Lawson Software Reports Second Quarter Fiscal 2007 Financial Results
Lawson Software, Inc. (Nasdaq:LWSN) today reported financial results for its second quarter of fiscal 2007, the second full quarter of post-combination results after its acquisition of Intentia International AB in April 2006.
ST. PAUL, Minn. (January 08, 2007) – Lawson Software, Inc. (Nasdaq:LWSN) today reported financial results for its second quarter of fiscal 2007, the second full quarter of post-combination results after its acquisition of Intentia International AB in April 2006. Lawson reported GAAP (generally accepted accounting principles) revenues of $184.5 million for its fiscal 2007 second quarter ended Nov. 30, 2006. This was an increase of 107 percent from revenues of $89.0 million in its fiscal 2006 second quarter. The increase in revenues is primarily attributable to the consolidation of revenues of the former Intentia. Excluded from these results is $3.9 million of deferred maintenance and service revenue that was written down under the purchase accounting method used for the acquisition of Intentia.
GAAP net loss was $3.5 million, or $0.02 per share, compared with GAAP net income of $6.6 million, or $0.06 per diluted share in the same period last year. This decline is primarily attributable to the consolidation of the former Intentia’s costs and operating expenses as well as a significant increase in the quarterly effective tax rate. Also included in these results are pre-tax expenses totaling $10.4 million for amortization of acquired intangible assets, restructuring charges, amortization of purchased maintenance contracts, and integration related costs, and $1.6 million of non-cash stock-based compensation as a result of adopting FAS 123(R) in the year. (Under the FAS 123(R) method, stock-based employee compensation cost is recognized using the fair-value based method for all unvested stock options after June 1, 2006.) Including the written down maintenance and service revenue and excluding these costs and expenses, the non-GAAP net income would have been $5.4 million, or $0.03 per diluted share.
“We’ve made good progress in our first two quarters following our combination with Intentia,” said Harry Debes, Lawson president and chief executive officer. “Validation includes increased cross-selling and Lawson M3 solution sales, high customer satisfaction and retention, healthy maintenance and consulting services revenues, and an increased pipeline. However, our license revenue is not where it should be. As a result, we are recalibrating our guidance for the second half of our fiscal year. It’s also important to note that our deferred license balance is increasing, which will be a net benefit to license revenue in future quarters. In addition, we are moving forward with our transformation plans to drive operational efficiencies throughout our global operations.”
For the six months ended Nov. 30, 2006, GAAP net loss was $19.3 million, or $0.10 per share, on total revenues of $346.3 million, compared with GAAP net income of $10.7 million, or $0.10 per diluted share, on total revenues of $177.0 million, in the comparable fiscal 2006 period. Excluded from these six-month results is $8.5 million of deferred maintenance and service revenue that was written down under the purchase accounting method used for the acquisition of Intentia. Included in the six-month results is $25.5 million of pre-tax expenses for amortization of acquired intangible assets, restructuring charges, amortization of purchased maintenance contracts, and integration related costs, and $3.7 million of non-cash stock-based compensation as a result of adopting FAS 123(R) in this year. Including the written down maintenance and service revenue and excluding certain expenses, six month non-GAAP net income would have been $10.0 million, or $0.05 per diluted share.
Financial Guidance
For the third quarter of fiscal year 2007 ending February 28, 2007, the company is estimating GAAP revenue of $181 million to $189 million, excluding approximately $2 million of deferred maintenance and services revenue written down under the purchase accounting method used for the Intentia acquisition. Including this amount, the company estimates non-GAAP revenues of $183 million to $191 million. License contracting is estimated to be between $32 million and $38 million, with estimated recognized license revenues between $20 million and $25 million. Estimated maintenance revenues are between $72 million and $74 million, and estimated consulting revenues are between $91 million and $92 million. The company anticipates a GAAP net loss of $0.01 to break even at $0.00 per fully diluted share. Non-GAAP fully diluted earnings per share is forecasted between $0.02 and $0.03, excluding approximately $9.8 million of pre-tax expenses related to the amortization of acquisition-related intangibles, amortization of purchased maintenance contracts, stock-based compensation charges, and integration costs. The non-GAAP effective tax rate in Q3 is anticipated to be 55 percent.
Total GAAP revenues for the fiscal year 2007 ending May 31, 2007 are estimated to be between $713 million and $733 million, excluding approximately $12 million of deferred maintenance and services revenue written down under the purchase accounting method used for the Intentia acquisition. Including this amount, the company estimates non-GAAP total revenues of $725 million to $745 million. The company also anticipates fourth quarter non-GAAP operating margin of mid-to-high single digits, and a non-GAAP effective annual tax rate of 58 percent.
Additional Second Quarter Fiscal 2007 Key Business Metrics:
Cash, cash equivalents and marketable securities were $278.8 million (including $13.5 million of restricted cash), compared to $289 million in the fiscal 2007 first quarter. This decline in cash was anticipated, driven primarily by the impact of the company’s change in U.S. maintenance contract renewal dates
Total license contracting was $30.2 million, an increase of approximately 20 percent over the first quarter, driven by increases in M3 contracting
Total revenues of $184.5 million increased 14 percent from first quarter, primarily driven by license and consulting revenue. Total license revenues of $22 million increased more than 30 percent over first quarter, primarily due to the increase in contracting
Total deferred revenues were $147 million. Deferred license revenue was $28 million, which is up $8 million from the first quarter
307 total deals were signed at an average selling price of $105,000, compared with 228 deals at an average selling price of $113,000 in the first quarter
27 new customer deals were signed at an average selling price of $420,000, compared with 34 at an average selling price of $352,000 in the first quarter
Three deals greater than $1 million and thirteen deals between $500,000 and $1 million were signed in the second quarter, compared to four deals greater than $1 million and six deals in the $500,000 to $1 million range in the first quarter
Revenues from the Americas region represented 53 percent of total revenue for the quarter; the Europe, Middle East, and Africa region represented approximately 43 percent of total revenue; and Asia-Pacific represented 4 percent of total revenue
Gross margin increased one percent to approximately 46 percent compared to the first quarter
Significant agreements were signed with Brooks Sports, Bucks County Pennsylvania, ETS Caillaud, Fulton Paper, Haulotte Group, Lisi Automotive, Manitou, Nebraska Methodist Health System, Pulte Homes, WesternGeco and Zeppelin Baumaschinen
The company signed four new Lawson M3 deals with customers in the Americas
Lawson continued to see good customer adoption of Lawson System Foundation 9 with 111 customers purchasing in the second quarter
Conference Call and Webcast
The company will host a conference call and webcast to discuss its second quarter results and future outlook at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) on Jan. 9, 2007. Interested parties may listen to the call by dialing 888-769-8514 (passcode Lawson 104) and international callers 1-210-234-0001. A live webcast will also be available on www.lawson.com. Interested parties should dial into the conference call or access the webcast approximately 10-15 minutes before the scheduled start time.
A replay will be available approximately one hour after the conference call concludes and will remain available for one week. The replay number is 866-436-9385 and international 1-203-369-1034. The webcast will remain on www.lawson.com for approximately two weeks.
Source: Lawson
