October 3rd, 2008
Lawson Q109: 'sloppy execution'
Harry Debes, CEO at Lawson Software doesn’t mince his words. So when the company announced its missed Q1 fiscal 2009 results (PDF) yesterday it came as no surprise that during the earnings call he had this to say about the way the company performed:
…some of this was sloppy execution on our part and some of it is that we can’t always control access to customer executives according to our quarter end timetables.
I’ve been selling software for 30 years and I can tell you that in some quarters, deal velocity goes in your favor and you sign absolutely everything, even deals you did not forecast. But in other quarters, deal velocity does not go exactly as planned and this was one of those times it did not go our way.
But let there be no doubt — we are disappointed with these contract signing results and as a result, we are taking a harder look at the deals in our short-term pipeline and making sure that our closing timetables and activities are more crisp and achievable.
New licenses were off 17%, services were off by 3% counterbalanced by an uptick of 13% in maintenance revenues. The net effect was a slim 2% year over year growth in top line revenue to $190.9 million. Earnings slid from $5.6 million profit to a net loss of $2.5 million on a year over year basis.
The good news is that $4 million in slipped revenue has not been lost but deferred into the current quarter. In what can only be described as a moment of irony, Debes described how the company’s emphasis on bundling licensing with services is leading to increased revenue deferral:
So in some respects, our model is changing from the sell it now and recognize it now model we’ve had in the past to something which is more akin to the SAAS model, where the revenue is recognized either over the installation cycle or over the term of the hosting arrangement.
The comment is ironic because most recently, Debes found himself at the center of a storm around the saas model.
Throughout the call, Debes sought to allay analysts concerns that the current financial crisis might affect business over the coming quarters but was wise enough not to put his head on the block and commit to firm numbers. As one of the companies that is relatively early in the reporting cycle, Lawson provides an early indication of how macro-economic conditions are impacing the enterprise tech sector.
The full transcript of the earnings call may be found at Seeking Alpha.
Dennis Howlett has been providing comment and analysis on enterprise software since 1991. See his full profile and disclosure of his industry affiliations.
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