect to see double digit quarter-to-quarter growth in SaaS revenue for at least the next few quarters. With SaaS revenue continuing to grow at a greater rate than our other revenue streams, and assuming modest maintenance revenue growth, we continue to expect to reach our goal of achieving recurring revenue closer to 70 percent of total revenue in the next few years.”

Tags: CDC Software, ERP, financial report Q2 2010